The 5 Best Biotech Stocks Under $20
There are quite a few biotech stocks under $20 worth looking at. These are companies that are firmly out of penny territory, but might face growth headwinds. Nevertheless, there’s a reason investors are looking at them. They offer the promise of unlimited upside—most biotechs are just one drug away from major profitability. That said, they might also be one failed clinical trial away from becoming a penny stock. It’s the gamble investors take when they open a position in a low-cost biotech stock.
If you’re looking for companies that are more of a safe bet than a lottery ticket, here are five of them. They’re all trading for less than $20 right now. That said, they could find their way to much higher prices in the coming quarters, as drugs near marketability and new breakthroughs fuel their science. An investment in any of them could pay off huge.
Beest Biotech Stocks Under $20
1. SIGA Technologies, Inc.
SIGA Technologies, Inc. (Nasdaq: SIGA) may not look like the most novel company to invest in, but looks can be deceiving. In fact, that’s why this company is on the list.
On the surface, SIGA Technologies, Inc. appears to market a superfluous product. Its flagship Oral TPOXX® is a smallpox treatment drug. The only problem is that, for the most part, smallpox is an eradicated disease. Nevertheless, this product sets the foundation for the company’s incredible balance sheet. Unlike most biotechs of its size, it’s profitable and has an extremely strong balance sheet. If you’re a stickler for fundamentals, this company has them.
The other enticing prospect of this stock is its familiarity with antiviral drug development. Post-pandemic, antiviral drug developers are in high demand. SIGA Technologies, Inc. recently signed deals with other pharma companies, as well as the U.S. government, to position itself as a premier partner in the fight against future viral outbreaks.
2. Catalyst Pharmaceuticals, Inc.
Catalyst Pharmaceuticals, Inc. (Nasdaq: CPRX) is another profitable biotech. It focuses on therapeutics for rare neurological diseases. Its balance sheet is clean and it offers investors the promise of stability with consistent revenue. In fact, this stock is likely undervalued by most metrics. With a P/E of just ~6 and 28% growth YTD in 2021, this stock has all the makings of a hidden gem.
There’s also the prospect of institutional investor sentiment. Hedge funds have taken a shine to Catalyst Pharmaceuticals, Inc., with an uptick in institutional interest lately. Middling interest now could become a catalyst for major growth later as hedge funds start to value the company and see that it’s undersold. Retail investors getting in now will enjoy the pop when the buy-in from institutions happens.
3. Amarin Corporation
Amarin Corporation (Nasdaq: AMRN) only produces one drug, Vascepa. It’s a prescription-grade omega-3 fatty acid formulated to reduce the risk of heart attack and stroke in at-risk patients. The company has faced headwinds domestically as it struggles to protect its patent against generics and imitators. That said, investors are bullish on the stock because of its potential in Europe.
The European Commission approved Vascepa (Vazkepa) for distribution in Europe in early 2021. Currently, it’s the “first and only EC-approved therapy to reduce cardiovascular risk in high-risk statin-treated patients who have elevated triglycerides.” The success of the drug in the U.S. means there’s a market full of untapped potential now that it’s approved in Europe. The stock could see a pop like it did in late 2018.
4. Innoviva Inc.
Innoviva Inc. (Nasdaq: INVA) is another stock with a strong balance sheet—something prized in biotechs. The steady cash flow and strong financials come from its portfolio of royalties, paid by the likes of Glaxo Group Limited (NYSE: GSK). The company has returned value to shareholders since 2014.
This biotech isn’t a growth stock and there’s a reason its stock price is generally flat over time. As a patent catalog, it’s not innovating in new research of drugs. Instead, it’s capitalizing on existing patents. Why invest? Because the company’s royalties increase as demand for the drugs do. Analysts predict big demand for several of its products in the coming years, which has upgraded the company to a “buy” across the board. A low P/E ratio alongside such a stellar balance sheet is difficult to pass up.
5. XBiotech Inc.
XBiotech Inc. (Nasdaq: XBIT) has been on an upward trajectory over the past year as the company gains momentum. The company focuses on bringing novel products and therapies into clinical trials quickly, to help expedite the deployment timeline. Where the company sets itself apart is that its research consists of True Human antibodies. This means they harvest and use antibodies from test subjects to refine drugs and therapies.
This company has prior success in selling a dermatology drug to Jansen, but has struggled to push into the same territory again. The good news is that the company’s core focus right now is studying COVID-19 antibodies, to understand how the virus functions and mutates. This is a hot topic area, which means the stock is a clear candidate for potential growth.
Investing in the Best Biotech Stocks Under $20
As is the case with any biotech stock, it’s important to stay engaged. Watch for clinical trial reports as they near fruition. Check back at the company’s drug pipeline to see what’s progressing. Watch the ticker news for information. Most important: tray true to your investing thesis. If you can stomach the risk of biotech stocks under $20, you can weather the fluctuations that come with them. Hopefully an investment in any of these five companies results in growth instead of pullback.
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Please note that the market is always in flux. The securities listed above were recommended while trading at a share price of under $20, but may have since gained in value.