In this article, we discuss 10 biotech penny stocks with growth catalysts.
According to Global Market Insights, the market for biotech in 2020 was valued at $497 billion, and it is forecasted to grow to $952.0 billion in 2027, at a CAGR of more than 9.4% between 2021 and 2027.
Increasing prevalent chronic diseases have led to high growth in biotechnology, especially in sub-sectors such as genomics, metabolomics, and proteomics. Similarly, RNA vaccines, CRISPR gene editing, and precision medicines are currently the focus of extensive clinical studies and research as well. In addition to that, the rising trend for organic food means that demand for biotech is also increasing in the agricultural space.
After an explosive surge in 2020, the biotech stocks collapsed 25% in 2021, and these companies were down by approximately 20% after January 2022.
Some of the most popular companies in the healthcare space include Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Amgen Inc. (NASDAQ:AMGN), but in this article, we focus on biotech penny stocks with growth catalysts.
Photo by National Cancer Institute on Unsplash
Our Methodology
After an extensive assessment of the biotechnology sector, we picked penny stocks that were priced under $5. These companies are working on some ambitious projects that could act as potential growth catalysts, propelling their stock prices significantly higher in the near-term.
Data from 900+ elite hedge funds tracked by Insider Monkey at the end of December 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Biotech Penny Stocks with Growth Catalysts
10. Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN)
Number of Hedge Fund Holders: 2
Share Price as of April 5: $0.2439
Headquartered in Charlottesville, Virginia, Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) is a biotechnology firm that focuses on drug development and therapies that improve the body’s ability to deliver oxygen. As of December 31, 2021, the company reported holding $37.3 million in cash and cash equivalents, which will fund operations through 2023.
Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) is in the midst of multiple clinical trials, which are expected to conclude in mid-2022 and in the second half of the year. One of the clinical studies involves evaluating tuberous sclerosis (TSC) as an adjunct to standard of care in the treatment of hypoxic solid tumors. Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) believes that it has the required data to initiate the Phase 2 trial of its oncology-focused Hypoxic Solid Tumor Program. The trial will commence in the second half of 2022, and upon completion, it will act as a major growth catalyst for the company.
According to Insider Monkey’s fourth quarter database, Renaissance Technologies and Two Sigma Advisors held bullish positions in Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN), with combined stakes worth $441,000.
In addition to Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Amgen Inc. (NASDAQ:AMGN), Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN) is a notable stock to invest in.
9. Alzamend Neuro, Inc. (NASDAQ:ALZN)
Number of Hedge Fund Holders: 3
Share Price as of April 5: $1.143
Alzamend Neuro, Inc. (NASDAQ:ALZN) is a clinical stage biotech company that develops pharmaceutical drugs and treatments for neurodegenerative diseases and psychiatric disorders, mainly focusing on Alzheimer’s. Priced at $1.14, Alzamend Neuro, Inc. (NASDAQ:ALZN) is a significant biotech penny stock to look out for.
On March 28, Alzamend Neuro, Inc. (NASDAQ:ALZN) announced the full results of its AL001 trial. AL001 is a lithium delivery system that works as an oral treatment for patients with dementia displaying cognitive impairment associated with Alzheimer’s. According to the company’s management, AL001 tested as safe and well-tolerated in healthy adult subjects, with no clinically significant abnormal findings in the trial. Bioequivalence may utilize AL001 when obtaining approval for the indications of presently available lithium products, and for new products as a benchmark for added safety.
According to Univest Securities analyst James Lang, a University of Cambridge study involving approximately 30,000 patients proved a significant link between lithium and dementia prevention. The analyst believes the new research validates Alzamend Neuro, Inc. (NASDAQ:ALZN)’s AL001 trials for Alzheimer’s disease. He reiterated a Buy rating on the stock with a $15 price target on March 21. AL001 should be approved by the FDA and commercialization will commence during 2025, added the analyst.
Among the hedge funds tracked by Insider Monkey, 3 funds reported owning stakes in Alzamend Neuro, Inc. (NASDAQ:ALZN) at the end of December 2021, worth $422,000, compared to 2 funds in the earlier quarter, holding stakes in Alzamend Neuro, Inc. (NASDAQ:ALZN) valued at $236,000. Paul Marshall and Ian Wace’s Marshall Wace LLP is the biggest stakeholder of the company, with 163,774 shares worth $313,000.
8. Cocrystal Pharma, Inc. (NASDAQ:COCP)
Number of Hedge Fund Holders: 3
Share Price as of April 5: $0.5299
Cocrystal Pharma, Inc. (NASDAQ:COCP) is a biotechnology company focused on the discovery and development of antiviral drugs and therapeutic treatments for chronic viral diseases. The company is headquartered in Bothell, Washington. Cocrystal Pharma, Inc. (NASDAQ:COCP) is a notable penny stock that could explode, priced at $0.52 as of April 5.
On March 10, Cocrystal Pharma, Inc. (NASDAQ:COCP) announced a Phase 1 clinical trial of its orally administered antiviral CC-42344 for the treatment of pandemic and seasonal influenza. According to the company management, there is an “urgent need for new antiviral medicines that address pandemic and drug-resistant seasonal influenza strains”. In pre-clinical testing, the drug has shown favorable safety profiles, which further validates Cocrystal Pharma, Inc. (NASDAQ:COCP)’s proprietary drug discovery platform technology. Once the antiviral hits the market, it will act as a significant growth catalyst for the company.
According to the fourth quarter database of Insider Monkey, 3 hedge funds held long positions in Cocrystal Pharma, Inc. (NASDAQ:COCP), with collective stakes amounting to $5 million. Hal Mintz’s Sabby Capital held the biggest position in the company, owning 5.7 million shares worth $3.73 million.
7. ObsEva SA (NASDAQ:OBSV)
Number of Hedge Fund Holders: 3
Share Price as of April 5: $1.605
ObsEva SA (NASDAQ:OBSV) is a clinical-stage biotech company that develops and discovers therapeutics for complications in reproductive health and pregnancy. ObsEva SA (NASDAQ:OBSV) was founded in 2012 and is headquartered in Geneva, Switzerland. On March 28, Aegis analyst Nathan Weinstein initiated coverage of ObsEva SA (NASDAQ:OBSV) with a Buy rating and a $12 price target.
ObsEva SA (NASDAQ:OBSV) announced its expected 2022 milestones on March 10. The company forecasts that it will achieve core clinical and regulatory objectives in 2022, such as FDA approval for Linzagolix, a specialized hormone antagonist, to treat uterine fibroids. Results for a study that determines whether Linzagolix is suitable for endometriosis were announced on March 22, building upon the positive topline conclusions announced in January 2022. The company is now working to develop Linzagolix to treat endometriosis, which could be commercially huge for ObsEva SA (NASDAQ:OBSV) upon conclusion.
Among the hedge funds tracked by Insider Monkey in Q4 2021, 3 funds were bullish on ObsEva SA (NASDAQ:OBSV), compared to 1 fund in the prior quarter. Ken Griffin’s Citadel Investment Group owns the largest position in the company, with 85,588 shares worth $170,000.
6. Pluristem Therapeutics Inc. (NASDAQ:PSTI)
Number of Hedge Fund Holders: 4
Share Price as of April 5: $2.11
Pluristem Therapeutics Inc. (NASDAQ:PSTI) is an Israel-based biotechnology company that works to develop and research cell therapeutic products for the treatment of ischemic, inflammatory, and hematologic conditions, in addition to autoimmune disorders.
On March 2, Pluristem Therapeutics Inc. (NASDAQ:PSTI) issued an update to its shareholders, and the CEO stated that he is confident about the direction that Pluristem Therapeutics Inc. (NASDAQ:PSTI) has taken. The cell expansion platform has the potential for high demand in the medical field and the company also announced its partnership with Tnuva, Israel’s largest food producer, to develop cultured food. Pluristem Therapeutics Inc. (NASDAQ:PSTI)’s cutting edge technology and expertise could make it a leader in this space, and it aims to launch raw meat products in 2023. An additional clinical hematological study is expected later in 2022 that will advance the creation of next generation products using CRISPR and induction technologies.
Pluristem Therapeutics Inc. (NASDAQ:PSTI) announced on March 23 positive final results from its innovative hematology Phase I study to evaluate the safety and exploratory efficacy of intramuscular injections of PLX-R18, which works to improve the regenerative potential of the bone marrow. The FDA’s recognition of PLX-R18’s potential to treat Acute Radiation Syndrome (ARS) is also notable. This treatment potentially carries great significance for current events in Ukraine and Europe, providing hope for treatment in the case of a nuclear war. Pluristem Therapeutics Inc. (NASDAQ:PSTI) believes that this treatment will promote well being, improve the standard of care, and likely save lives.
Among the hedge funds tracked by Insider Monkey at the end December 2021, 4 funds reported owning stakes in Pluristem Therapeutics Inc. (NASDAQ:PSTI), compared to 6 funds in the earlier quarter. Cathie Wood’s ARK Investment Management is the largest shareholder of the company, with more than 1 million shares worth $1.5 million.
Pluristem Therapeutics Inc. (NASDAQ:PSTI) is on the radar of elite hedge funds, just like Moderna, Inc. (NASDAQ:MRNA), Pfizer Inc. (NYSE:PFE), and Amgen Inc. (NASDAQ:AMGN).
5. Brickell Biotech, Inc. (NASDAQ:BBI)
Number of Hedge Fund Holders: 5
Share Price as of April 5: $0.265
Brickell Biotech, Inc. (NASDAQ:BBI) is a Colorado-based clinical stage biotechnology company that primarily develops prescription therapeutics for treating dermatological conditions and other prevalent skin diseases. The shares of Brickell Biotech, Inc. (NASDAQ:BBI) were priced at $0.265 as of April 5.
The company recently shifted focus from dermatology to inflammatory and autoimmune diseases. Brickell Biotech, Inc. (NASDAQ:BBI)’s lead asset is BBI-02, a novel DYRK1A inhibitor that is expected to be clinically tested in the first half of 2022, and the Phase I data from the trials will be gathered by year end. Upon receiving positive affirmation from the clinical trial, BBI-02 has development potential in a range of autoimmune and inflammatory diseases, where its differentiated mechanism could lead to significant value for Brickell Biotech, Inc. (NASDAQ:BBI).
On March 8, William Blair analyst Tim Lugo initiated coverage of Brickell Biotech, Inc. (NASDAQ:BBI) with an Outperform rating and a $2 fair value estimate. With the company’s early-stage pipeline targeting novel mechanisms in autoimmune and inflammatory conditions, Brickell Biotech, Inc. (NASDAQ:BBI)’s pivot from its dermatology focus can be commercially huge, the analyst told investors in a research note. He believes the present valuation “holds a strong risk/reward profile” as compared to industry rivals, offering the possibility for a “10-fold increase” from current levels.
According to Insider Monkey’s Q4 data, 5 hedge funds were bullish on Brickell Biotech, Inc. (NASDAQ:BBI), compared to 3 funds in the earlier quarter. The total stakes held in the fourth quarter were valued at $865,000.
4. CTI BioPharma Corp. (NASDAQ:CTIC)
Number of Hedge Fund Holders: 11
Share Price as of April 5: $4.755
CTI BioPharma Corp. (NASDAQ:CTIC) was incorporated in 1991 and is headquartered in Seattle, Washington. The company specializes in the development and commercialization of targeted therapies for blood-related cancers in the United States.
On February 28, the FDA approved CTI BioPharma Corp. (NASDAQ:CTIC)’s VONJO for the treatment of adults with intermediate and high-risk primary or secondary myelofibrosis with a low platelet count. Limited treatment options have classified this disease as an area of urgent unmet medical need. CTI BioPharma Corp. (NASDAQ:CTIC)’s VONJO is a safe treatment option for myelofibrosis, and the development of the drug is a significant growth catalyst for the company.
Brookline analyst Leah Rush Cann raised the price target on CTI BioPharma Corp. (NASDAQ:CTIC) on March 1 to $12 from $7.20 and reiterated a Buy rating on the shares after the company reported the FDA approval for VONJO.
According to Insider Monkey’s fourth quarter database, 11 hedge funds were bullish on CTI BioPharma Corp. (NASDAQ:CTIC), with combined stakes worth $56.6 million. Mark Lampert’s Biotechnology Value Fund / BVF Inc is the biggest shareholder of the company, with approximately 9 million shares worth $22.1 million.
3. Sorrento Therapeutics, Inc. (NASDAQ:SRNE)
Number of Hedge Fund Holders: 12
Share Price as of April 5: $2.24
Sorrento Therapeutics, Inc. (NASDAQ:SRNE) is a clinical stage and commercial biotechnology company that develops novel therapies for cancer, autoimmune, inflammatory, viral, and neurodegenerative diseases. The company was founded in 2006 and is based in San Diego, California.
Sorrento Therapeutics, Inc. (NASDAQ:SRNE) announced on March 31 that the FDA has cleared the commencement of the Phase 3 clinical trial of Abivertinib in severe COVID-19 patients. Sorrento Therapeutics, Inc. (NASDAQ:SRNE) published preliminary results of two phase 2 studies that showed patients suffering from severe pneumonia due to COVID-19, especially those needing non-invasive ventilation or high flow oxygen supplementation, were five times more likely to benefit from Abivertinib therapy than the ones who needed low flow supplementation. The study will be conducted at multiple sites in the United States, Mexico, and Brazil. This will be an important growth catalyst for Sorrento Therapeutics, Inc. (NASDAQ:SRNE) upon conclusion.
According to Insider Monkey’s fourth quarter database, 12 hedge funds were bullish on Sorrento Therapeutics, Inc. (NASDAQ:SRNE), compared to 10 funds in the earlier quarter. D E Shaw held a significant stake in the company, with 2.4 million shares worth $11.3 million.
2. Verastem, Inc. (NASDAQ:VSTM)
Number of Hedge Fund Holders: 16
Share Price as of April 5: $1.51
Verastem, Inc. (NASDAQ:VSTM) is a biotechnology company that develops medication and treatments for oncology patients. The company was incorporated in 2010 and is headquartered in Needham, Massachusetts. Priced at $1.51, Verastem, Inc. (NASDAQ:VSTM) is a significant biotech penny stock that exhibits growth catalysts.
On March 28, Verastem, Inc. (NASDAQ:VSTM) announced that it has received a funding of up to $150 million from Oxford Finance via a credit facility for the commercial preparation and potential launches of VS-6766 and defactinib, which are treatments for ovarian cancer and lung cancer.
Truist analyst Srikripa Devarakonda initiated coverage of Verastem, Inc. (NASDAQ:VSTM) on March 9 with a Buy rating and a $6 price target. According to the analyst, the stock is “undervalued” given its directed programs in two cancers. Devarakonda added that Verastem, Inc. (NASDAQ:VSTM) can benefit from a $470 million market opportunity in ovarian cancer, as well as the “early but strong” clinical data and positive expert feedback.
The Q4 database of Insider Monkey suggests that 16 hedge funds were bullish on Verastem, Inc. (NASDAQ:VSTM), with collective stakes worth approximately $106 million. Julian Baker and Felix Baker’s Baker Bros. Advisors is the largest shareholder of the company, with roughly 21.5 million shares valued at $44 million.
1. Adagio Therapeutics, Inc. (NASDAQ:ADGI)
Number of Hedge Fund Holders: 17
Share Price as of April 5: $4.13
Adagio Therapeutics, Inc. (NASDAQ:ADGI) is a clinical-stage biotech company that specializes in the development and commercialization of antibody-based treatments for infectious diseases. The company was incorporated in 2020 and is based in Waltham, Massachusetts.
On March 30, Adagio Therapeutics, Inc. (NASDAQ:ADGI) reported that the primary endpoints were met with statistical significance for all three indications in its ongoing global Phase 2/3 clinical trials that evaluate Adintrevimab (ADG20) as a treatment for COVID-19. A significant decline in cases of COVID-19 was observed with Adintrevimab as compared to placebo. Based on these results, Adagio Therapeutics, Inc. (NASDAQ:ADGI) plans to reach out to the FDA and submit an Emergency Use Authorization application in the second quarter of 2022 for Adintrevimab for the prevention and treatment of COVID-19. Upon FDA approval, this treatment will be a consequential growth catalyst for Adagio Therapeutics, Inc. (NASDAQ:ADGI).
According to Insider Monkey’s fourth quarter database, 17 hedge funds placed long bets on Adagio Therapeutics, Inc. (NASDAQ:ADGI), up from 12 funds in the prior quarter. Peter Kolchinsky’s RA Capital Management is the leading shareholder of the company, with approximately 5 million shares worth $36.2 million.
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Disclosure: None. 10 Biotech Penny Stocks with Growth Catalysts is originally published on Insider Monkey.
