For investors willing to do their research and take calculated risks, biotech penny stocks can offer the potential for high returns. These companies have a low market capitalization and are not yet profitable, but they offer the potential for high growth as their products gain regulatory approval and market acceptance.
While they can be risky, some investors believe biotech penny stocks offer a unique opportunity for significant returns. Let's look at three companies poised for growth and have the support of analysts. Before we do, it's important to understand that investing in penny stocks comes with a higher risk than investing in larger, more established companies.
vTv Therapeutics
- Market cap $77.41 million
- Current share price: $0.74
- Upside potential: 440%
vTv Therapeutics (NASDAQ: VTVT) is a clinical-stage biopharmaceutical company focusing on small-molecule drug development that targets “unmet medical needs.” In other words, they develop cellular therapies to cure/treat rare serious hematologic diseases, including blood cancer. The company has several products in its pipeline, with several in Phase 2 trials.
The stock has fallen over the last month, quarter, and year: -6.30%, 9.28%, and -6.30%, respectively. On the other hand, VTVT has rebounded 11.68% YTD. This has helped to position the stock just short of the 52-week range median. In addition, the $4.00 price target represents an upside of 440.4%, so while the price has consistently failed to meet the price target, even a dramatic miss would be significant growth.
In vTv’s March earnings report, earnings came in at -$0.06. While this is a negative value, it has two good traits. First, the value met the consensus estimate. Secondly, it beat last year’s Q1 EPS by 2 cents. Actual earnings have consistently met the estimate for all of 2023, and analysts do not project this to grow much if at all, the next year. Still, VTVT’s -1.17 beta value makes them 217% LESS volatile than the S&P so the stock could bear less risk than others. Indeed, it has seen the least fluctuation since its IPO, than the other two on this list (see chart.).
SAB Biotherapeutics, Inc.
- Market Cap of $36.57 million
- Current share price: $0.73
- Upside potential: 400%
SAB Biotherapeutics, Inc. (NASDAQ: SABS) is a clinical-stage biopharmaceutical company that develops human-antibody-based immunotherapies, most notably influenza. Their most recent influenza therapeutic just received Fast Track designation. That investigational product is known, as SAB-176, at least for now. SAB-176 aims to help high-risk patients with Type A and Type B influenza, particularly those with anti-viral resistant strains.
More importantly, the Fast Track Designation pushed shares up 80%. And while SABS has mostly held a Buy rating of some kind over the past, this significant bump likely had a hand in continuing the trend. And it appears investors have noticed since trading volume shot up 400%, to 2.1 million shares, in the same week.
At the same time, the $3.67 price target represents a similar upside of 405.4% over the current $0.73 per share. While that remains down from the Dec 1, 202 historical high of $11.23–and down -74.81% from one year ago–SABS has been on a bit of a rally. Over the last 30 days, the stock is up 42.25%; and up 76.52% in the last week. Furthermore, the stock is also up 22.99% YTD. So even though the stock remains in the bottom 15% of its 52-week range outlook is improving.
Gamida Cell Ltd.
- Market cap $60.02 million
- Current share price $0.73
- Upside potential: 1,015%
Biotech Gamida Cell Ltd. (NASDAQ: GMDA) develops cell therapies for blood cancer and other rare hematologic diseases. The company’s biggest pipeline product right now is Omidubicel. This is a stem-cell-based bone marrow therapy.
GMDA's share price is in the bottom 10% of the 52-week range, near the same margin as SABS. However, analysts have given GMDA a $9.00 price target, representing an upside of 1,015.2%. That is more than twice as much anticipated growth than both SABS and VTVT. And as is the case with the others, GMDA is down on several metrics (in this case, all of them): at least -75% since last year; nearly 50% on the quarter; -47.25% over the last month; and -37.44% YTD.
Of the three stocks on this list, GMDA has the best historical high, $15.41, which they posted in December 2018. By April 2020, that value had plummeted to $2.75 and eventually rebounded as high as $12.33 in early Feb 2021. That was GMDA’s last real peak as it started declining from there to reach its current value.
GMDA earnings have consistently satisfied analysts’ estimate range for at least the last few years, aside from a big dip in Q4 of 2020. Fortunately, the earnings dip rebounded to its earlier value of -$0.30, so the steady momentum picked up where it left off. Earnings are estimated to continue improving, and while it appears positive earnings are inevitable, the slower growth rate means that could be more than a year away.
