2 Healthcare Stocks to Buy for 2026 and Beyond

Axsome Therapeutics reported $442.5 million in revenue through the first nine months of 2025, up 65.8% year-over-year, driven by approved products Auvelity, Symbravo and Sunosi and supported by near-term regulatory catalysts including a potential approval for Auvelity in Alzheimer’s agitation and an imminent AXS-12 submission for narcolepsy. Exelixis recorded $1.7 billion in revenue through Sept. 30, 2025, up about 7.5% year-over-year, with Cabometyx remaining the core revenue driver protected from generic competition into the next decade and Zanzalintinib showing strong phase 3 results in metastatic colorectal cancer that could broaden the company’s addressable market and reduce single-product exposure.

Analysis

Market structure: Axsome (AXSM) and Exelixis (EXEL) stand to gain if near-term regulatory wins materialize — AXSM reported $442.5M YTD (9M) through 2025, +65.8% YoY, and EXEL $1.7B, +7.5% — signaling commercial traction that can expand pricing power in under-served niches (AD agitation, metastatic CRC). Winners include specialty oncology and CNS-focused small biotechs and potential acquirers; losers would be incumbents in narrow indications and generic entrants if patents are challenged. Options IV for both will remain elevated around filings.

Risk assessment: Primary tail risks are FDA rejection or safety signals (40–60% negative share shocks plausible), patent-invalidating litigation for Cabometyx (multi‑hundred‑million USD revenue hit), and commercialization shortfalls for AXSM that force equity raises and 10–30% dilution. Immediate days–weeks: filing/announcement volatility; short-term (3–12 months): label decisions and launch KPIs; long-term (12–36 months): realized revenue and payer adoption. Hidden dependencies: payer coverage, real‑world effectiveness, and manufacturing scale for new indications.

Trade implications: Favor idiosyncratic, event-driven allocations: small (1–3% portfolio) long positions into AXSM/EXEL ahead of regulatory milestones with built-in hedges. Use call spreads or LEAPs to cap capital and buy short-dated protective puts into binary events. Rotate modestly into oncology exposure at the expense of broad biotech ETFs to capture product-specific upside while limiting sector beta.

Contrarian angles: Consensus underestimates commercial execution risk — launches often take 12–24 months to reach modeled uptake, so valuation assuming immediate blockbuster revenue is likely overstated. Conversely, successful Zanzalintinib could make EXEL an M&A target, compressing long-term upside volatility; therefore, mispricings exist both for overoptimistic run-ups and for post-approval sell-the-news weakness. Watch for payer denial or narrow labeling as major asymmetric risks.

Key Decisions for Investors

• Establish a tactical 1–2% long position in AXSM (shares or Jan‑2027 LEAPs) sized to outcomes — hedge with 3–6 month 10–15% OTM puts to cap downside to ~30%; add to position only on pullbacks >25% or on confirmed FDA acceptance/approval within 6–12 months.
• Establish a 2–3% long position in EXEL via a 9–12 month call spread (to limit capital) ahead of an expected Zanzalintinib regulatory submission in the next 6–12 months; pair this with a short equal‑notional position in XBI (or IBB) to isolate EXEL idiosyncratic upside.
• If either stock runs >50% pre-approval, trim 40–60% to harvest volatility premium; if revenue growth for AXSM decelerates to <30% YoY or EXEL reports negative YoY revenue, reduce exposure to zero and reassess.
• Monitor three near-term triggers (acting within 3–30 days of each): NDA/BLA acceptance or PDUFA date announcement; topline Phase 3 safety signals; and major payer formulary decisions. A CRL or narrow label should be treated as a stop‑loss exit (sell full position within 5 trading days).