With the FED poised to lower interest rates this year, investors are looking at riskier places in the economy and stock market. The biotech sector, though not risk-free, holds intriguing prospects, often driven by clinical trials and technology approvals. Now, let’s delve into the promising prospects of three compelling biotech stocks that could be on the brink of multibagger performances.

Xenon Pharmaceuticals (XENE)

Xenon Pharmaceuticals (NASDAQ: XENE) has captured the market’s attention with a diverse pipeline of neurological therapies aimed at addressing neurological disorders, predominantly in Canada. The company’s key milestone opportunity, the XEN1101 Phase 3 Program, targeting major depressive disorders, has generated significant interest. Despite regulatory uncertainties, analysts expect a remarkable 107.8% growth in earnings per share over the next 12 months. The forward price-to-earnings (P/E) ratio, currently at 538.0 times, reflects the market’s optimism, reminiscent of NVIDIA’s stellar stock performance after seemingly lofty valuations.

Argenx (ARGX)

Argenx (NASDAQ: ARGX) stands out with a robust product pipeline, poised to transition several projects from proof of concept to registration. The company’s focus on autoimmune diseases in the U.S. and internationally aligns with major medical trends across diverse patient demographics. Particularly noteworthy is the Phase One development of ARGX-118, designed to prevent airway inflammation, a critical concern in the wake of the COVID-19 pandemic. The stock’s forward P/E of 111.7 times, coupled with projections of around 240.0% EPS growth in the coming year, underpin high market expectations, emphasizing its potential as one of the top biotech stocks in the market.

IntraCellular Therapies (ITCI)

IntraCellular Therapies (NASDAQ: ITCI) operates in the U.S., with a focus on neurological disorders, especially in the bipolar depression and Parkinson’s disease treatment space. Despite a relatively lower forward P/E of 88.8 times compared to its peers, the company is anticipated to deliver explosive EPS growth of 225.8% this year. The imminent breakout of its Lumateperone pipeline from Phase 3 trials is expected to be a significant value driver. If you’re eyeing the top biotech stocks, beginning here is prudent in light of the company’s potential to surprise investors with a substantial announcement during quarterly earnings calls.

As of this writing, Gabriel Osorio-Mazzilli did not hold any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.