European biotech back on stage

The spectacular rally of Abivax, with shares surging over 850% following positive Phase III data in ulcerative colitis, has reignited investor confidence and reshaped market dynamics. This “Abivax effect” underscores a simple truth: in today’s environment, Phase III readouts are the ultimate value driver.

While macro headwinds persist (U.S. drug pricing reforms, FDA review delays), market uncertainty has greatly diminished. The NEXT BIOTECH index has climbed 13.7% year-to-date, with most of this advance driven by a sharp rally since April’s “Liberation Day”, while the STOXX 600 Healthcare has slipped 7.4% over the same period. The number of companies trading below cash has dropped to 16% from 20% in April, signalling renewed interests from investors and improving fundamentals.

Equity capital markets remain tight, but September brought a turning point: LB Pharmaceuticals’ US$285m IPO, the first U.S. listing in seven months, alongside follow-ons from Mineralys and Dianthus. In Europe, ECM deal value reached US$1bn in Q3, the highest since early 2024. Meanwhile, M&A is accelerating: in September, Pfizer acquired Metsera (up to US$7.3bn), Novartis bought Tourmaline (US$1.4bn), Roche acquired 89bio (up to US$3.5bn),  Servier acquired Kaerus (up to US$450m) and in the last days of the month, Genmab acquired Merus (US$8bn). These deals confirm that pharma is willing to acquire late-stage or commercial assets to offset looming patent cliffs.

Investors are now laser-focused on companies with pivotal readouts within 12 months, seeking binary catalysts that can deliver asymmetric returns. Beyond Abivax, two European names dominate watchlists:

Valneva (VLA) – Its Lyme disease vaccine VLA15, partnered with Pfizer, is the only Phase III programme in this indication addressing a US$1bn+ market. Milestone payments and revenue share could support VLA profitability by 2027.

Nanobiotix (NANO) – The French nanomedicine pioneer is running NANORAY-312, a Phase III trial in locally advanced head and neck cancer. Interim data in 1H 2026 could support early filing and strengthen its US$2bn+ J&J partnership, validating NBTXR3 as a platform technology in oncology.

With patent cliffs forcing pharma to replenish pipelines, late-stage biotechs are prime acquisition targets. Abivax’s Phase III success has already sparked speculation of a US$10bn M&A valuation, underscoring the premium on de-risked assets. For investors, the message is clear: follow the catalysts.

The European biotech sector is entering a phase of disciplined optimism. For companies nearing pivotal readouts, the next 12 months represent a unique window, not just to validate their science, but to capture investor attention in a market hungry again for tangible value creation.

This article from Damien Choplain, Managing Director, CO-head European Healthcare Research, Stifel was originally published in European Biotechnology Magazine Autumn 2025.