In this article, we discuss the 10 best biotech penny stocks to buy now. If you want to skip our detailed analysis of the biotech sector, go directly to 5 Best Biotech Penny Stocks To Buy Now.
Like all sectors of the economy right now, the biotech sector is going through a lot of pain. The SPDR S&P Biotech ETF (NYSE:XBI) has fallen 41.43% in the year to date, and 17.9% in just the month of April. Jared Holz, healthcare equity strategist at Oppenheimer, told CNBC in May that the biotech sector is filled with “un-buyable” assets, and that a self-correction is in store for the entire industry. He noted that the sector is saturated, and that a study of 820 biotech companies showed that more than 500, or close to 60%, of these companies have an enterprise value of less than $100 million. For a lot of these “un-investable” companies, Holz predicts that the industry’s assets will consolidate over time, through M&A (merger and acquisitions) activity where up-and-coming biotech compaies are either acquired by large-caps or merged with similarly sized firms.
Future Outlook
According to Global Market Insights, the biotech sector is projected to grow from nearly $500 billion in 2020 to approximately $950 billion in 2027, at a compound annual growth rate (CAGR) of 9.4% during this period. Innovative discoveries in the fields of genomics, molecular biology, mRNA vaccines, and the rising trend of digital-health initiatives will drive this growth. As the world continually seeks cures for increasingly complex diseases, use cases for discoveries in the biotech sector also include food genetics and agriculture, a trend driven by the growing demand for high quantities and qualities of food around the world.
The biotech sector has made many millionaires, and especially over the last two years. The pandemic economy’s special focus on the biotech sector inflated the industry with many firms with no viable products or technology. But some winners stood out and recorded blockbuster gains for investors. One example is Moderna, Inc. (NASDAQ:MRNA), which hit the jackpot with its first commercial product, the Spikevax mRNA vaccine for Covid-19. Its shares stood at around $18 at the start of 2020, before climbing to an all time-high of $449 in September 2021 as millions around the world were inoculated with its vaccine. Shares currently stand at roughly $128. Other notable names in the sector include Pfizer Inc. (NYSE:PFE), which generated more than $36 billion in sales from its Covid vaccine in 2021, developed in collaboration with BioNTech SE (NASDAQ:BNTX).
It would be wise for investors to know which small- or micro-cap names in the biotech sector are working on products/drugs/technologies that could position them for outsized gains in the future. That is why, we have prepared a list of the 10 best penny biotech stocks to buy now.
Photo by National Cancer Institute on Unsplash
Our Methodology
We picked 10 stocks in the biotech sector trading below a $5 value. These companies are working on products that boast substantial growth potential and the ability to command a unique position in the overall industry. Hedge fund sentiment has been provided so that readers are able to gauge what professional hedge fund managers think about each company. Analyst ratings have also been provided where available.
10 Best Biotech Penny Stocks To Buy Now
10. Matinas Biopharma Holdings, Inc. (NYSE:MTNB)
Number of Hedge Fund Holders: 1
Share Price (as of June 17): $0.74
9. Pluristem Therapeutics Inc. (NASDAQ:PSTI)
Number of Hedge Fund Holders: 2
Share Price (as of June 17): $1.21
Pluristem Therapeutics Inc. (NASDAQ:PSTI) is an Israeli biotech firm which focuses on regenerative medicine to treat a range of conditions such as inflammation, muscle injuries, haematological disorders and exposure to radiation. It uses a proprietary, 3D technology platform to develop placenta-derived cell products that can be used “off-the-shelf” and in any clinical setting, as compared to the stringent tissue matching requirements for traditional cell therapies.
Pluristem Therapeutics Inc. (NASDAQ:PSTI) has a collaboration agreement with Tnuva Group, Israel’s largest food producer, to establish a cultured food platform. Under the agreement, Pluristem’s cell production techniques will be combined with the latter’s expertise in food manufacturing, with the objective of launching its first raw cultured meat product in 2023. Pluristem Therapeutics Inc. (NASDAQ:PSTI) also has a partnership with NASA’s (National Aeronautics and Space Administration) Ames Research Center, to study the potential of Pluristem’s PLX cell therapies in preventing and treating medical conditions caused during space missions, including conditions relating to bone, blood, muscle, brain and heart.
2 hedge funds were long Pluristem Therapeutics Inc. (NASDAQ:PSTI) at the end of March, with combined positions worth $279,000. Jim Simons’ Renaissance Technologies was its top shareholder, with approximately 76,000 shares valued at $157,000.
8. Alzamend Neuro, Inc. (NASDAQ:ALZN)
Number of Hedge Fund Holders: 2
Share Price (as of June 17): $0.87
It is projected that 13 million Americans will be living with Alzheimer’s disease by 2050, and the global market opportunity is expected to reach $25.5 billion by 2025. This makes Alzamend Neuro, Inc. (NASDAQ:ALZN) very well-positioned for the future, given that it is a clinical-stage biopharmaceutical firm which develops therapies for the treatment of neurodegenerative diseases and psychiatric disorders, mainly Alzheimer’s. The company has two main drug candidates; AL001, which uses a combination of lithium, proline, and salicylate to treat Alzheimer’s, and Al002, which is a cell-based therapeutic vaccine which boosts T-cell activity in the body to restore the ability of a patient’s immunological system to combat Alzheimer’s.
Alzamend Neuro, Inc. (NASDAQ:ALZN) was given an unchanged ‘Buy’ rating by Univest Securities analyst James Lang in March, along with a $15 price target. He noted that a University of Cambridge study found a positive link between lithium regiment and a lower rate of dementia. This validates Alzamend’s lithium product AL001, which the analyst believes will receive FDA authorization and commence commercialization during 2025.
With aggregate stakes worth $329,000, 2 hedge funds owned positions in Alzamend Neuro, Inc. (NASDAQ:ALZN) at the end of the first quarter, as compared to 3 hedge funds a quarter earlier. Millennium Management, the firm’s largest Q1 shareholder, increased its stake by 941%, coming in at roughly 142,000 shares priced at $175,000.
7. Allarity Therapeutics, Inc. (NASDAQ:ALLR)
Number of Hedge Fund Holders: 3
Share Price (as of June 17): $1.72
Allarity Therapeutics, Inc. (NASDAQ:ALLR) is based in Cambridge, Massachusetts, and operates as a clinical-stage, precision medicine company working on therapies for hard-to-treat cancers. It also has a R&D (research and development) facility in Denmark. The firm’s proprietary, Drug Response Predictor (DRP) technology has revolutionized the process of matching the right drug therapies for each individual patient’s needs. This improves clinical outcomes, and reduces the time it takes to offer life-saving drugs to critical cancer patients. Allarity Therapeutics, Inc.’s (NASDAQ:ALLR) drug pipeline includes five anti-cancer therapies in mid-to-late stage clinical development.
3 hedge funds from the Q1 database of Insider Monkey reported ownership of stakes in the company, with a collective price tag of $530,000. This shows a positive trend from the previous quarter where a single hedge fund was long on the company shares. For the first quarter, Allarity Therapeutics, Inc. (NASDAQ:ALLR) disclosed earnings per share of $0.49, exceeding analysts’ estimates by $1.16.
On May 27, Ladenburg analyst Aydin Huseynov initiated coverage of Allarity Therapeutics, Inc. (NASDAQ:ALLR) with a ‘Buy’ rating and a price target of $8. The firm has a proprietary genomic platform which enables pre-selection of patients who are more likely to respond to a particular treatment, according to the analyst, who thinks that its lead drug candidate dovitinib for renal cancer has a 50% chance of securing FDA approval in 2025.
6. Cellectar Biosciences, Inc. (NASDAQ:CLRB)
Number of Hedge Fund Holders: 3
Share Price (as of June 17): $0.38
Cellectar Biosciences, Inc. (NASDAQ:CLRB) is a New Jersey-based biopharmaceutical firm which deals in the research, discovery, and commercialization of cancer therapies using its proprietary phospholipid drug conjugate (PDC) delivery platform, which targets specific cancerous cells in the human body. With shares trading at $0.38, Cellectar Biosciences, Inc. (NASDAQ:CLRB) is one of the best biotech penny stocks to buy now.
On April 7, Ladenburg analyst Ahu Demir assumed coverage of Cellectar Biosciences, Inc. (NASDAQ:CLRB) with a ‘Buy’ rating and $5 price target. The analyst notes that the firm is developing phospholipid-ether drug conjugates, or PDCs, and its lead asset is Iopofosine, a PDC-radiotherapeutic currently being assessed in a pivotal Phase 2 study for the treatment of Waldenstrom’s macroglobulinemia, and in the Phase 2 stage for multiple myeloma. Demir thinks the clinical data readouts should “potentially give rise to value expansion.”
3 hedge funds reported bullish bets on Cellectar Biosciences, Inc. (NASDAQ:CLRB) at the end of the first quarter, with combined stakes worth $1.35 million. AIGH Investment Partners was the firm’s largest Q1 shareholder with a $1.26 million stake, up 105% from the quarter before.
For investors looking for a bargain, Cellectar Biosciences, Inc. (NASDAQ:CLRB) is an exciting penny biotech stock to buy now, unlike big names such as Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and BioNTech SE (NASDAQ:BNTX).
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