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Some scientists believe that we’re in the golden age of biotechnology. Scientific advances are creating new and previously unimaginable ways to treat and prevent diseases. Biotech stocks are a type of investment that focuses on companies specializing in biotechnology.
The biotech sector is also presenting exciting opportunities for investors. Many of the best biotech companies have both strong drug candidate pipelines and winning drugs already on the market.
A biotechnology company uses living organisms such as bacteria or enzymes to make drugs. The use of living organisms differentiates biotechnology companies from pharmaceutical companies, which research and develop chemicals to invent drugs.
Investors should pay close attention to each phase of a biotech company's drug candidates. Drugs in later phases are more likely to succeed, making investing in that company less risky. There are four major steps and three phases that biotech companies follow to develop new drugs:
Most biotech companies have many drugs simultaneously under development, which provides multiple revenue streams. The safest biotech investments are focused on more than just a few experimental drugs.
Many growing biotech companies often generate cash by issuing new shares of stock, which dilutes the value of the existing shares. Some biotechnology companies also receive -- and may be heavily dependent upon -- money obtained via partnerships with larger drugmakers or grants from government agencies and nonprofit organizations. Mergers and acquisitions are common in the biotech sector, which means that any of the most promising biotech companies could be acquired by their larger competitors.
Reasons to invest in biotech stocks include:
On the other hand, reasons you might not want to invest in biotech stocks include:
The following are key steps to take to invest in biotech stocks:
BioNTech (BNTX +0.87%) hit the jackpot with its 2020 collaboration with Pfizer (PFE +0.49%) to develop a COVID-19 vaccine. Although sales for the vaccine the two partners market together, Comirnaty, have fallen since the end of the COVID-19 pandemic, BioNTech now has a huge cash stockpile as a result of the vaccine's success.
The German biotech innovator is still working on developing new vaccines for fighting viruses. It's evaluating a seasonal flu vaccine and a combination flu-COVID vaccine in late-stage testing. Both programs are collaborations with Pfizer.
However, BioNTech's big opportunity is in treating cancer. The company's pipeline features more than 20 phase 2 and phase 3 clinical trials targeting various types of cancer.
These are a few biotech companies to watch closely in 2025:


| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Axsome Therapeutics (NASDAQ:AXSM) | $6.5 billion | 0.00% | Pharmaceuticals |
| BioNTech Se (NASDAQ:BNTX) | $25.4 billion | 0.00% | Biotechnology |
| Exelixis (NASDAQ:EXEL) | $10.4 billion | 0.00% | Biotechnology |
| Regeneron Pharmaceuticals (NASDAQ:REGN) | $61.3 billion | 0.30% | Biotechnology |
| Summit Therapeutics (NASDAQ:SMMT) | $14.3 billion | 0.00% | Biotechnology |
| Vertex Pharmaceuticals (NASDAQ:VRTX) | $108.0 billion | 0.00% | Biotechnology |
Exelixis (EXEL +1.81%) has developed four drugs that are already on the market. Its biggest winner, by far, is Cabometyx, which is approved to treat renal cell carcinoma (RCC) and hepatocellular carcinoma (HC) -- the most common types of kidney cancer and liver cancer, respectively -- as well as thyroid cancer.
Exelixis and big drugmaker Bristol Myers Squibb (BMY +0.00%) won U.S. regulatory approval in early 2021 for the use of Cabometyx in combination with Bristol Myers' immunotherapy drug Opdivo. The company is also evaluating Cabometyx in combination with other drugs in late-stage studies targeting several types of cancer.
The next major growth driver for Exelixis could be zanzalintinib. The company reported positive results in June 2025 from a late-stage study of the drug targeting colorectal cancer. It's also evaluating zanzalintinib in combination with Opdivo in a late-stage study targeting non-clear cell renal cell carcinoma.
The biggest moneymaker for Regeneron (REGN +0.39%) is Eylea, an eye disease drug that the company makes in collaboration with Bayer (OTC:BAYR.Y). All net sales from Eylea in the U.S. are awarded to Regeneron, and the company splits the revenue earned from markets outside the U.S. with Bayer.
Regeneron also has a lucrative partnership with Sanofi (SNY +4.28%), another life sciences and pharmaceutical company. Together, the two companies are marketing and selling the autoimmune disease drugs Dupixent and Kevzara, the cancer drugs Libtayo and Zaltrap, and the cholesterol drug Praluent.
The company won initial approval from the FDA in February 2021 for Evkeeza in treating homozygous familial hypercholesterolemia (HoFH), a rare form of high cholesterol, in patients ages 12 and older. It also picked up an additional approval for the drug in March 2023 for treating HoFH patients between the ages of 5 and 11.
Regeneron also now has another drug in its lineup. The company won FDA approval of Lynozyfic (linvoseltamab) in treating relapsed/refractory multiple myeloma in July 2025. Its pipeline also includes 13 late-stage programs.
Axsome's (AXSM +1.96%) revenue is soaring thanks to strong momentum for two drugs -- Auvelity and Sunosi. The company launched Auvelity in October 2022 as a treatment for major depressive disorder. It acquired sleep disorder drug Sunosi from Jazz Pharmaceuticals (JAZZ +0.21%) in May 2022.
In January 2025, Axsome added a third product to its lineup with the U.S. Food and Drug Administration (FDA) approval of Sybravo for treating migraines. The drug could have significant commercial potential, with current migraine therapies not as effective as desired for many patients.
Other regulatory approvals could be on the way. Axsome plans to file for FDA approvals of AXS-05 (Auvelity) in treating Alzheimer's disease and AXS-12 in treating narcolepsy in 2025.
Vertex, (VRTX -0.29%), which makes multiple cystic fibrosis (CF) drugs, enjoys a monopoly over sales of treatments for the underlying cause of CF. Its dominance in CF was bolstered by the December 2024 approval of Alyftrek.
CF isn't Vertex's only market now, though. The big biotech company is ramping up commercialization efforts for Casgevy, a gene-editing therapy approved to treat two rare blood disorders -- sickle cell disease and transfusion-dependent beta-thalassemia.
Vertex also won FDA approval in January 2025 for Journavx (suzetrigine). This non-opioid drug is the first new type of pain medication approved in more than 20 years.
The company hopes to file for regulatory approvals in 2026 for povetacicept in treating chronic kidney disorder IgA nephropathy and for zimislecel in treating severe type 1 diabetes. Vertex's pipeline also includes other promising candidates, including inaxaplain, which targets APOL1-mediated kidney disease.
Summit Therapeutics (SMMT +2.83%) doesn't have any products on the market yet. However, that status could change in the not-too-distant future.
In May 2025, the company announced positive results from a late-stage study evaluating ivonescimab in combination with chemotherapy as a second-line treatment for non-small cell lung cancer (NSCLC). These results should pave the way for Summit to file for FDA approval of its experimental immunotherapy.
Ivonescimab is already approved in China as a second-line treatment for NSCLC in combination with chemotherapy. It's marketed in the country by Summit's partner, Akeso (OTC:AKES.F). The drug also proved to be effective as a first-line treatment for NSCLC in a late-stage study conducted by Akeso. In this study, ivonescimab achieved significantly higher progression-free survival in first-line NSCLC patients than Merck's (MRK +0.36%) Keytruda.