Each quarter, Locust Walk’s deal team compiles key statistics and trends on strategic transactions and financings. Our 2025 Q2 Report applies the latest data to analyze the current landscape in life sciences deals. 

This quarter we completely revamped the report to better reflect on global strategic dealmaking since assets have no borders for potential acquirers/licensees. We compared various geographies to understand relative volume and reached some interesting conclusions. Please share any feedback for ways we can continually improve this report.

In Q2 2025, Licensing and M&A activity was concentrated on de-risked assets, with the U.S. dominating M&A while China and Europe gained significant licensing momentum.

Geographically, the balance of licensing activity has been evolving with China-based companies dominating 2025’s licensing deal flow, accounting for 42% of total deal value, cementing China’s role as a major participant in global dealmaking through large pharma partnerships.

• Licensing deals with European sellers also ticked upward, both in count and value, and both Chinese and European sellers experienced 3-year highs in quarterly total deal value ($24.4B and $14.8B, respectively) through licensing deals for predominantly late-clinical stage assets.
• While U.S. licensing deal volume fell to a 3-year low and the U.S.’s share of deal value fell from 55% to 25%, avg. deal values remained consistent at $0.9B; these deals skewed towards preclinical programs and highlights that U.S. innovation in later stages of development is being accessed via M&A.

Globally, biopharma licensing total deal value in Q2 2025 had strong growth, up 20% from Q1, and the composition of those deals shifted toward later-stage programs and more de-risked assets as highlighted by a 3-year high in Phase 3 licensing deal value.

• Consistent with this risk-averse approach, established modalities like small molecules and monoclonal antibodies accounted for a greater share of licensing value, increasing QoQ by ~20 percentage points.
• Even with this later-stage tilt, licensing economics remained heavily back-ended rather than upfront, signifying that while pharma is interested in buying assets, they are still structuring partnerships to share risk.
• In Q2 2025, licensing deal value for immunology and inflammation increased by 10 percentage points to a four-year high, while oncology dropped 16 points quarter-over-quarter, signaling a strategic shift toward autoimmune and inflammatory assets amid growing enthusiasm for novel I&I targets.

M&A deal characteristics in Q2 2025 emphasized late-stage assets within established modalities, with small molecules and biologics comprising 82% of total M&A deal value in the quarter and geographically, acquisitions of U.S.-based companies accounted for 81% of global M&A deal value, a large contrast to the 25% of global licensing deal value.

• There was, however, a slight uptick in deals involving nucleic-acid technologies: the share of M&A value from nucleic acid-based assets (like RNAi) rose ~5 percentage points vs Q1, driven largely by the Novartis/Regulus and BioNTech/CureVac transactions.
• 4 of the 7 public-company acquisitions in Q2 had positive 52-week premiums, a stark contrast to the previous year when most deals were valued below 52-week highs, and 30-day VWAP premiums increased from a median of 56% to 112% from Q1 to Q2 2025, signaling that buyer sentiment is improving and strategic exits can still deliver value.

In Q2 2025, the global biotech financing environment remained subdued with venture and public markets contracting across most regions.

US Capital Markets

The U.S. biotech financing environment in Q2 2025 had a sharp pullback with a 28% decline in overall financing and a closed IPO market in the US.

• For the first time since at least 2020, not a single biotech IPO priced on U.S. markets during the quarter, including companies that had filed (e.g., Odyssey Therapeutics) withdrawing their plans due to unfavorable conditions and the poor post-IPO performance of recent listings.
• Follow-on equity offerings and PIPEs continued, but at muted levels; Q2 follow-on deal value was flat versus Q1 even with almost 50% fewer deals, implying only a few stronger companies tapped the market

Q2 2025 saw the weakest biotech venture funding activity since 2023, with total deal value dropping $1.3 billion, or 32%, compared to Q1.

• Despite the general pullback, a handful of big financings signaled investors are focused on risk-off investing in later-stage opportunities, with nine companies raising >$100M rounds in Q2; derisking future financing overhang likely drove some of the large round sizes.
• Notably, some large preclinical and discovery-stage financings closed indicating investors can garner high conviction for select early projects.

European Capital Markets

European biotech financing in Q2 2025 showed a mix of resilience in certain areas (large early-stage financings and steady investor interest in specific themes) as well as the broader global headwinds of risk aversion.

• The number of private biotech financings dipped to 7 deals in Q2, down from 18 in Q1, and while total deal value fell by 34% to $854M, average deal size increased to $122M (representing a 3-year high) as investors gathered around large rounds for later-stage assets.

APAC Capital Markets

Biotech and pharma financing in APAC during Q2 2025 varied widely by country, but generally echoed the global theme of constrained capital access.

• The HKEX was the best performing market over Q2 2025, however, only 4 of the exchange’s IPOs were for biotech companies.
• China’s biotech venture funding fell in Q2 2025 amid regulatory reforms and investor re-calibration, with only 8 private financings completed totaling $208M; however, these companies benefit from having increased access to non-dilutive capital through global licensing transactions.
• Japan’s venture financing contracted in Q2 as well with only 4 private biotech financings closed in Japan during the quarter, a decline in both count and total value from prior quarters, ending what had been a modest recovery trend in late 2024 to early 2025.

Q2 2025 revealed a split in strategic dealmaking: tight capital markets signaled ongoing pressure, especially for U.S. companies, while steady dealmaking from large pharma showed that belief in the sector’s long-term value remains, hinting at a potential recovery once broader conditions improve.

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