Each quarter, Locust Walk’s deal team compiles key statistics and trends on strategic transactions and financings. Our 2025 Q3 Report applies the latest data to analyze the current landscape in life sciences deals.

Last quarter, we revamped the report to better reflect global strategic dealmaking, since assets have no borders for potential acquirers or licensees. This quarter, we’ve refined it further to highlight key trends, such as a new M&A premium slide tracking public deal premiums since 2022, rather than focusing solely on quarterly data. Please share any feedback and ideas on how we can continue improving the report.

In Q3 2025, global biopharma transaction activity reflected a balanced but evolving landscape, with stable licensing economics, a shift toward earlier-stage risk-taking, and continued M&A around de-risked assets.

Globally, Licensing activity remained stable in Q3 2025, with total deal value, transaction volume, and average deal size all roughly in line with Q2, sustaining levels near three-year highs.

• • The quarter marked a pivot back to earlier-stage assets (Discovery–Phase 1), reversing Q2’s later-stage skew, though deal structures remained heavily back-end weighted with upfronts <5% of total value, underscoring ongoing risk-sharing.
  • Established modalities (i.e., protein biologics, small molecules) continued to dominate, representing >80% of deal value, while non-oncology TAs reached a four-year high, indicating a gradual diversification away from oncology.

Geographically, licensing activity in Q3 2025 continued H1’25 trends with China continuing to expand its leadership, achieving a three-year high in total deal value and capturing an additional 6 percentage points of global share with a smaller number of larger, higher-value transactions.

• • U.S. licensing remained early-stage focused with stable totals but smaller average deal sizes, underscoring a tilt toward M&A for later-stage assets.
  • European licensing activity in Q3 2025 declined in aggregate value despite increased volume, signaling a reset to more typical activity levels for the region, focused on early innovation, following Q2’s surge driven by large one-off deals (e.g., BioNTech/BMS, Philochem/RayzeBio).
  • Japan-based buyers shifted toward earlier-stage, non-core TA assets (infectious disease, dermatology, ophthalmology, metabolic), while other regions normalized after a Q2 surge, led by smaller transactions in South Korea, Singapore, and Canada.

M&A QoQ total deal value significantly increased (+64%), anchored by late-stage and approved assets, which comprised ~73% of deal value and ~67% of volume and maintained average deal sizes >$2B (near multi-year peaks).

• • The quarter’s M&A mirrored licensing trends with established modalities (~85% of value) and increasing therapeutic diversification, including a notable rise in metabolic/endocrine deals highlighted by Pfizer’s acquisition of Metsera for $4.9B upfront and up to $7.3B of total deal value.
  • Ex-US M&A surged, led by EU+UK sellers, highlighted by Merck’s $10B Verona Pharma and Genmab’s $8B Merus acquisitions, producing the highest total and average deal values since 2023.
  • US-seller M&A volume grew but aggregate value declined ~25%, bringing totals back in line with 2024 as only 3 of 12 transactions exceeded $1B.
  • Despite volume gains, equity premiums compressed as buyers targeted companies facing financial stress or strategic headwinds.

In Q3 2025, improving public valuations and renewed APAC activity signaled a gradual thaw in global biotech capital markets after prior quarters of contraction.

US Capital Markets

Public markets improved materially, with biotech indices tracking broader market gains (the XBI closed the quarter above $100) and the number of companies trading below cash dropped to the lowest since 2021.

• • Q3 2025 saw the IPO window begin to thaw, with LB Pharmaceuticals securing the first biotech IPO since February with their $285M upsized offering.
  • Public financings surged ~40% QoQ, marking a yearly high driven by follow-ons increasing 81% in total value and PIPEs increasing 52% in total value, although the PIPEs were concentrated among a few large deals.
  • Venture funding remained muted (-3% QoQ), but Series C+ rounds gained share (39% YTD), reflecting follow-on investment in portfolio companies.

European Capital Markets

Venture financing saw an 86% increase in deal count but ~40% drop in total value, implying smaller, earlier-stage rounds.

• • Investment shifted back to discovery-stage companies, reversing prior quarters’ preference for clinical-stage companies, with small molecule and biologic platforms gaining share at the expense of cell therapy and other complex modalities.

APAC Capital Markets

In Q3 2025, Asia-Pacific capital markets displayed mixed performance across geographies, with China and Japan driving regional strength through robust public and private financing activity, while South Korea and other markets lagged broader equity indices.

• • China continued to lead APAC market momentum, with pharmaceutical stocks rallying +31.6%, outpacing the Hang Seng Index (+10.9%), reflecting investor confidence reinforced by record out-licensing activity.
  • Japan experienced a broad market rally, as the Nikkei 225 reached all-time highs, and biotech stocks rose but increased volatility.
  • South Korea’s KOSPI continued its strong rally (+10.8% YTD), but biotech stocks underperformed (+7.2%), highlighting persistent sector-specific headwinds despite broader market optimism.

The quarter reflected measured optimism, gradual increased risk-taking, and improving investor confidence, positioning the sector for selective growth heading into Q4 2025.

We invite you to read our report and welcome the opportunity to discuss its contents with you.