The number of biotechnology companies going public through reverse mergers has increased nearly sixfold in 2026, as start-ups seek to accelerate their stock market listings by merging with struggling already-listed firms. According to investment bank William Blair, 23 biotech companies have announced plans for reverse mergers this year, up from just four in 2025. This rise has occurred alongside a rebound in traditional biotech initial public offerings (IPOs), which have also risen to 23 this year from 12 last year.
Reverse mergers allow private biotech firms to go public by combining with a publicly traded company, often one facing setbacks such as clinical trial failures that have hampered its prospects. This process enables private companies to bypass the lengthy and sometimes uncertain IPO route. The recent availability of listed merger candidates stems from a pandemic-driven surge in biotech IPOs during 2020 and 2021, followed by a market slowdown that left many public biotechs vulnerable.
One prominent example is Cyclerion Therapeutics, which went public in 2019 but faced repeated clinical disappointments, including the failure of its sickle cell treatment. Cyclerion recently completed a reverse merger with Korsana Biosciences, a neurodegenerative disease-focused biotech. Korsana’s investors now hold a majority stake in the merged entity, having raised $380 million through private investment in public equity (PIPE) financing from groups including Fairmount and RTW Investments.
Market participants and legal experts note that the growing participation of sophisticated life sciences investors has improved the reputation of reverse mergers, moving them away from being seen as a last resort to a viable, sometimes preferred, alternative to traditional IPOs. Brian Rosenzweig, a capital markets partner at Covington law firm, said the market for reverse mergers has grown more sophisticated, with the same investors fueling demand in both IPOs and reverse deals.
Recent high-profile transactions include Caldera Therapeutics, which secured $278 million from investors such as Bain Capital Life Sciences and Janus Henderson in a merger with Synlogic, and Obsidian Therapeutics, which raised $350 million from Atlas Venture and Janus Henderson prior to merging with Galera.
Lawyers emphasize that reverse mergers offer speed and financing certainty. Rita Sobral, a partner at Cooley, noted that once a business combination agreement with financing locked in is signed, the deal is assured, reducing reliance on favorable IPO market conditions.
Jonathan Violin, chief executive of Korsana, underscored that the decision between reverse mergers and IPOs ultimately hinges on a company’s scientific strength and capitalization rather than the listing method. He pointed out that the traditional stigma surrounding reverse mergers has diminished given the risks and duration inherent in IPO processes.
Still, the rebound in traditional biotech IPOs provides a viable alternative for companies. Recent public listings, such as Alamar Biosciences, have seen positive stock performance, with shares rising approximately 15 percent since its April debut.
Industry sources caution that while reverse mergers have become more prevalent, the pool of attractive public companies suitable for such deals—those with healthy balance sheets and minimal legal issues—is shrinking. One investor noted that many companies went public hastily during the pandemic and that clean merger candidates are becoming scarce. As a result, high-quality biotech firms continue to have access to traditional IPO opportunities alongside reverse mergers.