By many measures, biotech is booming.
U.S. biotech IPO volume hit a five-year high in the third quarter, with nine offerings raising $2.4 billion, according to an analysis by the global investment bank Locust Walk.
Dealmaking has also been robust, with biopharma M&A reaching $173 billion through the third quarter — already outpacing 2025’s full-year total.
But other indicators paint a different picture.
Global licensing fell to a two-year low in Q3, Locust noted, with deal value down 33% quarter over quarter as average deal size declined and activity shifted “away from biobucks-heavy discovery/preclinical deals.”
For small biotechs, those shifts can become existential.
Scientific setbacks such as clinical failures often drive layoffs or company closures. But investor appetite for certain targets, modalities or stages of development can also determine whether a company gets to stay in the game.
Here are three biotechs that recently closed shop or began winding down operations — and what pushed them to their end.
Caribou’s off-the-shelf CAR-T programs run out of runway
Caribou Biosciences wasn’t necessarily looking to go toe-to-toe with competitors in the CAR-T cell therapy space, CEO Rachel Haurwitz told PharmaVoice earlier this year. Instead, the early clinical-stage company had its sights on reaching patients who couldn’t access approved CAR-Ts like Gilead Sciences and Kite Pharma’s Yescarta or Bristol Myers Squibb’s Breyanzi.
Until recently, Caribou was riding a wave of momentum toward that goal.
In June, the company presented fresh phase 1 data for its candidate vispa-cel showing it generated progression-free survival for 17.1 months in B-cell non-Hodgkin lymphoma — an outcome on par with separate trials for Breyanzi and Yescarta that showed progression-free survival for 14.8 months and 14.9 months, respectively.
As a single-dose therapy derived from donated cells, vispa-cel was poised for a planned phase 3 trial where it could prove its worth as an easier-to-manufacture and potentially cheaper version of CAR-T cell therapy, Haurwitz said.
Now those plans have been derailed.
Caribou said earlier this month that it is discontinuing development of vispa-cel and another allogeneic CAR-T cell candidate as it seeks “strategic alternatives.” Ultimately, the company couldn’t raise enough funds to keep the programs going, it said.
“Despite the progress we’ve made, the current financing environment for allogeneic CAR-T cell therapies has made it increasingly challenging to secure the capital necessary to responsibly advance these programs,” the company stated.
Caribou’s announcement triggered speculation that it could become the target of a reverse merger — a type of deal that allows private companies to pair with public shell companies, which can allow them to raise funds on the public market while bypassing a traditional IPO process.
Reverse mergers are becoming increasingly common in biotech and accounted for over two dozen announced deals in the industry so far this year — more than twice the rate in 2025, according to a JP Strategy Partners tracker.
Caribou’s statement that it’s exploring “strategic alternatives” and that it’s working with Wedbush Securities could indicate it’s looking for some kind of deal or financial lifeline to carry on. But even if the company lands a reverse merger, that doesn’t mean its clinical assets will survive the deal, Daina Graybosch, a Leerink analyst, told BioPharma Dive. At this point, investors will likely be more willing to support other off-the-shelf CAR-T candidates instead, Graybosch said.
Adecto can’t find backing for a new cancer target
A “risk-averse funding environment” was also to blame for Adecto Pharmaceuticals’ undoing, according to the biotech’s CEO, Nora Mineva.
At its inception in 2014, Adecto’s goal was to treat aggressive forms of breast cancer by turning off a protein called ADAM8. Launched by researchers at Tufts University, the biotech set out to develop a monoclonal antibody for triple-negative breast cancer.
The upstart scored a $100,000 award in a competition for new ventures at Tufts in 2015, and then a government grant to develop an ADAM8 diagnostic in 2019.
A patent application for its therapy filed in August indicated that Adecto might be setting the stage to head into the clinic.
“By targeting ADAM8 for inhibition, Adecto’s therapy aims to reprogram both lymphoid and myeloid cells, generating a more potent anti-tumor immune response to efficiently kill cancer cells, including those resistant to conventional immunotherapy,” the company said in a statement.
Then, in late September, Mineva announced on LinkedIn that because the fundraising environment was “hesitant to back new therapeutic targets without clinical data,” Adecto had hit the end of its financial runway and “officially closed its doors.”
“We remain deeply convinced that ADAM8-targeted therapies and diagnostics will one day be an essential part of the cancer standard of care. It is our sincere hope that the foundational groundwork we laid over the past decade has brought that day closer for patients,” Mineva wrote.
The company’s researchers plan to release a final paper describing the isolation and characterization of their antibody along with validation that ADAM8 is a safe therapeutic target, Mineva wrote.
Arpeggio Bio winds down as drug program unravels
Arpeggio Bio was founded on an idea its CEO described as “beautiful.”
Launched in 2018 from the University of Colorado Boulder, Arpeggio took aim at the “dark portion” of genomes to better understand how drugs impact different cells. Leveraging machine learning techniques and what it described as the “largest database of nascent-RNA sequences in the world,” the startup created a platform to screen drug libraries for their effects on “thousands of gene and non-coding transcripts.”
The approach allowed “for the first time, the design of molecules to modulate not just a single target, but a cell’s entire transcriptome,” according to Arpeggio’s founder and CEO Joey Azofeifa in a statement.
After an initial $3.2 million seed funding round in 2020, Arpeggio announced a $17 million series A haul in 2022, saying it had contracted with more than 40 pharma companies to “assess the impact of diverse classes of molecules on cellular transcription.”
But after its lead program for a small molecule NRF2 degrader in non-small-cell lung cancer began to “unravel,” Azofeifa posted on LinkedIn in August that Arpeggio had decided the previous month to “wind down.”
“Drug discovery is hard,” Azofeifa wrote in his post, explaining that the startup was ultimately “unable to separate the molecule's efficacy from an off-target liability.”
