My Top 3 Biotech Stocks for May 2026

Biotech investors are finally getting something they haven't seen in years: a friendlier macro environment. Interest rates appear to be stabilizing, FDA activity is picking up again, and large pharmaceutical companies are sitting on billions in cash while staring down looming patent cliffs.

That combination is creating a fertile backdrop for smaller biotech companies with strong pipelines, differentiated technology, and upcoming catalysts. Here are my top three biotech stocks for May.

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Schrödinger

Schrödinger (NASDAQ: SDGR) develops physics-based software and artificial intelligence (AI) tools that pharmaceutical companies use to simulate how drug molecules behave before moving into expensive laboratory and human testing.

Major drugmakers use its platform to accelerate drug discovery in areas such as cancer, autoimmune diseases, and precision medicine. At the same time, the company also advances its own pipeline of internally developed drug candidates.

Worth noting: Schrödinger is one of the few AI-driven biotech companies that actually generates revenue, too. The company reported $256 million in total revenue for 2025, including $200 million in software revenue and annual contract value (ACV) of $198 million. Management is guiding for 10% to 15% ACV growth in 2026, with an expected range of $218 million to $228 million.

The company's balance sheet also remains solid. Management has repeatedly emphasized that existing cash reserves support operations well into the company's path toward positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of 2028.

What investors are really betting on, however, is the platform's ability to generate successful internal drug candidates. Schrödinger continues advancing oncology and precision medicine programs while maintaining partnerships with major pharmaceutical companies.

This is still a development-stage biotech story in many respects, but the software business gives the company a revenue foundation that most early stage biotech companies simply do not have. And that's not trivial.

Sarepta Therapeutics

Sarepta Therapeutics (NASDAQ: SRPT) remains one of the most controversial stocks in biotech, but it also remains one of the few gene therapy companies generating substantial commercial revenue.

The company reported full-year 2025 net product revenue of $1.86 billion. Of that total, approximately $899 million came from Elevidys, Sarepta's one-time gene therapy designed to deliver a functional version of the dystrophin gene (a protein that helps keep muscle cells strong and stable during movement) to patients with Duchenne Muscular Dystrophy.

Another $966 million came from the company's PMO franchise, which includes a variety of drugs that help certain Duchenne patients produce shortened forms of the dystrophin protein.

The problem is that safety concerns surrounding Elevidys continue to weigh heavily on investor sentiment. Multiple patient deaths tied to acute liver failure forced the company into shipment pauses, FDA scrutiny, and labeling changes over the past year.

Despite the controversy, Elevidys continues to generate significant commercial revenue. Sarepta treated more than 1,300 patients with Elevidys and maintained its 2026 revenue guidance of $1.2 billion to $1.4 billion.

The market is now trying to determine whether Sarepta can stabilize the safety narrative while continuing to expand its Duchenne Muscular Dystrophy franchise. This stock still carries significant risk. Ongoing regulatory scrutiny has weakened investor confidence, but unlike many biotech companies trading on future possibilities, Sarepta already has a large commercial business generating real cash flow. And a lot of it.

NRX Pharmaceuticals

NRX Pharmaceuticals (NASDAQ: NRXP) remains highly speculative, but the company has begun to generate the kind of regulatory momentum that makes it attractive.

If you're unfamiliar, NRX is a small biotech company developing treatments for severe depression, suicidal bipolar disorder, and other serious central nervous system conditions. The company's lead drug candidate, NRX-101, is designed to help stabilize patients following ketamine treatment while potentially reducing relapse and suicidal risk.

Ketamine is a dissociative anesthetic used to rapidly treat severe depression and suicidal thoughts, particularly in patients who have not responded to traditional antidepressants.

The biggest recent development came in March, when the FDA informed the company it had not identified any major problems with how NRX's preservative-free ketamine performed compared to an already approved version of ketamine. The company now expects a potential FDA decision this summer.

More recently, NRX announced FDA clearance to proceed with a clinical trial combining NRX-101 with robotic-enabled transcranial magnetic stimulation for patients suffering from depression and suicidality.

Unlike larger biotech companies, NRX still carries substantial financing and execution risk. This remains a small-cap biotech company operating in a difficult capital environment.

But mental health and neuropsychiatric treatment remain major unmet medical needs, and investors are paying increasing attention to companies targeting severe depression, PTSD, and suicidality. If NRX secures regulatory approval or delivers positive clinical data over the next 12 months, the stock could attract significantly more institutional attention.

Biotech investing is never about certainty. Clinical failures happen. Regulatory setbacks happen. Capital raises happen. But Schrödinger has a real software business supporting its AI platform, Sarepta has nearly $2 billion in annual product revenue despite ongoing controversy, and NRX has multiple regulatory catalysts approaching within the next several quarters.

That's why these are my top three biotech stocks for May 2026.

Jeff Siegel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Schrödinger. The Motley Fool has a disclosure policy.