The life sciences industry experienced a year filled with signs of rebound and fresh optimism driving momentum forward. After several years marked by market volatility, slow deal making activity, and a pause in capital deployment, indicators of industry stabilisation emerged. The recovery has not been uniform throughout the USA, and national trends have diverged from regional hubs of innovation such as Massachusetts. Against this backdrop, this article examines some key trends and developments that emerged from the life sciences industry in 2025 throughout the USA, including certain emphasis on Massachusetts, an epicenter of biotechnology.

Deal-Making National Trends

Early stage transactions: Fewer deals, higher selectivity

Industry reports [1, 2] indicate that fewer early stage transactions closed in 2025 compared to prior years. However, the transactions that did close were focused on targeted assets. Rather than acquiring broad early stage pipelines, companies concentrated their buying power on high value emerging assets with strong scientific specificity.

This trend reflects a disciplined approach to risk wherein buyers were still interested in early assets but only when the asset demonstrated compelling novelty, validated scientific functionality, and a clear path to the clinic. These trends were reinforced by the new administration in 2025, which created uncertainty in regard to future regulatory approval processes making early stage purchases more selective and fraught with clearing a high degree of diligence. Moving forward, there may be a shift toward smaller pre-clinical deals focused on asset quality over quantity.

Later stage transactions: A shift towards certainty

In contrast, later stage dealmaking increased, driven by acquiring companies seeking assets with greater clinical and regulatory clarity, spurred on by layoffs at the Food and Drug Administration (FDA) causing drug approvals to stall.

M&A activity: A rebound begins

After a downturn in 2023 and 2024, M&A activity in 2025 started to recover. Large pharmaceutical companies armed with balance sheet strength, a downturn in venture capital funding and facing patents soon to expire reignited a renewed energy to the M&A markets. J.P. Morgan reported that M&A activity surpassed 2024 to see 129 biotechnology and pharma M&A deals totalling USD138 billion. Nine transactions were above USD5 billion.

Funding climate: Early signs of stabilisation

Following several turbulent years marked by fundraising headwinds, life science financing began to show meaningful signs of recovery. Venture investment in the biotechnology sector jumped 70.9%, rising from USD1.8 billion in Q2 2025 to USD3.1 billion in Q3 2025, an early indication that market confidence is returning.

Noteworthy late stage funding included Artios Pharma’s USD115 million Series D round to advance its DNA damage response (DDR) oncology programmes, as well as MapLight Therapeutic’s USD372.5 million Series D to propel its pipeline targeting schizophrenia, Alzheimer’s disease, and autism spectrum disorder. Two Massachusetts based companies were highlighted as closing significant funding rounds in 2025, including Cambridge based Be Biopharma, which closed a USD92 million Series C and Cambridge based Atavistik Bio, which closed a USD120 million Series B round.

IPO activity: Slow to start in 2025 but signs of recovery in early 2026

Despite entering 2025 with renewed optimism for a rebound in life sciences IPOs, the market struggled to build momentum. A Q4 report shows only nine biotechnology and pharma companies went public on United States exchanges, down from 19 in 2024 and 13 in 2023. One Massachusetts based life sciences company went public in 2025, Concord based Beta Bionics with an IPO size of USD235 million. (Global Healthcare and Life Sciences IPO Activity - 2025 Review - DealForma) As IPO activity lagged, it became increasingly clear that M&A and licensing deals were emerging as the preferred exit pathways for the sector. 2026 is hinting at early signs of a rebound, with multiple biotechnology companies lined up to go public in the first quarter of this year. Boston and North Carolina based Aktis Oncology went public in January 2026 with a USD318 million IPO, while February has seen Spyglass Pharma and Veradermics both IPO, hinting at an uptick of IPO activity. (Why biotech IPOs are back for 2026).

Conclusion

These trends highlight an industry in transition moving past the volatility of recent years and toward a more disciplined, strategically focused era of innovation and investment.

Dealmaking Massachusetts Trends

Introduction

Despite national indicators pointing toward a recovery of the life sciences industry, the Massachusetts life sciences ecosystem diverged, magnifying heightened problems faced in this regional hub. By the close of 2025, challenges surrounding mass layoffs, failed drug products, funding downturns and lab space vacancies were spread across the headlines, creating uncertainty and doubt for the future of the industry.

Employment: Growth flattened after a decade of bustling activity

Life sciences employment stalled during parts of 2025 after decades of steady growth. In the second quarter of 2025, 18 Boston area life sciences companies announced layoffs, which impacted roughly 1,300 employees. By the end of the year, the total job losses were around 4,600 workers.

Funding: Steady volume, lower dollars

According to a 2025 Industry snapshot, the number of venture capital deals in 2025 (93 deals) was nearly identical to the number of deals in 2024 (95 deals).[14] However, total funding was off by 17% and more than half of the dollars were awarded in just the top ten deals. Similar trends were seen with the deployment of federal funding in Massachusetts, as the total National Institutes of Health (NIH) funding to Massachusetts was down over prior years.

Real estate: Lab vacancies at a record high

As companies halted expansion and reduced hiring, a surplus of lab and commercial space became available in downtown Boston and beyond. Around 1.1 million square feet of lab and good manufacturing practices (GMP) space became available, bringing the total inventory to roughly 63.2 million square feet. Lab vacancies in Cambridge/Kendall Square (22.9%) and Boston (38.3%) remained high, leading to a market in favour of tenants with landlords offering competitive pricing and flexible lease terms to prospective occupants.

Bright spots in the Bay State

Buried amongst these challenges, there was much to be celebrated for the Massachusetts life sciences sector. (2025 Industry Snapshot) Massachusetts is positioned to grow its manufacturing footprint as the Commonwealth’s research and development continues to trend towards biologics and advanced modalities. Despite being home to 2% of the United States population, Massachusetts organisations received 9.3% of all NIH funding. 93 Massachusetts companies completed funding rounds, with an average raise of USD34.3 million, exceeding the national average of USD29 million. Top funders included Acidea Therapeutics, which closed a USD207.5 million Series C and Abcuro, which closed a USD200 million Series C.

Conclusion

As 2026 kicks off, optimism is growing as many see clear signs of recovery and a brighter future taking shape.

Women’s Health Initiatives

The life sciences industry has experienced an increased focus and attention on women’s health initiatives in 2025. It is widely recognised and acknowledged that certain diseases and conditions:

• are unique to women (eg, fertility care, menopause and women’s oncology);
• disproportionately impact women (eg, migraines, fibromyalgia, autoimmune diseases, and lung cancer); and
• present differently in women (eg, cardiovascular disease, diabetes, and Alzheimer’s Disease).

Women make up approximately 49.6% of the world population and approximately 50.5% of the US population, yet women’s health represented only 2% of the USD41.2 billion in venture funding that went to health innovators in 2023. (Women’s health investment trends | Deloitte Insights). Accordingly, increased focus and resources directed to women’s health is no longer just a critical moral obligation but also a business imperative and opportunity. Fortunately, there is a growing trend acknowledging the need to address women’s health issues, which is reflected in research activity, private funding, M&A activity, and partnering deals.

Momentum to solve systemic issues in research and funding of women’s health received a boost in the USA with the announcement of the Women’s Health Initiative (WHI) 2023, during the Biden administration. The WHI and subsequent Executive Order on Advancing Women’s Health Research were established to encourage the scientific, private sector, and philanthropic communities to prioritise women’s health research through direct action and increased funding. However, federal funding cuts in 2025 created immediate, far-reaching disruption to the WHI and consequently slowed women’s health research, innovation, and related initiatives. On a positive note, in 2025, the establishment of the Milken Institute aimed to accelerate private sector investment in women’s health innovation and research in hopes to continue to bridge the gap in women’s health advancements. 

Additionally, there has been an emergence of new dedicated funds and resources focused exclusively on women’s health as well as increased activity from women’s health pharma companies (and divisions within big pharma) that have stepped up to fill the void left by the decreased public funding. Funds such as Amboy Street Ventures and Portfolia are focused on funding innovations focused on women’s health. In August 2025, the Gates Foundation announced an investment of USD2.5 billion to improve women’s health to support over 40 innovations across five critical areas that have historically received few resources. (New Funding to Catalyze Women's Health Research, Development, and Innovation)

The life sciences industry also experienced a positive increase in women’s health M&A activity in 2025, as highlighted by the USD18.3 billion acquisition of Hologic, a global leader in women’s health diagnostics and treatment by funds managed by TPG and Blackstone.

The 2026 WHAM Report announced that the women’s health sector is expected to grow from USD45.5 billion in 2025 to USD58 billion by 2029. Women’s health venture capital has tripled since 2019, despite only representing approximately 2-3% of healthcare venture capital. Niche companies accelerating innovation include Bloomer Tech, Oura, Setpoint, Sage Therapeutics, Gameto, and Amber Therapeutics. Many of these companies are focused on medical conditions disproportionately or solely impacting women, including heart disease, autoimmune diseases, postpartum depression, and infertility.

In Massachusetts, women’s health initiatives continue to receive meaningful and increasing attention. For example, in 2025, there was one of the largest single-year investments made by the Commonwealth specifically focused on women’s health innovation with a total of USD5 million being made available to grant recipients. Additionally, in 2024 the Commonwealth passed a maternal health bill (H.4999 “An Act promoting access to midwifery care and out-of-hospital birth options (the “Momnibus” bill)) that expands access to midwifery care, birth centers and postpartum mental health services. On the research side, in June 2025, the Healy-Driscoll Administration and Massachusetts Life Sciences Center (MLSC) awarded USD3.7 million to support 16 women’s health innovation research products. Overall, Massachusetts maintains a strong set of companies focused on women’s health who contribute to the increased innovation and focus on women’s health in the life sciences industry broadly.

AI in Drug Research and Development

The influence and impact of artificial intelligence (AI) in drug development has been transformative over the last few years and deal-making  is reflected in each step of the drug research and development process, including partnerships for discovery services, AI-enabled platforms and services, and deploying AI for use in clinical trials.

The biotechnology AI industry has garnered some of the largest financings over the last year. Industry-wide, there were fewer financing deals with more selectivity, but mega rounds persisted and AI biotechnology companies benefitted from this mega round trend. Noteworthy AI deals in the industry included Isopmorphic Labs’ USD600 Million capital raise in March 2025, Pathos AI’s USD365 Million Series D round in May 2025, and Boston-based Insilico Medicine’s USD123 Million Series E in June followed by its IPO on the Hong Kong exchange, which raised a total of HKD2.277 billion (approximately USD293 million). According to PitchBook, over the past 12 months (article published in November 2025), VC investment in AI drug development totaled USD3.2 billion across 135 deals and AI-native biotechnology companies (AI-native biotechnology companies are defined as a biotechnology company that utilises AI as a fundamental piece or element of their preclinical or clinical development process and main source of differentiation) had a nearly 100% valuation premium in 2024 significantly higher than the broader biopharma median highlighting a “frenzied AI investment environment and investor conviction in the ability of AI integration to drive greater R&D efficiency and improve clinical success”.

AI platforms that aim to derisk drug discovery and increase efficiencies in clinical timelines and success rates in clinical trials, offer promising solutions to significant challenges faced by the industry. Notably, in 2025, 87% of life sciences researchers reported using AI for work-related research tasks, an increase from 75% in 2023. [Artificial Intelligence (A.I.) in Life Science: New Survey of 408 Researchers Reveals Split Sentiment, Surging Adoption, and Rising Trust Barriers]

In addition to the noteworthy referenced financings reference above, in 2025 and early 2026 a number of significant big pharma partnering and M&A deals with AI-focused biotechnology companies were announced, including Eli Lilly’s recent (January 2026) USD1 billion collaboration with Nvidia for the development of an AI co-innovation lab focused on AI-driven drug discovery, and its USD1.3 billion deal with Superluminal Medicines for the discovery of small-molecule drugs for cardiometabolic disorders; and AstraZeneca’s acquisition of Boston-based Modella AI (January 2026) to integrate oncology research and development to support clinical development and biomarker discovery and its collaborations with BostonGene and Algen Bio in the oncology and immunology space.

Massachusetts is leading efforts to integrate AI into pharmaceutical development. The Massachusetts AI Hub aims to establish the state as a global leader in AI innovation with a focus on collaboration between government, industry, emerging companies, and academia. The AI Hub will leverage resources from the Mass Leads Act to support AI initiatives with the aim for Massachusetts to become a global leader in AI development. AI has become a workforce requirement in the Bay State, not just a niche skill. For instance, MassBio and Google hosted an AI for Drug Discovery training and Merck, J&J, and Eli Lilly rolled out internal generative AI platforms and training programmes. AI in drug development is likely to continue to increase throughout the industry as evidenced by the financings and M&A activity in 2025 as well as the utilisation of AI platforms and tools generally in development.

Cell and Gene Therapy: From Miracles to Milestones

The cell and gene therapy space continues to showcase potential breakthrough science while navigating the challenges of a complex development, manufacturing and commercial landscape. As these therapies increasingly demonstrate meaningful patient outcomes, the business and legal side of the equation has become a critical contributor to these scientific advancements. The appeal of cell and gene therapies is broad, with 2025 bringing a variety of deals, including notable deals such as AstraZeneca in its licence agreement with Algen Biotechnologies and its acquisition of EsoBiotec; Kite Pharma in its licence agreement with Pregene; and Eli Lilly in its collaborations with MeiraGTx and Seamless Therapeutics and its acquisitions of Verve Therapeutics and Adverum Biotechnologies. Additionally, there were notable terminations of deals in 2025, including Genentech’s agreement with Adaptive Biotechnologies, Kite Pharma’s agreement with Shoreline Biosciences, and Carisma Therapeutics’ unwinding from its Moderna relationship and failed reverse merger with OrthoCellix. Still, as the cell and gene therapy space continues to calibrate its momentum and optimism, the focus on deal terms and risk allocation has become increasingly important.

The regulatory landscape has also experienced some calibration and innovators must remain mindful of how updated guidance may translate into diligence and deal making realities. Recent FDA guidance has promoted more flexible chemistry, manufacturing, and controls approaches with an aim to accelerate development timelines for cell and gene therapy players. It remains to be seen if this approach will relieve some pressure from the development process. In the meantime, innovators can still expect to see challenges and, if those innovators become licensors, to see robust diligence into their manufacturing know-how, processes and capabilities, often including related representations, warranties, indemnities, and technology transfer provisions.   

Investor and strategic partner expectations are also evolving in parallel. While single-asset and single-indication deals remain attractive, parties are often also seen evaluating the durability and utility of underlying platforms. High-profile collaborations such as the decade-plus evolving relationship between Vertex and CRISPR Therapeutics [1, 2] (which notably gave rise to CASGEVY) serve as an example of how parties are considering broad relationship to structure the division of labour, governance, cost-sharing, and profit allocation to drive continued innovation. These structures reflect the recognition of the evolution of risk during – and perhaps even more notably in the cell and gene therapy space than other technologies – after development.

Reimbursement and patient access considerations are also an important focus during deal negotiations. Products that are potentially curative, single- or minimal-administration therapies introduce payment models and logistical challenges that often differ from other therapies, thus impacting the manner of thinking through royalties, milestones and diligence obligations. The challenges encountered by bluebird bio [1, 2] (now Genetix Biotherapeutics) commercialising Lyfgenia (including scrutiny on high price and long treatment process leading to slow uptake) underscores how regulatory approval does not automatically translate into sustainable market success, a distinction that is increasingly reflected in transaction modeling and, as in a related manner, influences agreement terms including diligence obligations (including post-approval diligence) and milestone structures.

The Massachusetts ecosystem benefits from strong alignment between policy support, capital formation, and operational infrastructure. Organisations such as the Massachusetts Life Sciences Center continue to invest in foundational capacity, while industry groups like MassBio have elevated manufacturing scale-up as a priority. With well over 100 companies and research institutions in Massachusetts working in the cell and gene therapy space, including the headquarters or major hubs of powerhouses like bluebird bio (now Genetix Biotherapeutics), Vertex, Sarepta, Editas and more, Massachusetts demonstrates how scientific, financial, and political support can drive innovation and dealmaking in this space.

In sum, these dynamics underscore that success in cell and gene therapy is no longer defined solely by scientific breakthrough, but by the ability to thoughtfully structure the commercial and legal frameworks that bring those breakthroughs to patients, resulting in success not only for those patients but for industry partners as well. As manufacturing complexity, reimbursement models, and platform durability continue to shape investment and collaboration decisions, deal architecture is becoming an essential tool for managing risk while preserving innovation incentives. For transactional practitioners and industry participants alike, the next phase of growth in cell and gene therapy will depend as much on disciplined execution and creative structuring as it does on the science itself.

Rare Disease

Among the landscape of financial strain, selective dealmaking, and a new administration overhauling the regulatory and drug approval process in 2025, federal and state agencies played a key role in shaping new pathways to advance innovation to support rare disease research and accelerate development frameworks for high need patient populations.

In 2025, the FDA announced new regulatory pathways designed to accelerate treatments for rare disease, specifying essential criteria needed for approval. These pathways aimed to streamline the requirements and loosen evidentiary support providing a valuable advantage for companies navigating the complexities of seeking drug approval for rare indications. This new legislation demonstrated the disproportionate challenges faced by small patient populations. By offering a more predictable regulatory approval process, companies can pursue high impact programmes with greater confidence.

Additionally, the NIH complemented the FDA approach to rare disease by supporting research to advance genetic disorders, autoimmune rare diseases, and novel therapeutic mechanisms. Initiatives supported by the NIH ranged from creating a brain-computer interface to decode inner speech for patients suffering from brain injuries to using gene editing to support babies born with rare diseases and administering an experimental small molecule to alleviate Co-enzyme q10 deficiency.

In a landmark move, the NIH made one of its largest, rare disease investments to date, providing USD26 million to the Rare Disease Clinical Research Network (RDCRN). This funding strengthened collaborative research groups aimed at bringing new therapies closer to patients.

In Massachusetts, a robust advocacy infrastructure strengthened the local rare disease community. With changes to orphan drug incentives and shifts in FDA leadership, organisations such as the Massachusetts Rare Disease Advisory Council (RDAC) and the National Organization for Rare Disorders (NORD) provided guidance, engagement, and support for innovators and patients alike. Their presence offered a stabilising force to ensure that even as federal signals fluctuated, local stakeholders retained a clear voice and reliable framework for advancing rare disease.

In conclusion, the FDA’s expanded regulatory pathways and the NIH’s substantial rare disease investments reshaped the industry’s strategic landscape and offered alternative routes aimed at sustaining innovation in some of the most vulnerable of patient groups.

Final Remarks

As the life sciences industry moves into 2026, the industry is entering a time of renewed momentum and excitement. Venture capital is being deployed to drive innovation and growth and many therapeutic areas are poised for disruption. The demand for anti-aging and longevity treatments along with cardiometabolic treatments show no sign of slowing down. Radiopharmaceuticals are attracting investment along with CAR-T therapies, which demonstrate a renewed interest in the oncology sector.

Beyond scientific progress, 2026 will also be impacted by several high impact policy developments. Ongoing impacts from the 2025 Federal Circuit Decision of Regents of the Univ. of Cal. v Broad Inst., Inc. will be felt by life sciences companies as the Patent Trial and Appeal Board (PTAB) takes up the case on remand in view of new guidance from the Federal Circuit in regard to conception and reduction to practice of an invention. At the same time, many are awaiting review of Gilead Life Sciences v Superior Court being heard by the California Supreme Court, raising the “duty to innovate” issue and questions about pharmaceutical companies' obligations to pursue new therapies as well as questions about product liability and drug pricing.

2026 is shaping up to be a year of acceleration, growth, investment and a regulatory environment that will impact the life sciences industry for years to come.