Earlier this year, the new Presidential Administration introduced a series of policies, legislative proposals and regulatory actions that have impacted the business and regulatory environment and contributed to a climate of uncertainty—particularly in the biopharmaceutical sector. These developments gave companies much to address in their first quarter 10-Q filings. To shed light on how biopharmaceutical companies addressed these developments, we conducted a survey of the Q1 Quarterly Reports of the top 100 biopharmaceutical companies. Our analysis revealed that most companies are actively assessing the potential impact of these changes, with more than two-thirds (68%) of companies updating their risk factors and more than half (53%) updating their Management’s Discussion & Analysis (MD&A) accordingly. Below is a summary of the key disclosure changes, with a focus on topics of heightened relevance to the industry—including tariffs, changes in laws related to Medicaid or Medicare, federal workforce disruptions and other issues such as the Section 232 investigation and the Section 340B Drug Pricing Program.
Q2 2025: Life Sciences Capital Markets Recap
Despite positive momentum in the life sciences capital markets throughout 2024 and expectations for increased favorability in both public and private investment avenues in 2025, the second quarter of 2025 continued a trend of subdued activity for the sector. As of mid-2025, life sciences companies continue to navigate a challenging financing environment, as evidenced by the statistics below and against a backdrop of the XBI and BBC both suffering moderate declines while the broader market is up 8% for the year. In the public markets, public equity capital remains scarce and issuers are heavily favoring confidential offerings to mitigate market and execution risk following key clinical read-outs. In the private markets, venture capital investors remain selective and are favoring de-risked, later-stage assets, while smaller, early-stage companies are continuing to weather an extended “biotech winter”.
Is There a Duty to Disclose FDA Feedback?
The Trustees of Welfare & Pension Funds of Local 464A – Pension Fund v. Medtronic PLC, 726 F. Supp. 3d 938 (D. Minn. 2024).
Case Highlights
On March 28, 2024, a federal district court held that positive statements about the prospect of U.S. Food and Drug Administration (FDA) approval of a company’s latest product were not sufficiently alleged to be false or misleading even though the company did not disclose that it had received a Form 483—a form issued by the FDA following an inspection that lists objectionable conditions an investigator believes violate the Food, Drug, and Cosmetic Act and other related acts. The plaintiffs in The Trustees of Welfare & Pension Funds of Local 464A – Pension Fund v. Medtronic PLC (“Medtronic”), 726 F. Supp. 3d 938 (D. Minn. 2024), filed a lawsuit alleging that Medtronic misled investors when it disclosed that the application process for FDA approval for its next generation insulin pump designed to manage type 1 diabetes—the MiniMed 780G (780G)—was “on track.” The plaintiffs alleged that this statement led investors to believe that FDA approval was likely when, in fact, Medtronic had received a Form 483 following the FDA’s inspection of a Medtronic facility, which ultimately led to an FDA warning letter and a decision to delay approval. Medtronic’s stock price dropped when it announced that it could no longer include FDA approval of 780G in its guidance for fiscal year 2023. The plaintiffs claimed that the defendants had a duty to disclose Medtronic’s receipt of Form 483—which it had received approximately six months before the warning letter was disclosed—given Medtronic’s disclosures that its submission for FDA approval of 780G was “on track.” While the court acknowledged that this was a “close[ ] question,” it found that the complaint did not allege that the “on track” statement was false or misleading. The court distinguished Public Pension Fund Group v. KV Pharmaceutical Company (“KV Pharmaceutical”), 679 F. 3d 972 (8th Cir. 2012), where the Eighth Circuit held that defendants in that case had a duty to disclose the receipt of Form 483 when they told shareholders that the company was compliant with FDA regulations given “numerous, severe, and pervasive objectionable conditions” covering “the entire range of the defendants’ operations and products.” Here, unlike KV Pharmaceutical, the Medtronic complaint did not allege how the issues raised in Form 483 would necessarily doom or impact the timeline for FDA approval and the defendants never represented that Medtronic was in compliance with all FDA regulations.
National Venture Capital Association Addresses “Shadow Trading” Concerns Summer Updates to Form of CDA and Model PIPE Documents
The National Venture Capital Association (NVCA) has continued its commitment to standardizing venture financing documents by incorporating new language into its form confidential disclosure agreement (CDA) aimed at addressing the emerging “shadow trading” issue in light of the SEC v. Panuwat case. This update should help to standardize shadow trading carveouts in CDAs, which have initially varied in their adoption and have sometimes been met with resistance by counterparties based on a misunderstanding of the Panuwat holding.
Potential Impacts of Most-Favored-Nation Executive Order on Ex-US License Agreements
Introduction
On May 12, 2025, President Donald Trump signed an Executive Order titled “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients”. This order aims to address the perceived imbalance where the United States funds a significant portion of global pharmaceutical profits and pays high prices, while drug manufacturers offer deep discounts to access foreign markets, subsidizing those lower prices through higher prices in the United States. The stated purpose of the Executive Order is to ensure that Americans are not forced to pay almost three times more for the same medicines and have access to the most-favored-nation (MFN) price.
Opening the Window for S-3 Effectiveness Post-10-K Filing
It’s a tale as old as time for many small- and mid-cap biotech companies…you file a new Form S-3 shelf registration statement in connection with your Form 10-K filing in late February or March and are eager to do a shelf takedown after some promising investor meetings. The SEC confirms that it is not reviewing the Form S-3 and you are able to go effective, but wait! As a non-WKSI, you must have your proxy information on file (either through Part III of your Form 10-K or by filing your proxy within 120 days of year end) in order to take your Form S-3 effective and begin using the shelf. Companies have historically had three choices to resolve this dilemma: (i) quickly pull together a Form 10-K/A to include Part III information in the Form 10-K filing, (ii) accelerate the proxy filing timing or (iii) wait until the proxy is on file. Options (i) and (ii) will put unwanted pressure on the legal and finance teams and under option (iii) each passing day could mean the difference between an equity raise and losing interested investors.
Key Takeaways: Life Sciences 2025 Outlook: Capital Markets Webcast (March 19)
Melanie Neary, Branden Berns, and Ryan Murr of Gibson Dunn, along with Bud O’Hara of Jefferies, hosted a Life Sciences 2025 Outlook: Capital Markets webcast on Wednesday, March 19, 2025, breaking down capital market trends, deal activity, and industry expectations for life sciences in 2025.
Join us: Life Sciences 2025 Outlook: Capital Markets Webcast (March 19)
You’re invited! Please join Ryan Murr, Branden Berns and Melanie Neary of Gibson Dunn and Bud O’Hara of Jefferies for a Life Sciences 2025 Outlook: Capital Markets webcast on Wednesday, March 19 from 1 – 1:45 pm ET / 10 – 10:45 am PT. We will provide an integrated outlook on capital markets in the life sciences industry, identifying trends and uncertainties that will shape the year ahead.
Introducing Biotech Briefings
Dear friends and colleagues,
We are excited to introduce Biotech Briefings, providing Gibson Dunn’s commentary and perspectives on the legal, business, and regulatory issues shaping the life sciences industry.
From groundbreaking developments in biopharma, medical devices, and diagnostics to the evolving landscape of IP, FDA and SEC regulation, Biotech Briefings delivers timely insights for companies, investors, and industry stakeholders.
Stay tuned for expert analysis on:
- Key FDA, FTC & SEC developments
- M&A, financing & strategic partnerships
- Market dynamics shaping investment & innovation
We invite you to follow along for actionable insights at the crossroads of law, business, and science.
The Gibson Dunn Life Sciences Team
Life Sciences 2025 Outlook
The life sciences industry is entering 2025 with a largely favorable set of catalysts for the coming year, but also with some larger risks that will impact companies differently.
Webcast: Preparing for Stronger Markets: Considerations for IPO Readiness
As more private companies begin to explore IPOs again after a difficult period in the markets, strong pre-IPO readiness can position companies to more swiftly access IPO market windows when they open. This presentation explores preliminary IPO planning considerations and key issues for private companies thinking about an IPO.
Life Sciences Review and Outlook – 2024
This update provides a recap of 2023 highlights for capital markets, M&A activity, royalty finance transactions and clinical funding arrangements, along with expectations for 2024.
The past five years have been particularly tumultuous in the biopharma sector. Strong capital markets and M&A activity into early 2020 were whipsawed during the pandemic, with equity valuations climbing significantly through early 2021 before dropping dramatically through the fourth quarter of 2023.
Webcast: Recent Developments – ATM Programs and Rights Offerings
In the current equity capital markets environment, offerings that avoid significant dilution can be advantageous. ATM offering programs provide public companies an efficient means of raising capital over time by allowing them to tap into the existing trading market for their shares on an as-needed basis. Rights offerings allow public companies to raise capital while offering all current shareholders the opportunity to participate equally, thereby allowing shareholders to avoid dilution when trading prices are relatively low.