After years stuck in the “doldrums,” the biopharma sector is in a “very good place” heading into the new year, analysts told BioSpace, with both rare and chronic diseases headlining investor and R&D interest as JPM26 kicks off.
After a frenzied 2025 filled with an onslaught of new FDA policies—many around accelerating cell and gene therapies for rare diseases—the biopharma sector is in a “very good place” heading into 2026 following a late-year market rebound, 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,” he told BioSpace last month. However, he added, “I think we’re only in the third inning” of the comeback.
RBC Capital Markets echoed this sentiment in its 2026 RBC Global Biotech Outlook report. “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,” the analysts wrote. “It’s been multi-factorial, and a lot of the drivers persist and could continue to catalyze some momentum.”
The firm credited “a spate of strong clinical data” from Insmed, Kymera Therapeutics, Wave Life Sciences and more for “remind[ing] that the inherent risks in drug development can pay off.”
Heading into the industry’s annual kickoff meeting, the J.P. Morgan Healthcare Conference that begins today in San Francisco, this sentiment is most welcome.
The Mainstays: Cancer, Neuro and I&I
Asked which therapeutic areas will generate the most risk appetite from biopharma companies and investors in 2026, Suvannavejh noted that these are different questions.
Two areas, oncology and neuroscience, will continue to be of interest due to high unmet medical need, 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.”
Will cancer be the top area for therapeutic investment? “I don’t know,” Suvannavejh said, “but it will be amongst the top, as it always is.”
As for neuroscience, Suvannavejh noted that this sector remains an area of high interest—for biopharma companies, at least. “I do think that because of still unmet medical need, both on the neuropsychiatry side and also the neurodegenerative disease side, I think industry will continue to be very interested,” he said.
Suvannavejh highlighted a couple of key upcoming Alzheimer’s readouts that could catalyze interest among investors: for Eli Lilly’s next-gen therapy remternetug and for Roche’s comeback kid trontinemab, which drew attention at the 2025 Clinical Trials on Alzheimer’s Disease (CTAD) last month.
Lilly is expecting data from the Phase III TRAILRUNNER-ALZ 1 trial of remternetug in March, while Roche “plan[s] to have a strong congress presence throughout the year and . . . will continue to share fresh data [from trontinemab] as and when they are available,” a spokesperson told BioSpace in an email.
Another key area Suvannavejh highlighted is immunology & inflammation, because that is “where industry is going.”
“I think I&I will still be an area of high interest because if you hit a common mechanism, you can probably affect most diseases,” he added.
RBC highlighted multi-specifics in I&I as one modality “poised for an eventful, data-rich 2026.”
Other such modalities RBC put in this category are degraders, multi-targeting antisense oligonucleotides, antibodies and psychedelics.
“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,” the analysts wrote.
Compass reported positive Phase III data in June for its investigational psilocybin therapy COMP360 in treatment-resistant depression. Results from a second pivotal trial are expected in the second half of this year. Meanwhile, MindMed’s lysergide (LSD) candidate, MM120, is scheduled to produce Phase III data from two trials in generalized anxiety disorder this year.
These predictions are largely in line with those of the Association of Multisite Research Corporations (AMRC). A representative from the group told BioSpace in an email that the group collectively sees a “therapeutic area rebalancing toward chronic and high-growth diseases” with a focus on oncology, cardiometabolic/obesity, central nervous system and cell and gene therapy spaces.
“Oncology will remain the largest driver of new trial starts, with strong growth in neurology, metabolic/endocrinology, and immunology,” Mona Alqam, US Country Head at research site network Pratia, said in an emailed statement.
Vaccines and some infectious disease work, on the other hand, will plateau, AMRC predicts. As Jeff Kingsley, chief development officer at Centricity Research, told BioSpace, “We’re seeing movement away from vaccine work. It has been too volatile and too detrimental to site organizations.”
FDA Adopts Orphan Diseases
During a tumultuous 2025 in which the FDA lost the majority of its senior leadership and threw countless policy curveballs at the biopharma industry, there were bright spots—particularly in the area of drug development for rare and orphan diseases.
The agency in November introduced the plausible mechanism approval pathway for rare diseases, intended to expedite treatments “for products where a randomized trial is not feasible.” This followed the Rare Disease Evidence Principles framework in September to streamline the approval of therapies for ultrarare diseases, usually those affecting less than 1,000 people in the U.S.
Suvannavejh sees momentum from these regulatory actions carrying over into the new year.
“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.
While Congress failed to reauthorize the long-running priority review voucher (PRV) rare disease program at the end of its 2024 session, Suvannavejh credited the PRV with helping to whet biopharma’s appetite for rare disease drug development. “Fifteen years later, we have a lot of biotech companies that focus on rare diseases, because the business conditions started favoring that business model,” he said.
One of last year’s buzziest feats was the treatment of a nine-month-old child named KJ with a one-time, personalized CRISPR treatment. KJ suffered from an ultrarare disease called CPS1 deficiency wherein the body cannot process urea; the condition can lead to permanent brain damage or death. KJ’s case marked the first individualized CRISPR treatment.
“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 the coming years we will be able to offer more and more rare disease patients with high unmet need a therapeutic option specific for their gene mutation,” David Fischer, chief technology officer (discovery) at Charles River Laboratories, told BioSpace in an email.
Rare disease drug developers also secured another policy win in October, when the U.S. Centers for Medicare and Medicaid Services expanded protections for orphan drugs under the Inflation Reduction Act’s drug price negotiation program to include those approved for multiple rare indications.
In terms of continuing impact from the IRA, RBC wrote that with “greater orphan protections, we see a minimal impact to smid-cap biopharmas, a modest impact to larger biotechs like GILD and AMGN, and the greatest impact to large pharma.”
