Reverse mergers have returned with a bang. More biotechs have taken this back door to the public markets so far in 2026 than in any full year since 2021, according to J.P. Morgan, with institutional investors backing many of the newly public companies from day one.
Opportunities for reverse mergers proliferated as biotech funding dried up, leaving many publicly traded companies with little of value beyond their Nasdaq listings. Yet reverse merger activity has declined in recent years, with the number of deals falling from a recent peak of 34 in 2021 to just 12 in 2025.
This trend reversed this year, according to JPM's report published Tuesday.
Over the first nine months of 2026, JPM tracked 27 reverse mergers worth a combined total of $7.5 billion. The deal value is below the $9.8 billion across 2025 and the $8.4 billion in 2022, albeit with time to beat those figures over the final months of 2026.
The financing of reverse mergers has changed even more dramatically. Last year, three of the 12 reverse mergers featured private investment in public equity (PIPE), which involves the sale of shares in a public company to selected institutional investors. This year, 19 of the 27 reverse mergers have involved PIPE financing, more than in any full year since 2021.
Paragon Labs, a biotech builder backed by investment firm Fairmount, has contributed to the resurgence of interest in reverse mergers with PIPEs. This year, Paragon’s Korsana Biosciences, Mentari Therapeutics and Velaris Therapeutics have gone public via reverse mergers, raising $380 million, $200 million and $350 million, respectively, in the process.
Reverse mergers are one of several types of deals that blasted past prior full-year totals over the first nine months of 2026. The upfront value of mergers and acquisitions hit $138.9 billion across 113 deals over the first nine months of 2026, compared to $122.1 billion across all of last year, according to the report.
Eli Lilly, flush with cash from its GLP-1 juggernauts, drove M&A in the quarter, announcing 13 transactions with an aggregate reported value north of $30 billion. Vertex’s $10 billion Crinetics Pharmaceuticals buyout was the quarter’s biggest deal.
JPM also tracked a slowdown in biopharma venture funding, which slipped from $9.9 billion in the second quarter to $6.7 billion in the third quarter of this year. Even so, the bank's analysts estimated that full-year funding could hit $33 billion, making 2026 the biggest year for biopharma VC investment since 2021.
The state of biotech funding is one of the hot topics being discussed at Fierce Biotech's high-impact event in London next month. Find out more information and register by clicking on the banner below:
