Biotech is heating up as fresh drug data and dealmaking bring investors back to the sector. Cancer treatments and genetic platforms are driving much of the action, while a growing wave of China licensing deals is reshaping where the next blockbuster drugs could come from.
China deals transform pipelines
China has become one of pharma’s most important hunting grounds for new cancer drugs, with licensing deals worth tens of billions of dollars flowing to local biotech companies.
For Chinese developers, Western partners bring the capital and global reach that are harder to find at home, where drug sales tend to offer weaker economics.
AstraZeneca has licensed multiple Chinese medicines, including an inhaled asthma and chronic obstructive pulmonary disease drug from Sino BioPharmaceutical. The company is also developing cancer drugs with Dizal Pharmaceutical and Hutchmed.
"What we’re doing is collaborating, but we’re also competing."
Pascal Soriot, AstraZeneca.
Much of the attention is centered on two cancer technologies. Bispecific antibodies are designed to hit two biological targets at once, while antibody-drug conjugates pair a cancer-seeking antibody with a chemotherapy payload.
Summit Therapeutics is betting heavily on Akeso’s bispecific antibody ivonescimab, with Phase 3 lung cancer data expected before the end of 2026.
Merck is advancing sac-TMT, an antibody-drug conjugate licensed from Kelun-Biotech, while GlaxoSmithKline is testing Hansoh Pharmaceutical’s Ris-Rez in global Phase 3 lung cancer trials.
Speed compresses valuations
Biotech’s rally has already been large enough to draw scrutiny from investors focused on scarcity value. The SPDR S&P Biotech ETF rose around 85% over the past 12 months, while the S&P 500 gained roughly 20% over that period.
The concern is that Chinese competitors can now follow validated drug mechanisms faster than before. Kosta Kleyman of Seligman Investments said Chinese firms can build credible rivals, run early trials cheaply, and license assets quickly.
Revolution Medicines shows the risk behind that view. Its pancreatic cancer drug Rasonque won FDA approval this week, while a Chinese-developed oral competitor licensed by Erasca is already visible.
That shortens the window where a single company can own a new mechanism without close competition.
Cancer vaccines get another shot
Moderna has given its cancer platform fresh momentum. Its personalized vaccine intismeran delivered positive Phase 3 melanoma results versus KEYTRUDA, giving the program its strongest validation yet.
President Stephen Hoge said the results support Moderna’s strategy of priming T cells to recognize mutations unique to each tumor. “This is T-cell priming, not T-cell exhaustion,” Hoge said.
The next test is whether intismeran can repeat that success beyond melanoma. Moderna and Merck have nine trials underway, including Phase 3 lung cancer studies and fully enrolled Phase 2 programs in kidney and bladder cancers.
Moderna has already treated about 3K patients and built an automated facility in Marlborough to support production as the program expands.
Midcaps move toward decisions
Compass Pathways is approaching a major regulatory milestone as its rolling new drug application moves toward completion in Q4 2026.
Oppenheimer reiterated its Outperform rating after positive 52-week trial data and kept its $20 price target. Shares have gained about 22% over the past three months, keeping attention on the upcoming filing.
Scholar Rock has an FDA decision due Sept. 30. Pharvaris and Travere Therapeutics have also gained momentum, though both look more stretched on weekly relative strength.
Funds spread the risk
One failed trial or delayed approval can quickly reset a biotech stock. Diversified funds reduce that company-specific risk while keeping investors exposed to new drug development.
The VanEck Biotech ETF is up about 22% YTD and holds larger US-listed biotech names including Amgen. The iShares Biotechnology ETF also holds Gilead Sciences, Vertex Pharmaceuticals, and Regeneron Pharmaceuticals.
The Global X Genomics & Biotechnology ETF focuses on gene editing, sequencing, genetic medicines, and diagnostics. The ALPS Medical Breakthroughs ETF targets companies with at least one drug in Phase 2 or Phase 3 trials.
Single stocks offer more upside when the science works, while funds make one bad clinical readout easier to absorb.