Biotech IPOs Surge 55% as Nvidia Exit and ARK Buy Split AI Drug Discovery Stocks

U.S. biotech and pharmaceutical IPOs have delivered a weighted average return of 55% this year, crushing the broader U.S. IPO market, which has posted a weighted average loss of 4.4% excluding blank-check companies and other financial vehicles. The Nasdaq Biotechnology index has gained 13% this year, helped by a more stable regulatory backdrop, notable trial data breakthroughs and acquisitions by big pharma companies.

At least six biotechs, led by CRISPR-based genetic medicines developer Scribe Therapeutics Inc., have filed for IPOs this month that could price later in July and the first half of August. Proceeds raised from biotech IPOs this year include the biggest-ever biotech listing, rare cancer specialist Parabilis Medicines Inc.'s US$770.6 million offering last month. Three buyouts of US$10 billion or more were announced in the past month, including AbbVie's purchase of Apogee Therapeutics Inc., GSK's deal for Nuvalent Inc. and Vertex Pharmaceuticals' purchase of Crinetics Pharmaceuticals Inc.

In AI-driven drug discovery, Nvidia's decision to fully exit Recursion Pharmaceuticals was followed almost immediately by ARK Invest buying 1.25 million shares. ARK Invest also increased stakes in Generate Biomedicines, Tempus AI, Alamar Biosciences and Eli Lilly, reflecting continued interest in AI-driven drug discovery and precision medicine. It trimmed holdings in Absci and Twist Bioscience as part of ongoing portfolio rebalancing.

Recursion's stock has traded at US$3.42 after a 30-day share price return of -27.70% and a 1-year total shareholder return of -62.00%. The company recently received a $30 million payment from Roche and Genentech and maintains collaborations with Roche, Genentech, Bayer and Takeda. Revenue growth stood at 52.84%. Valuation views are split: one widely followed narrative pegs fair value at $1.97, while a discounted cash flow model estimates future cash flow value of $9.63 per share.

Separately, clinical-stage oncology drugmaker Revolution Medicines has gained 132% this year. The company is developing drugs targeting cancer-driving proteins once considered 'undruggable.' Its lead candidate, daraxonrasib, beat cytotoxic chemotherapy in a head-to-head study in patients with metastatic pancreatic cancer, posting a median overall survival of 13.2 months versus 6.7 months with chemotherapy. The company carries a market value of $39 billion despite having no products on the market and being consistently unprofitable.