In this article, we will be taking a look at the 11 Cheap Biotech Stocks to Buy According to Hedge Funds.
Mizuho’s Jared Holz appeared on CNBC’s “Closing Bell Overtime” on July 8 to talk about whether the biotech industry is prepared for a breakthrough. Jared Holz acknowledged that the biotech industry has been particularly challenging to forecast, mostly because of the enormous number of publicly traded equities that, taken as a whole, don’t exhibit a distinct, cohesive trend with a lot of positive and negative aspects. He pointed out that this is why it is difficult to make a call to the industry as a whole.
Holz noted that the industry was starting to trade a little better, hitting higher lows and stopping its daily decline that had been going on for a while. He thinks that the market has fully comprehended and assimilated all of the negative aspects, including pricing pressure, competition, and the volume of assets in the publicly traded arena, indicating that it is time for a move higher.
Additionally, he affirmed that his prediction of a biotech breakout was based on his analysis and was impacted by a shift in investor mood. Over the past few months, he said, investor interactions have been much more upbeat. He ascribed this change in part to real M&A activity, in part to better clinical data, and in part to conversations about the “pharma dilemma,” which probably refers to the necessity for pharmaceutical companies to acquire fresh assets. He added that although he doesn’t think interest rates are particularly linked to this industry, some people do, and they expect rates to drop over time, which adds to the bullish feeling. He also took note of the technical signs, noting that the biotech index had ceased to fall irrespective of whether the overall market was rising or falling, suggesting that the industry was in a better position.
Our Methodology
For our methodology, we first screened for stocks with a forward price-to-earnings (P/E) ratio below 15 and a market capitalization above $2 billion using a stock screener. From this filtered list, we selected the top 10 companies. These were then ranked according to the total number of hedge fund holders in Q2 2025, as reported by the Insider Monkey database.
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).
Here is our list of the 11 cheap biotech stocks to buy according to hedge funds.
11. Genmab A/S (NASDAQ:GMAB)
Number of Hedge Fund Holders: 19
Genmab A/S (NASDAQ:GMAB), based in Copenhagen, is a biotechnology company focused on developing antibody-based therapies for cancer and other serious diseases. It is among the cheap biotech stocks to buy. With over 45 INDs since 1999 and a pipeline of around 10 programs, the company has contributed to the approval of eight medicines and co-owns products such as Tivdak and Epkinly/Tepkinly, collaborating with major pharma players including Pfizer and AbbVie.
In Q2 2025, Genmab A/S (NASDAQ:GMAB) reported 19% year-over-year revenue growth and a 56% increase in operating profit which was driven by royalties from DARZALEX and Kasimpta, and strong sales of McKinley and Tivdak. The corporation ended H1 2025 with approximately $3 billion in cash, supporting ongoing R&D and growth initiatives. The business also completed a share buyback in June, reflecting confidence in its growth and commitment to shareholders.
Strategically, the firm is accelerating its late-stage pipeline, including the Phase 3 EPCORE FL-1 trial, which met dual primary endpoints in relapsed/refractory follicular lymphoma. The company is intensifying commercial efforts for Epkinly and Tivdak globally and recently increased share capital through employee warrant exercises, signaling continued investment in talent and innovation.
Looking ahead, Genmab A/S (NASDAQ:GMAB) aims to become a fully integrated biotech powerhouse by 2030, leveraging its KYSO antibody platform to deliver transformative therapies. Partnerships with large pharmaceutical companies remain central to strengthening its R&D capabilities and global commercialization reach.
10. Novavax, Inc. (NASDAQ:NVAX)
Number of Hedge Fund Holders: 24
Novavax, Inc. (NASDAQ:NVAX) is a biotechnology company specializing in vaccines for serious infectious diseases, with its leading product, Nuvaxovid™, a recombinant protein-based COVID-19 vaccine approved for adults 65+ and high-risk individuals aged 12–64 in the U.S. The vaccine combines recombinant protein technology with nanoparticle and Matrix-M adjuvant to enhance immune responses.
In August 2025, Novavax, Inc. (NASDAQ:NVAX) received FDA approval for Nuvaxovid’s Biologics License Application, triggering a $175 million milestone payment from partner Sanofi. The company transferred U.S. commercial leadership of Nuvaxovid to Sanofi for the 2025–2026 vaccination season, with further marketing authorization transfers in the U.S. and EU expected later in 2025, generating additional milestone payments.
The business is expanding its pipeline beyond COVID-19, including COVID-19–influenza combination vaccines and a standalone influenza vaccine in Phase 3, showing strong immune responses and T-cell activity. Its H5N1 avian flu candidate also produced promising preclinical results, boosting investor confidence.
Financially, Novavax, Inc. (NASDAQ:NVAX) reported an unexpected net income of $107 million in Q2 2025, aided by milestone payments, cost reductions, and organizational efficiencies. The corporation also refinanced convertible debt in August 2025, improving terms and extending maturities to support pipeline advancement and partnership strategies.
9. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)
Number of Hedge Fund Holders: 27
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is a commercial-stage biopharmaceutical company focused on therapies for rare neurological diseases. Its flagship product, WAKIX (pitolisant), treats excessive daytime sleepiness and cataplexy in adults with narcolepsy and recently received FDA approval for Prader-Willi Syndrome, expanding its patient base. The company aims to surpass $1 billion in narcolepsy-related revenue by 2030, supported by patient growth, label expansions including pediatric use, and next-generation formulations.
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)’s late-stage pipeline is strong, with ongoing and upcoming Phase 3 trials targeting Prader-Willi Syndrome and Fragile X Syndrome. Given its expanding addressable market and robust clinical development, HRMY is increasingly being mentioned among cheap biotech stocks to buy, as investors seek undervalued opportunities with significant upside. Preclinical data for BP1.15205, a potential best-in-class orexin-2 agonist, showed promising wake-promoting and cataplexy-suppressing effects, with human trials expected to begin in late 2025.
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is currently considered undervalued relative to its growth potential. Analysts project approximately 45% upside as pipeline progress, market opportunities, and label expansions drive long-term growth. The business will participate in the 2025 Cantor Global Healthcare Conference in September, highlighting continued engagement with investors and the broader healthcare sector.
