10 Best Small-Cap Biotech Stocks with Massive Potential According to Hedge Funds

6. Cogent Biosciences, Inc. (NASDAQ:COGT)

Number of Hedge Fund Holdings: 31 

Cogent Biosciences, Inc. (NASDAQ:COGT) is a biotechnology company focused on developing precision therapies for genetically defined diseases. At its core, the company designs and develops small molecule therapeutics to treat rare conditions with significant unmet medical needs. Cogent Biosciences, Inc. (NASDAQ:COGT) primary focus is on creating treatments for diseases driven by genetic mutations, particularly in oncology.

A major catalyst for the company is the advancement of its clinical trials, particularly the SUMMIT and PEAK studies. Cogent Biosciences, Inc. (NASDAQ:COGT) recently announced that its Phase 3 PEAK trial in patients with Gastrointestinal Stromal Tumors (GIST) has completed enrollment and advanced past the interim futility analysis. This progress suggests that bezuclastinib, the company’s lead candidate, is showing promise in treating GIST. Additionally, the corporation’s SUMMIT trial for Non-Advanced Systemic Mastocytosis (NonAdvSM) is on track, with positive data reported from Part 1b of the study.

A significant challenge for Cogent Biosciences, Inc. (NASDAQ:COGT) is the competitive nature of the biotech industry, particularly in the development of treatments for rare diseases. For instance, Blueprint Medicines has already secured approval for Ayvakit in the non-AdvSM market, giving them a first-mover advantage. The company’s bezuclastinib must demonstrate superiority to existing treatments to capture market share, which adds pressure to their clinical trial outcomes.

As of Q3 2024, 31 hedge fund holders held stakes in the company with Soleus Capital being the largest stakeholder as tracked by the Insider Monkey database. Street analysts hold a consensus Strong Buy rating on the stock. With an upside potential of over 58%, COGT is one of the best biotech stocks on our list.