By Ben Glickman
Wall Street is opening its coffers again for risky drug developers.
Many small biotechnology companies have struggled to raise money in recent years. Public markets were all but shut. Initial public offerings slowed to a trickle and follow-on share sales, used by already-public companies to raise more funding, were muted. Some biotechs shut down.
Yet investors began writing more checks toward the end of last year, giving some firms much-needed funding to pay for their costly research.
Drug developers and other life-sciences companies traded on U.S. exchanges raised more than $13 billion from issuing new stock in the fourth quarter, the most for any quarter since the second quarter of 2021, according to data from LSEG, a financial-data provider.
Apogee Therapeutics, which is developing treatments for immune diseases, raised some $345 million from investors in October, more than its $300 million target.
Chief Executive Michael Henderson said the Waltham, Mass., company wasn't planning on launching a stock offering after reporting solid trial data in July but began hearing from investors who said they would be there if the company changed its mind.
"That was a very different tone than it had been," said Henderson.
After several lean years, biotech companies -- along with larger drugmakers -- are getting a fresh and positive look on Wall Street. The SPDR S&P Biotech exchange-traded fund, which tracks a collection of industry stocks, was up nearly 50% at Dec. 31 from six months earlier.
The improvement is explained partly by Wall Street enthusiasm for booming obesity-drug sales and for an uptick in dealmaking, which show there is a lucrative exit available for investors.
Also, generalist investors who don't specialize in the life sciences have begun making more investments.
Henderson said that certain calls with big mutual-fund investors, which in the past featured one analyst who specialized in biotechnology, were attended by nearly a dozen analysts and portfolio managers, including those with little to no background in life sciences.
Biotech bets are risky. Most drug candidates fail. Companies face other headwinds, industry officials and analysts said, including U.S. government cutbacks to grants that could dent research efforts that eventually lead to new drugs for businesses.
Investments in biotechs by venture capitalists and private funds -- which often go to earlier-stage companies -- are still well below their 2021 peaks and fell slightly in 2025 from the prior year, according to S&P Global Market Intelligence.
When they are willing to back a biotech, financiers are being selective and are looking to invest in drugs for a large market or that have a straightforward path to regulatory approval, industry officials said.
Funding is crucial for startups. They are often years away from producing any revenue from drugs they are working on. They intermittently raise money to pay for research and, if candidates show enough promise, big clinical trials that can lead to approval and sales.
Wall Street's interest in biotech jumped during the Covid-19 pandemic, sending stocks higher and leading to ample available funding. When interest rates rose, many investors retrenched. Funders became choosier about their capital, leading some biotechs to lay off workers or close.
The tough environment lingered into 2025, when uncertainty about potential regulatory changes under the Trump administration dented biotech stocks.
Erick Lucera, chief financial officer of Dyne Therapeutics, recalled analysts and investors focusing on the downside of potential investments in biotech, asking how the business plan could go awry or about regulatory hurdles.
Yet starting in the fall, more of their questions shifted to how big a commercial market potential therapies could have. They seemed focused, Lucera said, on not missing out on possibly lucrative opportunities.
"You get the FOMO kicking in," said Lucera, referring to a fear of missing out after a string of successful commercial launches and big buyouts in biotech.
Dyne, also of Waltham, is developing drugs to treat Duchenne muscular dystrophy and other neuromuscular disorders. It raised just over $400 million from investors in a mid-December stock sale, also exceeding its target.
In December, Structure Therapeutics raised nearly $750 million in a stock offering, above the $650 million it expected. The South San Francisco, Calif., company is developing a weight-loss pill, one of the hottest categories in the industry.
"We've been fortunate to have our business model really fit with the times that we're facing right now," Chief Executive Ray Stevens said.
Write to Ben Glickman at ben.glickman@wsj.com
(END) Dow Jones Newswires
January 12, 2026 12:00 ET (17:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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