A slow start to 2026 has put first-time biotech financings on course for their worst year since before the pandemic, reducing the already limited funding opportunities available for startups.
The data come from J.P. Morgan’s first-quarter biopharma licensing and venture report (PDF). Analysts tracked 50 seed and series A investments collectively worth $2.3 billion over the first three months of 2026. The data reverse the encouraging trend seen in the first quarter of 2025, when J.P. Morgan reported (PDF) that the number of investments rose to 60 and their combined value reached $3.7 billion.
The 2025 data marked a sharp improvement over the first three months of 2024, when the analysts tracked (PDF) 51 deals worth $2.4 billion. Early-stage biotechs raised less in the early months of 2026 despite investors making some large series A bets, such as the $130 million pumped into Slate Medicine and the $95 million committed to Poplar Therapeutics across initial and extension rounds.
With the recovery seen in 2025 petering out this year, the sector is on track to record its lowest number of first-time financings this decade. The number of seed and series A rounds appeared to have bottomed out in 2024 at 221 for the whole year, before climbing to 236 in 2025. With three quarters to go, there is still plenty of time for investors to drive the full-year early-stage deal count past 221.
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Yet the current data suggest investors continue to prioritize later-stage companies. J.P. Morgan tracked 51 series B and later investments worth $4.5 billion in the first quarter of 2026. The deal value is higher than in the first quarters of 2024 and 2025, as is the difference between the sums invested in early- and later-stage rounds.
J.P. Morgan said VCs are prioritizing biotechs “with established data packages, de-risked development and nearer-term catalysts, reinforcing the funding gap between early- and late-stage issuers.” Companies with those characteristics have clearer routes to licensing deals, takeovers and IPOs that can offer exits for VCs and lessen their reliance on investors for money.
Biotech acquisitions by large-cap biopharmas remained focused on late-stage programs in the first quarter of 2026, J.P. Morgan said. Drugmakers struck as many takeovers in the first quarter of 2026 as the same period of last year—32—but the upfront value of those deals ballooned. The recent deals were worth $40.9 billion in cash and equity, compared to $28.7 billion for the takeovers penned in early 2025.
Merck & Co. contributed to the upswing by agreeing to buy Terns Pharmaceuticals for $6.7 billion, as did Eli Lilly when it offered $6.3 billion upfront for Centessa Pharmaceuticals. The takeovers were part of a surge in dealmaking late in the first quarter.
