We recently published a list of 10 Hot Biotech Stocks Under $5. In this article, we are going to take a look at where Heron Therapeutics, Inc. (NASDAQ:HRTX) stands against other hot biotech stocks under $5.
The biotechnology sector is gaining new momentum with better market conditions, cutting-edge innovations, and growing investor attention. After a tough 2024, the industry is ready for major growth powered by developments in personalized medicine, AI-driven drug discovery, and rising demand for biologics. MarketsandMarkets reported that the global biotech market should grow from $483.0 billion in 2024 to $546.0 billion in 2025, reflecting a solid 13% increase. This growth shows the sector’s resilience and future potential.
A major factor in this upturn is the expected change in the Federal Reserve’s interest rate policies. Biotech needs lots of capital for expensive R&D and clinical tests, making it sensitive to shifting rate trends. Genetic Engineering and Biotechnology News noted that lower rates increase capital availability, helping biotech companies extend operations, attract venture funds, and speed up drug development. Analysts think a rate cut could free up billions in sidelined investment money for struggling new biotech companies seeking stable funding.
Biotech stocks are gaining traction among investors. Despite short-term ups and downs, biotech remains a high-growth area with good opportunities for risk-takers. Top investment banks have noticed biotech’s recovery. Goldman Sachs called it an “undervalued opportunity,” pointing to strong fundamentals, better clinical results, and a favorable regulatory setting. Goldman Sachs stressed that biotech stocks offer an “option-like structure” with strong upside potential, especially as interest rates fall. Simultaneously, JPMorgan analysts expect biotech funding to recover, noting signs of stability in research and manufacturing areas that suffered in previous funding droughts. Though biotech IPOs have been quiet since 2021, industry experts believe that falling interest rates and favorable conditions for investments could reopen the IPO window for companies seeking institutional backing.
Meanwhile, scientific breakthroughs are also driving biotech growth as gene editing, AI-powered drug discovery, and precision medicine are changing how we treat cancer, autoimmune disorders, and rare genetic conditions. With advances in CRISPR gene editing and cell therapies, biotech companies are addressing medical needs in ways unimaginable just ten years ago.
Our Methodology
To identify the 10 Hot Biotech Stocks Under $5, we screened for companies in the biotechnology sector trading below $5 per share while meeting key financial and growth criteria. We focused on stocks with a strong market capitalization, ensuring they had a solid financial foundation. Additionally, we selected companies that have gained at least 20% in the past six months, reflecting recent positive momentum, and exhibit a potential upside of at least 20%, indicating strong future growth prospects. After filtering stocks based on these parameters, we ranked them in ascending order of their potential upside to determine our final list.
To further validate our selections, we analyzed hedge fund sentiment using data from Insider Monkey’s Q4 2024 hedge fund database. Stocks with higher hedge fund ownership are often backed by institutional investors with deep research capabilities, adding an additional layer of confidence to their growth potential.
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).
A biomedical scientist using the latest equipment to engineer a drug delivery technology.
Heron Therapeutics, Inc. (NASDAQ:HRTX)
Potential Upside: 152.00%
Number of Hedge Fund Holders: 17
Heron Therapeutics, Inc. (NASDAQ:HRTX) has advanced its commercial-stage biotech portfolio, concentrating on novel drug delivery systems that improve patient care. Its Biochronomer technology allows extended drug release, making its treatments highly effective for managing chemotherapy nausea, post-surgery pain, and other conditions. With a robust pipeline and growing product use, Heron is cementing its position in the biotech industry.
Financially, Heron Therapeutics, Inc. (NASDAQ:HRTX) posted a total net revenue of $144.2 million for the year ended December 31, 2024, up 14% from the prior year. The company reached profitability in Q4 with $3.6 million in net income, a significant improvement from a $10.7 million loss in Q4 2023. Yearly adjusted EBITDA hit $8.6 million, reflecting improved operational efficiency and cost management. CINVANTI, its main injectable antiemetic, bounced back strongly with over $100 million in 2024 sales. Meanwhile, ZYNRELEF, the company’s post-op pain therapy, reached record revenues of $8.5 million in Q4, increasing 33% from the previous quarter. The company finished the year with $59.3 million in cash, giving it stable funding for growth.
Heron Therapeutics, Inc. (NASDAQ:HRTX) scored a major legal win on December 3, 2024, when the U.S. District Court ruled in the company’s favor in a patent dispute with Fresenius Kabi USA, LLC. The court upheld Heron’s CINVANTI patents, which remain protected until 2035. This prevents immediate generic competition, strengthening Heron’s market position and revenue stability.
Moreover, the company has significant momentum in its acute care products, with APONVIE and ZYNRELEF showing substantial yearly growth. ZYNRELEF now has broader coverage under the NOPAIN Act and enhanced ease of use with its new vial access needle (VAN), which should speed up adoption in 2025.
Heron Therapeutics, Inc. (NASDAQ:HRTX) is set for continued growth. Strong finances, increasing product adoption, and secure patent protection make it a hot biotech stock.
Overall, HRTX ranks 7th on our list of hot biotech stocks under $5. While we acknowledge the potential of HRTX, our conviction lies in the belief that certain 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 HRTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.