The number of biotech companies going public through reverse mergers has risen almost sixfold this year, as promising start-ups take advantage of struggling groups on the Nasdaq to fast-track their stock market debuts.
Twenty-three biotechs have announced they are pursuing reverse mergers this year, according to investment bank William Blair, up from four last year. That surge has come despite a revival in biotech IPOs, which have also risen to 23 this year, from 12 in 2025. In these deals, a private biotech can go public by merging with a listed company, usually one that has suffered a significant setback such as the failure of a main drug candidate.
Brian Rosenzweig, a capital markets partner at law firm Covington, said that the view of reverse mergers as a lesser option has changed as the market has become more sophisticated. Following a frothy market for life sciences listings during the pandemic, a number of listed biotechs have since suffered clinical setbacks, leaving them open to a tie-up. Sophisticated investors such as Fairmount and RTW Investments have helped raise significant sums, including $380mn for Korsana Biosciences and $350mn for Obsidian Therapeutics.
Lawyers and executives say some companies choose reverse mergers even as the IPO market picks up, attracted by their speed and greater certainty over financing. Unlike a listing, where investor demand and pricing can be unpredictable, reverse mergers allow biotechs to agree valuations and secure financing upfront. Korsana chief executive Jonathan Violin said the old view of reverse mergers was a mistake, arguing that the strength of the company and its science matter most.
Source: Financial Times Companies · Summarized by HeadlinesBriefing