Boston biotech industry is under pressure due to a funding drought and Trump's policy

Boston’s biotech sector is facing a sharp downturn due to the Trump administration's policies, with declining investments, stalled IPOs, and funding cuts to key research institutions like Harvard.

Why it matters: Biotech is a cornerstone of Boston’s economy, supporting a large portion of the workforce and driving innovation. The sector's instability threatens local jobs, future drug development, and national health leadership.

Backstory: After the Federal Reserve raised interest rates in 2022, biotech already faced headwinds. Trump administration actions — including calls for lower drug prices, delays in FDA approvals, and federal funding freezes — have deepened the crisis.

The crisis in numbers:

• Biotech IPOs, often considered the heartbeat of the industry, have hit their lowest point since 2012; no venture-backed firms have gone public in 2025.

• Moderna’s shares are down 27% this year, making it one of the S&P 500’s worst performers this year. The company is one of the largest employers in Boston’s Cambridge area.

• Bluebird bio, once spearheading Boston’s biotechs and valued at $10B, sold for $29M earlier this year, making it one of the worst biotech busts in history.

• Vor Biopharma is laying off most of its staff despite a $175M fundraising and license agreement with China’s RemeGen.

Regulatory crisis: The FDA's staff morale is reportedly low, with the difficult political environment having the greatest influence on biotech companies.

• In June, the resignation of FDA official Peter Marks triggered regulatory uncertainties, bringing Verve's share price down and forcing the company to sell to Eli Lilly for $1.3 billion.

• KalVista Pharmaceuticals reported an FDA drug approval delay in June due to the agency’s heavy workload and limited resources, highlighting growing regulatory bottlenecks.

Just the beginning: The NIH has paused grants to Harvard, cutting off a vital funding stream for biotech innovation. The city's dependence on a robust federal-academic ecosystem means that the current effects may continue to be felt in the years ahead, as a lack of funding makes new academic spin-offs increasingly rare.