In this article, we will be talking about the 12 best small cap pharma stocks to buy now.
Impact of US Tariffs and Obesity Drug Performance on the Pharmaceutical Industry
Emily Field, Head of European Pharma Research at Barclays, spoke on CNBC on February 20 about the performance of obesity medications, the effects of US tariffs, and the dynamics of the pharmaceutical industry. According to her, the industry might not perform poorly at least in the first half of this year. The effectiveness of obesity medications is still up for debate, though, as leading companies in the field have shown inconsistent results.
Speaking about the tariffs, she stated that since some businesses assemble their products in the US after producing them overseas, their implementation raises several unanswered questions for the pharmaceutical industry. These businesses therefore have relatively low manufacturing costs, which is an important factor to take into account when assessing the effects of tariffs. She thought that these businesses could easily absorb the higher expense of the tariffs. The topic hasn’t come up much on earnings calls this quarter, and the market is nearing the end of the reporting season.
Eli Lilly’s Chief Scientific Officer spoke with CNBC’s Health and Pharma correspondent Angelica Peebles about the weight reduction industry. The domain presents opportunities for easier-to-use treatments, including tablets, and medications that help individuals lose weight, she noted based on the conversation. How much weight reduction users need to observe on top of what they already have is another topic of discussion about the subject. According to Dan Skovronsky, Chief Scientific Officer of Eli Lilly, the majority of the audience seems to benefit from medications that provide about 20% weight loss. According to him, the market for stronger medications that offer at least 25% is smaller.
He also believed that the potential benefits of these weight reduction medications for a wide range of illnesses were the most fascinating thing he had witnessed in his work as a scientist and doctor. The patterns they have been observing in the answers from patients serve as their current source of knowledge.
A closeup view of a magnified pharmaceutical tablet.
Our Methodology
For our methodology, we selected stocks with a market capitalization between $250 million and $2 billion and ranked them based on the highest hedge fund sentiment according to Insider Monkey’s database, as of Q4 2024.
Here is our list of the 12 best small-cap pharma stocks to buy now.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12. Anika Therapeutics, Inc. (NASDAQ:ANIK)
Number of Hedge Fund Holders: 21
Anika Therapeutics, Inc. (NASDAQ:ANIK) is a global joint preservation company specializing in early intervention orthopedic care. It develops, manufactures, and commercializes products based on hyaluronic acid (HA) technology, focusing on osteoarthritis pain management, regenerative solutions, soft tissue repair, and bone-preserving joint technologies. The company’s portfolio includes visco-supplementation treatments, joint implants, surgical instruments, and advanced wound care solutions.
Anika Therapeutics, Inc. (NASDAQ:ANIK) reported its Q3 2024 financial results on October 31, 2024, showing a 7% revenue decline compared to the same period last year, with total revenue of $38.8 million. The decline was mainly due to reduced market access and competitive pricing pressures on their U.S. OA Pain Management products, particularly with their partner J&J Medtech, and weaker performance in the businesses they are exiting, like Arthrosurface and Parcus Medical. However, the company saw positive growth in its Regenerative Solutions, with revenue rising 17% to $2.7 million, driven by strong demand for the Integrity Implant System, which saw a 40%+ increase from the previous quarter.
Anika Therapeutics, Inc. (NASDAQ:ANIK) posted a net loss of $29.9 million, or $2.03 per share, but its adjusted net income was a loss of $3.8 million, or $0.25 per share. Adjusted EBITDA stood at $5.4 million, and the company ended the quarter with a cash balance of $62.4 million. Despite the challenges, the corporation is focusing on its core hyaluronic acid (HA) technology and its Regenerative Solutions portfolio, divesting non-core assets like Arthrosurface and Parcus Medical to concentrate resources on higher-growth areas.
Looking forward, the company sees strong potential in its products. The Integrity Implant System’s growth signals promising prospects for its Regenerative Solutions.
Additionally, the upcoming U.S. launch of Hyalofast and the potential approval of Cingal could provide significant growth opportunities, positioning Anika as a contender among the best pharmaceutical stocks.
As of Q4 2024, 21 hedge funds held stakes in the company, as tracked by the Insider Monkey database.
11. Collegium Pharmaceutical, Inc. (NASDAQ:COLL)
Number of Hedge Fund Holders: 22
Collegium Pharmaceutical, Inc. (NASDAQ:COLL) is a specialty pharmaceutical company focused on developing abuse-deterrent opioid medications for chronic pain management. Its key products include Xtampza ER, extended-release oxycodone, and Nucynta products (ER and IR), which are tapentadol-based treatments for severe, persistent pain. The company aims to provide effective pain relief while reducing the risks of opioid misuse and abuse. The stock stands eleventh among the best small cap pharma stocks to buy now.
Collegium Pharmaceutical, Inc. (NASDAQ:COLL), which focused on pain management historically, has recently expanded into neurology with the acquisition of Ironshore Therapeutics. This move brings Jornay PM (a stimulant for ADHD) into their product lineup, alongside their core pain management products: Belbuca (for chronic pain) and Xtampza ER (an abuse-deterrent oxycodone). In the third quarter of 2024, the company reported strong financial performance with a record net revenue of $159.3 million, a 17% increase from the previous year. The growth was driven by higher sales of Belbuca and Xtampza ER, which brought in $53.2 million and $49.5 million, respectively.
The company achieved profitability with a GAAP net income of $9.3 million, and adjusted EBITDA reached a record $105.1 million, marking an 18% increase year-over-year. Collegium Pharmaceutical, Inc. (NASDAQ:COLL) also reaffirmed its 2024 financial guidance, expecting net product revenues of $620.0 to $635.0 million and adjusted EBITDA between $395.0 and $405.0 million.
The Insider Monkey database shows that in Q4 2024, 22 hedge funds owned shares in Collegium Pharmaceutical, Inc. (NASDAQ:COLL), up from 18 in the previous quarter.
10. Esperion Therapeutics, Inc. (NASDAQ:ESPR)
Number of Hedge Fund Holders: 22
Esperion Therapeutics, Inc. (NASDAQ:ESPR) is a pharmaceutical company focused on developing treatments for cardiovascular and cardiometabolic diseases. Its main products, Nexletol and Nexlizet, are oral medications that lower LDL cholesterol and reduce cardiovascular risk, providing options for patients who can’t tolerate statins or need additional treatment. What sets the company apart is its development of the first FDA-approved, non-statin oral drugs for LDL-C lowering, targeting a significant patient group with unmet needs in cardiovascular care.
Esperion Therapeutics, Inc. (NASDAQ:ESPR) reported strong growth in its Q3 2024 financial results. Total revenue increased by 52% year-over-year to $51.6 million, with U.S. product revenue rising 53% to $31.1 million, which was driven by a 44% increase in retail prescriptions. Collaboration revenue also grew by 50% to $20.5 million, boosted by higher royalty and product sales. Prescription growth was solid, with a 12% increase in total retail prescription equivalents and an 18% rise in new-to-brand prescriptions. October saw even stronger growth, with a 17% increase in total prescriptions.
Despite a net loss of $29.5 million, an improvement from last year’s $41.3 million loss, Esperion Therapeutics, Inc. (NASDAQ:ESPR)’s financial position strengthened with cash and cash equivalents totaling $144.7 million as of September 30, 2024, compared to $82.2 million at the end of 2023. Operating expenses were mixed, with R&D costs down 30% due to the completion of a major study, while SG&A expenses rose 20% due to increased sales and promotional activities.
Esperion Therapeutics, Inc. (NASDAQ:ESPR) also continues to build strategic partnerships with companies like Daiichi Sankyo and Otsuka Pharmaceutical, which help expand its market reach in Europe and Asia. Strong clinical data supporting the cardiovascular benefits of its products adds to the company’s competitive position.
