We recently published a list of 10 Hot Biotech Stocks Under $5. In this article, we are going to take a look at where Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN) stands against other hot biotech stocks under $5.
The biotechnology sector is gaining new momentum with better market conditions, cutting-edge innovations, and growing investor attention. After a tough 2024, the industry is ready for major growth powered by developments in personalized medicine, AI-driven drug discovery, and rising demand for biologics. MarketsandMarkets reported that the global biotech market should grow from $483.0 billion in 2024 to $546.0 billion in 2025, reflecting a solid 13% increase. This growth shows the sector’s resilience and future potential.
A major factor in this upturn is the expected change in the Federal Reserve’s interest rate policies. Biotech needs lots of capital for expensive R&D and clinical tests, making it sensitive to shifting rate trends. Genetic Engineering and Biotechnology News noted that lower rates increase capital availability, helping biotech companies extend operations, attract venture funds, and speed up drug development. Analysts think a rate cut could free up billions in sidelined investment money for struggling new biotech companies seeking stable funding.
Biotech stocks are gaining traction among investors. Despite short-term ups and downs, biotech remains a high-growth area with good opportunities for risk-takers. Top investment banks have noticed biotech’s recovery. Goldman Sachs called it an “undervalued opportunity,” pointing to strong fundamentals, better clinical results, and a favorable regulatory setting. Goldman Sachs stressed that biotech stocks offer an “option-like structure” with strong upside potential, especially as interest rates fall. Simultaneously, JPMorgan analysts expect biotech funding to recover, noting signs of stability in research and manufacturing areas that suffered in previous funding droughts. Though biotech IPOs have been quiet since 2021, industry experts believe that falling interest rates and favorable conditions for investments could reopen the IPO window for companies seeking institutional backing.
Meanwhile, scientific breakthroughs are also driving biotech growth as gene editing, AI-powered drug discovery, and precision medicine are changing how we treat cancer, autoimmune disorders, and rare genetic conditions. With advances in CRISPR gene editing and cell therapies, biotech companies are addressing medical needs in ways unimaginable just ten years ago.
Our Methodology
To identify the 10 Hot Biotech Stocks Under $5, we screened for companies in the biotechnology sector trading below $5 per share while meeting key financial and growth criteria. We focused on stocks with a strong market capitalization, ensuring they had a solid financial foundation. Additionally, we selected companies that have gained at least 20% in the past six months, reflecting recent positive momentum, and exhibit a potential upside of at least 20%, indicating strong future growth prospects. After filtering stocks based on these parameters, we ranked them in ascending order of their potential upside to determine our final list.
To further validate our selections, we analyzed hedge fund sentiment using data from Insider Monkey’s Q4 2024 hedge fund database. Stocks with higher hedge fund ownership are often backed by institutional investors with deep research capabilities, adding an additional layer of confidence to their growth potential.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An engineer operating a 3D printing machine to create a organ or cell-based transplant for a autoimmune disease.
Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN)
Potential Upside: 285.00%
Number of Hedge Fund Holders: 26
Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN) is a clinical-stage biotechnology company. It develops immunology treatments to improve organ transplant outcomes and treat autoimmune conditions. Its main drug, tegoprubart, aims to prevent rejection in kidney, liver, and pancreatic islet cell transplants.
For Q3 ended September 30, 2024, Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN) reported a balance of $78.2 million in cash, not including its recent $135 million financing. Research and development costs rose to $16.5 million due to an increase in clinical trials, including the Phase 1b and Phase 2 BESTOW studies. General and administrative costs grew to $4 million from higher service and operational costs, though the company’s recent $135 million financing round should fund operations through 2026.
Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN) hit key milestones recently as it completed enrollment for its Phase 2 BESTOW trial of tegoprubart for kidney transplants four months early. This trial will assess tegoprubart’s ability to prevent organ rejection, with results expected in late 2025. Updated Phase 1b data presented at the American Transplant Congress (ATC) showed improved kidney function in patients after transplant.
Moreover, Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN) reported positive results in an investigator-initiated trial at UChicago Medicine. The trial revealed that tegoprubart helped type 1 diabetes patients achieve insulin independence after islet transplantation. This could make tegoprubart therapy a safer alternative to current treatments with harsh side effects.
Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN) also contributed to a breakthrough at Massachusetts General Hospital in a groundbreaking xenotransplantation. Tegoprubart showed promising results when used in a genetically modified pig kidney transplant, showcasing its value for xenotransplantation. With the rising need for new organ transplant options, Eledon might emerge as a frontrunner in cutting-edge immunosuppressive treatments. This could not only create new revenue streams but also broaden the company’s market footprint.
With Eledon Pharmaceuticals, Inc.’s (NASDAQ:ELDN) strong finances and advancing clinical programs, it remains a hot biotech stock for those interested in innovative immunosuppression therapies.
Overall, ELDN ranks 5th on our list of hot biotech stocks under $5. While we acknowledge the potential of ELDN, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ELDN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.