2 Under-the-Radar Stocks to Buy Heading Into 2026

Axsome Therapeutics (AXSM 1.63%) and Exelixis (EXEL 1.68%) are hardly the best-known players in the large biotech industry. Thankfully, they don’t need to be so to have excellent prospects. Both of these relatively small drugmakers have a lot going on that could lead to excellent financial results and strong stock market performances in the medium term. Let’s dig deeper into Axsome Therapeutics and Exelixis and discuss why both biotechs are attractive buys heading into the new year.

1. Axsome Therapeutics

Axsome Therapeutics has performed well over the past year as it continues to make strong clinical and regulatory progress while generating steadily growing revenue. The company’s Auvelity, approved for major depressive disorder in 2022, is making headway. It is currently its main growth driver. In the third quarter, Axsome Therapeutics’ revenue increased by 63% year over year to $171 million.

In January, the company received approval for Symbravo, a medication for migraines that should also help drive sales in the right direction. In the next few years, Axsome Therapeutics is expected to launch additional new products while securing important label expansions. Let’s start with the latter. Auvelity completed phase 3 studies in Alzheimer’s disease agitation and is now racing toward this new indication.

Meanwhile, Axsome Therapeutics has several candidates in its late-stage pipeline that are close to — or have already — performed well in pivotal studies. One of them is AXS-12, an investigational therapy for narcolepsy. What does the commercial opportunity for Axsome Therapeutics’ approved products and pipeline programs look like? The biotech estimates a potential of over $16 billion in peak sales across all indications it is targeting for its approved medicines and those it could launch.

That sounds optimistic for a biotech with a market cap of $7.7 billion, but it’s worth noting that in AD agitation, for instance, there is only one medicine approved by the U.S. Food and Drug Administration, despite the fact that more than 5 million patients in the U.S. suffer from it. There is a large addressable market here. Several other candidates in Axsome’s pipeline also fit a similar profile of targeting areas with a high unmet need.

So, Axsome Therapeutics’ prospects look strong, and even after a solid performance over the trailing-12-month period, it remains an attractive stock to buy heading into 2026.

2. Exelixis

Exelixis specializes in developing cancer medicine, an area dominated by some of the largest pharmaceutical and biotech companies. Still, the drugmaker has been successful thanks to Cabometyx, a therapy that treats renal cell carcinoma (kidney cancer) and hepatocellular carcinoma (liver cancer). One of Cabometyx’s strengths is that it has been approved for multiple indications as a stand-alone therapy or in combination with other cancer medicines. These label expansions have enabled Exelixis to continue improving its financial results.

In the third quarter, the company’s revenue increased by 10.8% year over year to $597.8 million. Exelixis is also addressing issues some investors had. One of them was the threat of generic competition for Cabometyx. The biotech won a lawsuit that will keep generics off the market until 2030, a major boost to its medium-term prospects.

Even so, Exelixis remains highly dependent on Cabometyx. It is also working on that problem. Exelixis is developing several newer cancer medicines that could decrease its reliance on this drug. One of them is zanzalintinib, which is being developed to treat metastatic colorectal cancer, the second-leading cause of cancer death in the world. Zanzalintinib performed well in a phase 3 clinical trial as a combo treatment for this disease.

There is a need for new treatment options here, and zanzalintinib could be one, if it ultimately earns approval — and so far, it looks likely to. Exelixis has several other candidates in early-stage studies that should make progress in the next few years, while Cabometyx’s sales remain on an upward trajectory. All of these developments could jolt the stock price and allow it to deliver competitive returns through the next five years (and possibly beyond).