In this article, we will discuss the 10 best biotech stocks to buy under $20.
The biotechnology industry is experiencing rapid growth, driven by increasing demand for innovative treatments, technological advancements, and government support. The aging population and rising healthcare needs are creating a strong market for new therapies, while breakthroughs in areas like gene editing, sequencing, personalized medicine, and AI are enabling the development of novel approaches. Between 2019 and 2021, venture capital firms invested over $52 billion in therapeutic-focused biotech companies worldwide. Of this total, two-thirds was allocated to start-ups with platform technologies.
By addressing critical unmet medical needs, biotech companies are transforming healthcare with groundbreaking therapies. A key development in this space is the launch of the National Bioeconomy Board as part of Biden’s Investing in America agenda. It aims to harness the potential of biotechnology for the U.S. economy.
In addition to this, the National Security Commission on Emerging Biotechnology is developing policy recommendations to streamline the regulatory process for biotechnology products. By lowering barriers to entry, more researchers can leverage biotechnology for agricultural applications, supporting U.S. farmers and improving food security. These efforts are expected to create new market opportunities.
Also Read: 10 Largest Biotech Hedge Funds and Their Top Stock Picks
Market Growth Forecast
The biotechnology industry has seen an increase in mergers and acquisitions activity, along with expectations of declining interest rates which have contributed to a strong start in 2024. As a result, projections indicate the global biotechnology market could reach an impressive $5.7 trillion by 2033, growing at a compound annual growth rate (CAGR) of nearly 14% from 2024 to 2033. Even the agricultural biotechnology market is forecasted to grow at a 7.9% CAGR, reaching a market value of $232 billion by 2032.
However, despite the market’s potential, significant risks remain when investing in biotech companies. A failure to meet clinical trial endpoints or secure sufficient funding before a product launch can lead to bankruptcy. The risk of failure is especially high in the biotech sector, where drug development typically takes over a decade and has an estimated failure rate of around 90%.
Hence, biotech stocks are often considered “high-risk, high-reward” investments due to their upside potential coupled with significant risks. If you’re interested in exploring this sector, a good strategy might be to focus on promising but cheap biotech stocks. Keeping this in mind, we have curated a list of the best biotech stocks to buy under $20.
A scientist in a lab conducting research on cell-based therapeutics and biotechnology.
Our Methodology
To identify the top biotech stocks to buy under $20, we analyzed the biotech companies that were most popular among hedge funds as of Q2 2024 and traded under $20. Analysts are optimistic about these companies due to their potential to deliver strong returns for investors. Drawing from Insider Monkey’s comprehensive database of over 900 hedge funds, we ranked the best biotech stocks under $20 in ascending order based on their popularity among hedge funds as of Q2, 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).
10 Best Biotech Stocks To Buy Under $20
10. Centessa Pharmaceuticals Plc (NASDAQ:CNTA)
Number of Hedge Fund Holders: 25
Price: $15.48
Centessa Pharmaceuticals Plc (NASDAQ:CNTA) is a clinical-stage biopharmaceutical company focused on developing innovative medicines to address unmet needs. Its pipeline includes several promising drugs, along with earlier-stage preclinical programs, such as additional OX2R agonists.
The company’s ORX750 drug has advanced Phase II studies for treating rare sleep disorders like narcolepsy and idiopathic hypersomnia. Moreover, positive interim data from Phase I studies showed ORX750’s potency and favorable pharmacokinetic profile. The drug’s safety, along with its potential for expanded applications in neurodegenerative and psychiatric disorders, could significantly increase the company’s valuation.
As of June 30, 2024, Centessa Pharmaceuticals Plc (NASDAQ:CNTA) held $294.8 million in cash, cash equivalents, and short-term investments. Based on current projections, these funds are expected to support operations through mid-2026 without the need to access the remaining available tranches of the Oberland credit facility.
Centessa Pharmaceuticals Plc (NASDAQ:CNTA) has received an average rating of Strong Buy from analysts.
9. Geron Corporation (NASDAQ:GERN)
Number of Hedge Fund Holders: 26
Price: $4.75
Geron Corporation (NASDAQ:GERN) is a clinical-stage biopharmaceutical company focused on developing and commercializing innovative treatments for blood cancers. The company’s lead product, a telomerase inhibitor currently in Phase 3 clinical trials, targets and inhibits the progression of cancer cells in the blood.
In June, Geron Corporation (NASDAQ:GERN) announced the FDA approval of Rytelo (Imetelstat) for the treatment of lower-risk myelodysplastic syndromes (MDS) in patients with transfusion-dependent anemia. This is a significant milestone for the drug.
The company’s annual revenue for 2024 (TTM) reached $1.37 million, marking a 479.32% increase from 2023 when revenue was recorded at $0.23 million. With FDA approval and strong revenue growth, Wall Street analysts predict a substantial rise in the company’s share price to $7.58 by August 2025. Analysts have given Geron Corporation (NASDAQ:GERN) stock a Buy rating, citing the company’s promising growth potential.
8. Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI)
Number of Hedge Fund Holders: 28
Price: $8.25
Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) is a life sciences company that provides products for drug development, diagnostics, vaccines, and human disease research. It has two segments namely Nucleic Acid Production and Biologics Safety Testing. The company serves biopharmaceutical companies, research organizations, and in vitro diagnostics companies.
Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) is a key player in nucleic acid production, which is critical for the development of therapies, vaccines, and diagnostics. This segment has shown strong growth, aided by new partnerships and facility expansions, particularly the upcoming Flanders 2 facility, which is expected to increase production capacity.
Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI)’s focus on innovation, its expanding product portfolio, and the operational efficiencies gained through strategic investments position it well for continued growth. The stock has received an average rating of Moderate Buy with a price target of $11.
Here’s what RGA Investment Advisors said about Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) in its Q1 2024 investor letter:
“We first purchased shares of Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI) early in Q3 of 2023. Much like our experience with META in 2022, almost immediately following our first purchases, the stock’s price tumbled. Given Maravai is a small cap, with a fairly illiquid float and volatile shares, we started our position on the smaller side. As the stock continued to stay weak, we used this as an opportunity to meaningfully increase our holding, much as we had done with META.
Maravai first hit public markets in late 2020 on the heels of its phenomenal success in helping the Pfizer/BioN-Tech mRNA vaccine approach commercial launch. Maravai was formed as a holding company backed by private equity firm GTCR. Its two key subsidiaries are TriLink Biotechnologies and Cygnus Technologies, in the Nucleic Acid Production (NAP) and Biologics Safety Testing (BST) segments respectively. TriLink is the subsidiary whose capabilities formed a critical piece of the Pfizer/BioNTech vaccine, while Cygnus is one of the most important quality control companies for the manufacturing of biologics. Each is an incredibly unique asset…” (Click here to read the full text)
7. Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT)
Number of Hedge Fund Holders: 32
Price: $9.38
Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) is a California-based biopharmaceutical company that develops treatments for dermatological diseases. Its lead product, Zoryve, is a topical roflumilast cream for plaque psoriasis as well as atopic dermatitis.
In Q1 2024, Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) recorded solid growth in prescriptions for both the cream and foam products. Net revenues totaled $21.6 million, with 70% coming from the cream and 30% from the foam, which is still in the early stages of its launch. To date, over 255,000 prescriptions for both products have been generated by more than 12,500 unique prescribers, reflecting the positive clinical outcomes experienced by healthcare professionals and their patients.
The strong performance and growth potential of Zoryve (Roflumilast) have made analysts quite positive about Arcutis Biotherapeutics, Inc.’s (NASDAQ:ARQT) outlook. The product has shown promising results in clinical trials for the treatment of psoriasis, and seborrheic dermatitis. It has also received FDA approval for mild to moderate atopic dermatitis. Since there is no branded product competition for seborrheic dermatitis, the approval and commercialization of the company’s product could help in gaining market share.
Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) stock has received a consensus rating of “Moderate Buy”. Meanwhile, the price target for the stock stands at $13.33, representing a potential upside of around 40% from the current price levels.
6. Immatics N.V. (NASDAQ:IMTX)
Number of Hedge Fund Holders: 33
Price: $11.73
Immatics N.V. (NASDAQ:IMTX) is focused on discovering effective targets for cancer immunotherapies by developing the right T cell receptors. The company’s pipeline includes two types of therapies: Engineered Adoptive Cell Therapies (ACTengine) and antibody-like TCR Bispecifics (TCER). Each therapy has its own advantages and is designed to treat patients at different disease stages and with various types of solid tumors.
Immatics N.V.’s (NASDAQ:IMTX) lead candidate IMA203 targeting solid tumors, has shown promising clinical data. For example, its most recent clinical trials revealed an improved overall response rate of 55%, with a median response duration exceeding 13 months, suggesting long-lasting effects. This indicates potential for breakthrough treatments in melanoma and other solid cancers.
Given its promising pipeline, analysts have set a price target of $16 and given Immatics N.V. (NASDAQ:IMTX) a ‘Buy’ rating, which reflects confidence in the company’s long-term prospects. At the end of Q2 2024, 33 hedge funds, tracked by Insider Monkey, reported owning a stake in Immatics N.V. (NASDAQ:IMTX), making it one of the best biotech stocks to buy under $20.
5. Cogent Biosciences, Inc. (NASDAQ:COGT)
Number of Hedge Fund Holders: 33
Price: $10.85
Cogent Biosciences, Inc. (NASDAQ:COGT) is a biotechnology company focused on developing targeted therapies for genetically defined diseases. The company is based out of Waltham, Massachusetts.
Currently, Cogent Biosciences, Inc. (NASDAQ: COGT) is advancing its lead drug, bezuclastinib, in multiple registration-directed trials (SUMMIT, APEX, and PEAK) aimed at treating systemic mastocytosis (SM) and gastrointestinal stromal tumors (GIST). These trials are progressing well, and the futility analysis has been passed without any suggested changes. Following these promising results, the management has reaffirmed their guidance for positive topline results.
In addition to this, Cogent Biosciences, Inc. (NASDAQ: COGT) company’s cash position remains strong at $389.9 million, and the management expects it to be sufficient to fund operations through 2027. Due to its strong cash position and the potential of its lead drug, analysts are optimistic about the company’s future. As a result, the stock has been rated as a “Moderate Buy,” with an average 12-month price target of $15, representing an upside potential of over 30%.
