In this article, we will look at the 10 best biotech stocks under $10.
The Global Biotech Industry
According to an industry analysis report by Grand View Research, the global biotech industry was valued at $1.02 trillion in 2021 and is expected to grow at a compound annual growth of 13.9% from 2022 to 2030. The Covid-19 pandemic has resulted in the surging growth of the global biotech industry over the past two years. By 2030, Grand View Research forecasts the global biotech industry to generate a revenue of $3.87 trillion. According to Grand View Research’s findings, North America was the dominant region and accounted for a 44.20% share of the global biotech industry in 2021, and the Asia Pacific is forecasted to be the fastest-growing region for biotech applications from 2022 to 2030.
Biotech IPOs in 2022
IPOs have been on pause in 2022 due to high inflation, rising interest rates, and a turbulent market. However, the biotech industry is still attracting investors and venture capitalists. On September 18, the Wall Street Journal reported that as of September 15, 18 biotech companies have gone public in 2022. The Covid-19 pandemic had wreaked havoc around the world, but it certainly boosted the biotech industry. 2020 and 2021 were the years of biotech IPOs, with 91 biotech startups going public in 2020 and the listing of 111 biotech companies in 2021. While the near-term looks bleak for biotech IPOs, the head of healthcare equity capital markets at SVB Securities, Rahul Chaudhary, told the Wall Street Journal that he sees a strong reopening of the IPO market in early 2023.
Biotech Stocks are Defensive
Jefferies managing director and biotech analyst, Michael Yee, appeared in an interview on CNBC and discussed opportunities in the biotech space amid skyrocketing inflation and rising interest rates. According to Michael Yee, biotech stocks are recession-proof and inflation resilient. Michael Yee said:
“This group (biotech) has been overlooked for the past year and a half… Certainly, as the Fed was raising interest rates, we were certainly worried about a global recession, a lot of big-cap pharma and biotech stocks have done well, both because of their defensive nature and dividend yield… We do think this has been a good sector for the second half and I do think we can see a continued move up…”
The biotech industry has attracted investors in recent years due to the groundbreaking work done by healthcare giants such as Johnson & Johnson (NYSE:JNJ), Merck & Co., Inc. (NYSE:MRK), and Amgen, Inc. (NASDAQ:AMGN) to battle the Covid-19 pandemic. With technological advancements in artificial intelligence and machine learning, biotech companies are innovating constantly and developing novel therapies to treat critical diseases. In this article, we will review some of these companies that have the potential to gain massively in the foreseeable future.
Photo by National Cancer Institute on Unsplash
Our Methodology
To determine the 10 best biotech stocks to buy under $10, we reviewed the biotech industry and spotted companies, major players, and emerging players alike, that were trading below $10. We then narrowed down our selection to companies that had promising fundamentals, strong cash positions, and positive market sentiment. We have mentioned analyst ratings and the hedge fund sentiment along with each stock as well as their share price as of September 23. We have ranked these stocks in increasing order of their popularity among elite hedge funds.
10 Best Biotech Stocks Under $10
10. Minerva Neurosciences, Inc. (NASDAQ:NERV)
Share Price as of September 23: $9.33
Number of Hedge Fund Holders: 2
Minerva Neurosciences, Inc. (NASDAQ:NERV) is a clinical-stage biotech company that designs, develops, and commercializes therapies for the treatment of central nervous system diseases. On August 22, Minerva Neurosciences, Inc. announced that it has submitted a New Drug Application to the FDA for MIN-101, the company’s novel treatment for patients with schizophrenia.
On August 23, Steve Cohen’s Point72 Asset Management disclosed that it owns roughly 0.47 million shares of Minerva Neurosciences, Inc. which represents an approximately 8.8% passive stake in the company. As of September 23, Minerva Neurosciences, Inc. has gained 44% over the past six months.
Shortly after the company filed an NDA with the U.S. Food and Drug Administration, H.C. Wainwright analyst Douglas Tsao revised his price target on Minerva Neurosciences, Inc. to $24 from $40 and reiterated a Buy rating on the shares.
Insider Monkey spotted Minerva Neurosciences, Inc. on 2 hedge fund portfolios at the close of Q2 2022. The funds held collective stakes of $0.38 million in the company. As of June 30, Millennium Management owns more than 79,000 shares of Minerva Neurosciences, Inc. and is the largest shareholder in the company. The fund’s stakes are valued at $0.26 million.
For investors looking to invest in large-cap biotech stocks, some of the best companies in that category include Johnson & Johnson, Merck & Co., Inc., and Amgen, Inc..
9. Tenaya Therapeutics, Inc. (NASDAQ:TNYA)
Share Price as of September 23: $3.18
Number of Hedge Fund Holders: 12
Tenaya Therapeutics, Inc. (NASDAQ:TNYA) is involved in the research and development of therapies for heart disease. The company uses three product platforms to develop its therapies: Gene Therapy, Cellular Regeneration, and Precision Medicine. On July 6, Tenaya Therapeutics, Inc. published preclinical research related to HDAC6 inhibitors being used to treat heart disease in the July 6 issue of Science Translational Medicine.
Shortly after the company’s announcement of its publication, Piper Sandler analyst Yasmeen Rahimi maintained her Overweight rating and $40 price target on Tenaya Therapeutics, Inc. and noted that the company has strengthened the credibility of its approach to treating heart failure. On September 6, Tenaya Therapeutics, Inc. received FDA approval for testing its TN-301, a small molecule inhibitor designed to treat heart failure.
Insider Monkey spotted 12 hedge funds that held stakes in Tenaya Therapeutics, Inc. at the end of Q2 2022. The total stakes of these hedge funds amounted to $58.3 million.
As of June 30, Casdin Capital owns more than 3.5 million shares of Tenaya Therapeutics, Inc. and is the largest shareholder in the company. The investment covers 1.7% of Casdin Capital’s 13F portfolio.
8. Ovid Therapeutics Inc. (NASDAQ:OVID)
Share Price as of September 23: $1.85
Number of Hedge Fund Holders: 12
Ovid Therapeutics Inc. (NASDAQ:OVID) is an emerging biotech company that designs therapies for epilepsies, seizure-related disorders, and neurological disorders. This August the company announced that it is on its way to file with the FDA to run clinical trials for OV329, the company’s novel therapy to treat epilepsy. The company is expected to file for an IND with the FDA in the back half of 2022.
Ovid Therapeutics Inc. has enough cash to fund its operations moving forward as it starts clinical studies for OV329. On August 9, Ovid Therapeutics Inc. announced that as of June 30, the company has $152.4 million worth of cash, cash equivalents, and marketable securities.
On August 29, Citi analyst Yigal Nochomovitz raised his price target on Ovid Therapeutics, Inc. to $2.50 from $2.40 and maintained a Neutral rating on the shares.
At the close of Q2 2022, 12 hedge funds were long Ovid Therapeutics Inc. and held stakes worth $47.4 million in the company. Of those, Mark Lampert’s Biotechnology Value Fund was the top shareholder in the company with stakes worth $14.73 million.
7. AbCellera Biologics Inc. (NASDAQ:ABCL)
Share Price as of September 23: $9.20
Number of Hedge Fund Holders: 17
AbCellera Biologics Inc. (NASDAQ:ABCL) operates an AI-powered antibody discovery platform through which the company analyzes the natural immune system and looks for antibodies that can be produced as drugs. On September 21, AbCellera Biologics Inc. announced that it has begun construction of its new 380,000-square-foot facility based in Vancouver, Canada.
AbCellera Biologics Inc. is one of the best biotech stocks to buy now. As of September 23, the stock is trading at a PE multiple of 15x.
Wall Street analysts are bullish on AbCellera Biologics Inc.. On July 26, Piper Sandler analyst Do Kim raised his price target on AbCellera Biologics Inc. to $22 from $21 and maintained a buy-side Overweight rating on the shares. This August, Credit Suisse analyst Tiago Fauth maintained an Outperform rating on AbCellera Biologics Inc. and adjusted his price target on the shares to $34 from $40.
At the end of Q2 2022, 17 hedge funds were eager on AbCellera Biologics Inc. and held stakes worth roughly $320.5 million. As of June 30, Baker Bros. Advisors owns more than 10.4 million shares of AbCellera Biologics Inc. and is the leading shareholder in the company.
6. 89bio, Inc. (NASDAQ:ETNB)
Share Price as of September 23: $4.95
Number of Hedge Fund Holders: 23
89bio, Inc. (NASDAQ:ETNB) is a clinical-stage biopharmaceutical company that is involved in the research and development of therapies for liver and cardio-metabolic diseases. On August 26, 89bio, Inc. announced successful results from the phase 2 trial of pegozafermin, the company’s novel treatment for liver and metabolic diseases.
On August 11, 89bio, Inc. announced that as of June 30, the company has $139.3 million in cash, cash equivalents, and securities.
Wall Street analysts see material upside to 89bio, Inc. and the stock is among the best biotech stocks with good fundamentals. This August, H.C. Wainwright analyst Ed Arce raised his price target on 89bio, Inc. to $27 from $26 and maintained a Buy rating on the shares. On September 13, Raymond James analyst Steven Seedhouse raised his price target on 89bio, Inc. to $25 from $14 and reiterated a Strong Buy rating on the shares.
Insider Monkey found 89bio, Inc. on 23 hedge fund portfolios at the end of Q2 2022. The total stakes of these hedge funds amounted to $73.93 million, up from $37.75 million in the previous quarter with 12 positions. The hedge fund sentiment for the stock is positive.
As of June 30, Peter Kolchinski’s RA Capital Management is the top shareholder in 89bio, Inc. with stakes worth $25 million. The investment covers 0.66% of the fund’s 13F portfolio.
While biotech penny stocks can be successful short-term trades, for investors looking to own biotech companies for the long term some of the top options in the space include Johnson & Johnson, Merck & Co., Inc., and Amgen, Inc..
5. CymaBay Therapeutics, Inc. (NASDAQ:CBAY)
Share Price as of September 23: $3.40
Number of Hedge Fund Holders: 23
CymaBay Therapeutics, Inc. (NASDAQ:CBAY) develops therapeutics for the treatment of liver and other chronic diseases. The company’s flagship product is seladelpar, a potential treatment for primary biliary cholangitis. On June 6, Sujal Shah, CEO of CymaBay Therapeutics, Inc. disclosed his purchase of roughly 51,000 common shares of the company for a transaction valued at $0.10 million. As of September 23, CymaBay Therapeutics, Inc. has gained 7.3% over the past six months.
On August 1, CymaBay Therapeutics, Inc. announced the successful enrollment for RESPONSE, the company’s global 52-week phase 3 study for evaluating seladelpar as a treatment for PBC. On August 11, CymaBay Therapeutics, Inc. announced that it has $170.8 million worth in cash, cash equivalents, and securities, which will help the company stay on its operating plan through 2023.
CymaBay Therapeutics, Inc. is rising in popularity among institutional investors and is therefore one of the best biotech stocks to buy now. According to Insider Monkey’s database, 23 hedge funds were bullish on CymaBay Therapeutics, Inc. at the end of Q2 2022. These funds held collective stakes of $107.25 million, up from $100 million in the previous quarter with 21 positions. The hedge fund sentiment for the stock is positive.
As of June 30, VenBio Select Advisor owns 10.3 million shares of CymaBay Therapeutics, Inc. and is the largest shareholder in the company. The fund’s stakes are valued at $30.38 million.
4. Mersana Therapeutics, Inc. (NASDAQ:MRSN)
Share Price as of September 23: $6.15
Number of Hedge Fund Holders: 23
Mersana Therapeutics, Inc. (NASDAQ:MRSN) is a clinical-stage biotechnology company that is involved in the research and development of antibody-drug conjugates for the treatment of cancer. On September 12, Mersana Therapeutics, Inc. announced it has received Fast Track designation from the FDA for XMT-1660, the company’s ADC-based treatment for breast cancer.
Wall Street sees upside to Mersana Therapeutics, Inc.. On August 9, Baird analyst Collen Kusy raised her price target on Mersana Therapeutics, Inc. to $20 from $18 and maintained a buy-side Outperform rating on the shares.
As of September 23, Mersana Therapeutics, Inc. has gained 55.7% over the past six months.
At the close of Q2 2022, Insider Monkey found 23 hedge funds that held stakes in Mersana Therapeutics, Inc.. The total stakes of these hedge funds amounted to $187.7 million. This is compared to 26 positions in the previous quarter with stakes worth $122.6 million.
As of June 30, OrbiMed Advisors is the leading shareholder in Mersana Therapeutics, Inc. with stakes worth $41.6 million. The investment covers 0.75% of the fund’s 13F portfolio.
3. EQRx, Inc. (NASDAQ:EQRX)
Share Price as of September 23: $4.52
Number of Hedge Fund Holders: 26
According to Insider Monkey’s database, 26 hedge funds were bullish on EQRx, Inc. (NASDAQ:EQRX) at the end of Q2 2022. These funds held collective stakes of $355.5 million in the company.
2. ImmunoGen, Inc. (NASDAQ:IMGN)
Share Price as of September 23: $4.58
Number of Hedge Fund Holders: 28
ImmunoGen, Inc. (NASDAQ:IMGN) is a clinical-stage biotechnology company that researches and develops antibody-drug conjugate therapies for use in oncology. On August 31, ImmunoGen, Inc. provided updated data for its Phase 2 CADENZA study of IMGN632, the company’s ADC-based treatment for hematologic malignancy. The company also reported that is has received regulatory alignment from the FDA for continuing CADENZA into 2024.
Shortly after the company reported that it has aligned with the FDA for CADENZA, Piper Sandler analyst Joseph Catanzaro maintained his $6 price target and Neutral rating on ImmunoGen, Inc.. On September 9, Barclays analyst Peter Lawson started coverage of ImmunoGen, Inc. with a buy-side Overweight rating and an $8 price target. As of September 23, ImmunoGen, Inc. has gained 7.5% over the past six months.
At the end of the second quarter of 2022, 28 hedge funds held stakes in ImmunoGen, Inc. worth $361.65 million. This is compared to 30 positions in the previous quarter with stakes worth $314 million.
As of June 30, RA Capital Management is the top shareholder in ImmunoGen, Inc. with stakes worth $97.83 million. The investment covers 2.6% of Peter Kolchinski’s 13F portfolio.
1. Kezar Life Sciences, Inc. (NASDAQ:KZR)
Share Price as of September 23: $8.02
Number of Hedge Fund Holders: 28
Kezar Life Sciences, Inc. (NASDAQ:KZR) is a clinical-stage biotechnology company involved in the research and development of novel small molecule therapeutics to treat immune-mediated diseases and cancer. The company’s flagship product is KZR-616, a phase-2 immunoproteasome inhibitor to treat lupus nephritis, dermatomyositis, and polymyositis, among other diseases.
On June 28, JonesTrading analyst Catherine Novack raised her price target on Kezar Life Sciences, Inc. to $20 from $17 and maintained a Buy rating on the shares.
On July 11, Kezar Life Sciences, Inc. disclosed that the company holds $307 million in cash, cash equivalents, and marketable securities as of June 30, 2022.
At the close of the second quarter of 2022, 28 hedge funds were long Kezar Life Sciences, Inc. and held stakes worth $231.6 million in the company. Of those, Suvretta Capital Management was the leading shareholder with stakes worth $36.49 million. The investment covers 1.38% of Aaron Cowen’s 13F portfolio.
You can also take a look at 10 Best Biotech Penny Stocks To Buy and 11 Best Pharma and Biotech Stocks to Buy.
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This article is originally published at Insider Monkey.
