During normal times, if such times ever existed, healthcare industry stocks were some of the most volatile and risky buys on the market.
Of course, these aren’t regular times and in the wake of the coronavirus outbreak, any medical sector companies with a hint of research and development of new pharmaecuetical technology, equipment, or drugs have been hogging the spotlight. Many of those companies are smaller entities that have managed to capture a niche. These companies have the potential, especially now, to grow at an accelerated rate. But with that potential reward comes increased risk. Not to mention, small-cap healthcare firms can be pushed out of the market by their bigger competitors.
But it’s factors like these that make small-cap healthcare firms attractive targets for investors, especially in the world of penny stocks.
Indeed, many small companies have been able to ride the coronavirus wave to bigger profits while others have been hit by social distancing measures. These measures have impacted the ability to hold clinical trials, leading to the closure of various clinics while hospitals have had to shut down certain procedures in order to focus on the virus. This has had a particularly negative impact on companies in the pre-revenue phase.
The virus has also prompted a massive stock sell-off, which could be worrisome for some investors but others have been able to take advantage of the resulting heightened-risk factors.
So, if you’re an investor with a high risk profile, healthcare penny stocks can be a great place to eek out profits, especially in these trying times.
Here are 6 of the best medical penny stocks that we’re keeping an eye on this month.
1. Adaptimmune Therapeutics ($ADAP)
Earlier this year, Adaptimmune Therapeutics’ stock rocketed upward following the announcement of a partnership deal with Astellas Pharma. That partnership led to an R&D process that looked into the use of stem-cell-derived T-cell therapies for cancer treatment.
The company reported four partial responses to the experimental therapy, only two of which had so far been confirmed. Investors were sufficiently impressed by the results to push the stock up 139 percent.
Part of that partnership deal also gave Adaptimmune Therapeutics an additional $50 million to play with, along with $78.1 million raised during a second public offering. Meanwhile, ADAP is expected to launch its first commercially available cell therapy, called ADP-A2M4, in 2022. The therapy will help treat synovial sarcoma. If things go according to plan, we’ll likely see another spike in ADAP’s stock price over the intervening years.
Keep in mind, Adaptimmune still has no approved products on the market. But that could provide sufficient risk to drive up potential profits even higher.
2. Curis ($CRIS)
Curis is a biotechnology company focused on developing drugs for treating cancers. Much of its research is centered around collaborations with other drug makers, specifically on testing and develiping drugs.
That means putting new drugs through trials in order to gain federal approval. It also means that the stock price can fluctuate wildly depending on the outcome of these trials.
The company has yet to see much in the way of profits as it has concentrated on research, but management has indicated that the company is ready to bring a number of products to market, which would help raise profits for the firm.
Curis has seen some success with its Erivedge drug, which has been FDA approved and commercialized by Genentech and Roche. This drug is used to treat basal cell carcinoma and is available within the United States, the European Union, and a number of other countries. Curis’ Fimepinostat has also been fasttracked by the FDA and is on its way to clinical trial. Of its four other drugs, Curtis says two are in the clinical phase and two are in the pre-clinical stage.
Given Curis’ business model, volatility for the stock is high. But that can be an attractive option for investors. So investors should ask themselves if they see potential promise in Curis’ drug pipeline, making it important to track progress of the various treatments from the pre-clinical phase through to clinical trials.
Recently, SIO Capital Management bought 4.3 million shares in Curis. Two other firms, BVF Partners and Sabby Capital each bought 3.7 million and 2.3 million respective shares in the firm. In total, institutional investors and hedge funds own 39.10 percent of the company’s stock.
The Wall Street Journal says that Curis has a “Buy” listing from three brokerage firms. There are no research analysts giving the stock a “Sell” rating.
All of that could be seen as a vote of confidence for this medical penny stock in the months and years to come.
3. Agenus Inc. ($AGEN)
This medical penny stock is an immunotherapy company. Agenus develops compounds to help the immune system battle cancer.
The company’s most advanced drugs currently in development are the anti-CTLA-4 antibody, zalifrelimab, and the anti-PD-1 targeting therapy, balstilimab.
The company had a rough start to the year, losing almost half of its value year-to-date. That drop can be attributed to the recent market downturn alongside worries that AGEN’s cervical cancer product, made up of a combination of the aforementioned zalifrelimab and balstilimab, was not commercially viable.
However, in late August Agenus management announced a recent abstract involving these same antibodies had been accepted for oral presentation at a high profile conference. Now, oral presentations are typically the realm of important discoveries, so investors took note.
Many of these investors appear optimistic that the data presented at the high-profile ESMO conference will increase the likelihood that the FDA will approve the drugs down the road.
While cervical cancer combination therapy isn’t expected to surpass $100 million in annual revenue, we should note that Agenus’ market cap is $321 million. Additionally, the company has its hands in other potential cancer treatments and a partnership with Gilead Sciences.
All of these factors combine to create a particularly attractive value proposition for investors.
4. Viking Therapeutics Inc. ($VKTX)
Viking Therapeutics has had a rollercoaster of a time with investors. For much of its existence, this biotech company was one of the most coveted stocks on the market thanks to its experimental non-alcoholic steatohepatitis (NASH) treatment.
The drug showed promise that it could clear fat from the liver and enhance the patient’s lipid profile. The company is now at a second mid-stage study for biopsy-confirmed NASH for VK2809, and it expects to release new data in the first half of 2021.
This drug could provide a lot of potential for the beleaguered company. Over the next couple years, any drug approved for NASH may reap insane returns with over $5 billion in sales annually. VKTX has been negatively impacted by the Coronavirus, but once the pandemic is behind us, the company could see a surge as the market normalizes.
Recently, the company announced it would participate in four upcoming investor conferences. Meanwhile, at least 14 analysts have given Viking Therapeutics a “Buy” rating, with no analysts calling the stock overweight or recommending a “Sell” rating.
5. Biomerica, Inc. ($BMRA)
This firm develops and manufactures equipment for major hospitals, clinics, and universities in order to diagnose a number of different diseases.
The company saw an upswing after it announced the approval of two of its products to be used for a large swath of medical tests in China, which is one of the biggest medical markets on earth.
Indeed, in March of 2020, Biomerica’s stock outperformed the market after the company began sending its 10-minute coronavirus tests. Thanks to the portability and simplicity of its tests, the company was able to grab the attention of investors, sending its stock upward.
Beyond the Coronavirus implications of its technology, this Irvine, California-based company provides testing kits used to analyze blood, urine, and fecal samples to help diagnoze various diseases. Their products can also measure the level of specific hormones, antibodies, antigens, or other substances that exist in the body in extremely small concentrations.
Biomerica’s tests are most commonly used to test for food intolerances, gastrointestinal diseases, diabetes, and various other tests at the point of care, where speedy results are an asset.
The company is also working on InFoods, an IBS (irritable bowel syndrome) diagnostic-guided therapy. InFoods is currently in clinical studies to help identify specific foods that have anegative impact on the patient’s diet that, when removed, can help the patient’s IBS-related symptoms.
While all of this is great for investors, what people are really paying attention to is the company’s previously mentioned coronavirus testing capabilities. Not only is the company able to provide rapid COVID-19 testing at a critical moment in history, it’s also well-positioned to fulfill large international orders with its easily movable and cost-effective testing kit.
Given that the test can be administered at almost any location outside of a hospital, there could be huge implications for mass-testing efforts. These tests could be used in airports, at borders, in schools, or at the pharmacy counter.
The one-use test is built around a finger prick blood sample and can produce results in 10 minutes and could cost as little as $10 per patient.
Most analysts have placed Biomerica’s stock at a “Buy” rating with a forecasted upside of 70 percent from its current price.
6. Precigen Inc. ($PGEN)
This BioSciences company has been raising investor eyebrows for some time. Like many companies on this list, and many firms within the healthcare industry as a whole, its stock performance has been a stomach-churner.
At various times, Precigen’s stock has fallen by as much as 94 percent in recent months. However, after that notable plunge, the share price began to rise again. Since then, the company has received a number of analyst upgrades.
Precision BioSciences currently develops the ARCUS gene-editing platform, a competitor to the more well-knnown CRISPR-Cas9 tools. Precision’s offering includes cutting enzymes that are much smaller, making it easier to deliver genetic medicine. There are also certain safety improvements and the tool has been proven to be more accurate and efficient at making genetic edits.
Not to mention, Precision’s tool isn’t embroiled in a bitter argument over licensing agreements like CRISPR tools currently are.
Beyond that, Precision has elected to focus its attention on engineering immunotherapies, at least initially. This is in contrast to other companies who are looking to directly edit cells in patients’ bodies. Effectively, this allows researchers increased control over those edits being carried out.
PGEN may prove one of the riskier bets on this list. Despite optimism at various points in the company’s history, its stock has so far failed to live up to its potential. However, some analysts consider the stock a good bet, with H.C. Wainwright listing the stock as a “Buy” rating.
Time will tell whether PGEN can take advantage of its potential and surpass the much more recognized CRISPR technology as the go-to for gene editing uses.
Of course, whenever you’re investing your money, it’s important to do your research. Let articles like this serve as a jumping-off point to allow you to dig into the companies balance sheets, research, and offerings before putting in your own money.
Penny stocks, by their very nature, are volatile investments. The healthcare industry as a whole is a volatile investment, especially in the age of Coronavirus. So be careful.
That said, there is a lot of potential for profit in this sector. People all over the world are looking for answers and any company that may be able to provide a glimpse of insight into how we can beat this virus is going to see a boost to its bottom line. Whether that boost will last is another matter.
After all, 2020 has been an especially strange time for the markets, with huge sell-offs followed by inexplicable rallies. But the ongoing market turmoil is going to have lasting effects, but these stocks also have an incredible amount of potential to surge above the gray once the pandemic is contained. For any investors who aren’t afraid to take a risk, these 6 healthcare penny stocks may be a great bet.