10 Best Biotech Stocks Under $5

Published November 14, 2021 at 8:53 am EST Updated September 7, 2026 at 1:04 pm EDT

In this article, we will discuss the 10 best biotech stocks under $5 in 2021.

The biotech industry has seen strong growth in terms of funding through venture capitalists, joint ventures, and co-developments in the recent past. As per McKinsey, venture capital investment increased by 45% in the biotech industry, bringing the worldwide total to $36.6 billion in 2020. Moreover, biotech companies raised over $34 billion through initial public offerings within the same year. Favorable state regulations, the development of improved products, significant investment in the biotechnology sector, and increased demand for synthetic biology are some of the factors considered to be propelling the market.

McKinsey studied the biotech sector’s economic performance and interviewed 20 C-level executives from small and midsize biotech and venture capital (VC) companies to develop a better understanding of global biotech funding in the light of the pandemic.

According to their research, many industries faced severe financial impact during Covid-19, but the biotech industry appeared to have survived the storm: it rebounded swiftly after a temporary slump. It broke the declining trend seen in many industries and drew record levels of investment through 2020 and early 2021, owing to improvements in science and technology. Biological science has been brought to the attention of various stakeholders, including patients, healthcare professionals, governments, and agencies all across the world as a result of the pandemic. The average share price of European and US biotech stocks rose at more than twice the pace of the S&P 500 between January 2020 and January 2021, while Chinese biotech stocks fared as much as six times better, with their average stock price more than doubling in a year.

Some of the most popular biotech stocks of 2021 include Pfizer Inc. (NYSE:PFE), Moderna, Inc. (NASDAQ:MRNA) and BioNTech SE (NASDAQ:BNTX).

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Our Methodology

With this context in mind, let’s analyze the 10 best biotech stocks under $5. We considered the analysts’ ratings, hedge fund sentiment, and long-term growth potential while choosing these stocks.

Why do we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Best Biotech Stocks Under $5

10. GeoVax Labs, Inc. (NASDAQ:GOVX)

Number of Hedge Fund Holders: 1

Price as of October 14, 2021: $4.16

GeoVax Labs, Inc. (NASDAQ:GOVX) is an Atlanta, Georgia-based biotech company that is involved in the development of cancer and infectious diseases treatment through vaccines and immunotherapy. The company caught the limelight when it gave PNP Therapeutics exclusive rights for the commercialization of Gedeptin, a product that aids in the treatment of solid tumors.

GeoVax Labs Inc.’s leading product in the pipeline is the preventive vaccine against a certain type of HIV that is prevalent in America, Australia, Japan, and Western Europe. The product has cleared Phase 1 and Phase 2a of human trials and entering the crucial stage of human testing and approval from the FDA. GeoVax Labs Inc. also has a vaccine to combat the Ebola virus that has shown 100% effectiveness in non-human primates and is on the way for Phase 1 human trials. The company has received notice of allowance for the patent of this vaccine from the US Patent and Trademark Office on October 15. GeoVax Labs Inc. also has a 100% single-dose vaccine to protect against the Zika virus in its pipeline.

With so many possibilities of a breakthrough, GeoVax Labs Inc. makes it to our list of the 10 best biotech stocks under $5.

9. Selecta Biosciences, Inc. (NASDAQ:SELB)

Number of Hedge Fund Holders: 11

Price as of October 14, 2021: $4.34

Selecta Biosciences, Inc. (NASDAQ:SELB) is a Massachusetts-based biotech company that is home to the ImmTOR platform that is designed to reduce unnecessary immune responses, even allowing for the redosing of life-saving gene therapies for the treatment of numerous diseases. In this regard, Selecta Biosciences, Inc. entered into a partnership with Takeda Pharmaceuticals in October 2021.

Since the start of the year, the stock price of Selecta Biosciences Inc. has risen by over 21%. Kristen Kluska at investment advisory Cantor Fitzgerald gave the stock an Overweight rating with a price target of $9.

The largest stake in Selecta Biosciences Inc. is held by Mark Lampert’s Biotechnology Value Fund, worth over $7 million as of the second quarter of 2021.

Apart from Selecta Biosciences, Inc., some notable biotech stocks include Pfizer Inc., Moderna, Inc., and BioNTech SE.

8. VistaGen Therapeutics, Inc. (NASDAQ:VTGN)

Number of Hedge Fund Holders: 16

Price as of October 14, 2021: $2.50

VistaGen Therapeutics, Inc. (NASDAQ:VTGN) is a company focused on developing treatments related to anxiety, depression, and other central nervous systems (CNS) disorders. The stock is placed eighth on our list of the 10 best biotech stocks under $5.

VistaGen Therapeutics product pipeline is led by PH94B. The odorless non-sedating nasal spray aids in reducing anxiety, and the company is doing a Phase 2A clinical trial to understand its impact on patients with Adjustment Disorder with Anxiety. In addition to this, the company is doing Phase 3 clinical trials to comprehend the effectiveness of PH94B in patients having Social Anxiety Disorder as well.

The stock offers tremendous upside as it was seen ‘significantly undervalued’ by Brian Skorney at investment management firm Baird. Skorney initiated coverage on the stock with an Outperform rating and a price target of $9.

OrbiMed Advisors, as the leading investor in VistaGen Therapeutics Inc., has a stake worth $45.6 million as of the second quarter of 2021. Overall, 16 hedge funds in Insider Monkey’s database were bullish on VistaGen Therapeutics Inc., compared to 15 in the preceding quarter, translating into an increase of 36.2% in the stake value.

Along with VistaGen Therapeutics Inc., Pfizer Inc., and Moderna Inc., BioNTech SE is one of the biotech stocks hedge funds are investing in.

7. Verastem, Inc. (NASDAQ:VSTM)

Number of Hedge Fund Holders: 21

Price as of October 14, 2021: $2.75

Verastem, Inc. (NASDAQ:VSTM) is ranked seventh on our list of the 10 best biotech stocks under $5. It is a Massachusetts-based biotech company involved in the development of cancer treatments. The company is making headways in the treatment of lung and ovarian cancer.

Verastem Oncology recently revealed the results of VS-6766 and defactinib Phase I/II FRAME study in the treatment of ovarian cancer. The study revealed a 46% partial response rate across the patient sample. In addition to this, the company announced a partnership with Amgen Inc. (NASDAQ:AMGN) to evaluate the impact of VS-6766 and sotorasib in a certain type of lung cancer. The clinical trials are expected to commence by the end of this year.

Verastem Inc. was given a Buy rating earlier this year at Alliance Global Partners with a price target of $6. Analyst Matt Cross stated that Verastem Inc. had “undergone an extensive corporate makeover in the last 18 months.”

The company also saw a considerable increase in hedge fund positions over the last two quarters. Out of the 873 funds in Insider Monkey’s database, 21 held stakes worth $241.4 million in Verastem Inc. at the end of the second quarter of 2021, up from 12 in the preceding quarter.

6. Akebia Therapeutics, Inc. (NASDAQ:AKBA)

Number of Hedge Fund Holders: 14

Price as of October 14, 2021: $2.92

Akebia Therapeutics, Inc. (NASDAQ:AKBA) is a Cambridge, UK-based biotech company founded in 2018 following the merger with Keryx Biopharmaceuticals. The company is focused on developing treatments against kidney diseases. It is placed sixth on our list of the 10 best biotech stocks under $5.

The company carries two main assets presently. The first already approved in the US drug is Auryxia. The drug aids in controlling serum phosphorus levels in dialysis-dependent Chronic Kidney Disease (CKD) patients and iron deficiency anemia for CKD patients who are not dependent on dialysis.

The second drug is vadadustat. Akebia Therapeutics Inc. (NASDAQ:AKBA) has filed a New Drug Application with FDA following Phase-III trials of the drug and expects an outcome in March 2022. The drug is targeted towards the treatment of anemia due to CKD. Akebia Therapeutics (NASDAQ:AKBA) vadadustat is hoping to become the first approved drug of its kind after FibroGen Inc’s (NASDAQ: FGEN) drug was not given approval by the FDA in July.

On the expectation of approval, Christopher Raymond at Piper Sandler has given the stock an Overweight rating with an $8 price target, reflecting a potential upside of over 170% from the current stock price.

Just like Akebia Therapeutics Inc., Pfizer Inc., Moderna, Inc., and BioNTech SE are some of the biotech stocks gaining positive analysts’ ratings.

5. NuCana plc (NASDAQ:NCNA)

Number of Hedge Fund Holders: 7

Price as of October 14, 2021: $2.74

NuCana plc (NASDAQ:NCNA) is a UK-based biotech company focused on discovering treatments for different types of cancer. The company has its proprietary ProTide technology that has played an integral part in the development of notable antiviral drugs like sofosbuvir by Gilead Sciences, Inc. (NASDAQ:GILD).

In addition to this, the FDA gave fast track designation to NuCana’s Acelarin (NUC-1031) as the first line of treatment for patients with advanced biliary tract cancer. Although the drug is in Phase 3 study, the Fast Track status is granted to drugs that are viable and cater to serious medical needs. As a result of this grant, NuCana plc’s (NASDAQ:NCNA) stock saw a surge of 21% in premarket trading.

The consensus price target for NuCana plc (NASDAQ:NCNA) among the four analysts providing 12-month predictions is $20.14.

4. Arbutus Biopharma Corporation (NASDAQ:ABUS)

Number of Hedge Fund Holders: 5

Price as of October 14, 2021: $4.15

Arbutus Biopharma Corporation (NASDAQ:ABUS) is a Canadian biotech company that is focused on developing a treatment for hepatitis B infection. Around its main drug, AB-729, Arbutus Biopharma Corporation (NASDAQ:ABUS) is working on mid-stage trials with three different partners and expects results from these trials in the second half of 2021 and early 2022.

Arbutus Biopharma Corporation (NASDAQ:ABUS) was also in the limelight after it won a patent infringement case against Moderna, Inc. for the use of its lipid nanoparticles that help in the delivery of drugs to certain cells. This delivery system has been employed in the development of the COVID-19 vaccine by Moderna. The win can open the door to potential royalties from the vaccine that is expected to generate annual revenues of $20 billion for Moderna.

The company was covered by B. Riley Securities with a Buy rating and a price target of $7.

3. Leap Therapeutics, Inc. (NASDAQ:LPTX)

Number of Hedge Fund Holders: 9

Price as of October 14, 2021: $3.32

Leap Therapeutics, Inc. (NASDAQ:LPTX) is a single-asset biotech firm founded in 2011. The single asset therapeutic DKN-01 is an antibody that targets the WNT antagonist DKK1, which is commonly found in cancer. DKK1 is crucial to the growth of carcinogenic cells.

Leap Theurapetics, Inc. has seen a rise of over 85% on the back of positive results of Phase 2a study for DKN-01 in combination with other therapies and chemotherapy in gastric cancer. This provides potential upside in the future as the research gains momentum further through favorable results.

Mara Goldstein, an analyst at Mizuho Financial Group, seems to be bullish on DKN-01 as she initiated coverage on Leap Therapeutics Inc. with a Buy rating and a target price of $6.

However, this should be pointed out that Leap has licensed DKN-01 from Eli Lilly and Company (NYSE:LLY), and in case of approval from the FDA, the company would have to pay royalties on potential net sales. Furthermore, the company would have to pay potential royalties to Lonza for licensing its technology.

2. Voyager Therapeutics, Inc. (NASDAQ:VYGR)

Number of Hedge Fund Holders: 13

Price as of October 14, 2021: $4.40

Voyager Therapeutics, Inc. (NASDAQ:VYGR) is a Massachusetts-based biotechnology organization that is home to the proprietary RNA-based functional screening technology, TRACER. The technology helps in identifying distinct capsids that can target certain cells and tissues more effectively as opposed to the current methods. The company also has proprietary adeno-associated virus (AAV) capsids through TRACER technology.

Voyager Therapeutics, Inc. has been in the limelight following an agreement with Pfizer Inc. that would allow the pharmaceutical giant to license drugs formulated as a result of Voyager’s RNA-driven TRACER screening technology. In exchange, Voyager Therapeutics, Inc. would receive a $30 million payment upfront and milestone payments of $600 million along with sizeable royalties on net product sales.

Yanan Zhu, an analyst at Wells Fargo, commented that the licensing agreement between the two companies validates the TRACER screening technology and potentially opens the door to more such deals with other partners down the line. Investment firm Baird upgraded the stock from a Neutral to an Outperform rating and raised the target price from $6 to $9 based on this development.

At the end of the second quarter of 2021, 13 hedge funds in Insider Monkey’s database held stakes in Voyager Therapeutics, Inc., worth $27.9 million, up from 9, worth $24.1 million in the preceding quarter.

1. Seelos Therapeutics, Inc. (NASDAQ:SEEL)

Number of Hedge Fund Holders: 13

Price as of October 14, 2021: $2.35

Seelos Therapeutics, Inc. (NASDAQ:SEEL) is involved in the development of treatment for patients with central nervous system (CNS) disorders. The company is betting on realizing the potential of SLS-002, intranasal racemic ketamine for the treatment of major depression disorders (MDD) and acute suicidal ideation and behavior (ASIB). Presently, the research is in the proof-of-concept stage, and if approved, it would only be the second medication of its kind, following the approval of Johnson & Johnson’s fast-acting Spravato in June 2020. Seelos Therapeutics, Inc. (NASDAQ:SEEL) also has a couple of gene therapy medications to combat Parkinson’s disease.

On the back of a positive outlook from the research, Johnathan Aschoff, equity analyst at Roth Capital, upgraded Seelos Therapeutics, Inc. from a Neutral to a Buy rating with a target price of $8, which reflects an upside potential of over 240% from the current stock price. Investment advisory firms B. Riley and Guggenheim also covered the stock and gave a Buy rating with a target price of $11 and $8, respectively.

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