Biotech stocks are surging. How investors can play the new drug innovation boom

Moderna gave investors a scare as its stock plunged on Thursday. But it's still one of the hottest biotechs this year. And it's hardly alone – the sector is on a roll and looks poised for more gains.The iShares Biotechnology ETF (IBB) is up 24% through October 23, building on a 28% gain in 2025. Two dozen of the ETF's 233 holdings have more than doubled year-to-date. Moderna leads the pack with a 587% surge — even after an 18% decline following a leak of clinical data for its cancer vaccine (which was actually positive). Analysts say a new biotech cycle is underway, fueled by clinical trial results, M&A activity, and promising technologies such as genomics, mRNA — and AI. "We're in the midst of a powerful innovation cycle," said John Hall, portfolio manager of the T. Rowe Price Biotechnology ETF. "What's super exciting is we're seeing newer modalities start to make it to market." Companies "understand the disease biology better," he adds, and that could ultimately lead to more novel drugs making it to market.Investors are excited about technologies like mRNA and genomics, along with a steady stream of new drug approvals. The FDA approved about a dozen novel biologic drugs in 20...