5 Best Small-Cap Biotech Stocks with Massive Potential According to Hedge Funds

4. Vaxcyte, Inc. (NASDAQ:PCVX)

Number of Hedge Fund Shareholders: 37

There was a surge in hedge fund ownership of Vaxcyte, Inc. (NASDAQ:PCVX) during the second half of 2022, with the number of funds long PCVX more than doubling. Peter Kolchinsky’s RA Capital Management has an aggressive stake in Vaxcyte, owning over 7.89 million shares on June 30 worth over $394 million.

Vaxcyte, Inc. (NASDAQ:PCVX) shares have gained 7.52% this year, greatly outperforming the Nasdaq US Small Cap Biotechnology Index. They’ve been particularly robust since April 11, soaring by 46.4%. That surge began in earnest following the release of positive phase 2 trial data for VAX-24 in mid-April. The 24-Valent pneumococcal conjugate vaccine (PCV) candidate is being studied for the prevention of invasive pneumococcal disease (IPD). The company’s investigational drug application for VAX-31 was also cleared by the FDA in mid-October.

Bank of America has a $67 price target and ‘Buy’ rating on Vaxcyte, Inc. (NASDAQ:PCVX), with analyst Jason Gerberry pointing to the company’s manufacturing and supply agreement with Lonza as a huge boon. The agreement allows Vaxcyte to manufacture its vaccine candidates at a scale that would be challenging, if not impossible, for most small biotechs. The analyst also noted that Vaxcyte has maintained full ownership of its vaccines, with just a 4% royalty being owed out on future net sales.