Please find attached an update on the biopharma market for the week of June 23, 2025.
Walking the Economic High Wire
While economic fundamentals are improving, geopolitical matters remain hot. The immediate flashpoint is the Israel-Iran conflict. President Trump made a bold move to bomb Iran’s nuclear facilities over last weekend – driven by the desire to remove the threat of a nuclear bomb program there.
Trump is wary of alienating congressional factions that are deeply divided on involvement in foreign wars, and any ongoing military entanglement could derail his domestic agenda given the current exigency of getting his economic bill through the U.S. Congress.
The timing of Israel’s attack on Iran has not been ideal from a Trump economic policy perspective.
Voters are increasingly uncomfortable with Trump’s policy directions and congressional elections are not that far away.
This said, our casual observations from everyday people in the grocery store in a community in upstate New York on Sunday (June 22nd) are that the Iran attack has, if anything, bolstered Trump’s standing with the U.S. electorate, generating a typical “rally around the flag” reaction from patriotic residents.
The Iran attacks caught everyone's attention, and the residents of my town seemed very proud overall that the U.S. stood up for principle in taking a calculated military risk.
Let’s see how matters play out in the weeks ahead.
If the current situation lasts Trump may have done himself a great favor.
In contrast, if Iran moves to shut the Strait of Hormuz or, otherwise inflicts significant pain on Western economies, the situation could change quickly – particularly because Trump did not seek congressional approval for the attack on Iran. News stories published by a variety of press sources on Monday morning (June 23rd) were largely negative on the Iran attacks but financial markets futures did not react as much as some had feared.
Inflation is a Bright Spot in an Otherwise Cloudy Sky
After years of persistent inflation following the COVID-19 pandemic and a series of monetary tightening cycles by the Federal Reserve, the United States has finally received some welcome news. Key indicators, including the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) index, have shown a consistent slowdown in inflationary pressures. Core inflation, which excludes food and energy, has dipped below 2.5%, aligning more closely with the Fed's long-term target.
This progress reflects a combination of factors: cooling wage growth, normalization of supply chains, and improved productivity.
The inflation reprieve would, under normal conditions, bolster consumer confidence, stimulate investment, and give the Federal Reserve more leeway to lower interest rates. However, that outcome remains elusive due to external shocks and internal political disarray.
To complicate this picture, it appears highly likely that China and U.S. allies have been selling off their Treasury bond holdings.
Thus, despite favorable inflation data, we find ourselves with a ten-year Treasury yield holding steady at over 4.3%.
No relief for the weary here, including those in the biotech sector.
Tough Navigation for the “Big Beautiful Bill”
At the heart of Trump's domestic strategy is his self-proclaimed "Big Beautiful Bill," a sprawling legislative package that combines tax reform, energy deregulation, and infrastructure spending. Trump has declared July 4th as his personal deadline for getting the bill passed, casting it as the cornerstone of his second-term agenda.
Passage of this bill is seen as vital for multiple reasons: it offers potential economic stimulus, could boost his approval ratings, and may provide a springboard for a narrative of political success heading into the 2026 midterms.
However, the bill faces considerable hurdles in Congress, with Democrats united in opposition and many Republicans expressing concerns over fiscal discipline. Elon Musk’s recent comments on the bill and deficits have not helped matters.
Further muddying the waters are President Trump’s simultaneous deadlines for reaching new agreements with virtually every major country - except, strangely, Russia and North Korea. Trump has imposed or threatened to impose tariffs on European steel, Indian pharmaceuticals, Chinese semiconductors, and Canadian agricultural goods.
The logic appears to be that tariff threats can extract better trade terms, but the strategy may be faltering. With no comprehensive trade agreements in sight, international uncertainty is stalling investment and undermining global supply chain confidence. The exemption of Russia and North Korea from tariff discussions raises further questions about Trump's diplomatic priorities and political motivations.
Uncertainty is Today’s Only Constant
Financial markets have responded with pronounced volatility. Equities swing wildly with each new headline, and bond yields remain erratic. The VIX index, Wall Street’s so-called “fear gauge,” has stayed over 20 for weeks on end.
This environment is difficult for investors to navigate. There is no clear fiscal trajectory, no defined foreign policy doctrine, and no predictable regulatory framework. The usual instruments of market forecasting—Fed minutes, earnings reports, economic indicators—are being drowned out by Trump’s improvisational style.
Despite the economy’s inflation success, President Trump’s approval ratings remain deeply underwater.
Polling data from Pew, Gallup, and Quinnipiac all show consistent disapproval in the 60% range. Much of this can be attributed to Trump's mercurial leadership style, political controversies, and perceived lack of empathy.
Recent polls show that Trump’s most fervent supporters are growing anxious about his ability to deliver concrete legislative results.
The key to his political recovery lies in converting economic good news into tangible benefits for average Americans: lower interest rates, cheaper goods (via removed tariffs), and new job opportunities from the infrastructure and energy components of his legislative bill. But each of these goals is contingent on cooperation from institutions and actors that Trump has spent years antagonizing.
Biotech Floating in a Large Turbulent Sea
The Fed, led by Chair Jerome Powell, remains publicly committed to data-dependent policy. While inflation progress could justify a rate cut, the Fed is wary of acting too soon amid geopolitical risks and fiscal instability.
The contradiction at the heart of today’s moment is this: while inflation, the most persistent and destabilizing economic threat of the past few years, is finally under control, every other component of the economic and political system is fragile.
To successfully navigate the high wire he is on, Trump must secure new trade deals, unify a fractious Congress, placate an independent Fed and win back public trust.
It is a monumental task.
The markets, for their part, are simply trying to survive the storm.
And our much-cherished biotech industry, finds itself as a leaf floating on a sea of uncertainty.
If Trump can thread this needle—pass the bill, calm foreign tensions, and allow inflation data to pave the way for rate cuts—then his presidency may yet achieve some measure of stability.
If not, the next crisis will likely be political, not economic.
For now, the only certainty is uncertainty.
BIO Conference and Industry Sentiment
We spent four days last week attending the BIO International conference in Boston. This annual occasion brings together thousands of people from our industry from every country imaginable for discourse, debate and dealmaking.
We spoke to one attendee who said he entered the event depressed about the biotech industry and left uplifted: struck by the “gritty determination” of so many companies that he met.
In total, our colleagues at Stifel held nearly 400 meetings at the event and came away with a picture of extraordinary innovation, industry change and numerous opportunities.
Things that were particularly notable this year were (1) the ever-rising presence of Chinese biotechs, (2) the interest of investors to put money to work and (3) the large and impressive booths from both Abu Dhabi and Saudi Arabia – both positioning the Middle East as an emerging destination for biotech.
We also found big pharma to be highly engaged, searching for innovation, speaking to small biotechs and touting their track records.
We were most impressed by our meetings with many mid-sized biopharmas in both the U.S. and Europe. Despite the tough markets, we were struck by how many of these groups had clear business plans designed to succeed.
Deep Innovation in the Works
While today’s trend in public bio investment is very much focused on the practical (more on this in a bit), we were most interested in companies working on radical innovation at BIO. There were three threads that most caught our attention:
- Multiple companies working on cell therapy for Parkinson’s. The idea is to inject incremental dopaminergic neurons into the brain. We are under CDA with various players so haven’t been able to say how big this is going to get based on extant datasets of U.S. players, but IRegen, a Chinese biotech, openly disclosed that it is seeing the equivalent of “complete responses” in Parkinson’s with its allogeneic cell therapy. We are seeing Parkinson’s Disease become the latest field with curative solutions at hand from cell therapy.
- Focus on aging from Saudi Arabia and Abu Dhabi (via HELM). Both countries are making heavy investments in the area. We have expressed the view that this area will ultimately be far bigger than obesity.
- Personalized “process approvals” from the FDA. We enjoyed a lunch with Elliot Hershberg at BIO, newly installed leader of Amplify’s $200mm digital biology fund. He has been investing in tech platforms that can solve multiple conditions through customized antigenic therapies using a range of modalities including radiotherapy.
Wow!
The BIO Event Wasn’t All Roses
Of course, not everything about the event was rosy. We spoke on a panel on “Biotech Underdogs” which reminded all of us how difficult it is to gain access to capital. The panelist’s message was ultimately positive but the travails of many in our industry were not far from mind.
We also participated in a panel on Chinese biotech and could not help but note how well biotechs are doing there and the ongoing competitive threat to U.S. and Europe biotechs from rapid innovation in China.
We noted at BIO that hundreds of regions in the U.S. and elsewhere in the world are aggressively attempting to attract biotech investment. We were struck by a nagging sense that the sector may still be seeing inefficiency in investment driven by regionalist priorities.
We participated in an interview on BiotechTV where we noted that certain parts of the U.S. are industrial wastelands filled with empty factories that once held workers who, ultimately, could not compete against foreign competition.
We noted that urgent need for U.S. biotech CEOs to learn from Chinese business practices, particularly related to costs and speed to clinic.
Our message in the interview was ultimately positive, noting that biotech stocks have performed quite well since the April 8th “Liberation Day” event where the U.S. promoted tariff policies.
This has been particularly true for IPO and follow-ons.
While stocks, particularly those in the Russell 2000 index, are down year-to-date, market performance has been quite strong since April 8, 2025 (the fateful “Liberation Day”).
IPO’s have had appalling performance YTD (down, an average of 52%). However, these stocks are up 66.6% since April 8th, showing substantial outperformance relative to the XBI. Follow-ons have also outperformed the XBI nicely.
We believe that these data portend a strong pick up of the financing market in the second half of 2025.
Investor Sentiment is Brightening
Biotech stocks have been performing quite well in the last month.
Investor sentiment is very much on the mend, although this is far from a uniform thing.
Specifically, meetings with investors in recent weeks have reminded us of the old Captain Kirk “Star Trek” shows. Every episode involved landing on a different planet where the inhabitants were completely different (some in tin foil bikinis; others bearing spears etc).
Likewise, some public investors today display great optimism and are in the market with a bid to buy. There is particular interest in getting “big allocations” of follow-ons and in getting access to exciting biotech stories. These investors are displaying a deep understanding of science and a discerning ability to sort through today’s biowreckage and buy the many “ridiculously cheap” stocks to be found in the public markets.
Other investors, in contrast, are obviously still focused on keeping their LP’s on board and worry about buying new stories in the market. Instead, they indicate that they wish to support the companies that they are “already involved with”.
We are also hearing quite a few investors who are in between: “We can buy, but the size of our investments isn’t quite what it was before.”
The terrified sentiment of two months ago is almost completely gone now.
The market was frozen and offering volume had gotten to the equivalent of a “ground halt” during a winter storm.
Perhaps the great negative concerns we are hearing now are on the private side.
Many well-performing private funds are indicating that LP’s are not re-upping for the next fund until more of their PE/credit/VC plays return capital. In contrast, those groups with family office LP’s are doing better.
We have seen a complete turnabout from 2022 when public investors were hurting but private players were still highly active.
Fashions are Shifting
One of the remarkable aspects of the biotech industry involves the rapid change in investor focus and fashion. One can chronicle a shift from a focus on oncology and rare disease stories in the 2016 to 2019 period to one focused in vaccines and platform technologies during the Pandemic.
Since then, we have gone through several evolutionary steps, at first seeing a rush to late-stage companies with data, followed by more tolerance for earlier stage companies but with a heavy emphasis on emerging science in immunology and obesity stories. Neuroscience has waxed and waned – mainly the latter this year. And oncology has never left us, but early oncology has become very much out of fashion.
Conversations with investors lately show further shift is underway.
In meeting after meeting with public investors we are hearing a search for companies with drugs that are likely to get approved by the FDA that have a great market opportunity.
There is a sense that the obesity field, for example, is quite crowded. Investors want to put capital into stories that stand out or, ideally, are in less competitive fields. Recent large financings where Stifel has been involved have been for Trevi (chronic cough drug), Insmed (Bronchiectasis), Mineralys (blood pressure) and Sionna (cystic fibrosis). It’s becoming a bit of a “donut year”. Investors are looking for good stories that are a little bit out of the previous core areas.
Today’s public investor is highly pragmatic – looking for the pure opportunity of a good drug for a good market, no matter the therapeutic area or label.
It would be disingenuous to suggest that obesity stories and immunology stories have fallen out of fashion lately. Rather, what we are seeing is a focus on the best stories in those areas as investors have become more selective about where to put their dollars.
Last Sunday (June 21) saw Lilly publish Phase 3 results for orforglipron as a treatment for T2DM in the New England Journal of Medicine. A few hours later, Dr. Rosenstock presented the results at ADA. The line to get in the room was “crazy” and the session was standing room only.
Investigators, physicians and investors remain highly interested in transformative stories in both the obesity and immunology fields.
Biopharma Market Update
The Stifel Global Biotech Value Tracker rose by 0.4% last week, more than the XBI and BBC – which both fell. The discrepancy is explained by performance of China biotechs which are on a tear and included in the Stifel tracker. Treasury yields remain stubbornly high. The XBI is down 8.5% for the year while the Stifel Global Biotech Value Tracker is up for the year (+12%). The difference reflects the inclusion of China biotechs.
Biotech stocks are up 48% since hitting a low point on Apr 8, 2025. Biotech stocks ended last week up 12% for the year.
The public biotech population continues its decline. In May 2022 we counted 892 public biotech companies worldwide. Today, that count is down to 727 biotechs (down 18.5%).
The count of negative EV life sciences companies worldwide fell from 162 six weeks ago to 145 last Friday.
This metric has been improving rather substantially in recent weeks.
Capital Markets and Deals Update
The last biotech company to go public on the NASDAQ was Aardvark which priced its deal on Feb 12th (more than four months ago). Since then, eight biotech companies have gone public in other countries (mainly HK). Last week saw a substantial Nasdaq IPO in diagnostics (Caris Life Sciences).
The market is open to commercial stage companies with a good growth story.
The slowdown in the biopharma follow-on market has reversed in recent weeks. While one would not call this a boom market by any measure, we are seeing volume going up in June as markets have stabilized.
Recent months have seen modest activity in the venture privates market. The market has been particularly slow in the last two weeks.
We have seen $14 billion in biopharma M&A volume so far in the month of June. Overall, the year continues to look like quite a solid year for M&A. Last week saw Lilly offer to buy Verve for $1.4 billion and Supernus offer to buy Sage for $561 million upfront.
On Science, Truth and Free Society
The Trump administration’s record on science and academic freedom has been marked by significant funding cuts and ideological interventions. Early executive orders froze or cancelled tens of billions of dollars in federal research funding, including major cuts to the NIH, NSF, CDC, NASA, NOAA, and the EPA—targeting areas like climate change, gender identity, and DEI initiatives.
This included defunding hundreds of NIH grants—later deemed discriminatory by a federal judge—and plans to slash budgets by up to 55% in FY 2026.
This week is a critical one in which the U.S. Senate is considering the extent of prospective cuts to the NIH budget.
Numerous science agency websites had content removed or censored under ideological pretexts (e.g., removing “gender ideology” and diversity-related pages), prompting legal action to restore over 3,000 pages at the CDC and FDA.
Simultaneously, academic freedom has been under pressure. The administration has targeted high-profile universities—such as Harvard, Columbia, and others—with grant freezes and investigations tied to campus protests or ideological dissent.
Scholars report chilling effects, especially around sensitive academic and political subjects such as immigration, with many scientists feeling less able to discuss such topics freely.
In response, leading organizations including AAUP, PEN America, and 1,900-plus scientists have warned that these measures threaten the autonomy of American universities, disrupt scientific collaboration, and jeopardize the U.S.’s long-term leadership in global science
Being historically minded, this week we carry excerpts of writings on the relationship between government actions, science and society at large.
To some degree, we recognize that these excerpts are largely “preaching to the choir” as our readership is largely pro-science and supportive of the long-term growth of liberalism and academic freedom – based on ideas established during the Enlightenment in the early 1600s.
But, nonetheless, we think it is well worth while to reread the words of many thinkers who have gone before us on this important topic.
French President Emmanuel Macron spoke at the Sorbonne in May 2025 and warned that the Trump administration’s crackdown on scientific research and academia in the United States threatens both economic innovation and liberal democracy.
Macron spoke about Enlightenment values, especially those of Voltaire, to emphasize the centrality of free inquiry and the danger posed by ideological control.
Voltaire’s quotes highlight enduring Enlightenment values: skepticism of authority, the sanctity of individual conscience, and the importance of open debate.
These maxims set the tone for subsequent excerpts from other intellectuals and scientists, such as Thomas Jefferson, Richard Feynman, and Hannah Arendt.
Jefferson's 1799 letter emphasizes the irreversibility of scientific progress and argues that preserving freedom of thought and the press is essential for human advancement. Presciently, Jefferson argues that we should be willing to do anything to preserve freedom of scientific thought in the United States.
Feynman, writing in 1955, echoes this idea, asserting that the “philosophy of ignorance”—acknowledging what we don’t know—is the driving force behind scientific and societal progress. He writes:
“It is our responsibility as scientists, knowing the great progress which comes from a satisfactory philosophy of ignorance, the great progress which is the fruit of freedom of thought, to proclaim the value of this freedom; to teach how doubt is not to be feared but welcomed and discussed; and to demand this freedom as our duty to all coming generations.”
Arendt offers a stark warning about the dangers of ideological conformity and totalitarian logic. She contends that tyrannical regimes prepare the ground by severing people’s relationship with truth and with each other.
In her haunting book, she writes:
The ideal subject of totalitarian rule is not the convinced Nazi or the convinced Communist, but people for whom the distinction between fact and fiction (i.e., the reality of experience) and the distinction between true and false (i.e., the standards of thought) no longer exist.
J. Robert Oppenheimer adds to this, noting that open access to knowledge and diverse intellectual communities are fundamental freedoms and crucial bulwarks against tyranny.
Ashley Montagu underscores that science thrives on uncertainty and inquiry, while bigotry and dogma rely on rigid certainties, writing:
“It was Oliver Wendell Holmes, Sr., who likened the bigot to the pupil of the human eye: the more light you expose it to the narrower it grows. Bigotry and science can have no communication with each other, for science begins where bigotry and absolute certainty end. The scientist believes in proof without certainty, the bigot in certainty without proof.”
Bertrand Russell highlights how science gained influence by demonstrating practical utility, even when persecuted by religious and political authorities. He argues that controlling thought is ultimately more dangerous than physical coercion.
Karl Popper urges reliance on empirical reasoning over ideological prophecy. He writes:
“Thus threatened both from the right and from the left, a rationalist attitude to social and economic questions could hardly resist when historicist prophecy and oracular irrationalism made a frontal attack on it. This is why the conflict between rationalism and irrationalism has become the most important intellectual, and perhaps even moral, issue of our time.”
Sibel Erduran, writing in 2025, analyzes the rise of the “post-truth” condition, where emotion, identity, and disinformation erode public trust in science and expertise. She writes:
“The term ‘post-truth’ has been used to characterize the contemporary era. Designated as the word of the year in 2016 by the Oxford English Dictionary, “post-truth” refers to “relating to or denoting circumstances in which objective facts are less influential in shaping political debate or public opinion than appeals to emotion and personal belief. Furthermore, modern technology and media can provide us with echo chambers and epistemic bubbles that can lead to active and systematic distrust of outsiders or exclusion of voices altogether.”
These past voices are well worth contemplating as we consider today’s efforts to restrain spending on scientific research and to attempt to reframe debates around well settled areas of science such as the efficacy of vaccination.
Best,
Tim Opler
Managing Director
Stifel Investment Banking
Direct Phone: +1 212-257-5802
oplert@stifel.com
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