In this article, we discuss 10 biotech penny stocks that Redditors love.
The bull market around the biotech sector has cooled in recent weeks as interest rates rise and push investors towards safer havens. The broad pullback in the industry has also been fueled by failures in clinical trials, some regulatory setbacks, concerns around skyrocketing drug pricing, and muted mergers and acquisitions (M&A) activity. However, this correction has placed biotech stocks in deep value territory as companies with strong growth catalysts are now trading at bargain prices. In 2022, as the economy normalizes, these stocks could potentially soar.
According to the results of a survey conducted by Brian Abrahams, the chief of biotechnology equity research at investment firm RBC Capital Markets, 66% of investors think that biotech will outperform the broader market in 2022. Per the results of the survey, 58% plan to increase their exposure to the sector this year as well in anticipation of this growth. 64% of investors consider the biotech sector as undervalued, compared to only 49% echoing this sentiment in the second half of 2021, attesting to the broader opportunity around biotech stocks in a volatile market. Abrahams claims that “favorable valuations at base could attract more investments in the public market”.
In 2021, private investment in early-stage biotech firms surged. According to a report by McKinsey, venture capitalists had invested $3 billion into biotech firms within the first month of 2021, an increase of close to 60% year-on-year. Over the course of the period, IPO activity raised an average of $150 million, an increase of 17% compared to 2020. Per this data, in 2022, the sector is poised to witness a flurry of initial public offerings (IPOs).
For investors who cannot afford expensive options like Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), AbbVie Inc. (NYSE:ABBV) in the biotech sector, there are several biotech stocks that are trading in the penny domain, offering the same bang for the buck. Tracking retail investor interest in these biotech penny stocks, who use the internet platform Reddit to exchange investment ideas and like to invest in these high growth sectors, is also a useful exercise in identifying companies with explosive growth potential. Moving forward in 2022, market experts expect the sector to bounce back strongly from the lows of late 2021.
Our Methodology
These were picked based around the hype on these firms on internet platform Reddit. Companies that operate in the biotech sector and were trading at below $5 per share, as of May 3, were preferred for the list. A database of around 900 elite hedge funds tracked by Insider Monkey in Q4 2021 was used to quantify the popularity of each stock in the hedge fund universe.
Photo by National Cancer Institute on Unsplash
Biotech Penny Stocks Redditors Love
10. Hoth Therapeutics, Inc. (NASDAQ:HOTH)
Number of Hedge Fund Holders: 1
Hoth Therapeutics, Inc. (NASDAQ:HOTH) is a clinical-stage biotech firm that focuses on the development of therapies for unmet medical needs. On April 19, the company announced that it would be adding HT-TBI, a drug for treating secondary brain injury resulting from ischemic stroke and traumatic brain injury, to the pipeline. The company said the drug will be “developed as a ready-to-use drug-device combination product for use in non-healthcare settings”. The firm is also working on HT-ALZ, a drug for the treatment of Alzheimer’s disease.
On April 11, Hoth Therapeutics, Inc. (NASDAQ:HOTH) stock surged by more than 130% after the company announced preclinical data for HT-KIT, a drug designed to target the receptor tyrosine kinase KIT in mast cells. The drug prevented cancer cell growth and induced cell death over 72 hours.
Among the hedge funds being tracked by Insider Monkey at the end of the fourth quarter of 2021, New York-based investment firm Renaissance Technologies is a leading shareholder in Hoth Therapeutics, Inc. (NASDAQ:HOTH), with 167,100 shares worth $110,000.
Just like Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), AbbVie Inc. (NYSE:ABBV), Hoth Therapeutics, Inc. (NASDAQ:HOTH) is one of the stocks that elite investors have their eye on.
9. Acasti Pharma Inc. (NASDAQ:ACST)
Number of Hedge Fund Holders: 1
Acasti Pharma Inc. (NASDAQ:ACST) is a biopharmaceutical firm that concentrates on the development and marketing of drugs for cardiovascular diseases. Late last year, the company revealed that a key study into GTX-104, a drug for the treatment of subarachnoid hemorrhage, “met all primary endpoints based on an interim look”. The results were based on data from 20 of 50 normal healthy subjects in the trial. The firm also said that there were no serious “adverse effects” in the patients during the trials.
Acasti Pharma Inc. (NASDAQ:ACST) posted earnings for the fourth quarter of 2021 on February 14, reporting cash and cash equivalents of $46.3 million, compared to $26.5 million at the end of December 2020. The funding resources provide 21 months of operating runway.
At the end of the fourth quarter of 2021, 1 hedge fund in the database of Insider Monkey held stakes worth $88,000 in Acasti Pharma Inc. (NASDAQ:ACST), compared to 2 in the preceding quarter worth $160,000. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Acasti Pharma Inc. (NASDAQ:ACST), with 69,777 shares worth $88,000.
8. American Shared Hospital Services (NYSE:AMS)
Number of Hedge Fund Holders: 2
American Shared Hospital Services (NYSE:AMS) leases radiosurgery and radiation therapy equipment to healthcare firms. The company recently posted financial results for the fourth quarter of 2021, reporting earnings per share of $0.04 and a revenue of $4.6 million, up more than 1.7% compared to the revenue over the same period last year. The stock jumped close to 10% as the revenue was the highest reported since the pandemic began. During the quarter, the firm posted higher preliminary gross margin and operating income, compared to the other quarters of 2021.
One of the premier products of American Shared Hospital Services (NYSE:AMS) is radiosurgery equipment for the Gamma Knife stereotactic radiosurgery, a non-invasive procedure that treats malignant and benign brain tumors and arteriovenous malformations.
At the end of the fourth quarter of 2021, 2 hedge funds in the database of Insider Monkey held stakes worth $73,000 in American Shared Hospital Services (NYSE:AMS), the same as in the previous quarter worth $113,000. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in American Shared Hospital Services (NYSE:AMS), with 17,100 shares worth more than $41,000.
7. Alzamend Neuro, Inc. (NASDAQ:ALZN)
Number of Hedge Fund Holders: 3
Alzamend Neuro, Inc. (NASDAQ:ALZN) is a clinical-stage biotech firm that focuses on the development of drugs for the treatment of neurodegenerative diseases and psychiatric disorders. On April 11, the company announced that it would be partnering with Altasciences Clinical Kansas and iResearch Atlanta to conduct the Phase II study into a new Alzheimer’s disease drug under development. The enrollment for the study is expected to begin by the mid of 2022 and will test the tolerability of the drug.
On March 21, Univest Securities analyst James Lang maintained a Buy rating on Alzamend Neuro, Inc. (NASDAQ:ALZN) stock with a price target of $15, appreciating the results of a study into an Alzheimer’s disease drug that the firm was working on.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Alzamend Neuro, Inc. (NASDAQ:ALZN), with 163,774 shares worth more than $313,000. Overall, at the end of the fourth quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $422,000 in Alzamend Neuro, Inc. (NASDAQ:ALZN), compared to 2 in the previous quarter worth $226,000.
6. ReWalk Robotics Ltd. (NASDAQ:RWLK)
Number of Hedge Fund Holders: 3
ReWalk Robotics Ltd. (NASDAQ:RWLK) is a medical device company based in Israel. The firm has the distinction of having the first exoskeleton approved by the FDA that was designed to help people with mobility impairments. However, despite the approval, the devices have not been able to receive widespread recognition in the US as an alternative to wheelchairs. Growth of this product in markets outside the US, such as Europe, as well as among veterans in the US, is a strong catalyst for the stock in 2022.
ReWalk Robotics Ltd. (NASDAQ:RWLK) posted earnings for the fourth quarter of 2021 on February 24, reporting a revenue of $1.2 million, up over 1.5% compared to the revenue for the same period last year.
Among the hedge funds being tracked by Insider Monkey, New Jersey-based firm Sabby Capital is a leading shareholder in ReWalk Robotics Ltd. (NASDAQ:RWLK), with 1 million shares worth more than $1.2 million. Overall, at the conclusion of the fourth quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $1.8 million in ReWalk Robotics Ltd. (NASDAQ:RWLK), compared to 4 in the previous quarter worth $3 million.
In addition to Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), AbbVie Inc. (NYSE:ABBV), ReWalk Robotics Ltd. (NASDAQ:RWLK) is one of the stocks that hedge funds are monitoring.
5. ElectroCore, Inc. (NASDAQ:ECOR)
Number of Hedge Fund Holders: 4
ElectroCore, Inc. (NASDAQ:ECOR) is a medical device firm that focuses on the development of non-invasive vagus nerve stimulation therapies. On April 5, the company announced that it had entered into an agreement with Teijin Limited, a conglomerate based in Japan, to license exclusive rights to a non-invasive vagus nerve stimulation technology for commercialization in the country. The tech is used to treat a range of primary headache disorders. The firm will receive a non-refundable, upfront payment for the tech.
ElectroCore, Inc. (NASDAQ:ECOR) posted earnings for the first quarter of 2022 on May 5, reporting a revenue of close to $2 million, up over 58% compared to the revenue over the same period last year and beating estimates by $0.16 million.
At the end of the fourth quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $852,000 in ElectroCore, Inc. (NASDAQ:ECOR), compared to 5 in the previous quarter worth $2.3 million.
4. Pluristem Therapeutics Inc. (NASDAQ:PSTI)
Number of Hedge Fund Holders: 4
Pluristem Therapeutics Inc. (NASDAQ:PSTI) is a biotech firm specializing in cell therapeutic products and related technologies. In early January, the stock jumped more than 30% after the company announced that it would be partnering with Tnuva Group, one of the largest food producers in Israel, for the development and launch of cultured cell-based products for the food industry. The latter is expected to invest over $7 million in the project with the option to invest double this amount within twelve months.
Some other projects that Pluristem Therapeutics Inc. (NASDAQ:PSTI) is working on include research related to the potential of PLX cell therapies in preventing and treating medical conditions caused during space missions.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in Pluristem Therapeutics Inc. (NASDAQ:PSTI), with 1 million shares worth more than $1.5 million.
3. Brickell Biotech, Inc. (NASDAQ:BBI)
Number of Hedge Fund Holders: 5
Brickell Biotech, Inc. (NASDAQ:BBI) is a biotech firm working on drugs for the treatment of autoimmune, inflammatory, and other debilitating diseases. On May 3, the stock soared by close to 30% after the company announced that it had sold the rights of sofpironium bromide to Botanix Pharmaceuticals. The drug is used as a topical therapy for treating primary axillary hyperhidrosis, or excessive underarm sweating. The company will receive an upfront payment of around $9 million and milestone payments of up to $168 million from the sale.
On March 8, William Blair analyst Tim Lugo initiated coverage of Brickell Biotech, Inc. (NASDAQ:BBI) stock with an Outperform rating and a price target of $2, noting the current valuation offered a strong risk/reward profile for investors.
At the end of the fourth quarter of 2021, 5 hedge funds in the database of Insider Monkey held stakes worth $865,000 in Brickell Biotech, Inc. (NASDAQ:BBI), up from 3 the preceding quarter worth $1.2 million.
2. Asensus Surgical, Inc. (NYSE:ASXC)
Number of Hedge Fund Holders: 6
Asensus Surgical, Inc. (NYSE:ASXC) is a North Carolina-based medical device company. In 2022, the firm expects to achieve the full scale commercialization of articulating instruments globally, file for regulatory clearance of Senhance – a treatment for pediatric indication, as well as make progress on expanded machine vision capabilities for the Intelligent Surgical Unit. These pipeline projects will serve as growth catalysts for the stock that is trading at a much attractive valuation following a broad lull around the growth sector.
Asensus Surgical, Inc. (NYSE:ASXC) recently posted earnings for the first quarter of 2022, beating market estimates on earnings per share by $0.01 and reporting a revenue of more than $1 million during the period.
At the end of the fourth quarter of 2021, 6 hedge funds in the database of Insider Monkey held stakes worth $4.5 million in Asensus Surgical, Inc. (NYSE:ASXC), compared to 3 in the preceding quarter worth $1.1 million.
1. Seelos Therapeutics, Inc. (NASDAQ:SEEL)
Number of Hedge Fund Holders: 10
Seelos Therapeutics, Inc. (NASDAQ:SEEL) is a biopharma firm developing drugs for the treatment of central nervous system, respiratory, and other disorders. Late last year, the firm announced that it had obtained an exclusive worldwide license agreement for Wafermine, a drug developed by iX Biopharma. The company agreed to pay an upfront payment of $9 million for the purchase. Seelos will use the rights to test the drug as a treatment for indications such as chronic neuropathic pain.
On March 14, B Riley analyst Mayank Mamtani maintained a Buy rating on Seelos Therapeutics, Inc. (NASDAQ:SEEL) but lowered the price target to $4 from $6, noting the “higher cost of capital to support the company’s relatively higher operating expenditure ramp”.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm Woodline Partners is a leading shareholder in Seelos Therapeutics, Inc. (NASDAQ:SEEL), with 4 million shares worth more than $6.5 million.
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
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Disclosure. None. 10 Biotech Penny Stocks Redditors Love is originally published on Insider Monkey.
