After a weak first half, the drug and biotech sector has recovered in the past 2-3 months with large drugmakers like Pfizer, AstraZeneca, Eli Lilly and Novo Nordisk signing drug pricing agreements with the Trump administration. A rebound in mergers and acquisitions (M&A) has also increased investor confidence in the industry. The Large Cap Pharmaceuticals industry has outperformed the S&P 500 index in the past three months, as seen in the chart below.

Image Source: Zacks Investment Research

Innovation is also at its peak for the industry, with key spaces like obesity, gene therapy, inflammation and neuroscience attracting investor attention. FDA approvals continued at a decent pace throughout 2025. The FDA approved 41 drugs (as of Dec. 15). R&D innovation is likely to remain a major focus area in 2026 as well.

In this article, we discuss five of the most enthralling biotech breakthrough stocks for those investors who are looking to diversify away from traditional pharmaceuticals. In biotech, “breakthrough stocks” typically refer to companies that have recently delivered encouraging clinical study results or have upcoming data, secured important FDA approvals or have key upcoming FDA decisions, or have advanced notable scientific innovations. These stocks are Mind Medicine (MindMed) (MNMD Quick QuoteMNMD - Free Report) , Ocugen (OCGN Quick QuoteOCGN - Free Report) , Keros Therapeutics (KROS Quick QuoteKROS - Free Report) , Kyverna Therapeutics (KYTX Quick QuoteKYTX - Free Report) and Celcuity (CELC Quick QuoteCELC - Free Report) .

Except for KROS, which has a Zacks Rank #1 (Strong Buy), all stocks have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

With R&D costs for innovative research efforts being significantly higher, most of these companies are reporting losses, as of now. However, if their drugs are successfully developed/commercialized, the companies may see astronomical revenues. It is, therefore, a good idea to keep an eye on these stocks as they may give great returns in the next 2-3 years. Investors, at the same time, should keep in mind that investing in these biotech stocks is risky, as either these companies make it or don’t, depending on whether the FDA approves their innovative medicines. Some of these companies are years away from pivotal data, making them suitable investments only for aggressive investors seeking high-risk opportunities.

A chart showing the share price movement of the five stocks is given below. All the stocks have outperformed the industry’s increase of 15.3% in the past three months.

Image Source: Zacks Investment Research

Mind Medicine (MindMed) 

MindMed is developing its lead pipeline candidate MM120, an orally disintegrating tablet (ODT) and a pharmaceutically optimized form of lysergide D-tartrate, for the treatment of generalized anxiety disorder (GAD) and major depressive disorder (MDD). Two pivotal phase III studies — Voyage and Panorama — are currently enrolling MM120 ODT in GAD. Top-line data from the Voyage study is anticipated in the first half of 2026, while that from Panorama is expected in the second half of 2026.

The FDA has also granted a breakthrough therapy designation to MM120 for treating GAD, a debilitating mental health condition where there is an urgent need for transformational innovation, with the last new drug approval occurring in 2007. Earlier data from the phase II study on MM120 ODT demonstrated efficacy that far exceeded the current standard of care and a favorable tolerability profile.

A phase III study called Emerge of MM120 ODT in MDD has enrolled faster than expected, with top-line data now expected in mid-2026, earlier than the prior expectation of the second half of 2026. The company plans to initiate Ascend, its second phase III study in MDD, in mid-2026.

MindMed’s second asset in the pipeline, MM402, is being developed for autism spectrum disorder. A phase II study is expected to be initiated by the end of 2025.

With three pivotal data readouts expected, 2026 could be transformational for MindMed. Its recent $258.9 million financing has further strengthened its balance sheet, which should allow it to accelerate the development of MM120.

Ocugen

Ocugen is making rapid progress in its gene therapy programs for retinal diseases, which have differentiated mechanisms of action.

Enrollment is nearing completion in a phase III liMeliGhT study on lead modifier gene therapy candidate, OCU400, to treat retinitis pigmentosa (RP), a rare genetic disorder that can lead to vision loss and blindness. Top-line data from the phase III study is expected in the fourth quarter of 2026. Ocugen expects to file a biologics license application (BLA) and marketing authorization application for OCU400 in 2026, with a rolling BLA submission expected to begin in the first half of 2026. The FDA has granted orphan drug designation to OCU400 for treating RP.

RP disease is associated with mutations in more than 100 genes. Per the company, there is only one approved gene therapy for RP, which targets one of the 100 gene mutations associated with RP. OCU400 has shown the potential to treat multiple gene mutations associated with RP with a one-time subretinal injection.

The phase II/III GARDian3 pivotal confirmatory study for OCU410ST for Stargardt disease is also ongoing. There are no FDA-approved treatments available for Stargardt disease. Interim data from the study is expected in mid-2026, with a BLA filing planned for the first half of 2027.

Ocugen’s other important candidate, OCU410, is being developed in phase II as a one-time gene therapy for treating geographic atrophy (GA), an advanced stage of dry age-related macular degeneration. Data from the phase II study is expected in the first quarter of 2026, with phase III expected to begin in mid-2026.

Currently, patients with GA in the United States have only one option available, an anti-complement therapy, which requires multiple injections and only addresses one aspect of the disease. Ocugen believes that OCU410 addresses multiple aspects of the disease beyond the complement pathway and has the potential to change the treatment paradigm for GA.

With all three pipeline programs moving along on schedule, Ocugen plans to file three BLAs in the next three years.

Keros Therapeutics

Keros plans to begin a phase II study of its lead product candidate, KER-065, in patients with Duchenne muscular dystrophy (“DMD”) in the first quarter of 2026. The FDA has granted orphan drug designation to KER-065, a potentially differentiated TGF-β inhibitor, for the treatment of DMD. In August, Keros terminated the development of cibotercept for pulmonary arterial hypertension (“PAH”) and reallocated resources to KER-065, which it believes is its most promising clinical program. Earlier, a phase I study of KER-065 in DMD achieved its key objectives for safety, tolerability, pharmacokinetics and pharmacodynamics, supporting advancement to a phase II study.

Keros’s Japanese partner, Takeda, is also developing elritercept, an ActRIIA fusion protein, for the treatment of ineffective hematopoiesis in myelodysplastic syndromes and myelofibrosis. Takeda plans to soon advance elritercept into a phase III study in the first-line setting in myelodysplastic syndromes. The Takeda partnership drives near-term revenues for Keros in the form of milestone payments and royalties.

Kyverna Therapeutics

Kyverna's lead CAR T-cell therapy candidate, mivocabtagene autoleucel (“miv-cel,” formerly KYV-101), is being developed in a pivotal phase II study for stiff person syndrome (SPS), a rare, progressive neurological autoimmune disorder. The candidate has the potential to become the first FDA-approved CAR T therapy for an autoimmune disease.

Top-line data from the SPS study were announced this week, which showed that miv-cel achieved highly statistically significant and sustained improvements in overall disability, mobility, and stiffness in patients with SPS, while allowing them to stay free from immunotherapies. Kyverna plans to file a BLA for SPS in the first half of 2026. Miv-cel has received both Regenerative Medicine Advanced Therapy and Orphan Drug designations in this indication

Another phase II/III registrational study is evaluating miv-cel in generalized myasthenia gravis (gMG). Interim data from the phase II portion of the study demonstrated miv-cel’s potential to deliver durable, drug-free, disease-free remission. Kyverna expects to initiate patient enrollment in the phase III portion of the study soon and provide updated data from the phase II portion in 2026.  

Miv-cel is also being evaluated in phase I/II investigator-initiated studies, including in multiple sclerosis and rheumatoid arthritis, to inform the next priority indications for the company to advance into late-stage development.

In November, Kyverna closed a loan facility for up to $150 million with Oxford Finance, which has strengthened its financial flexibility to support continued development of its pipeline candidates.

Celcuity

In November, Celcuity submitted a new drug application to the FDA seeking approval for its lead pipeline candidate, gedatolisib, for patients with HR+, HER2- advanced breast cancer who have received prior treatment with a CDK4/6 inhibitor.  The NDA was based on data from the PIK3CA wild-type cohort of the phase III VIKTORIA-1 study, which demonstrated the potential of gedatolisib as a new standard of care second-line therapy for patients with HR-positive, HER2-negative advanced breast cancer. The FDA decision on the NDA is expected in 2026 and Celcuity has accelerated its commercial launch preparation.

Top-line data from the PIK3CA wild-type cohort of the VIKTORIA-1 study showed that the gedatolisib triplet and doublet achieved 7.3 and 5.4 months of incremental improvements in median progression-free survival, or PFS, over fulvestrant, respectively. The PFS improvements were greater than those reported by any phase III study for patients with HR-positive, HER2-negative advanced breast cancer receiving at least their second line of endocrine therapy.

Enrollment is complete in the PIK3CA mutant cohort of the VIKTORIA-1 study. Top-line data from this cohort is expected in the first half of 2026. Additional studies are ongoing on gedatolisib combinations in breast cancer and prostate cancer.