After a turbulent 2025 marked by new FDA policies and a late-year market rebound, the biopharma sector is entering 2026 in a strong position, according to Graig Suvannavejh, managing director of Equity Research at Mizuho Securities.
“I do think this general trend up and to the right will continue,” Suvannavejh told BioSpace last month. However, he added, “I think we’re only in the third inning” of the comeback.
RBC Capital Markets supported this view in its 2026 RBC Global Biotech Outlook report. The analysts wrote, “Things really have turned around - after being in the doldrums for the better part of 2 years following the peak of COVID and bottoming out this past April, biotech has been on a near-historic run. It’s been multi-factorial, and a lot of the drivers persist and could continue to catalyze some momentum.”
The report attributed recent progress to positive clinical data from companies such as Insmed, Kymera Therapeutics, and Wave Life Sciences. This data demonstrated that risks in drug development can lead to successful outcomes.
As industry leaders gather for the J.P. Morgan Healthcare Conference in San Francisco, optimism is evident among stakeholders.
Suvannavejh identified oncology and neuroscience as key therapeutic areas expected to attract significant attention from both companies and investors due to high unmet medical needs. He said, “The reason why we can have so many companies [in this space] is because people unfortunately suffer from cancer. Families suffer from cancer.” When asked if cancer would be the top area for investment, he responded: “I don’t know but it will be amongst the top, as it always is.”
Regarding neuroscience, Suvannavejh commented on ongoing interest driven by unmet needs in neuropsychiatry and neurodegenerative diseases. He pointed out upcoming Alzheimer’s trial results that could influence investor sentiment: Eli Lilly’s remternetug (with Phase III TRAILRUNNER-ALZ 1 trial data expected in March) and Roche’s trontinemab (which gained attention at the 2025 Clinical Trials on Alzheimer’s Disease conference). A Roche spokesperson stated via email: “We plan to have a strong congress presence throughout the year and . . . will continue to share fresh data [from trontinemab] as and when they are available.”
Immunology & inflammation was also highlighted by Suvannavejh as an area where industry focus remains strong. He explained that targeting common mechanisms within I&I may impact multiple diseases.
RBC identified several modalities likely to generate significant developments in 2026 within immunology & inflammation: degraders, multi-targeting antisense oligonucleotides, antibodies, psychedelics, and multi-specifics. On psychedelics specifically, RBC analysts wrote: “Psychedelics are ready to go from fringe to mainstream, as we expect late-stage data from MNMD [MindMed] and CMPS [Compass Pathways] and progress from other players will showcase their potential for transformative efficacy in hard-to-treat mental illnesses, and galvanize interest from providers and investors alike.”
Compass Pathways reported positive Phase III results for its psilocybin therapy COMP360 for treatment-resistant depression; further pivotal trial results are anticipated later this year. MindMed expects Phase III data for its lysergide candidate MM120 targeting generalized anxiety disorder.
These trends align with predictions from the Association of Multisite Research Corporations (AMRC), which anticipates increased focus on chronic conditions such as oncology, cardiometabolic/obesity disorders, central nervous system diseases, along with cell and gene therapies. Mona Alqam of Pratia noted via email: “Oncology will remain the largest driver of new trial starts with strong growth in neurology metabolic/endocrinology and immunology.” In contrast, vaccine research is expected to plateau due to volatility affecting site organizations.
In regulatory developments during 2025—a year marked by leadership changes at FDA—the agency introduced measures aimed at expediting rare disease treatments. These included a plausible mechanism approval pathway for cases where randomized trials are not feasible (introduced November) following September’s Rare Disease Evidence Principles framework intended for ultrarare conditions affecting fewer than 1,000 U.S. patients.
Suvannavejh believes these regulatory actions will drive continued momentum into 2026: “I think that given what we’re seeing from FDA . . . rare orphan [diseases are] going to have a banner year in terms of companies and investors who are interested in the space,” he said.
Although Congress did not reauthorize priority review vouchers (PRVs) for rare diseases at end-2024—an incentive previously credited with encouraging biotechs’ focus on rare conditions—Suvannavejh noted their long-term impact: “Fifteen years later we have a lot of biotech companies that focus on rare diseases because business conditions started favoring that business model,” he said.
A notable achievement last year was treating an infant named KJ suffering CPS1 deficiency with personalized CRISPR therapy—the first individualized use of CRISPR technology—which could signal expanded future options for patients with unique genetic mutations. David Fischer of Charles River Laboratories stated via email: “If we compare this with personalized antisense oligonucleotide therapies (82 individuals treated in the US since this field started in 2018), we can assume that in coming years we will be able to offer more rare disease patients...a therapeutic option specific for their gene mutation.”
Rare disease developers saw another policy change when Medicare expanded protections under drug price negotiation rules established by the Inflation Reduction Act (IRA) so orphan drugs approved for multiple indications now qualify for exemptions previously limited only single-indication products.
RBC observed that these enhanced protections mean minimal IRA impact on small- or mid-cap biopharmas but more substantial effects on larger firms like Gilead Sciences or Amgen—and greatest effect on large pharmaceutical companies.
