Jefferies Highlights Three Biotech Stocks With Blockbuster Potential

Investing.com -- Jefferies identified three biotechnology stocks that appear undervalued with strong commercial prospects despite a challenging macro environment. The firm noted that rising interest rates are pressuring small and mid-cap biotech companies, potentially shifting investor focus toward late-stage and commercial-stage names. All three of the highlighted stocks are positioned to launch products with significant peak sales potential.

1. Delphia Therapeutics (DFTX)

The company's single-dose oral psychedelic DT120 has produced three positive Phase III datasets in major depressive disorder and generalized anxiety disorder, each addressing over 20 million U.S. patients. A pre-NDA meeting in Q4 2026 should support an NDA submission in H1 2027 for GAD. The company could potentially file jointly for both indications, given DT120's two breakthrough therapy designations. Jefferies estimates $1.5 billion or more in peak sales per indication, implying a $9 billion valuation against the current $5 billion market cap. The expected approval of COMP360 by H1 2027 could benefit the entire psychedelic space. DT120 will also start a Phase III PTSD study in 2027, while DT402 will share Phase IIa data in H2 2026 for autism disorder. The company held $1.1 billion in cash as of Q2 2026.

2. Axsome Therapeutics (AXSM)

Auvelity is approved for both MDD and Alzheimer's agitation, with the latter indication launched in June 2026. Weekly total prescriptions and new prescriptions are reaching record highs, suggesting sample conversion is occurring. Total prescriptions grew 3-4% month-over-month in August 2026. Q3 sales could track to $213-218 million, in line with consensus of $215 million. Auvelity avoids the side effects and black box warning associated with competing treatments, which could drive adoption. Management's peak sales guidance of $8 billion for Auvelity, split evenly between MDD and ADA, suggests significant upside. The company's CNS pipeline of over 10 indications could create additional value in 2027-2029. Profitability is expected in Q4 2026.

3. BridgeBio Pharma (BBIO)

The company is positioned to launch four blockbuster oral medications. Attruby in ATTR-CM could reach $3-4 billion in U.S. peak sales. Sales are expected to grow $25-30 million quarter-over-quarter from the Q2 2026 base of $222 million, before accelerating in late 2027. Three additional billion-dollar products will launch in 2027: BBP-418 in LGMD2I/R9 has a November 27, 2026 PDUFA date; Encaleret in ADH1 has a May 8, 2027 PDUFA date; and Infigratinib in ACH could launch by mid-2027. Overall profitability is expected in Q3 2027.

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