The biotech sector in 2025 presents a landscape brimming with both opportunities and challenges.
The industry is being shaped by a confluence of factors, all of which are driving exciting innovations in healthcare.
Drawing from insights gained at the JP Morgan Healthcare Conference (JPMHC), held in San Francisco from January 13 to 16, the Investing News Network examines the key trends taking shape in biotech in 2025.
M&A and the future of therapy
Following a period of market stagnation, Evaluate's 2025 Market Preview suggests cautious optimism for the biotech sector in 2025. Industry experts anticipate increased mergers and acquisitions (M&A) and improved access to capital fueled in part by a looming US$300 billion patent cliff.
Companies facing steep revenue losses will be seeking to refill their pipelines, creating a ripe environment for “the biotech innovation engine” as noted in a market report authored by Dr. Arda Ural, EY Americas Life Sciences sector leader, at the end of December. Promising biotech companies could become attractive acquisition targets.
Acquisitions announced this week at JPMHC underscore this trend, with several significant deals announced. The day before the conference, Gilead (NASDAQ:GILD) signaled its intent with a US$1.7 billion investment in Leo Pharma's preclinical inflammation drugs.
The first day of JPMHC saw even more action. Johnson & Johnson (J&J) (NYSE:JNJ) made one of the largest biotech acquisitions in recent memory when it announced it would acquire Intra-Cellular Therapies for US$14.6 billion. Intra-Cellular Therapies is the maker of Caplyta, an atypical antipsychotic approved to treat schizophrenia and bipolar depression. This acquisition expands J&J's presence in the neuroscience market.
GSK (NYSE:GSK) also announced a strategic acquisition at JPMHC, striking a US$1.15 billion buyout deal for IRDx, a company developing non-invasive diagnostics for gastrointestinal (GI) cancers.
Vera Therapeutics (NASDAQ:VERA) later announced a licensing agreement with Stanford University for VT-109, a fusion protein designed to treat B cell diseases by targeting two proteins involved in overactive immune cell activity.
Inflammation and immunology (I&I) were indeed two prominent areas of interest at the conference. AbbVie's (NYSE:ABBV) CEO, Rob Michael, highlighted the company's strong performance in this area, driven by the success of Skyrizi (risankizumab) and Rinvoq (upadacitinib), which he said have effectively offset the revenue decline from Humira's patent expiration during a discussion at the conference. The company’s acquisition of Nimble Therapeutics for its preclinical IL-23 inhibitor highlights the ongoing search for innovative treatments for inflammatory diseases
Meanwhile, Kyverna Therapeutics (NASDAQ:KYTX) presented its ambitious goal of developing the first chimeric antigen receptor T-cell (CAR-T) therapy for autoimmune diseases.
Insight released by JPM senior analyst of large-cap biotechnology Jess Fye ahead of the conference also cited oncology as another therapeutic area of focus. That was evidenced by Eli Lilly's (NYSE:LLY) US$2.5 billion purchase of Scorpion Therapeutics on January 13, positioning them as a potential leader in the development of a new class of cancer drugs with their acquisition of STX-678, an experimental drug undergoing clinical trials.
This focus on oncology was further underscored by several partnerships and developments announced before and during the conference, including Boehringer Ingelheim licensing Lonza's antibody-drug conjugate (ADC) technology, Chugai (OTCPINK:CHGCF) and Araris's research collaboration to develop ADC treatments and Ginkgo Bioworks (NYSE:DNA) collaborating with Astellas (OTCPINK:ALPMF) to optimize next-generation cancer treatments. GSK highlighted its upcoming ADC Blenrep, and Novartis (NYSE:NVS) emphasized the potential of its breast cancer drug Kisqali.
Beyond oncology and I&I, the conference highlighted the continued interest in gene and cell therapy, with the US Food & Drug Administration (FDA) Center for Biological Evaluation and Research director Peter Marks saying his agency is aiming to accelerate approvals of gene therapies like CRISPR medicine Casgevy, Pfizer’s (NYSE:PFE) Beqvez and PTC Therapeutics (NASDAQ:PTC) Kebilidi. Denali Therapeutics (NASDAQ:DNLI) also shared an update on its leading asset to treat Hunter syndrome, DNL310 (tividenofusp alfa), announcing its intent to file for regulatory approval in 2025.
The company also said it expects to have one or two new drugs ready to bring to the clinic every year for the next three years thanks to its Transport Vehicle platform, a molecule capable of passing the blood-brain barrier.
Neurology also garnered attention. Apart from J&J’s acquisition, Bayer (OTCPINK:BAYRY) announced that it was moving onto Phase II trials of an allogeneic cell therapy to treat Parkinson’s disease. Earlier in Q1 2025, Biogen's (NASDAQ:BIIB) pursuit of Sage Therapeutics (NASDAQ:SAGE) and their jointly developed mood-stabilizing medicine Zurzuvae caused Sage’s stock price to surge more than 38 percent over the weekend.
Furthermore, Vertex Pharmaceuticals (NASDAQ:VRTX) awaits an FDA decision on its novel non-opioid pain treatment, suzetrigine, which is expected by January 30.
While M&A is on the rise, companies in biopharma have signaled a cautious approach to
the funding environment that could still be challenging for early-stage companies. Roche (OTCQX:RHHBF) recently decided to pull about 30 percent of its pipeline and, at JPMHC, said it has US$10 billion for M&A this year but will only spend it on "transformative assets" complementary to its portfolio or that "change the game" in important diseases.
AbbVie CEO Rob Michaels shared this sentiment in Oppenheimer’s 2024-25 Biopharma M&A and Strategic Collaboration Insight report. “Our main focus is our five key growth areas...immunology, oncology, neuroscience, aesthetics and eye care...So far this year, we’ve executed 15 deals along those lines, really focus(ing) more on early‐stage opportunities to drive growth in the next decade. So, that’s our primary focus.”
Impact of AI on biotech R&D
When AlphaFold, a groundbreaking artificial intelligence (AI) system with revolutionary protein structure prediction capabilities developed by Google’s (NASDAQ:GOOGL) DeepMind, was awarded the prestigious Nobel Prize in Chemistry in October 2024, the potential for AI to play an increasingly critical role in drug discovery and development became a more prominent topic of conversation.
AI applications like AlphaFold could reduce development costs, lessening biotech's reliance on partnerships or acquisitions from Big Pharma to secure funding. This would allow smaller companies to better protect their intellectual property and introduce more innovative drugs.
The FDA's release of draft guidance on AI in drug development further underscores the growing importance of AI in the biotech sector, signaling a shift towards greater acceptance and adoption of AI-based tools in the regulatory process.
Biotech under Trump: A new regulatory era?
Policy can either promote or hinder growth in a sector by affecting factors such as market access, the cost of compliance and funding for research. Regulatory changes and leadership appointments under President Trump have the potential to significantly impact the biotech industry. As Daphne Zohar, CEO of Seaport Therapeutics and former head of PureTech Health (NASDAQ:PRTC), noted in an email to Biopharma Dive, a change in FTC leadership could have a positive effect.
Current Federal Trade Commission (FTC) chairwoman Lina Khan's policies have been unfavorable to the healthcare industry and included heavy scrutiny of M&As. Trump’s picks – Andrew Ferguson as FTC chair and Mark Meador as a commissioner – are seen as likely to be less restrictive in their approach to dealmaking.
However, uncertainty around the confirmation of key health department appointments and an evolving tariff situation may contribute to market volatility in the short term. “Uncertainty always creates volatility, and volatility is not great for the public markets,” said Rebecca Stevenson, according to BioPharmaDive’s coverage of JPMHC. “Ultimately the dust needs to settle before we see generalist [investors] back in. Is that happening in the next six months? Probably not.”
On the other hand, it's important to consider that any potential policy shifts may take time to emerge, as the confirmation process for President-elect Trump's cabinet picks could take until mid-2025, as noted by the Evaluate authors.
Trump’s choice for FDA Commission, Johns Hopkins University pancreatic surgeon Dr. Marcus Makary, was well-received by the industry, who sees him as a more conventional pick than Trump’s choice to lead the Department of Health and Human Services, Robert F. Kennedy Jr.
Kennedy has stated that the high prevalence of chronic diseases in the US necessitates significant changes to the healthcare system. Financial disclosures from Stat+ indicate a vested interest in biotech investments, and his oversight could also breathe new life into stem cell research. In the aforementioned post, Kennedy wrote that he would support unconventional medical fields, including stem cell injections and nutraceuticals. In a post to X after his October nomination, Kennedy issued a warning: “FDA’s war on public health is about to end.”
Investor takeaway
The biotech sector in 2025 is at a crossroads, presenting a dynamic landscape of opportunities and challenges. As the sector navigates these complexities, collaboration between academia, industry and government will be crucial to unlocking its full potential and addressing the pressing healthcare challenges of the 21st century. Investors will need to closely monitor both clinical data and regulatory developments.
Don’t forget to follow @INN_LifeScience for real-time updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Radiopharm Theranostics and Sirona Biochem are clients of the Investing News Network. This article is not paid-for content.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
