The biotechnology sector is stealing U.S. IPO market thunder from artificial intelligence-related listings , delivering standout returns as bankers line up a steady stream of summer debuts.

U.S. initial public offerings of biotech and pharmaceutical companies this year have produced a weighted average return of 55 per cent, according to data compiled by Bloomberg. That stands in stark contrast with the 4.4 per cent weighted average loss for the broader U.S. IPO market, excluding blank-check companies and other financial vehicles, according to the data.

Bolstered by that success, 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 before activity shuts down completely for the summer.

“This is the healthiest biotech IPO market we have had in a long time,” said Jack Bannister, senior managing director in equity capital markets at investment bank Leerink Partners.

It was supposed to be the year of AI and aerospace and defence listings, topped by SpaceX’s record-setting IPO. Instead, shares of the 10 companies behind 2026’s biggest U.S. deals have slumped a weighted average of 6.3 per cent as concern grows over whether the AI rally is overextended.

Drivers of biotech and pharma’s outperformance include a 13 per cent gain in the Nasdaq Biotechnology index this year, a more stable regulatory backdrop, notable trial data breakthroughs and acquisitions by big pharma companies.

A trio of US$10 billion or bigger buyouts were announced in the past month, including Abbvie Inc.’s purchase of Apogee Therapeutics Inc., GSK PLC’s deal for Nuvalent Inc. and Vertex Pharmaceuticals Inc.’s purchase of Crinetics Pharmaceuticals Inc. The transactions have boosted valuations and left investors’ coffers brimming with spare cash that they can put straight back into the IPO market.

“Right now, you have some of the largest fund families in the world that are reallocating and pushing more capital into healthcare and the returns in the small- and mid-cap market has proven to investors there is a lot of upside,” said Seth Rubin, Stifel Financial Corp.’s global head of ECM.

There are signs of exuberance. Proceeds raised from biotech IPOs this year have topped US$5 billion three times last year, according to the data, and this includes the biggest-ever biotech listing, rare cancer specialist Parabilis Medicines Inc.’s US$770.6 million offering last month.

Pattern hair loss drug company Veradermics Inc. is up more than 500 per cent since its February debut, making its the best performing U.S. IPO from any sector this year. The second best, blood disorders-focused Hemab Therapeutics Holdings Inc., has more than doubled since its IPO in May.

One worry is whether the sector can continue to separate itself from broader market concerns about higher-for-longer interest rates, especially as rising rates have hurt biotechs in the past.

“Rate hikes could become a headwind because they affect the way people value biotech companies, but at the moment the sector is trading independent of that and counter to the AI trade,” Leerink’s Bannister said.

“You have to park your money somewhere and relative to other opportunities right now biotech feels like it’s not just a safe place, but a place that has real upside.”

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Bloomberg.com