In this article, we discuss the 10 biotech penny stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Biotech Penny Stocks to Buy Now.
The fears around the spread of the coronavirus have returned to haunt people around the world as governments scramble to contain Omicron, a new variant of COVID-19 that has been designated as “high risk” by the World Health Organization. Airlines have curbed travel from the countries where the new variant was first detected and border closures are once again on the cards as the market prepares for another potential blip in the economic recovery. However, United States President Joe Biden has ruled out another lockdown in winters.
In this uncertain market, the stocks of pharma firms like Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), AbbVie Inc. (NYSE:ABBV), Bristol-Myers Squibb Company (NYSE:BMY), Abbott Laboratories (NYSE:ABT), and GlaxoSmithKline plc (NYSE:GSK) have surged as they once again become the center of focus in the search for a vaccine that is potent against the new variant. Emerging biotech firms, some of which are discussed below, are also working on developing a vaccine for the new variant.
The strong growth registered by biotech stocks this year has come as a surprise to investors who have been caught off-guard by the momentum-carrying abilities of the sector. In 2020, according to a report by McKinsey, the average share prices of biotech firms had climbed at twice the rate of the benchmark S&P 500. Chinese firms had fared even better than their European and American counterparts in this regard, soaring by 600%. Within the industry, biotech firms outperformed biopharma companies.
Biotech Stocks: Future Outlook and Catalysts
At the beginning of this year, with vaccine deployment already underway, venture capitalists had already invested $3 billion into biotech firms, a jump of over 60% year-on-year. Biotech IPOs accelerated as well, raising on average $150 million at the initial offerings. This represented a 17% increase in IPO proceeds compared to 2020. Other deals within the industry have also become more popular. McKinsey estimates that the average deal size in the biotech universe in 2021 was $500 million, up 66% year-on-year.
Professional services firm Deloitte claims that like every other industry, the biotech world is also feeling the effects of the rapid digitization of the world. Corporate funding for digital health initiatives, which was around $10 billion in 2019, more than doubled in 2020 to reach a value of $21 billion. Customer-centric commercial models and new types of collaborations will likely define the industry going forward, Deloitte has predicted. Environment, social, and governance concerns will also remain a key focus for investors as they ramp up spending in biotech.
According to Grand View Research, the global biotech market will grow at a compound annual growth rate of close to 16% in the next seven years to reach a size of $2.44 trillion. Asia-Pacific is likely to read this growth, as easing of rules in China and India leads to a biotech boom in the Asian manufacturing hub. Government initiatives will also play their role in this regard. Overall, the region is likely to grow at a rate one percentage point higher than the global forecast in the next seven years.
The biotech and pharma industry has over 250 COVID-19 drugs in their pipelines, in addition to therapeutics. These firms, flush from pandemic highs, are also estimated to possess close to $200 billion in reserves for mergers and acquisitions. Investors who are eager to take advantage of the rally in biotech stocks as the race for a new vaccine begins should consider some cheap options in the sector that have explosive growth potential.
Our Methodology
These stocks were picked based on upcoming growth catalysts. The progress of the development of pipeline drugs for each are discussed alongside business fundamentals and analyst ratings to provide readers with some context for their investment choices. The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Photo by National Cancer Institute on Unsplash
Biotech Penny Stocks to Buy Now
10. Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN)
Number of Hedge Fund Holders: 2
Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) is a biopharma firm that focuses on the development of novel therapies for enhanced delivery of oxygen through the body. The company recently obtained regulatory approval for trans sodium crocetinate, a lead drug candidate for the treatment of Interstitial Lung Disease.
In August, the share price of Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) had soared after it announced updates to an ongoing COVID-19 study and forecast that it had a cash runway to last through 2023.
At the end of the third quarter of 2021, 2 hedge funds in the database of Insider Monkey held stakes worth $634,000 in Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN), the same as in the previous quarter worth $1.1 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in the company with 1.1 million shares worth more than $574,000.
Just like Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), AbbVie Inc. (NYSE:ABBV), Bristol-Myers Squibb Company (NYSE:BMY), Abbott Laboratories (NYSE:ABT), and GlaxoSmithKline plc (NYSE:GSK), Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) is one of the stocks attracting the attention of growth investors.
9. Asensus Surgical, Inc. (NYSE:ASXC)
Number of Hedge Fund Holders: 3
Asensus Surgical, Inc. (NYSE:ASXC) is a medical device company that markets robotics solutions for enhancement of minimal invasive surgery. The stock has surged in the past few days after the firm posted market-beating earnings for the third quarter.
In September, investment advisory HC Wainwright maintained a Buy rating on Asensus Surgical, Inc. (NYSE:ASXC) stock with a price target of $4, noting that recent partnerships indicated that the firm was poised for growth in 2022 and beyond.
At the end of the third quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $1.1 million in Asensus Surgical, Inc. (NYSE:ASXC).
8. Histogen Inc. (NASDAQ:HSTO)
Number of Hedge Fund Holders: 3
Histogen Inc. (NASDAQ:HSTO) is a biotech firm that develops therapies based on fibroblast cells grown under simulated embryonic conditions. In August, the company had announced that emricasan, a drug for the treatment of COVID-19, had shown that it was safe and well tolerated.
HC Wainwright analyst Douglas Tsao recently initiated coverage of Histogen Inc. (NASDAQ:HSTO) stock with a Buy rating and a price target of $2.40, underlining that the firm was being overlooked by investors despite a focus on first-in-class regenerative therapeutics.
At the end of the third quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $90,000 in Histogen Inc. (NASDAQ:HSTO), the same as in the preceding quarter worth $282,000.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Histogen Inc. (NASDAQ:HSTO) with 71,227 shares worth more than $54,000.
7. iBio, Inc. (NYSE:IBIO)
Number of Hedge Fund Holders: 4
iBio, Inc. (NYSE:IBIO) provides contract development and manufacturing services to the healthcare industry. The stock has surged more than 14% since November 29 after the company announced that IBIO-202, a next-gen vaccine candidate, might be effective against the new Omicron variant of COVID-19.
MP Securities analyst Roy Buchanan recently initiated coverage of iBio, Inc. (NYSE:IBIO) stock with an Outperform rating and a price target of $1.5. In an investor note, the analyst lauded the lead oncology asset of the firm as “novel in approach and design”.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm GLG Partners is a leading shareholder in iBio, Inc. (NYSE:IBIO) with 207,729 shares worth more than $220,000.
At the end of the third quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $506,000 in iBio, Inc. (NYSE:IBIO).
6. ReWalk Robotics Ltd. (NASDAQ:RWLK)
Number of Hedge Fund Holders: 4
ReWalk Robotics Ltd. (NASDAQ:RWLK) is a medical device company that markets robotic exoskeletons for individuals with mobility impairments. On November 5, the share price of the firm jumped over 50% after it received the Breakthrough Device designation for its ReBoot device from regulatory bodies. The device is an orthotic exo-suit designed to assist ambulatory functions and is powered by batteries.
ReWalk Robotics Ltd. (NASDAQ:RWLK) posted earnings for the third quarter on November 10, reporting a revenue of close to $2 million, up 162% compared to the revenue over the same period last year and beating expectations by $0.3 million.
Among the hedge funds being tracked by Insider Monkey, New Jersey-based investment firm Sabby Capital is a leading shareholder in ReWalk Robotics Ltd. (NASDAQ:RWLK) with 1.6 million shares worth more than $2.4 million.
At the end of the third quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $3 million in ReWalk Robotics Ltd. (NASDAQ:RWLK), up from 3 in the preceding quarter worth $4 million.
In addition to Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), AbbVie Inc. (NYSE:ABBV), Bristol-Myers Squibb Company (NYSE:BMY), Abbott Laboratories (NYSE:ABT), and GlaxoSmithKline plc (NYSE:GSK), ReWalk Robotics Ltd. (NASDAQ:RWLK) is one of the stocks on the radar of elite investors.
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Disclosure. None. 10 Biotech Penny Stocks to Buy Now is originally published on Insider Monkey.
