Biotech equities rallied heading into 2026 as the sector benefited from renewed M&A activity and easing rate expectations, driving a meaningful bounce in the SPDR S&P Biotech ETF (XBI). Industry commentary points to improved market liquidity, high‑profile deal flow and investor rotation back into innovative small and mid‑cap biotechs. The uptick will shape capital‑raising strategies and may accelerate deal timelines for companies with clinical readouts or late‑stage assets. Market participants should expect a more active M&A landscape and greater tolerance for clinical and regulatory binary risk in early 2026.