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 (NASDAQ:PRLD) remains on track to file an IND application for PRT13722 by mid-2026.

Prelude Therapeutics (NASDAQ:PRLD) 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.