Over the last few years, I have written about longevity, preventative medicine, and why I believe healthcare innovation will be one of the defining investment themes of the next decade.
Today, I want to revisit that idea because something important is happening beneath the surface.
Biotech stocks are breaking out and almost nobody is talking about it.
The SPDR S&P Biotech ETF (XBI) recently pushed to a multi-year high. The ALPS Medical Breakthroughs ETF (SBIO) is also trading at multi-year highs. Meanwhile, the iShares Biotechnology ETF (IBB) is sitting near the highest levels in its history and appears poised to break out of a massive base that has been forming for years.
If you’ve been investing long enough, you know that some of the biggest bull markets begin when nobody is paying attention.
That may be exactly what we’re seeing now.
Innovation Never Stopped
For years, biotech was the forgotten corner of the market. Following the pandemic boom, the sector suffered through a brutal bear market. Many companies lost 50%, 60%, even 80% of their value as higher interest rates reduced investor appetite for speculative growth stories.
But while stock prices struggled, innovation never stopped.
Researchers continued developing breakthrough therapies for cancer, obesity, autoimmune diseases, Alzheimer’s, rare diseases, and countless other conditions. Artificial intelligence is now accelerating drug discovery and reducing the time required to identify promising compounds. Even quantum computing is beginning to show potential in pharmaceutical research.
The result is a pipeline of innovation that may be stronger today than at any point in history.
Wall Street is finally starting to notice.
The M&A Wave Is Building
One of the clearest signs is the explosion in mergers and acquisitions.
Through the first six months of 2026, pharmaceutical and biotech deal activity has already reached approximately $123 billion, surpassing the entire total recorded during 2025. According to industry data, 32 biotech acquisitions have already been completed this year, and the pace continues to accelerate.
Why does this matter?
Because large pharmaceutical companies have a problem.
Many of their blockbuster drugs are approaching patent expiration over the next several years. When those patents expire, competitors can introduce lower-cost alternatives and profits often decline rapidly.
The easiest solution is to buy innovation.
That’s exactly what we’re seeing.
The Message the Sector Is Sending
Just this week, AbbVie (ABBV) announced a $10.9 billion acquisition of Apogee Therapeutics (APGE), paying nearly a 50% premium to gain access to promising immunology treatments. The deal is one of many billion-dollar acquisitions occurring across the industry as large pharmaceutical companies race to replenish their pipelines.
This creates a powerful tailwind for smaller biotechnology companies.
Not only can they benefit from successful clinical trials and new drug approvals, but they can also become acquisition targets themselves.
Historically, some of the strongest biotech bull markets have been fueled by exactly this combination: improving fundamentals, rising investor interest, and accelerating takeover activity.
That doesn’t mean every biotech stock will be a winner.
Far from it.
This remains one of the riskiest sectors in the market. Clinical trial failures can send stocks down 50% overnight. Drug approvals are never guaranteed. Volatility is part of the game.
That’s why I often prefer a portfolio approach or broad exposure through funds and carefully selected baskets of companies rather than betting everything on a single name.
The charts are improving, capital is flowing back into the space, the M&A machine is accelerating, and the innovation pipeline may be stronger than ever — yet most investors are still focused on yesterday's winners.
And if history is any guide, by the time everyone starts talking about it, a large portion of the gains will already be behind us.
Three Biotech Stocks on My Watch List
For investors looking beyond the ETFs and into individual names, here are three biotechnology companies that have caught my attention.
NewAmsterdam Pharma (NAMS)
NewAmsterdam is focused on developing treatments for cardiovascular disease, one of the largest healthcare markets in the world. The company is still in the development stage, but analysts expect revenue generation to begin around 2027. With a market capitalization of roughly $3.6 billion, it remains small enough that successful commercialization could significantly move the needle for shareholders.
Travere Therapeutics (TVTX)
Travere specializes in therapies for rare kidney and metabolic diseases. While the company carries a market value of approximately $5.2 billion, earnings growth expectations remain impressive. Analysts currently project earnings per share growth of 104% in 2026 and another 161% in 2027, reaching roughly $4.85 per share in 2027. Based on those estimates, the stock trades at only about 11 times projected 2027 earnings.
Liquidia Corporation (LQDA)
Liquidia is $6.6 billion company focused on treatments for rare cardiopulmonary diseases and appears to be approaching a major inflection point. Analysts expect the company to generate its first annual profit in 2026, with earnings projected at approximately $3.24 per share before climbing to around $5.55 in 2027. That puts the stock at roughly 13 times projected 2027 earnings, a surprisingly modest valuation for a company expected to deliver such rapid growth.
As always, these are not low-risk investments. Biotech stocks can be extremely volatile and clinical, regulatory, or commercial setbacks can cause significant price swings. But in a sector that appears to be emerging from a multi-year slumber, these are three names I’ll be watching closely as the biotech bull market potentially gains momentum.
To your future success,
Matt McCall
Founder, NXT Wave Research
