In this article, we will discuss the 9 Best Biotech Penny Stocks to Buy in 2026.
On April 24, Drew Pettit, Citi US equity strategist, joined ‘The Exchange’ on CNBC to discuss the market fundamentals this year, with a positive outlook for the market as investors look past geopolitical conflicts and political messiness in Washington regarding interest rates and the Fed. Drew emphasized that the market is refocusing on fundamentals, anticipating a strong year for earnings supported by secular economic trends, even while some concerns remain regarding the cyclical side of the economy. He specifically highlighted a diverse range of favored stocks.
Focusing on the semiconductor sector, Drew identified chips as the primary supply choke point for the AI buildout, leading to a market rotation toward these supply-constrained areas where margins are expanding, and sales are growing faster than assets. He explicitly rejected the idea of viewing semiconductors as a traditional cyclical leading indicator, arguing that they should be viewed as a growth story centered on a long-term AI buildout. Explaining why the strength in semiconductors doesn’t signal a broad economic positive, Drew said that the buyers of these chips (primarily hyperscalers with significant cash and clean balance sheets) are not sensitive to interest rates or cyclical trends. These buyers can absorb the cost pass-throughs, whereas companies in the broader cyclical economy, such as consumer-facing firms, lack the same power to push through price increases and inflation.
Our Methodology
We used screeners to identify biotech stocks that are trading below $5 per share, and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2025.
Note: All data was sourced on April 28.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
9 Best Biotech Penny Stocks to Buy in 2026
9. Prelude Therapeutics (NASDAQ:PRLD)
Number of Hedge Fund Holders: 9
Prelude Therapeutics (NASDAQ:PRLD) is one of the best biotech penny stocks to buy in 2026. On April 20, Prelude Therapeutics presented promising preclinical data for PRT13722, a first-in-class, oral KAT6A degrader. Designed for HR+/HER2- breast cancer, the candidate demonstrated the ability to achieve complete tumor regressions as a monotherapy across multiple models, including those resistant to current endocrine therapies.
Unlike traditional dual inhibitors, PRT13722 specifically targets and degrades the KAT6A protein, a mechanism Prelude believes offers superior efficacy and a significantly improved hematological safety profile. The preclinical findings suggest that PRT13722 is highly synergistic when combined with existing standards of care, such as CDK4/6 inhibitors and PI3Kα inhibitors.
This combinability is a key differentiator, as the degrader maintains its activity even in the presence of acquired therapy-resistant mutations, like ESR1. By selectively degrading KAT6A rather than inhibiting both KAT6A and KAT6B, the company aims to avoid the dose-limiting toxicities often associated with less selective approaches. Prelude Therapeutics remains on track to file an IND application for PRT13722 by mid-2026.
Prelude Therapeutics is a precision oncology company developing highly selective KAT6A degraders, JAK2V617F inhibitors, and next-gen degrader antibody conjugates (DACs). The firm uses targeted protein degradation to create transformative therapies for cancer patients with high unmet needs.
8. Autolus Therapeutics plc (NASDAQ:AUTL)
Number of Hedge Fund Holders: 14
Autolus Therapeutics plc (NASDAQ:AUTL) is one of the best biotech penny stocks to buy in 2026. On March 27, Autolus Therapeutics reported Q4 and full-year 2025 financial results, highlighting the commercial scale-up of its CAR T-cell therapy, AUCATZYL. The company achieved net product revenue of $74.3 million for 2025, with $23.3 million generated in Q4. Following its US approval, the therapy launched in the UK in January 2026 under routine commissioning.
Autolus remains optimistic about its commercial trajectory, projecting 2026 revenues between $120 million and $135 million while expecting a shift to positive gross margins during the year. The company is aggressively expanding the clinical utility of its lead candidate, obecabtagene autoleucel (obe-cel), beyond adult B-ALL.
Autolus Therapeutics plc (NASDAQ:AUTL) is also pioneering the use of CAR T-cells in autoimmune diseases; the LUMINA trial is currently enrolling patients with severe lupus nephritis, and the BOBCAT trial is exploring its application in progressive multiple sclerosis, with initial data expected by the end of 2026. For long-term growth and margin improvement, the company has initiated a manufacturing life cycle plan focused on automation and a next-gen platform designed to reduce production costs and increase capacity.
Autolus Therapeutics plc (NASDAQ:AUTL) develops T cell therapies for cancer and autoimmune diseases in the United Kingdom and internationally.
7. Ocugen Inc. (NASDAQ:OCGN)
Number of Hedge Fund Holders: 14
Ocugen Inc. (NASDAQ:OCGN) is one of the best biotech penny stocks to buy in 2026. On April 1, Ocugen completed dosing ahead of schedule in its Phase 2/3 GARDian3 pivotal clinical trial for OCU410ST, a first-in-class modifier gene therapy for Stargardt disease. The trial reached its enrollment target of 63 participants in less than 9 months, reflecting high patient and investigator engagement. Ocugen expects to release topline results in the second quarter of 2027, with a BLA filing targeted for mid-2027.
OCU410ST is a one-time subretinal injection designed to address all ABCA4-associated retinopathies, regardless of specific genetic mutations. Unlike traditional gene replacement therapies, OCU410ST uses an AAV5 platform to deliver the RORA gene, which regulates multiple pathways (including oxidative stress and inflammation) linked to retinal degeneration. Clinical data from earlier Phase 1 studies showed a 54% reduction in atrophic lesion growth and an average gain of 6 letters in visual acuity compared to untreated eyes.
The GARDian3 trial includes a diverse range of subjects, from pediatric to adult, and monitors the reduction in atrophic lesion size as its primary objective over 12 months. Secondary endpoints include visual acuity improvements and the preservation of the Ellipsoid Zon, a critical indicator of photoreceptor integrity. To date, the therapy has maintained a favorable safety profile with no serious adverse events reported, such as intraocular inflammation or vasculitis.
Ocugen Inc. works on vaccines, biologics, and novel gene and cell therapies that enhance patients’ health. Its product portfolio includes various products, including OCU400 under Phase 3 trials for the treatment of retinitis pigmentosa and Phase 1/2 trials for the treatment of Leber congenital amaurosis, OCU410 and OCU410ST both in Phase 1/2, OCU200 and NeoCart OCU500, OCU510, and OCU520.
6. ProKidney Corp. (NASDAQ:PROK)
Number of Hedge Fund Holders: 15
ProKidney Corp. (NASDAQ:PROK) is one of the best biotech penny stocks to buy in 2026. On March 25, ProKidney appointed Greg Madison as Chief Commercial Officer, a move aimed at preparing the company for the potential launch of its lead cell therapy, rilparencel. Reporting to CEO Bruce Culleton, M.D., Madison is tasked with shaping the commercial infrastructure and market strategy for the treatment, which is currently in late-stage clinical development for patients with advanced chronic kidney disease/CKD and diabetes.
Madison brings 20+ years of biopharma leadership, with an emphasis on nephrology and specialty markets. His prior experience includes serving as CEO of Shield Therapeutics and Melt Pharmaceuticals, as well as President and CEO of Keryx Biopharmaceuticals. During his tenure at Genzyme, Madison served as VP and GM of the Global Renal Business, where he was instrumental in driving the renal therapies Renagel and Renvela to blockbuster status with more than $1 billion in annual revenue.
The appointment comes as ProKidney Corp. targets a significant unmet need in the US, where ~37 million adults suffer from CKD. Rilparencel is specifically being developed for the Stage 3b/4 CKD population, which includes over 1 million individuals in the US whose disease is driven by diabetes.
ProKidney Corp. is engaged in developing cell therapies for the treatment of chronic kidney diseases. Its product portfolio includes rilparencel, which is in Phase III of clinical trial. Alongside this, the company is developing different cryopreserved versions of rilparencel, with each one in a different phase of clinical trials.
5. Absci Corporation (NASDAQ:ABSI)
Number of Hedge Fund Holders: 16
Absci Corporation (NASDAQ:ABSI) is one of the best biotech penny stocks to buy in 2026. On March 24, Absci reported Q4 and the full-year 2025 financial results, highlighting significant progress in its internal pipeline of AI-designed therapeutics. The company dosed the first three cohorts in its HEADLINE Phase 1/2a trial for ABS-201, a novel anti-PRLR antibody targeting androgenetic alopecia. Emerging data indicates the treatment is well-tolerated, and recent ex vivo studies suggest ABS-201 can stimulate hair growth by regenerating the follicle stem cell niche.
Absci expects to release preliminary safety and pharmacokinetic data in H1 2026, followed by interim proof-of-concept results in H2. The company is also diversifying the application of ABS-201 by preparing to initiate a Phase 2 trial for endometriosis in the fourth quarter of 2026. This expansion targets a significant unmet need for non-sex steroid hormone treatments in a market affecting millions of women.
Financially, Absci reported a full-year net loss of $115.2 million for 2025, with R&D expenses rising to $81.4 million as internal programs moved toward the clinic. Despite the increase in spending, the company maintains a solid balance sheet with $144.3 million in cash, cash equivalents, and marketable securities as of December 31. Management noted that this capital is sufficient to fund operations into H1 2028. Looking forward, Absci Corporation anticipates signing at least one major drug creation partnership with a large pharmaceutical company during 2026.
Absci Corporation develops several antibody therapeutics.
4. Lexicon Pharmaceuticals Inc. (NASDAQ:LXRX)
Number of Hedge Fund Holders: 20
Lexicon Pharmaceuticals Inc. (NASDAQ:LXRX) is one of the best biotech penny stocks to buy in 2026. On March 23, Lexicon Pharmaceuticals and Novo Nordisk (NYSE:NVO) initiated a Phase 1 clinical study for LX9851, a first-in-class, oral non-incretin small molecule inhibitor targeting obesity and metabolic disorders. Discovered by Lexicon and now under exclusive worldwide development by Novo Nordisk, the drug works by inhibiting Acyl CoA Synthetase 5 (ACSL5), a key regulator of fat accumulation and energy balance.
The Phase 1 trial will evaluate the safety and pharmacokinetics of LX9851 in 96 participants and is expected to conclude in the first quarter of 2027. The initiation of this study triggered a $10 million milestone payment to Lexicon, marking the second of three near-term payments under their 2025 agreement.
Lexicon remains eligible for a third $10 million payment later this year and could receive up to $1 billion in total upfront and milestone payments, plus tiered royalties on future net sales. Lexicon CEO Mike Exton noted that the partnership uses Novo Nordisk’s scale to advance what could become a highly differentiated approach to weight management.
Lexicon Pharmaceuticals Inc. is a biopharmaceutical company focused on the discovery, development, and commercialization of pharmaceutical products to treat human disease.
3. Allogene Therapeutics Inc. (NASDAQ:ALLO)
Number of Hedge Fund Holders: 21
Allogene Therapeutics Inc. (NASDAQ:ALLO) is one of the best biotech penny stocks to buy in 2026. On April 16, Allogene Therapeutics closed its underwritten public offering, raising $200.4 million in aggregate gross proceeds. The offering consisted of 87.5 million shares of common stock priced at $2.00 per share, plus an additional 12.7 million shares purchased through a partial exercise of the underwriters’ option. The transaction involved a large syndicate of financial institutions, with Goldman Sachs & Co. LLC, Jefferies, and TD Cowen serving as lead joint bookrunners.
The company intends to use the net proceeds for general corporate purposes. Key areas of allocation include clinical trial expenses, ongoing R&D, G&A costs, and capital expenditures. This capital infusion provides Allogene Therapeutics Inc. with enhanced financial flexibility to advance its pipeline of off-the-shelf chimeric antigen receptor T-cell (CAR T) therapies.
The offering was executed under an existing shelf registration statement that became effective in April 2024. Following the closing, the company’s common stock was trading down approximately 2.67%. Joint bookrunners for the deal also included Piper Sandler and William Blair, while Baird, Canaccord Genuity, and TPG Capital BD, LLC provided additional management and co-management support.
Allogene Therapeutics Inc. is a clinical-stage biotechnology company dedicated to the development of off-the-shelf allogeneic CAR-T cell therapies for cancer and autoimmune diseases. The company’s goal is to provide a scalable, readily available cell therapy derived from healthy donors.
2. Arbutus Biopharma Corporation (NASDAQ:ABUS)
Number of Hedge Fund Holders: 27
Arbutus Biopharma Corporation (NASDAQ:ABUS) is one of the best biotech penny stocks to buy in 2026. On March 23, Arbutus Biopharma concluded 2025 in a robust financial position, reporting $91.5 million in cash, cash equivalents, and marketable securities as of December 31. The company narrowed its annual net loss to $33.5 million ($0.17 per share), compared to $69.9 million in the previous year. This improvement was driven by a disciplined restructuring that reduced R&D expenses by ~$29 million and shifted the corporate focus toward its leading clinical programs, imdusiran and AB-101.
A major corporate milestone was reached on March 3, when Arbutus and its partner Genevant Sciences entered into a $2.25 billion global settlement with Moderna. The agreement resolves long-standing patent infringement litigation regarding lipid nanoparticle/LNP delivery technology. Arbutus is set to receive 20% of a $950 million upfront payment in July, after litigation costs, with an additional $1.3 billion contingent on future appellate rulings. Due to this substantial capital influx, management is currently evaluating a return of capital to its shareholders in Q3 2026.
On the clinical front, Arbutus Biopharma Corporation reported that two additional patients in Phase 2a trials for imdusiran achieved a functional cure for chronic hepatitis B, bringing the total to ten patients to date. The company also recognized revenue from a milestone payment under its LNP license with Alnylam for a hepatocellular carcinoma treatment, further validating its proprietary delivery platform.
Arbutus Biopharma Corporation develops therapies targeting infectious diseases, including chronic hepatitis B.
1. MiMedx Group Inc. (NASDAQ:MDXG)
Number of Hedge Fund Holders: 33
MiMedx Group Inc. (NASDAQ:MDXG) is one of the best biotech penny stocks to buy in 2026. On March 23, MiMedx officially announced the commercial launch of CHORIOFIX, the latest addition to its portfolio of advanced placental allografts. This organically developed product is a lyophilized human placental allograft designed to serve as a protective barrier for both acute and chronic wounds. It is specifically engineered to address complex clinical needs, such as large deficits and deep, tunneling wounds, which are historically difficult to treat effectively.
The allograft features a unique triple-layer construction, consisting of two chorion layers with an intact intermediate layer. This configuration makes CHORIOFIX the thickest product in the MiMedx portfolio to date, significantly enhancing its handling characteristics during positioning and suturing. Furthermore, its uniform, dual-sided design eliminates the need for specific orientation during application, providing a more streamlined experience for surgical and clinical staff.
In line with its focus on evidence-based outcomes, MiMedx Group Inc. has integrated CHORIOFIX into its CAMPAIGN trial. This prospective randomized controlled trial is designed to evaluate the clinical performance of CHORIOFIX and EPIEFFECT against the standard of care in treating non-healing diabetic foot ulcers.
MiMedx Group Inc. develops and sells placental tissue allografts to several sectors of the healthcare industry. It is involved in the processing of human placental tissues, the membrane, the umbilical cord, and the placental disc. It offers a range of wound care products, including Regentkit wound gel, Epicord, Epixpress, Choriofix, and more.
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