More funding options for (some) biotechs
Not all biotech teams may want to keeping turning the handle post-carveout, given the toll taken by a long financing winter.
But for survivors of that winter, it’s a great time to build. Private investors have doubled down on their strongest projects, creating a cohort of more robust, better-funded firms with broader financing options. Public investors (including hedge funds) have piled into the lucky few delivering Phase 3 clinical data. France’s Abivax, for example, saw its share price multiple over seven times in July 2025 following positive results from ulcerative colitis candidate obefazimod, a micro-RNA enhancer. Insmed stockholders have enjoyed a similarly high ride since Phase 3 results emerged in 2024 for brensocatib, approved this year as Brinsupri for the lung condition bronchiectasis. Insmed management has been vocal about its ambitions to go commercial and become “one of the next great biotechs”. Abivax CEO Marc de Garidel is also gearing up commercial activities to support a potential US launch for obefazimod, expected to be submitted to regulators next year. (See “Biotechs going commercial” material)
Biotechs in the “haves” camp – whether public or private – also have a more widely-available option for raising non-dilutive capital: royalty financing. (See Box: Royalty Financing Grows) In exchange for an up-front sum, biotechs sell all, or a share, of current or future royalty streams from programs they own or have a stake in. BridgeBio, for instance, in June 2025 raised $300 million from HealthCare Royalty Partners and Blue Owl Capital, in exchange for 60% of royalties owed it on the first $500 million of annual net sales in Europe of heart disease drug Beyonttra (acoramidis). (The drug, sold for transthyretin amyloid cardiomyopathy (ATTR-CM), was licensed to Bayer in 2024 and is launching this year.) HealthCare Royalty also in January paid French biotech Genfit E130 million for a portion of royalties owed on liver disease drug elafibranor, launched in the US in 2024 as Iquirvo by partner Ipsen.
Royalty financing deals have multiplied amid closed capital markets across the US and Europe. Yet Clarke Futch, CEO of HealthCare Royalty Partners, doesn’t expect this financing option to subside when and if IPOs return. “It’s an all-weather strategy,” he says, which may make biotech less volatile in the face of choppy markets. The opportunities for royalty financers, most of which bet on sales performance, not biotech pipeline value, attracted asset manager KKR to take a majority stake in HealthCare Royalty Partners in late July 2025. “Biopharma are voracious consumers of capital, and there are increasing number of innovations that need to be financed, says Kugan Sathiyanandarajah, head of KKR’s Health Care Strategic Growth business in Europe. Other big investors appear to agree: OrbiMed in August 2025 raised a $1.86 Royalty and Credit Opportunities fund.
Some royalty investors back earlier-stage opportunities: XOMA pivoted in 2017 from biotech to royalty aggregator, with a focus on early-clinical programs. It’s also now scooping up struggling public biotechs, buying four over the summer of 2025 (vaccine developer HilleVax, bispecific antibody play Lava Therapeutics, cell therapy company Turnstone Biologics and immunotherapy-focused Mural Oncology).
Alongside broader financing options are other forces encouraging clinical stage biotechs to market their products alone. Big buyers are hesitant and picky. Most new drugs these days are specialized treatments that require smaller sales forces, despite the attention focused right now on mega-blockbusters. Commercial resources are more readily available (not least from down-sized Big Pharma sales teams) and more flexible. Meanwhile, data management systems, analytics tools and digital marketing resources provide even small firms with a powerful means of tracking and adjusting outreach efforts to achieve maximum impact. “Accessing the right people is critical to launch success, and the right data infrastructure can give small biotechs a huge advantage,” Chris Martin, chief commercial officer at Verona, told Evaluate earlier in 2025.
In the end, Verona didn’t have long to capitalize on those advantages: Merck swooped in with its $10 billion about six months after launch. Potential suitors may be watching how well Insmed’s Brinsupri or Abivax’s obefazimod sell before putting offers in there - regardless of how much the target share price rises in the interim. (By the time Merck bought Verona, the company was six times more valuable than it was when Ohtuvayre received FDA approval).
Insmed has a broader asset base than Verona: it also sells a smaller drug, Arikayce, and its inhaled treprostinil project has significant potential in pulmonary obstructive hypertension (PAH); Insmed shares rose further in June 2025 when topline 2b results were announced. Chairman and CEO Will Lewis was vocal at the start of 2025 about his plans to build “one of the next great biotech companies of our eco-system,” and to set a “best launch” standard with Brinsupri.
