Small to mid-cap biotechnology companies are likely to see macro headwinds extend through the year, with tariff concerns and turnover at the US Food and Drug Administration further fueling near-term uncertainty, BofA Securities said in a Thursday note.

BofA Securities said an example of the FDA turnover's impact is the pause on the review of Novavax's (NVAX) Nuvaxovid COVID-19 vaccine, but the magnitude of recent layovers at the FDA "could take time to materialize."

The investment firm also said that "headline risk" continues to be a headwind but could decrease since pharmaceuticals are being exempted from US President Donald Trump's reciprocal tariffs, which should provide "near-term reprieve for the sector." The analysts said many of the small to mid-cap biotechnology firms have "little exposure" to tariffs as about 80% of them are "pre-commercial."

BofA Securities said Agios Pharmaceuticals (AGIO), Janux Therapeutics (JANX), CRISPR Therapeutics (CRSP), and Revolution Medicines (RVMD) are its top small to mid-cap biotech picks for 2025.

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