In this article, we will be taking a look at the 10 best biotech penny stocks to buy now.
Biotech Stocks in 2024: Growth Prospects, Key Players, and Investment Opportunities
In 2024, the healthcare industry has been doing well, encouraging investors to look into new and exciting opportunities. Particularly biotech is anticipated to profit, despite the dangers of continuous mergers and acquisitions. Traders ought to exercise caution. With an 11.8% CAGR, the worldwide biotechnology market is expected to reach USD 4.25 trillion by 2033. It is expanding quickly. The U.S. market is projected to increase at an 11.90% CAGR to reach USD 763.82 billion by 2033 from its 2023 valuation of USD 246.18 billion. In 2023, the U.S. led North America in terms of revenue share.
Fitch Ratings maintains a Neutral outlook for the global biotech industry in 2024. Its primary motivation to do so is the moderating inflationary rates. The industry is supported by factors such as a growing aging population, increased healthcare access, and a rise in chronic and specialist conditions. Fitch also forecasts a heightened focus on drug pricing and patient value.
Biotech equities including Vincerx Pharma (VINC), Corbus Pharmaceuticals (CRBP), and Viking Therapeutics (VKTX) have seen significant gains in 2024, with returns ranging from 134% to 446%, despite receiving less media attention than industries like technology and cryptocurrencies. Positive weight loss drug trial findings, for example, let Viking Therapeutics connect its product with a potentially billion-dollar market need. Although the success of individual stocks indicates prospective gains, larger indexes such as the NASDAQ Biotechnology PR USD Index reveal the volatility of the industry; it fell 11% between 2022 and 2023 as a result of economic difficulties but gained 3% by February 2024.
Investors eyeing biotech stocks may wonder which areas are prone to buyouts. Laura Chico identified key areas to watch for potential buyouts:
“Obesity has been a really big theme in 2023, and will probably continue for the foreseeable future, but across the area, at least in these recent M&A transactions, it’s been really broad-based, and I think that’s really a testament to the innovation in the space. We have several deals in oncology, immunology, inflammation, neuro, and even rare diseases. So it’s not just within certain verticals at this point.”
Chico advises biotech investors to monitor FDA approval news, scientific and clinical risks, and the disease categories that companies are targeting since these might provide indicators of company success. On March 6, Healthcare Equity Strategist Jared Holz talked about this possibility on CNBC’s “The Exchange”:
“[Biotech] has been one of the worst spaces in all of the equity market since mid-2021. We’ve barely seen any positive activity for any pronounced period until very recently… When you consider the risk factors, concerning drug prices and other elements of the business… all these risk factors are much more well understood and we can continue to move higher from here.”
Holz emphasizes the potential in well-positioned small-cap choices and says it’s not too late to invest in large-cap biotech equities. We’ve put up a list of oversold biotech stocks, which includes excellent choices under $20 as well as cheap options that have been missed.
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Our Methodology
To rank the best biotech penny stocks to buy now, we first identified large biotech companies priced under $5. We then selected the top 10 and ranked them based on the number of hedge fund holders in Q1 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Here is our list of the 10 best biotech penny stocks to buy now.
10. Vigil Neuroscience, Inc. (NASDAQ:VIGL)
Number of Hedge Fund Holders: 14
Vigil Neuroscience, Inc. (NASDAQ: VIGL) is emerging as one of the most promising biotech penny stocks to consider for investment. This innovative company specializes in developing novel therapeutic agents for neurodegenerative diseases, with a unique focus on microglia, the cells responsible for neuron defense and repair in the central nervous system. The focus of Vigil Neuroscience is on the activation of TREM2 by both large and small-molecule drugs.
With encouraging interim results from the first six patients, their top medication candidate, iluzanebart (VGL101), is undergoing a Phase 2 clinical study for ALSP. Phase 1 trials for Alzheimer’s disease are underway for VGL-3927, an oral small-molecule TREM2 agonist; the most recent results are anticipated this month.
Over the last three months, six Wall Street analysts have given Vigil Neuroscience, Inc. (NASDAQ: VIGL) a “Strong Buy” rating. The analysts’ 12-month price estimates for the firm are $18.33 on average, with a range of $11.00 to $24.00. This average price estimate indicates that the current price of $4.48 could potentially rise by about 309.15%.
As of the most recent data, there are 129 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities and Exchange Commission (SEC) for Vigil Neuroscience. In Q1 2024, there were 14 hedge fund holders in the company. Citadel Investment Group was the hedge fund with the largest shares in the company with 2,165,811 shares worth $7,385,416.
For the first quarter ended March 31, 2024, Vigil Neuroscience, Inc. (NASDAQ:VIGL)’s R&D expenses were $14.3 million, compared to $13.8 million in the same period of the previous year. During the same period, Vigil Neuroscience Inc. had $101.6 million in cash, cash equivalents, and marketable securities, down from $117.9 million on December 31, 2023. The company expects these funds to support operations until the second half of 2025. G&A expenses for Q1 2024 were $7.1 million, similar to $6.9 million in Q1 2023. The net loss for Q1 2024 was $19.9 million, nearly unchanged from $19.8 million in Q1 2023.
9. Black Diamond Therapeutics, Inc. (NASDAQ:BDTX)
Number of Hedge Fund Holders: 15
Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) is a biotechnology company focused on discovering and developing targeted therapies for cancer patients. The company specializes in targeting unique oncogenic protein isoforms, aiming to create precision medicines for specific cancer types. At the 2024 ASCO Annual Meeting, Black Diamond recently revealed encouraging Phase 1 clinical data for BDTX-1535 in glioblastoma patients who had recurrent disease.
The medication showed dose-proportionate plasma exposure and a 15-hour half-life on average, which supported daily use. Peak worldwide sales of BDTX-1535 may surpass $1 billion if both glioblastoma multiforme (GBM) and Tagrisso-resistant non-small cell lung cancer (NSCLC) are successfully treated.
Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) has a Strong Buy rating based on recent research conducted during the last three months by five Wall Street analysts. With a forecast range of high $16.00 to low $11.00, the average price target is $13.50. This represents a predicted rise of 187.23% from the $4.70 trade price as of right now. In Q1 2024, 15 hedge fund holders held the company with RA Capital Management being the hedge fund with the largest shares (3,525,754 shares) worth $17,875,573, comprising 0.22% of the stock portfolio.
Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) reported a net loss of $18.2 million during the first quarter of 2024, down from $20.9 million for the same period in 2023. The basic and diluted net loss per share for Q1 2024 was $0.35, a 38.6% decrease from Q1 2023’s $0.57. The company’s cash, cash equivalents, and investment holdings decreased to about $115.2 million as of March 31, 2024, from $131.4 million at the end of 2023. Research and development costs fell to $13.5 million from $14.8 million in Q1 2024, mainly as a result of lower investment in early discovery programs. Overall operational expenses dropped to $20.2 million from $21.6 million in Q1 2023.
8. Biomea Fusion, Inc. (NASDAQ:BMEA)
Number of Hedge Fund Holders: 15
Biomea Fusion, Inc. (NASDAQ:BMEA) is a clinical-stage biopharmaceutical company focused on developing irreversible small molecules to treat patients with genetically defined cancers and metabolic diseases. BMF-219, the lead candidate from Biomea Fusion, initially showed promise in treating both type 2 and type 1 diabetes. Positive results from Phase I/II clinical trials suggested that insulin production might be restored, and glycemic control could be improved. However, because of worries about drug-induced hepatotoxicity, the FDA put a clinical hold on these trials on June 7, 2024. This caused a sharp 63% decline in the value of BMEA’s shares. CEO Thomas Butler emphasized the company’s dedication to developing BMF-219 despite this setback by reiterating the medication’s general tolerability and its potential to close significant gaps in diabetes treatment.
Based on research conducted over the last three months by nine Wall Street analysts, Biomea Fusion is rated as a moderate buy. With a range of $5.00 to $60.00, the average 12-month price target is $20.56. Compared to its current market price of $4.53, this indicates a potential increase of 353.86%. In Q1 2024, 15 hedge fund holders held the company, down from 16 in the previous quarter. Cormorant Asset Management had the largest position in the stock with around 3,570,872 worth $53,384,536, comprising 2.34% of the company’s portfolio.
Biomea Fusion, Inc. (NASDAQ:BMEA) reported a $39.1 million net loss attributable to common stockholders in Q1 2024 as opposed to $29.1 million in Q1 2023. In Q1 2024, the net loss per common share, including basic and diluted, was $1.09. Cash, cash equivalents, and restricted cash held by the corporation as of March 31, 2024, were $145.3 million, as opposed to $177.2 million at the end of 2023. Due to rising clinical and pre-clinical development expenditures, the company’s research and development spending rose from $24.4 million to $33.8 million in Q1 2024. The amount spent on general and administrative costs climbed to $7.3 million from $5.6 million in Q1 2024, mostly as a result of higher personnel-related costs, such as stock-based compensation, which came to $5.0 million.
7. Savara Inc. (NASDAQ:SVRA)
Number of Hedge Fund Holders: 16
Savara Inc. (NASDAQ:SVRA) is an emerging biopharmaceutical company focused on developing innovative therapies for rare respiratory diseases. The company’s primary focus is on treatments for conditions that currently lack effective drug options, positioning it as a potential leader in addressing unmet medical needs. Molgramostim, the prime candidate for Savara, is exhibiting encouraging outcomes in Phase 3 trials for autoimmune pulmonary alveolar proteinosis (aPAP). Positive results demonstrated its effectiveness at the ATS International Conference in 2024. Important FDA designations for molgramostim also highlight its potential as a game-changing treatment.
Based on research conducted over the last three months by six Wall Street analysts, Savara has a Strong Buy recommendation. The 12-month price target ranges from $6.00 to $16.00, with an average of $9.83. From its current market price of $3.81, this is a potential increase of 158.01%. In Q1 2024, 16 hedge fund holders held shares in the company.
In Q1 2024, Savara Inc. (NASDAQ:SVRA) reported a net loss of $20.3 million, up from $10.6 million in Q1 2023 which reflected a 91.5% increase year-over-year. Their diluted loss per share was $0.11 in the same period compared to $0.07 in Q1 2023, marking a 57.1% increase in loss per share. Research and development expenses surged by 92% to $16.8 million in Q1 which was driven by ongoing investment in Molgramostim’s late-stage trials. Their general and administrative expenses rose 67% to $5.6 million due to higher personnel costs and commercialization preparations. As of March 31, 2024, Savara held $16.8 million in cash and $126.3 million in short-term investments, with total assets reported at $138.1 million.
6. Inozyme Pharma, Inc. (NASDAQ:INZY)
Number of Hedge Fund Holders: 18
Inozyme Pharma, Inc. (NASDAQ:INZY) is emerging as one of the best biotech penny stocks to consider for investors interested in the rare disease therapeutics space. The company specializes in developing novel treatments for rare genetic disorders affecting mineralization in the body, particularly focusing on ENPP1 and ABCC6 deficiencies. The lead product candidate from Inozyme Pharma, INZ-701, is a recombinant fusion protein. It has shown promising topline findings in Phase 1/2 trials for ENPP1 Deficiency, suggesting that it may be useful in treating abnormalities in the mineralization pathway brought on by deficiencies in ENPP1 and ABCC6. The FDA, EMA, and rare pediatric disease panels have all designated INZ-701 as an orphan medication. It has also been granted FDA fast-track status. For both ENPP1 Deficiency and ABCC6 Deficiency (PXE), the company intends to share more Phase 1/2 trial data at upcoming medical conferences.
Based on the analysis of five Wall Street analysts throughout the last three months, Inozyme Pharma is rated as a Strong Buy. With a range of $14.00 to $23.00, the average 12-month price target is $16.25. This indicates a possible rise of 259.51% from the $4.52 market price as of right now. In Q1 2024, there were 18 hedge fund holders in the company. Adage Capital Management held the largest number of shares (5,328,856 shares) in the stock worth $40,819,037, comprising 0.07% of the company’s total portfolio.
In Q1 2024, Inozyme Pharma, Inc. (NASDAQ:INZY) reported a net loss of $23.347 million, compared to $17.404 million in Q1 2023. The net loss per share attributable to common stockholders was $0.38 in Q1 2024 which is an improvement from $0.40 in Q1 2023, primarily due to an increase in weighted-average shares outstanding. Their total operating expenses rose to $24.345 million from $18.369 million year-over-year which was driven by higher research and development costs, which increased to $19.111 million in Q1 from $11.857 million. Inozyme reported increased interest income of $2.374 million in Q1’24 compared to $1.327 million in Q1 2023. The company’s CEO indicated that current cash reserves are sufficient to fund operations into Q4 2024.
5. Editas Medicine, Inc. (NASDAQ:EDIT)
Number of Hedge Fund Holders: 21
Editas Medicine, Inc. (NASDAQ:EDIT) is a clinical-stage biotechnology company focused on developing gene editing therapies using CRISPR technology. The company aims to treat genetic diseases by directly altering patients’ genomes. Editas Medicine’s lead candidate, EDIT-301, is advancing through late-stage clinical trials for sickle cell disease and beta-thalassemia. The company has focused its strategy on enhancing gene expression in rare genetic diseases, aiming to establish a pioneering position in these indications. Editas has also secured significant legal victories affirming its intellectual property rights in CRISPR technology.
Based on the analysis of ten Wall Street analysts over the last three months, Editas Medicine is rated as a Moderate Buy. With a range of $7.00 to $18.00, the average 12-month price target is $11.50. From its current market price of $4.74, this suggests a potential rise of 142.62%. In Q1 2024, there were 21 hedge fund holders in the company. The hedge fund with the largest shares in the stock is Deep Track Capital with 5,527,290 worth $41,012,492, comprising 1.17% of the company’s total portfolio.
In Q1 2024, Editas Medicine, Inc. (NASDAQ:EDIT) reported a net loss of $62.0 million, compared to $49.0 million in Q1 2023, with a net loss per share of $0.76 versus $0.71 in the same period last year. Collaboration and other R&D revenues decreased sharply to $1.1 million in Q1 2024 from $9.9 million year-over-year. R&D expenses increased to $48.8 million from $37.8 million, reflecting continued investment in clinical programs. The company’s general and administrative expenses decreased to $19.3 million from $23.0 million. As of March 31, 2024, Editas held $376.8 million in cash, cash equivalents, and marketable securities, down from $427.1 million at the end of 2023.
4. Alector, Inc. (NASDAQ:ALEC)
Number of Hedge Fund Holders: 24
Alector, Inc. (NASDAQ:ALEC) is a clinical-stage biotechnology company focused on developing therapies for neurodegenerative diseases and immuno-neurology. Alector has demonstrated noteworthy advancements in its clinical programs, specifically in the areas of frontotemporal dementia (FTD) and Alzheimer’s disease. AL001, which is their front-runner, has shown encouraging outcomes in FTD patients with progranulin mutations. Alector stated in January 2024 that it intended to raise money for its general company operations and future clinical pipeline breakthroughs through a public offering of common stock. With an emphasis on genetic forms of dementia and cutting-edge methods for treating immune dysfunction in the brain, Alector has established himself as a leader in immuno-neurology in response to the biotech industry’s growing interest in treatments for neurodegenerative diseases.
Alector, Inc. (NASDAQ:ALEC) holds a Moderate Buy rating based on analysis by 7 Wall Street analysts over the past 3 months. The average 12-month price target is $15.17, ranging from $9.00 to $35.00. This suggests a potential 234.14% increase from its current trading price of $4.54. In Q1 2024, 24 hedge funds held positions in the company. The hedge fund with the largest share was EcoR1 Capital with 4,056,548 shares worth $24,420,419, comprising 0.61% of the company’s total portfolio.
In Q1 2024, Alector, Inc. (NASDAQ:ALEC) reported collaboration revenue of $15.9 million, down slightly from $16.5 million in Q1 2023, primarily due to lower AL001 program revenue. Research and development expenses decreased to $45.2 million from $51.9 million which was driven by prioritization of late-stage programs and reduced personnel costs. The company recorded a net loss of $36.1 million, or $0.38 per share in the same period, improving from $45.9 million, or $0.55 per share, in Q1 2023. As of March 31, 2024, Alector held $562.1 million in cash, cash equivalents, and investments following a January 2024 follow-on financing.
3. C4 Therapeutics, Inc. (NASDAQ:CCCC)
Number of Hedge Fund Holders: 25
C4 Therapeutics, Inc. (NASDAQ:CCCC) is emerging as one of the most promising biotech penny stocks to consider for investment. The company specializes in developing targeted protein degradation science to create a new generation of small-molecule medicines for treating various diseases. C4 Therapeutics has achieved several milestones recently, for example, they partnered with Merck in December 2023 to develop degrader-antibody conjugates, receiving an upfront payment of $10 million and potential milestone payments totaling up to $600 million, along with royalties on future sales. Ron Cooper was appointed as Chairman of the Board of Directors, bringing valuable strategic guidance. Additionally, their drug candidate CFT7455 has shown promising early results in treating multiple myeloma, demonstrating high activity even at low doses.
C4 Therapeutics holds a bullish outlook driven by its innovative TORPEDO platform for degrader payloads, attracting major pharmaceutical partnerships. The recent collaboration with Merck has bolstered its financial position, funding clinical advancements. The partnership also offers significant revenue potential, with potential milestone payments of up to $740 million from Merck KGaA. In Q1 2024, 25 hedge fund holders held positions in the company, up from 21 in the previous quarter. RA Capital Management held the largest position in the company with 4,878,000 shares worth $39,853,260, comprising 0.5% of the company’s total portfolio.
In Q1 2024, C4 Therapeutics, Inc. (NASDAQ:CCCC) reported a total revenue of $3.0 million which is slightly down from $3.8 million in the same period last year. The company’s cash position as of March 31, 2024, stood strong at $299.2 million, expected to fund operations into 2027. C4 Therapeutics reported a net loss of $28.4 million for Q1 2024, showing improved financial management and reduced expenses compared to the previous year. Additionally, the company received an $8 million payment from Biogen for delivering its first development candidate.
2. Annexon, Inc. (NASDAQ:ANNX)
Number of Hedge Fund Holders: 27
Annexon, Inc. (NASDAQ:ANNX) is a clinical-stage biopharmaceutical company focused on developing innovative therapies for patients with classical complement-mediated disorders of the body, brain, and eye. The company is pioneering a new approach to treat complement-mediated diseases by inhibiting the classical complement pathway at its start. With the help of lead candidate ANX005, Annexon has advanced its clinical programs. The company recently announced a conference call to present Phase 3 data for Guillain-Barré syndrome on June 3, 2024. This announcement caused the stock price to rise by 60% during June 3–4. Even though Annexon suggested a public stock offering on June 4, the company has maintained its gains, demonstrating strong positive momentum.
Based on analysis by six Wall Street analysts over the last three months, Annexon, Inc. (NASDAQ:ANNX) has a Strong Buy rating. A high estimate of $30.00 and a low prognosis of $12.00 indicate the average 12-month price target, which is $17.50. Given that it is currently selling at $4.82, this implies a possible 263.07% gain. In Q1 2024, 27 hedge funds held positions in the company, up from 23 in the previous quarter. Biotechnology Value Fund / BVF Inc held the largest position in the company with 7,000,000 shares worth $50,190,000, comprising 1.37% of the company’s total portfolio.
In Q1 2024, Annexon, Inc. (NASDAQ:ANNX) reported a net loss of $25.2 million, or $0.21 per share which is a significant improvement from the $38.7 million loss, or $0.52 per share, in Q1 2023, reflecting enhanced financial performance. Their research and development expenses decreased to $21.0 million from $32.3 million in Q1 2023, as the company focused on advancing priority programs such as treatments for Guillain-Barré Syndrome (GBS) and Geographic Atrophy (GA), along with ANX1502 development. As of March 31, 2024, Annexon had cash, cash equivalents, and short-term investments totaling $264.9 million. Looking forward, key milestones for 2024 include pivotal Phase 3 data for ANX005 in GBS expected in Q2 2024, initiation of a Phase 3 trial for ANX007 in GA in mid-2024, and clinical proof of concept data for ANX1502 in the second half of 2024.
1. Applied Therapeutics, Inc. (NASDAQ:APLT)
Number of Hedge Fund Holders: 30
Applied Therapeutics, Inc. (NASDAQ:APLT) tops the list for being the best biotech stock to buy now and focuses on developing novel therapies for rare central nervous system diseases and diabetic complications. Applied Therapeutics has made significant strides in its drug development pipeline, particularly with its lead candidate AT-007. The company recently reported stellar results from a phase 2 study, which has generated considerable excitement among investors. This positive outcome has positioned Applied Therapeutics as one of the top biotech stocks to watch in the current market.
Based on research conducted over the last three months by three Wall Street analysts, Applied Therapeutics is rated as a Strong Buy. With a high estimate of $14.00 and a low estimate of $11.00, the average 12-month price goal is $12.33. This implies that its current market price of $4.60 may see a gain of up to 168.04%. In Q1 2024, 30 hedge fund holders held positions in the company, up from 25 in the previous quarter. Perceptive Advisors held the largest position in the company with 8,005,000 shares worth $54,434,000, comprising 0.94% of the company’s total portfolio.
As of March 31, 2024, Applied Therapeutics, Inc. (NASDAQ:APLT) reported cash, cash equivalents, and short-term investments of $146.5 million which is a significant increase from $49.9 million at the end of 2023. Research and development expenses for Q1 2024 totaled $12.2 million, down from $15.9 million in Q1 2023 which is primarily due to reduced costs related to CROs and drug manufacturing, partially offset by higher regulatory and personnel expenses. The company reported a net loss of $83.9 million, or $0.67 per share, for Q1 2024, compared to a net loss of $10.1 million, or $0.18 per share, in Q1 2023.
Overall, Applied Therapeutics ranks first among the best biotech penny stocks to buy now. You can visit 10 Best Biotech Penny Stocks to Buy Now to see the trending biotech stocks that are on the hedge fund radar. While we acknowledge the potential of biotech companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Applied Therapeutics but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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