While targeting the therapeutic side of the healthcare sector can be quite lucrative, nothing matches the excitement of biotech penny stocks. Of course, the excitement goes toward both extremes of the emotional spectrum.
This is a good time to remind you of all the reasons you shouldn’t buy biotech penny stocks. The first reason centers on the last two words. While many of these companies may claim advanced clinical data and whatnot, the reality is that many if not most players in this field will fail. That’s just the harsh reality of this business.
Also, you’ve got to be prepared for extreme volatility risk. Based on a number of factors ranging from financial considerations to scientific concerns, biotech penny stocks may find themselves tripping up. When they do, the results can be devastating.
To mitigate the obvious risks associated with this subsector, I’m only targeting companies that have multiple analyst buy ratings. This doesn’t guarantee anything but at least it’s something. With that, here are the biotech penny stocks to consider.
Adicet Bio (ACET)
Based in Boston, Massachusetts, Adicet Bio (NASDAQ:ACET) focuses on T-cell therapy for autoimmune diseases and cancer. Specifically, the company is researching gamma delta T-cells, which could lay the foundation for next-generation therapeutics. Currently, T-cell-based approaches have demonstrated significant efficacy in hematological malignancies. However, comparable efficacy in solid tumors has yet to be proven.
Per its website, Adicet believes that gamma delta T-cells have superior potential to contemporary T-cell-based therapeutics and thus can be deployed for both hematological cancers and solid tumors. In addition, ACET stock benefits from a large total addressable market. Back in 2022, the global T-cell therapy sector reached a valuation of $2.83 billion, according to Grand View Research. By 2030, industry revenue could hit $32.75 billion.
Enticingly, Adicet features a market capitalization of well less than $200 million. Even better, analysts rate shares a consensus strong buy with a $10.75 price target, implying almost 341% upside potential. When it comes to biotech penny stocks, you’re not going to find too many superior wagers.
Stoke Therapeutics (STOK)
Focused on addressing the underlying cause of severe diseases, Stoke Therapeutics (NASDAQ:STOK) focuses on upregulating protein expression with RNA-based medicines. Through its proprietary research platform called TANGO, Stoke aims to address some of the most vexing conditions. In particular, its lead clinical program centers on Dravet syndrome, a severe and progressive genetic epilepsy characterized by frequent, prolonged, and refractory seizures.
As well, the company is examining a preclinical target for autosomal dominant optic atrophy (ADOA), a severe progressive optic nerve disorder. Broadly speaking, the global RNA therapeutics market size reached an estimated valuation of $13.7 billion last year. Analysts project that by 2028, the sector could be worth $18 billion.
To be sure, Stoke isn’t exactly killing it in the financial realm. Frankly, it has spotty revenue and expanding net losses. However, one must also look at the positives. Notably, the company enjoys a cash-to-debt ratio of nearly 86X.
Analysts peg shares as a unanimous strong buy with a $21.80 price target. The high-side estimate lands at a very robust $35.
Actinium Pharmaceuticals (ATNM)
A late-stage biopharmaceutical company, Actinium Pharmaceuticals (NYSEAMERICAN:ATNM) develops targeted radiotherapies to meaningfully improve survival for those who have failed existing oncology therapies. Fundamentally, Actinium may benefit from a critical need. According to a paper published in the National Institutes of Health, of the 206,200 cancer cases diagnosed annually, first-line treatment failures are expected to rise to 87,269 cases.
Of course, failure of a treatment jeopardizes patients’ lives. Therefore, Actinium may provide hope in extremely difficult circumstances. As well, the global radiation oncology market could be worth $19.2 billion by 2032. That’s a sizable expansion from the $8.2 billion valuation posted in 2022.
Interestingly, ATNM has been a strong performer so far this year. Of course, that’s not to say that investors should lack vigilance. Over the past 52 weeks, ATNM lost almost 31%. Still, perhaps the most important signal to consider is the analyst rating – a unanimous strong buy. Further, the average price target hits $28, making ATNM one of the top biotech penny stocks to consider.
Clearside Biomedical (CLSD)
Focused on retinal diseases, Clearside Biomedical (NASDAQ:CLSD) may be one of the biotech penny stocks. However, it’s made significant progress that deserves careful consideration. In particular, the company features the first and only Food and Drug Administration-approved therapeutic that’s delivered into the suprachoroidal space (SCS). This describes the potential space between the sclera and choroid that traverses the circumference of the posterior segment of the eye.
Essentially, this innovative approach may help redefine the treatment of retinal diseases. Specifically, the back of the eye is the location where many irreversible and debilitating ocular conditions materialize. However, Clearside’s proprietary technology precisely administers therapeutics at the site of the disease.
Since early 2022, CLSD stock has meandered sideways, with the occasional spike northward. However, it hasn’t made headway in the charts, which clashes with the company’s clinical success. Still, analysts peg shares a unanimous strong buy with a $5.67 price target. With so much established potential, speculators may want to give Clearside a long look.
Karyopharm Therapeutics (KPTI)
Billed as the industry leader in oral selective inhibitor of nuclear export (SINE) technology, Karyopharm Therapeutics (NASDAQ:KPTI) focuses on addressing the fundamental mechanism of oncogenesis. Per the company’s website, this term refers to the process by which healthy cells become transformed into cancerous cells.
Leveraging its SINE innovation, Karyopharm features an extensive pipeline, covering a broad range of cancers including multiple myeloma, endometrial and myelofibrosis. Given the company’s relevancies, it’s not the most surprising development to see KPTI stock pop significantly higher this year. However, shares have been demolished over the trailing one-year period so prudence is necessary.
As well, the company’s financials could use some work, particularly in its balance sheet. That said, Karyopharm’s three-year revenue growth rate of 42.7% is impressive. Also, it sports an EBITDA growth rate of 16.8% during the same period.
Analysts rate shares a consensus strong buy with a $6 price target. That’s already robust and the high-side target goes up to a whopping $10. KPTI is easily one of the speculative biotech penny stocks to consider.
Outlook Therapeutics (OTLK)
A literal member of biotech penny stocks, Outlook Therapeutics (NASDAQ:OTLK) requires tremendous care. In the past 52 weeks, OTLK gave up around 63% of market value. Over the trailing five years, Outlook imposed a negative shareholder return of 95%. Needless to say, that would leave a mark.
However, for the adventurous, OTLK stock may be an enticing wager. Per the underlying company’s website, Outlook is a pre-commercial company dedicated to developing therapies for the preservation of vision. Further, management is focused on developing and eventually launching the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications.
Administered as an intravitreal injection for the treatment of wet age-related macular degeneration (AMD) and other retinal diseases, Outlook may offer much-needed hope. Unfortunately, there’s no cure for wet AMD, with treatments only slowing the disease.
Despite the company not posting revenue since the fiscal year 2020, analysts anticipate good things coming out of the biotech. Featuring a strong buy consensus view, the Street’s experts also forecast a price of $2.18 per share.
Cara Therapeutics (CARA)
If you want to dial up the risk-reward profile of your biotech penny stocks, look no further than Cara Therapeutics (NASDAQ:CARA). Based in Stamford, Connecticut, Cara aims to transform the way pruritus – an irritating skin sensation that arouses scratching – is treated. And no, we’re not talking about the occasion discomfort that can be alleviated rather quickly.
Instead, pruritus is an unpleasant sensation that provokes a guttural need to manually address the irritated skin. It’s debilitating and disabling, imposing a burdensome condition that impairs qualify of life. To Cara’s point, while other conditions – like cancer – grab the biotech headlines, millions of people who suffer from pruritus deserve relief.
Further, the condition is tied to other serious diseases. For example, about 200,000 patients undergoing dialysis suffer from a moderate to severe intractable itch. Here, Cara developed and launched the first and only product approved to help such patients.
Thanks to its core acumen, analysts rate shares a unanimous strong buy. Also, the average price target stands at a blistering $7.13.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.