After years of waiting, investors in the biotech industry have finally received long-awaited good news: the macro environment is becoming more favorable. Interest rates are stabilizing, and FDA (U.S. Food and Drug Administration) approval activities are picking up again. Here are three biotech stocks to watch in May.
Schrödinger (SDGR) develops physics-based software and artificial intelligence tools that pharmaceutical companies use to simulate the behavior of drug molecules before proceeding to expensive laboratory and human testing. Major pharmaceutical companies utilize its platform to accelerate drug discovery in cancer, autoimmune diseases, and precision medicine. At the same time, the company is also advancing its own internally developed drug pipeline.
Notably, Schrödinger is one of the few AI-driven biotech companies that genuinely generates revenue. The company reported total revenue of $256 million for 2025, including $200 million in software revenue and $198 million in annual contract value (ACV). Management expects ACV growth of 10% to 15% in 2026, with a projected range of $218 million to $228 million.
Sarepta Therapeutics (SRPT) remains one of the most controversial stocks in the biotech sector, but it is also one of the few gene therapy companies generating substantial commercial revenue. The company reported full-year 2025 net product revenue of $1.86 billion. Approximately $899 million of this came from Elevidys—a one-time gene therapy designed to provide a functional version of the dystrophin gene for patients with Duchenne muscular dystrophy. Another $966 million came from the company’s PMO product portfolio.
The issue is that safety concerns surrounding Elevidys continue to weigh heavily on investor sentiment. Over the past year, multiple patient deaths related to acute liver failure have forced the company to pause shipments and face FDA review and label changes. Despite the controversy, Elevidys continues to generate substantial commercial revenue, having treated over 1,300 patients, and the company maintains its 2026 revenue guidance of $1.2 billion to $1.4 billion.
NRX Pharmaceuticals (NRXP) remains highly speculative, but the company has begun to accumulate considerable regulatory momentum. This small biotech company is developing therapies for major depressive disorder, bipolar depression with suicidal tendencies, and other serious central nervous system disorders. Its lead candidate, NRX-101, is designed to help stabilize patients after ketamine treatment while potentially reducing the risk of relapse and suicide.
The latest major development came in March, when the FDA notified the company that it had found no major issues with its preservative-free ketamine compared to already approved ketamine versions. The company expects a potential FDA decision this summer. Most recently, NRX announced FDA approval to initiate a clinical trial combining NRX-101 with robot-assisted transcranial magnetic stimulation for patients with depression and suicidal ideation. If NRX receives regulatory approval or delivers positive clinical data within the next 12 months, the stock could attract more institutional attention.
There are never any guarantees in biotech investing. Clinical failures, regulatory setbacks, and financing activities are all par for the course. However, Schrödinger has a tangible software business underpinning its AI platform; Sarepta, despite ongoing controversy, generates nearly $2 billion in annual product revenue; and NRX has multiple near-term regulatory catalysts in the coming quarters. These factors form the core rationale for recommending the three stocks mentioned above.
