Zacks Industry Outlook Highlights Akebia Therapeutics, Ironwood Pharmaceuticals, Pyxis Oncology, Cardiol Therapeutics and Plus Therapeutics

For Immediate Release

Chicago, IL – October 15, 2025 – Today, Zacks Equity Research discusses Akebia Therapeutics AKBA, Ironwood Pharmaceuticals IRWD, Pyxis Oncology PYXS, Cardiol Therapeutics CRDL and Plus Therapeutics PSTV.

Industry: Drugs (non-Big Pharma)

Link: https://www.zacks.com/commentary/2767977/5-small-drug-stocks-to-buy-as-the-industry-shows-some-recovery

The drug and biotech sector bounced back this month after struggling this year due to tariff and pricing fears and broader macro headwinds. The recovery was propelled by Pfizer’s landmark drug-pricing deal with Trump, wherein Pfizer was granted a three-year exemption from tariffs on pharmaceutical imports in exchange for price cuts and discounts on some of its drugs and increased U.S. manufacturing investment.

The PFE-Trump deal, along with a recent surge in M&A activity, triggered a recovery in the overall pharma sector. This raised hopes for a sustainable recovery, as Trump offered to hold off tariffs on pharmaceutical imports to sign similar deals with other drugmakers. AstraZeneca also announced a similar deal with the Trump administration last week.

Amid the improving macro backdrop, theZacks Medical-Drugs industry is showing promising trends backed by a focus on innovation and positive pipeline/regulatory developments. In this scenario, Akebia Therapeutics, Ironwood Pharmaceuticals, Pyxis Oncology, Cardiol Therapeutics and Plus Therapeutics may prove to be good additions to one’s portfolio.

Industry Description

The Zacks Medical-Drugs industry comprises small and some medium-sized drug companies that make medicines. We have a separate industry outlook discussion on big drugmakers. Small drugmakers have a limited portfolio of marketed drugs or no commercial-stage drugs at all. Some drugmakers are dependent on just one marketed drug or pipeline candidate. For such companies, upfront or milestone payments from collaboration partners — in most cases, their larger counterparts — are the main sources of revenues. These companies need ample free cash flow to fund their R&D activities.

Factors Shaping the Future of the Medical-Drugs Industry

Pipeline Success: The success or failure of key pipeline candidates in clinical studies can significantly drive the stock price of industry players. Successful innovation and product line extensions in important therapeutic areas and strong clinical study results may act as important catalysts for the stocks.

Innovation is at its peak with key spaces like rare diseases, next-generation oncology treatments, obesity, immunology and neuroscience attracting investor attention. M&A activity also remains healthy.

Strong Collaboration Partners: These companies regularly seek external partners and collaborators for complementary strengths. A partnership deal with a popular drugmaker is a good sign about the potential of small pharma companies, especially when an equity investment is included in the deal. M&A deals are in full swing in the sector, signaling growth.

Investment in Technology for Innovation: For smaller companies, succeeding in a shifting global market and evolving healthcare landscape requires adopting innovative business models, investing in new technologies and increasing investments in personalized medicines. Over the past few years, scientific and technological advancements have made it possible to develop personalized therapies.

Other than that, adoption and information exchange through the meaningful use of health IT, development of therapies that improve overall patient outcomes and investment in developing and emerging markets are some of the key priorities for drug companies. Artificial intelligence and machine learning techniques are being used for the rapid advancement of drug discovery and target identification processes.

Pipeline Setbacks: The smaller companies have their share of risk in the form of unstable cash flows. Also, the failure of key pipeline candidates in pivotal studies and regulatory and pipeline delays can be huge setbacks for these smaller companies and significantly hurt their share prices.

Zacks Industry Rank Indicates Bright Prospects

The group’s Zacks Industry Rank is basically the average of the Zacks Rank of all the member stocks.

The Zacks Medical-Drugs industry currently carries a Zacks Industry Rank #68, which places it in the top 28% of the 243 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Before we present you with a few top-ranked stocks to capitalize on the thriving prospects of the small and medium-sized drugmakers’ space, let’s take a look at the industry’s recent stock-market performance and the valuation picture.

Industry Versus S&P 500 and Sector

The Zacks Medical-Drugs industry is a huge 146-stock group within the broader Medicalsector. The industry has outperformed the Zacks Medical sector while underperforming the S&P 500 so far this year.

Stocks in this industry have collectively risen 6.2% year to date against the Zacks Medical sector’s decrease of 0.2%. The Zacks S&P 500 composite has risen 12.2% in the said time frame.

Industry's Current Valuation

Based on the trailing 12 months price-to-sales ratio (P/S TTM), which is a commonly used multiple for valuing these small drugmakers, the industry is currently trading at 2.37, compared with the S&P 500’s 5.82 and the Zacks Medical sector's 2.45.

Over the last five years, the industry has traded as high as 3.58, as low as 1.97 and at the median of 2.44.

5 Drug Stocks to Bet On

Ironwood Pharmaceuticals: Cambridge, MA-based Ironwood Pharmaceuticals is finalizing a confirmatory phase III study design for its key pipeline candidate, apraglutide, for treating adult patients with short bowel syndrome with intestinal failure (SBS-IF) and plans to align with the FDA in the fourth quarter. Apraglutide is a once-weekly, long-acting synthetic glucagon-like peptide-2 (“GLP-2”) analog with the potential to treat a range of rare gastrointestinal diseases. Management believes that if successfully developed, apraglutide holds the potential to become a blockbuster drug. Ironwood is also focused on the label expansion of its approved drug, Linzess.

The stock of Ironwood Pharmaceuticals has risen 115.5% in the past three months. The consensus estimate for 2025 earnings has risen from 8 cents per share to 16 cents per share over the past 90 days. The company has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pyxis Oncology: A phase I monotherapy expansion study on Boston, MA-based Pyxis Oncology’s lead pipeline candidate, micvotabart pelidotin, for treating recurrent and metastatic head and neck squamous cell carcinoma (R/M HNSCC), is progressing well. Preliminary data from the study is expected to be announced later this year and in the first half of 2026.

A phase I/II combination study of V micvotabart pelidotin plus Merck’s blockbuster drug Keytruda is also ongoing with data expected later this year. Pyxis Oncology believes that micvotabart pelidotin’s unique mechanism as an extracellular targeted antibody drug conjugate has the potential to transform the treatment of advanced solid tumors.

The stock of Pyxis Oncology has risen 197.4% in the past three months. The consensus estimate for 2025 loss per share has narrowed from $1.44 to $1.34 over the past 90 days. The company has a Zacks Rank #1.

Plus Therapeutics: Austin, TX-based Plus Therapeutics is a clinical-stage biotech developing targeted radiotherapeutics for difficult-to-treat cancers of the central nervous system (“CNS”).

Plus Therapeutics’ lead pipeline candidate is Reyobiq (previously Rhenium Re186 Obisbemeda), which is designed to treat CNS cancers, including recurrent glioblastoma (“GBM”), leptomeningeal metastases (“LM”) and pediatric brain cancers. Data from the phase I study called ReSPECT-LM on Reyobiq in patients with LM was announced in August. In the study, Reyobiq showed promising efficacy signals and clinical responses in early cohorts and demonstrated a manageable safety profile.

In August, the company also successfully launched the CNSide cerebral spinal fluid (CSF) assay platform in Texas and has plans in place to broaden the regional availability of the CNSide test over the next 12 months. The company is also evaluating Reyobiq in the phase I/II study for recurrent GBM.

Plus Therapeutics’ stock has risen 113.6% in the past three months. Loss estimates for 2025 have improved from 55 cents per share to 10 cents per share over the past 90 days. The company has a Zacks Rank #1.

Cardiol Therapeutics: This Canada-based company is making rapid progress with the development of CardiolRx, its lead drug candidate for the treatment of inflammation and fibrosis in heart disease. CardiolRx is being evaluated in two diseases affecting the heart — recurrent pericarditis and acute myocarditis. A phase III MAvERIC study is ongoing, evaluating CardiolRx in recurrent pericarditis.

Top-line data from the phase II ARCHER study in acute myocarditis were announced in August 2025, which showed that CardiolRx led to a notable improvement in extracellular volume (ECV) over placebo. The data provide compelling clinical proof of concept for CardiolRx, supporting the advancement of the clinical development of this novel therapy for myocarditis and heart failure.

The stock of Cardiol Therapeutics has declined 18.6% in the past three months. The consensus estimate for 2025 loss has narrowed from 44 cents per share to 36 cents per share over the past 90 days. The company has a Zacks Rank #2 (Buy).

Akebia Therapeutics: Cambridge, MA-based Akebia Therapeutics’ newly launched product, Vafseo (vadadustat) tablets for the treatment of anemia due to chronic kidney disease (CKD), is witnessing strong U.S. launch momentum. Vafseo was launched in the United States in January 2025. Akebia is working to add new prescribers, increase volume with existing writers and increase utilization at mid-sized dialysis organizations. Akebia’s first product, Auryxia (ferric citrate), which is indicated for the control of serum phosphorus levels in adult patients with CKD on dialysis, is also generating decent sales.

The stock of Akebia Therapeutics has declined 28.3% in the past three months. The consensus estimate for 2025 has improved from a loss of 4 cents per share to earnings of 3 cents per share over the past 90 days. The company has a Zacks Rank #2.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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