In this article, we discuss the 10 unknown biotech stocks that can explode in 2022.
As coronavirus cases recede across the world and countries open up their borders for international travelers, the biotechnology industry, one of the best-performing sectors during the pandemic panic of 2020, is adapting to a new reality fraught with various challenges related to valuation and access to capital. However, the fundamentals of the sector remain robust and the biotechnology sphere remains a key driver of innovation and growth in the economy. Per market research firm Precedence, the global biotech market will reach $1.7 trillion in value by 2030.
Precedence predicts an annual growth rate of close to 9% for the biotech industry with North America highlighted as the largest market. Other market analysts are also bullish on the sector. According to Brian Abrahams, the co-Head of Biotechnology Research at news platform Endpoint, a recent Endpoint survey reveals that 66% of investors think that biotech will outperform the broader market in 2022. Nearly 58% plan to increase their exposure to the sector this year in anticipation of this growth.
Invest in Cheap Biotech Stocks, Beware of IPOs
Prominent stocks that are expected to lead this boom include Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), and AbbVie Inc. (NYSE:ABBV). However, there are several unknown companies in the biotech industry that offer explosive growth potential at cheaper prices. The statistics from the previous year support the thesis for investing in emerging biotech firms. Per a report by professional services firm EY, there were 50 new molecular entities approved by the FDA in the US in 2020 and 2021, up from 29 per year a decade ago.
In 2022, these numbers are expected to climb even further. However, investors should be careful about IPO activity in the sector. According to data compiled by BioPharma Dive, a combination of soaring inflation and rising interest rates, a recipe for disaster with relation to most growth sectors, has affected the biotechnology market as well, with only nine companies going public by April this year, compared to 33 IPOs that took place in 2021 by April. These IPOs raised around $744 million in proceeds, similar to numbers posted back in 2019. In this tough environment, young drug makers are looking towards other options, like conserving cash and staying private for longer, to stay afloat.
Our Methodology
Relatively unheard of companies that operate in the biotechnology sector and have growth catalysts for the coming months were selected for the list. The business fundamentals and analyst ratings of the companies are also discussed to provide further context for readers. An extensive database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the popularity of each stock among hedge funds.
Photo by National Cancer Institute on Unsplash
Unknown Biotech Stocks That Can Explode in 2022
10. Valneva SE (NASDAQ:VALN)
Number of Hedge Fund Holders: 1
Valneva SE (NASDAQ:VALN) is a biotech firm that concentrates on the development of prophylactic vaccines for infectious diseases with unmet needs. On June 20, drug giant Pfizer announced that it would be buying a stake worth $95 million, comprising nearly 8% of Valneva, as part of a larger plan to support the collaboration between the two firms for a vaccine against Lyme Disease. The vaccine, named VLA15, is set to enter a late-stage trial in the third quarter of 2022. Pfizer and Valneva have been working on the vaccine since 2020.
On June 15, Valneva SE (NASDAQ:VALN) had announced that it had entered into a settlement agreement with the government of the United Kingdom, in relation to the termination of the supply agreement for a COVID-19 vaccine candidate being developed by the former.
At the end of the first quarter of 2022, 1 hedge fund in the database of Insider Monkey held stakes worth $850,000 in Valneva SE (NASDAQ:VALN), the same as in the preceding quarter worth $1.3 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Laurion Capital Management is the only shareholder in Valneva SE (NASDAQ:VALN) with 25,000 shares worth $850,000.
Just like Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), and AbbVie Inc. (NYSE:ABBV), Valneva SE (NASDAQ:VALN) is one of the stocks that elite investors are monitoring as the market becomes more volatile amid rising inflation.
9. ObsEva SA (NASDAQ:OBSV)
Number of Hedge Fund Holders: 1
ObsEva SA (NASDAQ:OBSV) is a biopharma firm working on the development of novel therapeutics for women suffering from reproductive health and pregnancy. On June 17, the company announced that it had received marketing approval from authorities in Europe for Yselty, a drug made by the firm for the treatment of symptoms related to uterine fibroids in adult women of reproductive age. The decision will allow the firm to sell the drug in all 27 member states of the European Union, in addition to Iceland, Norway, and Liechtenstein.
On June 3, Cantor Fitzgerald analyst Brandon Folkes initiated coverage of ObsEva SA (NASDAQ:OBSV) stock with an Overweight rating and a price target of $6, noting that the firm was building an array of “best-in-class assets” in the women’s health domain.
At the end of the first quarter of 2022, 1 hedge fund in the database of Insider Monkey held stakes worth $33,000 in ObsEva SA (NASDAQ:OBSV), compared to 3 in the previous quarter worth $244,000.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is the only shareholder in ObsEva SA (NASDAQ:OBSV) with 21,531 shares worth $33,000.
8. VYNE Therapeutics Inc. (NASDAQ:VYNE)
Number of Hedge Fund Holders: 4
VYNE Therapeutics Inc. (NASDAQ:VYNE) is a biopharma firm that develops therapeutics for the treatment of immuno-inflammatory conditions. On June 17, the share price of the firm rose by more than 7% after it announced that it had completed enrollment in the phase 2a trial of FMX114, a gel to treat mild-to-moderate atopic dermatitis. The company expects efficacy results from the trial within the next two months. The study will observe the effect of the gel on 25 subjects with at least two lesions on their skin.
On May 12, VYNE Therapeutics Inc. (NASDAQ:VYNE) posted earnings for the first quarter of 2022, reporting earnings per share of $0.10, beating market estimates by $0.25. The revenue over the period was $0.18 million, down 21% year-on-year.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in VYNE Therapeutics Inc. (NASDAQ:VYNE) with 965,098 shares worth more than $627,000.
At the end of the first quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $1 million in VYNE Therapeutics Inc. (NASDAQ:VYNE), compared to 6 in the preceding quarter worth $3.9 million.
7. NRx Pharmaceuticals, Inc. (NASDAQ:NRXP)
Number of Hedge Fund Holders: 5
NRx Pharmaceuticals, Inc. (NASDAQ:NRXP) is a biotech firm focusing on the development of drugs for the treatment of central nervous system disorders and life-threatening pulmonary diseases. On May 12, the share price of the firm jumped close to 7% after it announced that it had started one of two phase 2 studies on NRX-101, a drug being developed by the company for the treatment of bipolar depression and sub-acute suicidality. The firm will conduct further studies on the drug later this year.
On May 26, NRx Pharmaceuticals, Inc. (NASDAQ:NRXP) had announced that a study on Zyesami, a drug for the treatment of COVID-19, had failed to meet key targets. The firm had filed for breakthrough therapy designation of the drug in April.
At the end of the first quarter of 2022, 5 hedge funds in the database of Insider Monkey held stakes worth $17 million in NRx Pharmaceuticals, Inc. (NASDAQ:NRXP), the same as in the preceding quarter worth $570,000.
6. AC Immune SA (NASDAQ:ACIU)
Number of Hedge Fund Holders: 6
AC Immune SA (NASDAQ:ACIU) is a biotech firm that develops medicines and drugs for the treatment of neurodegenerative diseases associated with protein misfolding. The firm is one of the leading researchers into new treatments for Alzheimer’s, including a monoclonal antibody crenezumab that was designed to target beta-amyloid, a key protein involved in the disease. Drug giant Roche, which has partnered with AC Immune, is also working on another Alzheimer’s candidate, the late-stage data from is expected in late 2022.
AC Immune SA (NASDAQ:ACIU) uses drug development platforms like SupraAntigen and Morphomer. It is working on several therapeutic and diagnostic product candidates, some of which are in clinical trials already.
Among the hedge funds being tracked by Insider Monkey, Australia-based investment firm Platinum Asset Management is a leading shareholder in AC Immune SA (NASDAQ:ACIU) with 1 million shares worth more than $4.2 million.
At the end of the first quarter of 2022, 6 hedge funds in the database of Insider Monkey held stakes worth $38 million in AC Immune SA (NASDAQ:ACIU), compared to 9 in the previous quarter worth $47 million.
In addition to Pfizer Inc. (NYSE:PFE), Eli Lilly and Company (NYSE:LLY), and AbbVie Inc. (NYSE:ABBV), AC Immune SA (NASDAQ:ACIU) is one of the stocks that hedge funds have their eye on in light of shifting valuations in the biotechnology sector.
5. Outlook Therapeutics, Inc. (NASDAQ:OTLK)
Number of Hedge Fund Holders: 6
Outlook Therapeutics, Inc. (NASDAQ:OTLK) is a biotech firm focusing on the development of monoclonal antibodies for various ophthalmic indications. On June 14, the company announced that it would be re-submitting a biologics license application to authorities in September for ONS-5010, a drug developed by the company for the treatment of wet age-related macular degeneration, a retinal disease. Authorities had asked for further information related to the drug back in late May, forcing Outlook to withdraw an earlier license application.
Outlook Therapeutics, Inc. (NASDAQ:OTLK) has already begun planning for the commercial launch of the drug in 2023. This includes plans for manufacturing, distribution, sales force planning, and payor community engagement.
At the end of the first quarter of 2022, 6 hedge funds in the database of Insider Monkey held stakes worth $3.2 million in Outlook Therapeutics, Inc. (NASDAQ:OTLK), compared to 9 in the previous quarter worth $3.9 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Outlook Therapeutics, Inc. (NASDAQ:OTLK) with 729,192 shares worth more than $1.2 million.
4. Seelos Therapeutics, Inc. (NASDAQ:SEEL)
Number of Hedge Fund Holders: 8
Seelos Therapeutics, Inc. (NASDAQ:SEEL) is a biopharma firm developing drugs for the treatment of central nervous system, respiratory, and other disorders. On May 18, the company announced that it had obtained a patent approval for SLS-007, a drug being developed by the firm for treating various neurodegenerative diseases. The firm is administering the drug in a preclinical trial through an adeno-associated virus. Preliminary data from a study into the drug is expected in the second half of 2022.
In March, B Riley analyst Mayank Mamtani maintained a Buy rating on Seelos Therapeutics, Inc. (NASDAQ:SEEL) stock and lowered the price target to $4 from $6, identifying the higher operating expenditure ramp of the firm as one of the reasons behind the target drop.
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 2.8 million shares worth more than $2.3 million.
At the end of the first quarter of 2022, 8 hedge funds in the database of Insider Monkey held stakes worth $9.5 million in Seelos Therapeutics, Inc. (NASDAQ:SEEL), compared to 10 in the preceding quarter worth $22 million.
3. Homology Medicines, Inc. (NASDAQ:FIXX)
Number of Hedge Fund Holders: 9
Homology Medicines, Inc. (NASDAQ:FIXX) operates a genetics medicine firm. On June 13, the company announced that authorities in the United States had lifted a clinical hold on trials of a pheNIX gene therapy of the firm. The therapy is designed to treat patients with phenylketonuria, an inherited disorder that can lead to brain damage, intellectual disabilities or seizures. The FDA had ordered the hold in February citing need for further risk prevention measures in the trial, a concern that Homology has now addressed.
On June 13, HC Wainwright analyst Patrick Trucchio reiterated a Buy rating on Homology Medicines, Inc. (NASDAQ:FIXX) stock with a price target of $20, noting that valuation of the firm was “compelling” at present levels.
At the end of the first quarter of 2022, 9 hedge funds in the database of Insider Monkey held stakes worth $7 million in Homology Medicines, Inc. (NASDAQ:FIXX), compared to 14 in the preceding quarter worth $9 million.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm Vivo Capital is the only shareholder in Homology Medicines, Inc. (NASDAQ:FIXX) with 853,143 shares worth $2.5 million.
2. OptiNose, Inc. (NASDAQ:OPTN)
Number of Hedge Fund Holders: 10
OptiNose, Inc. (NASDAQ:OPTN) is a biopharma firm focusing on the development of drugs for disorders related to the ear, nose, and throat. On June 13, the share price of the firm jumped over 36% after the firm announced Phase 3 data from the trial of a drug named Xhance, a treatment for chronic sinusitis patients. The firm said the data indicated that the drug had a “safety and tolerability profile consistent with its current labeling”. The results of the study are yet to undergo a peer review.
On June 13, Piper Sandler analyst David Amsellem reiterated an Overweight rating on OptiNose, Inc. (NASDAQ:OPTN) stock with a price target of $4, noting that the firm had a clear path to label expansion with regards to new drug Xhance.
At the end of the first quarter of 2022, 10 hedge funds in the database of Insider Monkey held stakes worth $23 million in OptiNose, Inc. (NASDAQ:OPTN), compared to 8 in the preceding quarter worth $10 million.
Among the hedge funds being tracked by Insider Monkey, Oregon-based investment firm Stonepine Capital is the only shareholder in OptiNose, Inc. (NASDAQ:OPTN) with 2.9 million shares worth $7.2 million.
1. Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX)
Number of Hedge Fund Holders: 18
Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) is a biotech firm concentrating on the development of treatments for neurodegenerative diseases. On June 13, the company announced that it had obtained approval from authorities in Canada for Albrioza, a drug developed by the company for the treatment of amyotrophic lateral sclerosis (ALS) under certain conditions. The approval is the first global approval for the drug and the first approved in Canada for ALS since 2018.
On June 14, Citi analyst Neena Bitritto-Garg maintained a Buy rating on Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX) stock and raised the price target to $33 from $32, noting that an approval of a new drug of the firm in Canada was a positive.
At the end of the first quarter of 2022, 9 hedge funds in the database of Insider Monkey held stakes worth $179 million in Amylyx Pharmaceuticals, Inc. (NASDAQ:AMLX).
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Disclosure. None. 10 Unknown Biotech Stocks That Can Explode in 2022 is originally published on Insider Monkey.
