Initial public offerings (IPOs) in the biotech sector are showing signs of recovery after reaching a historic low in 2025, with only eight companies going public, according to a BioSpace tally. Experts say that the increased use of artificial intelligence (AI) is playing a key role in this resurgence.
The renewed interest in biotech IPOs is significant because it signals changing investor confidence and evolving strategies within the industry. AI's ability to provide clearer risk assessments is seen as an important factor for both companies and investors.
Tyrone Lam, chief business officer at GATC Health, said, “AI is fundamentally changing the risk calculus in biotech investing.” Lam explained that while limited capital and high interest rates were often blamed for holding back investment, “what was really holding back investors was a lack of any reliable signal” from biotechs about their likelihood of success. He added that AI is beginning to address this challenge by allowing drugmakers to quantify risk and improve program design.
Ardy Arianpour, CEO and co-founder of SEQSTER, also highlighted how startups can use AI strategically: “Startups can use AI strategically to strengthen their pitch to investors.” Some recent high-profile IPOs have emphasized their use of AI as part of their core technology. For example, Eikon Therapeutics raised $381 million by integrating AI into its workflow for tracking protein movement inside cells. Aktis Oncology uses AI for selecting radiopharmaceutical targets, while Generate:Biomedicines employs machine learning models to generate medicines instantly.
Lam noted that these applications go beyond simply adding 'AI-powered' labels; they represent fundamental changes in how companies approach discovery and communicate with funders. “The startups that build infrastructure early... will be in a materially better position when it counts,” he said.
Generate:Biomedicines’ recent $425 million IPO stands out as an example of this trend. Backed by Flagship Pioneering, Generate’s platform draws on large data sets to develop new therapeutic proteins. The company plans to invest much of its IPO proceeds into late-stage studies for GB-0895, an antibody targeting airway inflammation.
Igor Pejic, a tech strategist and author, described Generate’s debut as potentially marking "the first real moment of fusion between biotech and AI," suggesting it could influence broader industry trends if successful clinical results follow.
