Aiolos Bio, Inc.

As 2025 begins, emerging biotechnology firms can be sorted into two groups: haves and have-nots.Venture funding rose last year, but a good portion of that money was concentrated into nine-figure megarounds that became more common. Initial public offerings were primarily open only to companies that fit a certain profile. And among already public U.S. biotechs, many saw their stock prices slide as pharmaceutical companies looked elsewhere for deals.The result has been what Piper Sandler analysts described in a report earlier this month as a stock-pickers market, with the few outperformers outnumbered by many more that are struggling. That description could apply to the private sector, too, where companies focused on immunology and cardiometabolic research had an easier time winning investment.With the year looking particularly uncertain, drug startups have several hurdles to overcome in the months ahead. Here are five questions they face in 2025:How will China licensing deals affect U.S. biotech?Pharma companies and U.S.-based biotechs have for years turned to China for help making drugs or running clinical trials. Increasingly, theyre looking to China to acquire new drug prospects they can plug directly into their pipelines a trend that could have ripple effects across the U.S. biotech ecosystem.Both the number and average value of licensing deals involving drugs discovered in China reached record levels in 2024, according to data published in December by Jefferies, an investment bank. Jefferies expects a further acceleration this year. Those figures extended a reversal from 2022, when a few high-profile regulatory setbacks involving China-discovered medicines led to a dip in deals. Notably, according to Jefferies, 2024s transactions involved less proven medicines than previously and drew from a broader group of therapeutic areas possibly signaling a change in deal strategy by U.S. companies.A report last week from Stifels Tim Opler, meanwhile, showed that pharma companies are now sourcing about one-third of their in-licensed molecules from China, up from between 10% to 12% during 2020 to 2022. Merck & Co., for example, bought a trio of China-originated medicines last year that were in either preclinical or early testing. Novartis and GSK sprung for similar deals too.Analysts at Jefferies believe the pattern is the result of China emerging as a hotspot for me too better versions of drugs, enabling dealmakers to cheaply pluck assets they can quickly advance through testing. In many cases, these medicines are aimed at drug targets that have recently become coveted due to emerging clinical data from other companies.The flurry of China dealmaking may come at the expense of U.S. biotechs, whose drugs are typically more expensive to acquire because of scarcity value or because their makers are already publicly traded, Jefferies analysts wrote.While venture capitalists are forming startups around China-based drugs, too, they may end up getting bypassed by pharmas that can do the work themselves, Stifels Opler wrote. Ben FidlerWill biotech keep contracting?A year ago, biotech investors and executives were hopeful the industry had weathered the worst of a prolonged market pullback. They had reasons for their optimism, too, as 2023 ended on a multi-month stock rally fueled by a spurt in dealmaking and expectations of interest rate cuts.Instead, the sector continued to contract. More than 100 biotech companies restructured, laid off staff, or reshuffled their pipelines in 2024, according to a report from the investment firm Mizuho Securities. The industrys flagship stock indices again underperformed the broader market. Public biotech acquisitions slowed. A series of negative study readouts and rising regulatory uncertainty associated with the incoming administration brought further gloom.Along the way, the number of publicly traded biotechs declined for a third consecutive year, either through acquisitions, reverse mergers, stock delistings or outright closures. Mizuho analysts predicted such consolidation will continue in 2025, dragging the number of existing biotech companies down closer to pre-pandemic levels. About 16% had market values lower than their cash reserves, reflecting how the group is trading at what Piper Sandler analysts called in their report historically low valuations.Theres been more of the same already at 2025s start, with several struggling companies laying off staff or considering strategic alternatives, a process that usually results in a sale or merger.While more venture dollars were invested in biotech startups last year, that money went to fewer companies in the form of larger rounds supported by broader investor syndicates, according to a report from HSBC Innovation Banking.That trend could help young companies achieve goals that boost their value. But it may also saddle them with bloated valuations that make for a tougher path to the public markets, HSBC analysts warned. Ben FidlerWill the IPO backlog clear?After three years of waiting for the IPO window to open, drug startups are largely still in a holding pattern.Since hitting a record high in 2021, the number of biotech IPOs per year has settled around 20. Last years 23 stock issuances were primarily priced by biotechs with drugs in mid-to-late stage testing, according to BioPharma Dive data.Meanwhile, the startups that formed during the pandemic-era funding boom have matured. Industry watchers have maintained this backlog of companies is just waiting for the right opportunity.“It's a very long line, and that line is made up of companies all the way back from 2021, said Jon Norris, a managing director at HSBC Innovation Banking.There were signs of momentum last fall. Between September and October, eight drugmakers went public in quick succession, raising a collective $1.5 billion. Many raised more than they had intended, an indication of investor demand.But post-IPO stock performance has remained listless, with most of the companies that went public last year trading at or below their offer price. Preclinical companies have had a hard time, while some of the top performers were already in Phase 3 testing when they debuted perhaps reflecting a lower appetite for drug development risk among public investors.Startups that penciled in an IPO may therefore need to wait. Doing so will be easier for some, however, as the number of mega-rounds, or financings of more than $100 million, grew by 70% to 106 last year, according to HSBC. More than half included the crossover investors that can bridge companies to a public stock offering, suggesting a strong IPO window in 2025-2026, HSBC wrote.At a minimum, people can say, 'I don't know if the IPO market is going to be busier or not in 2025, but if I have the option not to care by staying down as a private company, then that feels like a pretty good option, said Jack Bannister, an analyst at investment firm Leerink Partners. Gwendolyn WuWhat might rekindle the cell and gene therapy field?Gene therapys problems have graduated. The field, which recorded the first U.S. approval of a gene therapy for an inherited disease just eight years ago, has now produced over a dozen marketed products, including treatments for sickle cell disease, hemophilia, muscular dystrophy, blindness and a rare brain disorder. Scores of clinical trials testing others are underway.The pipeline is perhaps even broader in cell therapy, which has grown beyond its blood cancer applications and is now seen as a promising approach for immune diseases as well.Despite those accomplishments, theres a considerable amount of gloom. Many publicly traded biotechs working in the field have had to cut costs, lay off staff or restructure their research over the past year. Some of those decisions were brought on by company-specific challenges; others by changing outlooks for the markets they hoped to enter. Large pharmaceutical companies like Pfizer and Roche have pulled the plug or written off past investments.All of that has trickled down to the private markets, where funding for new cell and gene therapy developers has ebbed, according to BioPharma Dive data.One of the chief problems the field now faces is proving that these therapies, in more cases than not, are going to be commercially viable products when they reach market.Gene therapy has come of age, but commercial launches have been largely underwhelming, wrote analysts at Piper Sandler in the sixth edition of a sector report they published in October.Bluebird bio is a case study. The company has three approved gene therapies: Zynteglo for beta thalassemia, Skysona for cerebral adrenoleukodystrophy and Lyfgenia for sickle cell. Yet the firm has come close to running out of money and, even now, doesnt project breaking even until the second half of this year.The field needs more examples of commercial success. And for new technologies like gene editing, proof that the complex and cutting-edge medicines are clearly more compelling to patients than drugs made with established platforms. Ned PagliaruloWill the upswing in private M&A continue?Public biotech acquisitions may have slowed last year, but the number of private M&A deals swelled. According to HSBC, seven were worth $1 billion or more in value, with notable deals including GSKs purchase of Aiolos Bio and Mercks deal for EyeBio.Such deals can provide the exits that private companies venture backers may be seeking when IPOs are a more uncertain prospect.“When the rubber hits the road for these later-stage companies and they can't hit the public market, what is that going to look like? HSBCs Norris said. For companies with little to show potential acquirers, it could be a year of consolidation, while others might seek out reverse mergers. According to Norris, the latter is an option when companies cant increase their valuations any higher, but need more capital to continue R&D.Pharma companies may also be in need of M&A to bolster their pipelines as they face the loss of exclusivity for some of their best-selling drugs, said Scott Beardsley, a managing partner at Novo Holdings.“[Investors] are going to have to start making money again, and I think the easiest thing to fix that is M&A,“ Beardsley said. A couple of wins with big private M&A deals could also provide a boost to public deals.On Monday, there were two: GSK bought IDRx for $1 billion upfront, and Lilly acquired Scorpion Therapeutics principal drug for up to $2.5 billion. Gwendolyn Wu '

Two biotechs emerged on Friday with assets from Keymed Biosciences, extending a proliferating trend of Western investors propping up new companies to further develop assets discovered or initially created in China. Timberlyne Therapeutics broke cover with $180 million to take forward a CD38-targeted monoclonal antibody. Meanwhile, GSK-backed Ouro Medicines debuted with $120 million. Timberlyne is dishing out $30 million in near-term payments and up to $337.5 million in biobucks to Keymed, which gets a 25% stake in the new company. Ouro’s pact includes $16 million to start and up to $610 million in milestones for a T cell engager. Keymed disclosed both in HKEX filings . OrbiMed also formed a biotech, Belenos Biosciences , around a Keymed asset last year. Additional details were thin on San Diego-based Timberlyne, which is being backed by key investors Abingworth, Bain Capital Life Sciences and Venrock Healthcare Capital Partners. The company did not announce any leadership in its press release. Bain has done a few biotech deals revolving around China-based assets in recent years, including asthma biotech Aiolos and obesity drug developer Kailera . As has Venrock, most recently with Candid Therapeutics . Timberlyne’s other investors include Boyu Capital, Lilly Asia Ventures, Braidwell LP and 3H Health Investment. Timberlyne will get ex-China rights to CM313, a monoclonal antibody that could be tested for numerous diseases. The experimental medicine has “transformative potential in autoimmune diseases,” Keymed said in its Hong Kong stock exchange filing. Keymed has tested CM313 in clinical trials in patients with immune thrombocytopenia, systemic lupus erythematosus, and relapsed/refractory multiple myeloma. It will provide clinical supply of the drug to Timberlyne. A relatively unknown biopharma creation firm, named Mountainfield Venture Partners, helped form Timberlyne. The venture firm’s leaders include managing partners David Socks and Daniel Curran. Socks was previously a venture partner at Frazier Life Sciences, where he co-founded companies like HilleVax and Passage Bio. Curran was previously head of rare disease therapies at Takeda. Mountainfield appears to have formed last year, and Timberlyne seems to be its first disclosed portfolio company. Curran has been managing partner at the firm since March 2024, according to an SEC filing. Abingworth, Venrock and GV are investors in Mountainfield, according to its website.

Verdiva aims to advance a portfolio of next-generation oral and injectable treatments with first-in-class or best-in-class potential. Credit: Nuthawut Somsuk via Getty Images. As the obesity drug market continues to expand, Verdiva Bio has officially launched as a clinical-stage biopharmaceutical company focusing on obesity and other cardiometabolic disorders. The company has secured $410m in an oversubscribed Series A funding round, co-led by Forbion and General Atlantic, with contributions from investors such as RA Capital Management, OrbiMed, Logos Capital, Lilly Asia Ventures, and LYFE Capital. The funding will advance Verdiva’s pipeline of next-generation oral and injectable therapies that aim to achieve first-in-class or best-in-class status. UK-based Verdiva’s portfolio comprises assets licensed from China-based Sciwind Biosciences, granting the company global rights outside Greater China and South Korea. This includes a Phase II-ready oral glucagon-like peptide-1 receptor agonist (GLP-1RA) ecnoglutide, a potential first-in-class oral amylin agonist, and a long-acting subcutaneous amylin agonist. These therapies aim to target weight loss and maintenance, utilising proprietary oral delivery technology designed to enhance dosing convenience, scalability, and accessibility for broader patient populations. Khurem Farooq, previously CEO of Aiolos Bio and Gyroscope Therapeutics, has been appointed as Verdiva’s CEO, supported by a leadership team that includes senior executives from Aiolos Bio and Boehringer Ingelheim. In addition, Mark Pruzanski has been named chairman of the board. “Our most mature programme has the potential to be a first-in-class, once-weekly oral treatment for obesity and weight loss maintenance that could dramatically improve patient access and affordability,” said Farooq in the 8 January announcement. Verdiva has indicated plans to further expand its portfolio through additional in-licensing deals, signalling a broader ambition in the obesity and cardiometabolic space. The company’s approach reflects a growing trend of Western biotechs acquiring and advancing assets from Chinese pharmaceutical companies, with Verdiva joining other high-profile partnerships in the field. Chinese companies such as Sciwind Biosciences have become pivotal in the development of innovative obesity medications, with global entities such as MSD and AstraZeneca also striking deals to build their portfolios. The timing of Verdiva’s launch underscores the increasing demand for weight-loss treatments, driven by the success of Novo Nordisk’s Wegovy (semaglutide), and Eli Lilly’s Zepbound (tirzepatide). Wegovy is forecast to bring in $19.6bn in sales in 2030, with Zepbound estimated to make $27.6bn the same year, according to GlobalData’s Pharma Intelligence Center. GlobalData is the parent company of Pharmaceutical Technology.