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.
9. Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH)
Number of Hedge Fund Holders: 23
Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) is a biopharmaceutical company that specializes in the development, manufacturing, marketing, and sale of generic and proprietary injectable, inhalation, and intranasal products. The company operates primarily in the United States, China, and France.
Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) announced net revenues of $191.2 million in Q3 2024, a 6% year-over-year increase. The company attributed this growth to the launch of Albuterol MDI, Baqsimi ($40.4 million), and Primatene Mist ($26.1 million). The company intends to increase the Baqsimi market and bolster its sales team, and Primatene Mist is on course to reach $100 million in yearly sales by the end of 2024.
Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) earned $60 million in cash flow and repurchased $35 million worth of shares, despite a decline in adjusted net income to $49.6 million ($0.96 per share) as a result of lower gross margins (53% vs. 60% in 2023) and higher operating expenses. Additionally, a $50 million share buyback program was launched by Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH). Future expansion is anticipated to be fueled by ongoing negotiations with the FDA over its insulin pipeline, reinforcing its position among the best pharmaceutical stocks.
As of Q4 2024, 23 hedge funds held stakes in Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH), as tracked by the Insider Monkey database.
8. Avadel Pharmaceuticals plc (NASDAQ:AVDL)
Number of Hedge Fund Holders: 27
Avadel Pharmaceuticals plc (NASDAQ:AVDL) is a biopharmaceutical company focused on developing medications for unmet medical needs, especially sleep disorders. Its lead product, Lumryz, is a once-nightly sodium oxybate formulation designed to treat excessive daytime sleepiness and cataplexy in adults with narcolepsy. The company generates revenue through product sales in the U.S. and licensing arrangements. The company also markets hospital-based sterile injectable drugs like Akovaz, Bloxiverz, and Vazculep, which contribute to its revenue.
Avadel Pharmaceuticals plc (NASDAQ:AVDL) reported strong financial results in Q3 2024, with net revenue rising to $50.0 million, up significantly from $7.0 million in the same period last year. Gross profit reached $43.9 million, reflecting strong margins, and the company achieved a positive adjusted EBITDA of $6.1 million. As of September 30, 2024, Avadel had $66 million in cash and equivalents.
Avadel Pharmaceuticals plc (NASDAQ:AVDL) has seen notable growth in the narcolepsy treatment market, with its lead product, Lumryz, showing strong adoption. By the end of Q3, 2,300 active patients were using Lumryz, and 700 new patients were added in the quarter alone. The FDA recently approved Lumryz for patients aged 7 and older, expanding its market potential. For 2025, the corporation expects Lumryz’s net product revenue to reach $240-$260 million, marking a 50% year-over-year growth. A recent favorable court ruling further strengthens the company’s market position and intellectual property rights.
7. Kiniksa Pharmaceuticals International, plc (NASDAQ:KNSA)
Number of Hedge Fund Holders: 27
Kiniksa Pharmaceuticals International, plc (NASDAQ:KNSA) is a biopharmaceutical company based in London, UK, dedicated to discovering, acquiring, developing, and commercializing treatments for patients with serious diseases that have unmet medical needs.
The emphasis Kiniksa Pharmaceuticals International, plc (NASDAQ:KNSA) placed on raising prescriber adoption and disease awareness showed encouraging Q3 2024 results. The fact that over 2,550 prescribers have written Arcalyst prescriptions for recurrent pericarditis since the medication’s debut in April 2021 serves as proof of this. The average total length of Arcalyst therapy for recurrent pericarditis increased to almost 27 months by the end of Q3 2024. The focus continues to be on Kiniksa Pharmaceuticals International, plc’s (NASDAQ:KNSA) clinical pipeline, which includes the continuing abiprubart studies for Sjögren’s disease.
Notably, Arcalyst’s rise among new and returning prescribers was sustained by continuous execution across the commercial organization, which includes deliberate investments in brand and illness awareness.
Kiniksa Pharmaceuticals International, plc (NASDAQ:KNSA) anticipates that Arcalyst’s net sales will reach $410–$420 million by 2024. The business has been recruiting and administering medication to participants in the Phase 2b clinical trial of Abiprubart for Sjögren’s disease. It anticipates maintaining a positive cash flow each year while investing in all aspects of its operations, including pipeline development and commercialization.
Industry experts claim that commercial initiatives and disease awareness efforts have been driving up prescriber adoption. With a focus on raising illness awareness and recurrent pericarditis diagnosis, Kiniksa Pharmaceuticals International, plc (NASDAQ:KNSA) anticipates sustained growth in Arcalyst sales and prescriber numbers, strengthening its position among the best pharmaceutical stocks. The business is still concentrating on investing to introduce novel therapies for crippling illnesses to the market.
6. Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN)
Number of Hedge Fund Holders: 27
Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) is a specialty company focused on developing and selling medications for central nervous system (CNS) diseases, including epilepsy, migraine, ADHD, and Parkinson’s disease. The company has built a strong presence in the CNS market with well-known products like Qelbree for ADHD, Trokendi XR, and Oxtellar XR for epilepsy, and treatments for Parkinson’s disease such as Apokyn and Gocovri.
Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) reported strong financial results for Q3 2024, with total revenues reaching $175.7 million, a 14% increase from the previous year. Net product sales grew to $170.3 million, which was driven by the success of key products like Qelbree and Gocovri. Operating earnings surged to $40.9 million, while net earnings improved significantly to $38.5 million, or $0.69 per diluted share, compared to a loss in the same period last year.
Qelbree, a non-stimulant ADHD treatment, saw a 68% increase in sales, reaching $62.4 million in Q3 2024. Supernus Pharmaceuticals, Inc. (NASDAQ:SUPN) is also expanding its pipeline with promising drug candidates like SPN-830, SPN-817, and SPN-820, positioning the company for continued growth in the CNS market.
5. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)
Number of Hedge Fund Holders: 29
Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) stands fifth among the best small cap pharma stocks to buy now. It is a leading company focused on developing treatments for gastrointestinal (GI) diseases, with its main product, Linzess (linaclotide), being the top prescription treatment for irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC) in the U.S. The company generates revenue through Linzess sales and collaborations with other companies like AbbVie. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) stands out for its deep expertise in the GI field and its strong pipeline of potential drugs, positioning it to address unmet medical needs and create significant market opportunities in the GI space.
Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)’s Q3 2024 results show a mixed performance. Total revenue dropped to $91.6 million, down from $113.7 million in Q3 2023, mainly due to lower collaboration revenue from AbbVie related to Linzess. While prescription demand for Linzess grew by 13%, the company’s revenue from the drug decreased because of pricing pressures.
Net income also saw a significant decline, falling to $3.6 million ($0.02 per share) from $15.3 million ($0.10 per share) in the same quarter last year. Adjusted EBITDA decreased to $26.2 million from $49.1 million, reflecting the impact of lower revenue and pricing challenges.
Linzess U.S. net sales dropped by 19%, from $279.0 million to $225.5 million. Collaboration revenue from AbbVie also decreased to $88.9 million, compared to $110.1 million in Q3 2023. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)’s focus remains on treating GI disorders, including IBS-C and CIC, with LINZESS, and they are also working on apraglutide for patients with short bowel syndrome (SBS). They expect to submit the NDA for apraglutide in Q1 2025, which could provide a major growth opportunity for the company.
4. Pacira BioSciences, Inc. (NASDAQ:PCRX)
Number of Hedge Fund Holders: 30
Pacira BioSciences, Inc. (NASDAQ:PCRX) is a specialty pharmaceutical company focused on developing non-opioid pain management solutions, with its primary product being Exparel, a long-acting local analgesic for postsurgical pain. The company sells Exparel directly to hospitals, surgery centers, and healthcare providers. Pacira BioSciences, Inc. (NASDAQ:PCRX) stands out in the industry due to its commitment to non-opioid treatments, aiming to reduce opioid use and address the opioid crisis by offering safer alternatives for pain management.
Pacira BioSciences, Inc. (NASDAQ:PCRX) reported its Q3 2024 financial results with total revenues of $168.6 million, slightly up from $163.9 million in Q3 2023. The increase was mainly driven by higher sales of Exparel and iovera, although Zilretta sales remained steady. Exparel net product sales grew to $132.0 million, reflecting a 3% increase in volume and a 1% price increase. Iovera also saw a slight sales rise, while Zilretta sales declined slightly.
As one of the best pharmaceutical stocks, the company posted a net loss of $143.5 million, or $3.11 per share, primarily due to a $163.2 million goodwill impairment charge. Excluding this charge, non-GAAP net income stood at $38.2 million, or $0.83 per share. Despite this, Pacira BioSciences, Inc. (NASDAQ:PCRX) demonstrated strong operational profitability, with adjusted EBITDA rising to $54.7 million from the prior quarter.
Pacira BioSciences, Inc. (NASDAQ:PCRX) also holds a healthy cash position of $453.8 million and generated $53.9 million in cash from operations. In a positive development, the Centers for Medicare and Medicaid Services (CMS) confirmed that Exparel and iovera are eligible for separate Medicare payments under the NOPAIN Act, which should boost the adoption of these non-opioid pain management products in hospital settings.
3. Dynavax Technologies Corporation (NASDAQ:DVAX)
Number of Hedge Fund Holders: 31
Dynavax Technologies Corporation (NASDAQ:DVAX) is a biopharmaceutical company focused on developing vaccines to protect against infectious diseases. Its flagship product, Heplisav-B, is a hepatitis B vaccine for adults that offers full protection with a two-dose regimen, unlike traditional three-dose vaccines. The company uses its proprietary CpG 1018 adjuvant technology to enhance immune responses, and it generates revenue from sales of Heplisav-B and the adjuvant, which is also used in several COVID-19 vaccines. The company sells its products primarily in the U.S. and Europe.
Dynavax Technologies Corporation (NASDAQ:DVAX) reported strong Q4 2023 results, with total revenues of $72.0 million, a 30% increase from Q4 2022. The company’s flagship product, Heplisav-B, saw net product revenue of $71 million, up 39% year-over-year. It also reported a GAAP net income of $7.1 million ($0.06 per share basic) and adjusted EBITDA of $13.4 million, marking a 225% increase from the previous year.
Looking ahead, Dynavax Technologies Corporation (NASDAQ:DVAX) expects Heplisav-B revenue to reach $305 to $325 million in 2025, with plans to capture at least 60% of the market by 2030. The company is diversifying its portfolio, securing a $30 million contract with the U.S. Department of Defense for its plague vaccine program and completing enrollment for a Phase 1/2 shingles trial. These developments highlight the company’s promising pipeline and strong position in the vaccine market, which makes it an attractive investment opportunity.
2. Evolus, Inc. (NASDAQ:EOLS)
Number of Hedge Fund Holders: 32
Evolus, Inc. (NASDAQ:EOLS) is a performance beauty company specializing in the cash-pay aesthetic market, focusing on neurotoxins and dermal fillers. Its flagship product, Jeuveau, is a botulinum toxin type A used to temporarily improve moderate to severe frown lines between the eyebrows in adults.
Evolus, Inc. (NASDAQ:EOLS) reported strong revenue growth for Q3 2024, reaching $61.1 million, a 22% increase compared to the same period in 2023. This growth outpaced the overall market and was driven by effective marketing strategies, the Evolus Rewards program, and increased brand recognition. The company maintained a healthy gross margin of 68.9%, reflecting efficient cost management.
However, Evolus, Inc. (NASDAQ:EOLS) faced challenges with high operating expenses, which totaled $76.6 million. A large portion of these costs came from selling, general, and administrative (SG&A) expenses, including stock-based compensation. As a result, the company reported a non-GAAP operating loss of $6.7 million, a significant drop from the $1.1 million operating income in the previous quarter. This highlights the need to manage expenses as revenue continues to grow.
Evolus, Inc. (NASDAQ:EOLS) ended the quarter with $85 million in cash, a decrease from $93.7 million in June, and a cash burn of $8.7 million. The company revised its 2024 revenue guidance to $260 million to $266 million, forecasting 29% to 32% growth. They also expect a strong gross profit margin of 68% to 71% and non-GAAP operating expenses between $185 million and $190 million. Looking ahead, the company plans to launch Evolysse in the U.S. by September 2025, which is expected to attract interest due to its unique cold HA technology.
1. Indivior PLC (NASDAQ:INDV)
Number of Hedge Fund Holders: 35
Indivior PLC (NASDAQ:INDV) specializes in treatments for opioid addiction and serious mental illnesses and tops the list of the best pharmaceutical stocks. Its main products include buprenorphine-based medications like Sublocade, Suboxone, and Subutex for opioid use disorder (OUD), as well as Perseris for schizophrenia. With around 85% of its revenue coming from the U.S., the company focuses on addressing the opioid crisis and developing innovative treatments for substance use disorders and mental health conditions, positioning itself as a key player in this critical and expanding market.
Indivior PLC (NASDAQ:INDV)’s Q4 2024 financial results show steady growth, with total net revenue reaching $298 million, a 2% increase from the previous year. The company’s key product, Sublocade, saw a 10% increase in net revenue, reaching $194 million. Full-year 2024 performance was even stronger, with total net revenue rising by 9% to $1.188 billion, and Sublocade’s revenue surging by 20% to $756 million. The company also maintained a healthy adjusted gross margin of 83% and a stable adjusted operating profit of $66 million in Q4.
Looking ahead, Indivior PLC (NASDAQ:INDV)’s growth strategy revolves around Sublocade, which is expected to reach a peak net revenue of over $1.5 billion. The company is focusing on cost reductions and reinvesting savings into expanding Sublocade’s market presence and advancing its pipeline in opioid use disorder (OUD) treatments. For 2025, the corporation forecasts total net revenue between $955 million and $1.025 billion, with Sublocade revenue projected at $725 million to $765 million.
Overall, Indivior PLC (NASDAQ:INDV) ranks first among the 12 best small cap pharma stocks to buy now. While we acknowledge the potential of pharma companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than INDV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
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