5 Most Promising Small-Cap Stocks to Buy According to Hedge Funds

3. Upstream Bio, Inc. (NASDAQ:UPB)

Number of Hedge Fund Holders: 34

Market Cap: $340.12 million

Upstream Bio, Inc. (NASDAQ:UPB) is one of the most promising stocks on our list.

TheFly reported on June 3 that H.C. Wainwright analyst Matthew Caufield initiated coverage of UPB with a Buy rating and a $36 price target. The analyst highlighted the company’s lead candidate, verekitug, as a novel antibody designed to target the thymic stromal lymphopoietin receptor. The firm noted the potential of the therapy’s efficacy profile and differentiated quarterly subcutaneous dosing approach. H.C. Wainwright also identified thymic stromal lymphopoietin targeting in asthma as an area with significant unmet medical need.

More recently, on June 14, Upstream Bio, Inc. (NASDAQ:UPB) presented new responder analyses from its Phase 2 VIBRANT trial evaluating verekitug in participants with chronic rhinosinusitis with nasal polyps. The findings were shared during an oral presentation at the European Academy of Allergy and Clinical Immunology (EAACI) 2026 Congress in Istanbul, Turkey.

Results showed that verekitug, administered once every three months, achieved a placebo-adjusted reduction in nasal polyp score of -1.95 at Week 24 after accounting for rescue systemic corticosteroid use. The improvement exceeded the threshold generally considered clinically meaningful, highlighting the potential of verekitug in addressing unmet needs among patients with this condition.

Upstream Bio, Inc. (NASDAQ:UPB) is a clinical-stage biotechnology company developing therapies for severe inflammatory and respiratory diseases, including its lead programs targeting immune-driven conditions.