Recent trends indicate a significant resurgence in biotechnology stocks, which have outperformed broader market indices. Over the past six months, biotechnology stocks listed on the NASDAQ have achieved a remarkable return of over 34%. In comparison, the S&P 500 Biotechnology Select Industry index has surged by 49%, contrasting sharply with the S&P 500’s 26% gains during the same period. This shift reflects a renewed investor appetite for risk within the sector, spurred by optimism regarding regulatory relief from the U.S. government and advancements in clinical research.
Analysts attribute this momentum to several factors, including encouraging clinical trial outcomes, new regulatory approvals, and successful drug launches. According to analysts at Barclays, the uptick in biotechnology investment is also linked to a wave of mergers and acquisitions as larger firms seek to bolster their pipelines. “Opportunities are knocking as we look to the next waves of innovation in biotech,” noted analysts led by Etzer Darout, highlighting the industry’s potential for growth amid ongoing advancements in medical science.
Despite the impressive gains this year, the biotechnology sector still trades approximately 40% below its pandemic peak, positioning it as one of the few reasonably priced sectors in a market characterized by inflated valuations. This valuation disparity suggests considerable upside potential for long-term investors, particularly as interest rates in the U.S. may be cut further, which could enhance investor sentiment towards biotechnology stocks.
Top Long-Term Biotechnology Stocks to Consider
For those interested in investing in biotechnology, here is a selection of the top eight long-term stocks to consider, which have shown strong performance metrics and positive outlooks.
1. Tonix Pharmaceuticals Holding Corp (NASDAQ:TNXP)
– **EPS Growth Past 5Y:** 73.03%
– **EPS Growth Next 5Y:** 88.07%
– **Number of Hedge Fund Holdings:** 2
– **Stock Upside Potential:** 252.82%
Tonix Pharmaceuticals recently presented promising preclinical data for its smallpox and mpox vaccine candidate, TNX-801, at the World Vaccine Congress Europe 2025. The vaccine demonstrated strong immune responses and long-term protection across several animal models, though the company is not expected to achieve profitability this year.
2. Assembly Biosciences, Inc. (NASDAQ:ASMB)
– **EPS Growth Past 5Y:** 31.58%
– **EPS Growth Next 5Y:** 52.43%
– **Number of Hedge Fund Holdings:** 4
– **Stock Upside Potential:** 33.38%
Assembly Biosciences recently reaffirmed its Buy rating with a price target of $50 following positive interim data for its treatment of recurrent genital herpes. The results bolster confidence in the company’s antiviral pipeline, with plans to initiate Phase 2 clinical studies by mid-2026.
3. Sellas Life Sciences Group Inc. (NASDAQ:SLS)
– **EPS Growth Past 5Y:** 45.94%
– **EPS Growth Next 5Y:** 20.63%
– **Number of Hedge Fund Holdings:** 5
– **Stock Upside Potential:** 266.49%
Sellas Life Sciences has raised $31 million through the exercise of warrants as it prepares to host a virtual R&D Day to discuss its acute myeloid leukemia treatments. The company’s lead candidate, GPS, is an immunotherapy targeting the WT1 protein for various cancers.
4. Avalo Therapeutics, Inc. (NASDAQ:AVTX)
– **EPS Growth Past 5Y:** 56.49%
– **EPS Growth Next 5Y:** 40.60%
– **Number of Hedge Fund Holdings:** 12
– **Stock Upside Potential:** 89.51%
Piper Sandler analysts recently reaffirmed a Buy rating on Avalo Therapeutics with a price target of $48, indicating substantial upside potential. The company focuses on developing treatments for immune-mediated inflammatory diseases and has shown progress in its clinical pipeline.
5. Savara Inc. (NASDAQ:SVRA)
– **EPS Growth Past 5Y:** 24.35%
– **EPS Growth Next 5Y:** 34.32%
– **Number of Hedge Fund Holdings:** 18
– **Stock Upside Potential:** 119.19%
Savara is advancing its investigational treatment, molgramostim, for autoimmune pulmonary alveolar proteinosis, with promising results from Phase 3 trials indicating enhanced lung function.
6. Novavax, Inc. (NASDAQ:NVAX)
– **EPS Growth Past 5Y:** 25.88%
– **EPS Growth Next 5Y:** 46.55%
– **Number of Hedge Fund Holdings:** 24
– **Stock Upside Potential:** 34.98%
The company’s COVID-19 vaccine, Nuvaxovid, has transitioned to a licensing model, with Novavax set to receive milestone payments as it collaborates with Sanofi to enhance global access to its vaccine.
7. Verastem, Inc. (NASDAQ:VSTM)
– **EPS Growth Past 5Y:** 31.36%
– **EPS Growth Next 5Y:** 34.23%
– **Number of Hedge Fund Holdings:** 25
– **Stock Upside Potential:** 90.82%
Verastem recently reported positive preliminary results from a Phase 1/2a trial of its KRAS G12D inhibitor, which has shown anti-tumor activity in patients with advanced solid tumors.
8. Rezolute, Inc. (NASDAQ:RZLT)
– **EPS Growth Past 5Y:** 22.65%
– **EPS Growth Next 5Y:** 50.62%
– **Number of Hedge Fund Holdings:** 25
– **Stock Upside Potential:** 55.93%
Wedbush analysts maintain a Buy rating on Rezolute, focusing on its lead candidate for congenital hyperinsulinism, which addresses a critical unmet medical need.
Investors interested in biotechnology stocks should consider these options, especially as the sector continues to show resilience and growth potential in a recovering market environment.
