Low-priced biotech stocks have sold off recently, but these picks still have potential
A few weeks back, penny stocks in the biotech space were too hot to touch. But, with most of the excitement driven by the overall “meme-stock mania,” namely on Reddit’s r/WallStreetBets forum, these low-priced names have sold off tremendously in the weeks since.
It’s clear that, with hype rather than fundamentals fueling the rally, a pullback like this was due. Many names offering more sizzle than steak are falling back to reasonable but still frothy prices. However, in other cases, the pullback may have resulted in great entry points for several promising stocks.
Granted, promising is not the same thing as slam dunk. As is par for the course with this sector, it’s a game of high risk but high potential returns. However, while nothing’s guaranteed, there are plenty of situations right now where the risk-return proposition may be firmly in your favor.
So, which biotech penny stocks are worth a look today? Check out these eight:
- AIM Immunotech (NYSEAMERICAN:AIM)
- Asensus Surgical (NYSEAMERICAN:ASXC)
- Celsion (NASDAQ:CLSN)
- iBio (NYSEAMERICAN:IBIO)
- Jaguar Health (NASDAQ:JAGX)
- Ovid Therapeutics (NASDAQ:OVID)
- Rigel Pharmaceuticals (NASDAQ:RIGL)
- VBI Vaccines (NASDAQ:VBIV)
Penny Stocks: AIM Immunotech (AIM)
A few weeks ago, I discussed AIM stock as a play on the current fight against long-haul Covid-19 symptoms. But don’t view this name as a binary wager on the pandemic. Ampligen, AIM’s flagship drug candidate, has potential that extends beyond its possible use in protecting against some of the long-term effects of Covid-19.
For example, the candidate just received Orphan Drug status in Europe as a pancreatic cancer treatment. Plus, it also has potential as an overall treatment for chronic fatigue symptoms. To top it all off, the company may have another winner with their HPV-symptom treatment, Alferon.
While AIM has had some positive developments in recent weeks, like biotech penny stocks overall, shares have slid a bit since February. However, now at around $2 per share, the potential for gains could vastly exceed the risk of losses. This company may not yet have material amounts of revenue. Yet, with enough funding for operations over the next two years, it has a decent amount of time to advance bringing Ampligen and Alferon to market.
The caveat? Patience is key. Shares could see another big pop, if more positive news comes out. Or, shares could continue to languish in the near-term at today’s prices. But, with a substantial payoff if all goes right, this is still a name to consider.
Asensus Surgical (ASXC)
Asensus, formerly TransEnterix, isn’t a biotech company necessarily. Instead, it’s a medical-equipment maker. Recently, though, this surgery play saw big moves in its stock price, following positive news about its Sehance Surgical System.
Now, Senhance isn’t a new product — it first debuted in the late 2010s. However, after the company went back to the drawing board following a sales slump, it may finally live up its dashed expectations.
But, surging on hype as much as on its prospects, ASXC stock has been heading back to earth following its to-the-moon moves about a month ago. Still up substantially from where its sub-$1 late December price, could it mount a comeback? Or, should we expect a continued slide back among the penny stocks?
Only time will tell. The jury’s not really out yet whether Asensus’s second attempt with Senhance in the U.S. market will pay off. And at today’s market capitalization of $856 million, you are paying a hefty premium to wager everything goes off without a hitch.
However, despite it looking like something to tread carefully with, penny-stock investors looking to buy on weakness may find some opportunity here. That’s doesn’t mean now is the time to buy. But consider ASXC as another healthcare-related penny stock to keep on your radar.
Popping on some promising news about its ovarian cancer treatment, biotech investors have been taking profit with CLSN stock since the end of last month. But, as shares fall below $2 per share — trading for about $1.97 as of this writing — those with a longer time horizon may find this to be a worthwhile buy.
How so? The company doesn’t just have a solid contender in its cancer treatment, but other prospective treatments in its pipeline as well. In a letter to shareholders on Feb. 11, CEO Michael Tardugno highlighted two other candidates with the potential to change the game for this low-priced biopharma play.
More specifically, these are Celsion’s Placcine DNA platform — which is a potential treatment for future pandemics — as well as ThermoDox, a liver-cancer treatment. With many ways to win, a bit of positive news for any of these prospective drugs could send Celsion back to prior levels and perhaps well above the typical $5-or-less range of other penny stocks.
Again, when it comes to these biotech plays, it’s a game of high-risk, high-return. CLSN stock is no exception. But, with many avenues to reach success, this is yet another name to put on your watch list.
To many, iBio may be a Covid-19 vaccine stock that failed to deliver. Last summer, at the height of the vaccine race, shares went from around $1.50 to highs topping $7. Then, as other contenders beat it to the chase, IBIO stock returned to around the price where it started.
Now, competing vaccines from companies like Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) have crossed the finished line and been rolled out in a big way. However, that doesn’t necessarily mean “game over” for the biotech. It may be down, but it’s also premature to say it’s out.
How could this “also-ran” name stage a comeback? Several ways. As InvestorPlace’s Louis Navellier noted on Feb. 22, the company’s vaccine candidate still has a shot at moving the needle, but further progress with its FastPharming platform could deliver solid returns as well.
Put simply, investors are underestimating the future potential here with this pick of the penny stocks. As a result, shares have been oversold. With IBIO only needing a small amount of positive news to send it higher once again, consider giving this name a second look.
Jaguar Health (JAGX)
JAGX stock may be best known for its “meme stock” status. But, unlike some other biotech penny stocks that went up on a whim, investors may have been onto to something when they dived into Jaguar en masse at the start of 2021.
I’m talking about Mytesi, which I’ve previously discussed is a possible treatment for symptoms experienced by those showing long-haul Covid-19 symptoms. But, much like AIM Immunotech and its Ampligen candidate, possible demand for this drug goes beyond the current health crisis.
Originally developed to treat symptoms experienced by HIV/AIDS patients on antiretroviral therapy, Mytesi could still find commercial success with its intended market. On top of that, as InvestorPlace’s Will Ashworth noted, a spinoff of Jaguar’s Napo Pharmaceutical business into a third-party special purpose acquisition company (SPAC) is another possible development that could move the needle here.
Speculators may have bid up JAGX stock to unsustainable levels back in January. But, after falling from above $4 per share back to under $2, buying on this name’s recent weakness could prove profitable.
Ovid Therapeutics (OVID)
After crashing in late 2020, OVID stock has started to stage a comeback so far this year. Trending higher in January, shares dipped a bit in February. But, on news of the sale of the rights to its Soticlestat seizure treatment to Takeda Pharmaceutical (NYSE:TAK), shares started off March right, with a pop from around $3 per share back up to around $4.
Is this a sign of more gains to come? It’s possible. Out of the potential $856 million payout, Ovid’s only getting $196 million upfront. But, compared to its current market capitalization of around $267 million, that’s still a nice chunk of change.
And, with potential for the balance to be paid by Takeda, shares could continue to stage a recover if progress is made commercializing the experimental drug. Trading for over $6 per share just a few months ago, OVID stock may have plenty of room to run.
Investors may be cautiously responding to the positive Soticlestat news. But, that could be to your advantage, if you have yet to enter a position. This pick of the penny stocks is certainly worth a closer look.
Rigel Pharmaceuticals (RIGL)
Like many biotech penny stocks, RIGL stock has pulled back in recent weeks following its pop in early February. Shares soared from around $3.50 to highs above $5 per share, before sliding back below the $4 mark as of this writing.
But, with the recent news of its $960 million autoimmune therapy deal with Eli Lilly (NYSE:LLY), investors may have good reason to buy the dip here. Similar to the Ovid-Takeda deal, Rigel is getting $125 million upfront with the balance potentially coming into its hands as milestone payments.
The candidate, named R552, has only completed its Phase 1 clinical trials so far. Mid-stage trials are set to start this year. Yet, the fact Lilly was willing to strike a deal so soon for this experimental drug signals that R552 has a good shot of coming through the pipeline and becoming a marketable product.
RIGL stock may be back to price levels last seen in 2018. But, further news on R552 — coupled with the potential of some other preclinical drugs targeting central nervous system (CNS) diseases — this is definitely a biotech play to keep an eye on near-term.
VBI Vaccines (VBIV)
Similar to iBio, VBI Vaccines shares went on a wild ride in 2020, with the company being another “also-ran” contender in the vaccine race. But, while the leading vaccines are currently being rolled out across the globe, this firm’s candidates are only now getting started with early stage clinical trials.
The candidates, VBI-2901 and VBI-2902, may seem like they’re a bit late to the game. But, one Raymond James analyst is optimistic about their prospects. The analyst, Steven Seedhouse, believes that Wall Street is underestimating the potential strength of both candidates.
However, while VBI’s Covid-19 efforts have gotten most of the attention lately, there’s another treatment in its pipeline that’s been a possible catalyst since before the pandemic made headlines. I’m talking about the company’s Sci-B-Vac vaccine for hepatitis B (HBV). The vaccine has been approved for commercial use in Israel, but it’s yet to get U.S. Food and Drug Administration (FDA) approval. Seedhouse is bullish on Sac-B-Vac’s prospects as well.
This analyst may have a very aggressive price target on VBIV stock right now, estimating $9 per share versus today’s price of about $3. But, weighing risk against potential long-term gains, this may be another one of the speculative biotech penny stocks to cautiously take a look at.
Note: This article originally appeared at InvestorPlace.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016. On the date of publication, Thomas held a long position in AIM stock.