In this article, we will discuss the 10 best biotech stocks under $5 in 2021. You can skip our detailed analysis of the biotech sector and go directly to the 5 Best Biotech Stocks Under $5.
The biotech industry has seen strong growth in terms of funding through venture capitalists, joint ventures, and co-developments in the recent past. As per McKinsey, venture capital investment increased by 45% in the biotech industry, bringing the worldwide total to $36.6 billion in 2020. Moreover, biotech companies raised over $34 billion through initial public offerings within the same year. Favorable state regulations, the development of improved products, significant investment in the biotechnology sector, and increased demand for synthetic biology are some of the factors considered to be propelling the market.
McKinsey studied the biotech sector’s economic performance and interviewed 20 C-level executives from small and midsize biotech and venture capital (VC) companies to develop a better understanding of global biotech funding in the light of the pandemic.
According to their research, many industries faced severe financial impact during Covid-19, but the biotech industry appeared to have survived the storm: it rebounded swiftly after a temporary slump. It broke the declining trend seen in many industries and drew record levels of investment through 2020 and early 2021, owing to improvements in science and technology. Biological science has been brought to the attention of various stakeholders, including patients, healthcare professionals, governments, and agencies all across the world as a result of the pandemic. The average share price of European and US biotech stocks rose at more than twice the pace of the S&P 500 between January 2020 and January 2021, while Chinese biotech stocks fared as much as six times better, with their average stock price more than doubling in a year.
With this context in mind, let’s analyze the 10 best biotech stocks under $5. We considered the analysts’ ratings, hedge fund sentiment, and long-term growth potential while choosing these stocks.
Why do we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Biotech Stocks Under $5
10. GeoVax Labs, Inc. (NASDAQ:GOVX)
Number of Hedge Fund Holders: 1
Price as of October 14, 2021: $4.16
GeoVax Labs, Inc. (NASDAQ:GOVX) is an Atlanta, Georgia-based biotech company that is involved in the development of cancer and infectious diseases treatment through vaccines and immunotherapy. The company caught the limelight when it gave PNP Therapeutics exclusive rights for the commercialization of Gedeptin, a product that aids in the treatment of solid tumors.
GeoVax Labs Inc.’s (NASDAQ:GOVX) leading product in the pipeline is the preventive vaccine against a certain type of HIV that is prevalent in America, Australia, Japan, and Western Europe. The product has cleared Phase 1 and Phase 2a of human trials and entering the crucial stage of human testing and approval from the FDA. GeoVax Labs Inc. (NASDAQ:GOVX) also has a vaccine to combat the Ebola virus that has shown 100% effectiveness in non-human primates and is on the way for Phase 1 human trials. The company has received notice of allowance for the patent of this vaccine from the US Patent and Trademark Office on October 15. GeoVax Labs Inc. (NASDAQ:GOVX) also has a 100% single-dose vaccine to protect against the Zika virus in its pipeline.
With so many possibilities of a breakthrough, GeoVax Labs Inc. (NASDAQ:GOVX) makes it to our list of the 10 best biotech stocks under $5.
9. Selecta Biosciences, Inc. (NASDAQ:SELB)
Number of Hedge Fund Holders: 11
Price as of October 14, 2021: $4.34
Selecta Biosciences, Inc. (NASDAQ:SELB) is a Massachusetts-based biotech company that is home to the ImmTOR platform that is designed to reduce unnecessary immune responses, even allowing for the redosing of life-saving gene therapies for the treatment of numerous diseases. In this regard, Selecta Biosciences, Inc. (NASDAQ:SELB) entered into a partnership with Takeda Pharmaceuticals in October 2021.
Since the start of the year, the stock price of Selecta Biosciences Inc. (NASDAQ:SELB) has risen by over 21%. Kristen Kluska at investment advisory Cantor Fitzgerald gave the stock an Overweight rating with a price target of $9.
The largest stake in Selecta Biosciences Inc. (NASDAQ:SELB) is held by Mark Lampert’s Biotechnology Value Fund, worth over $7 million as of the second quarter of 2021.
Apart from Selecta Biosciences, Inc. (NASDAQ:SELB), some notable biotech stocks include Pfizer Inc. (NYSE:PFE), Moderna, Inc. (NASDAQ:MRNA), and BioNTech SE (NASDAQ:BNTX).
8. VistaGen Therapeutics, Inc. (NASDAQ:VTGN)
Number of Hedge Fund Holders: 16
Price as of October 14, 2021: $2.50
VistaGen Therapeutics, Inc. (NASDAQ:VTGN) is a company focused on developing treatments related to anxiety, depression, and other central nervous systems (CNS) disorders. The stock is placed eighth on our list of the 10 best biotech stocks under $5.
VistaGen Therapeutics (NASDAQ:VTGN) product pipeline is led by PH94B. The odorless non-sedating nasal spray aids in reducing anxiety, and the company is doing a Phase 2A clinical trial to understand its impact on patients with Adjustment Disorder with Anxiety. In addition to this, the company is doing Phase 3 clinical trials to comprehend the effectiveness of PH94B in patients having Social Anxiety Disorder as well.
The stock offers tremendous upside as it was seen ‘significantly undervalued’ by Brian Skorney at investment management firm Baird. Skorney initiated coverage on the stock with an Outperform rating and a price target of $9.
OrbiMed Advisors, as the leading investor in VistaGen Therapeutics Inc. (NASDAQ:VTGN), has a stake worth $45.6 million as of the second quarter of 2021. Overall, 16 hedge funds in Insider Monkey’s database were bullish on VistaGen Therapeutics Inc. (NASDAQ:VTGN), compared to 15 in the preceding quarter, translating into an increase of 36.2% in the stake value.
Along with VistaGen Therapeutics Inc. (NASDAQ:VTGN), Pfizer Inc. (NYSE:PFE), and Moderna Inc. (NASDAQ:MRNA), BioNTech SE (NASDAQ:BNTX) is one of the biotech stocks hedge funds are investing in.
7. Verastem, Inc. (NASDAQ:VSTM)
Number of Hedge Fund Holders: 21
Price as of October 14, 2021: $2.75
Verastem, Inc. (NASDAQ:VSTM) is ranked seventh on our list of the 10 best biotech stocks under $5. It is a Massachusetts-based biotech company involved in the development of cancer treatments. The company is making headways in the treatment of lung and ovarian cancer.
Verastem Oncology recently revealed the results of VS-6766 and defactinib Phase I/II FRAME study in the treatment of ovarian cancer. The study revealed a 46% partial response rate across the patient sample. In addition to this, the company announced a partnership with Amgen Inc. (NASDAQ:AMGN) to evaluate the impact of VS-6766 and sotorasib in a certain type of lung cancer. The clinical trials are expected to commence by the end of this year.
Verastem Inc. (NASDAQ:VSTM) was given a Buy rating earlier this year at Alliance Global Partners with a price target of $6. Analyst Matt Cross stated that Verastem Inc. (NASDAQ:VSTM) had “undergone an extensive corporate makeover in the last 18 months.”
The company also saw a considerable increase in hedge fund positions over the last two quarters. Out of the 873 funds in Insider Monkey’s database, 21 held stakes worth $241.4 million in Verastem Inc. (NASDAQ:VSTM) at the end of the second quarter of 2021, up from 12 in the preceding quarter.
6. Akebia Therapeutics, Inc. (NASDAQ:AKBA)
Number of Hedge Fund Holders: 14
Price as of October 14, 2021: $2.92
Akebia Therapeutics, Inc. (NASDAQ:AKBA) is a Cambridge, UK-based biotech company founded in 2018 following the merger with Keryx Biopharmaceuticals. The company is focused on developing treatments against kidney diseases. It is placed sixth on our list of the 10 best biotech stocks under $5.
The company carries two main assets presently. The first already approved in the US drug is Auryxia. The drug aids in controlling serum phosphorus levels in dialysis-dependent Chronic Kidney Disease (CKD) patients and iron deficiency anemia for CKD patients who are not dependent on dialysis.
The second drug is vadadustat. Akebia Therapeutics Inc. (NASDAQ:AKBA) has filed a New Drug Application with FDA following Phase-III trials of the drug and expects an outcome in March 2022. The drug is targeted towards the treatment of anemia due to CKD. Akebia Therapeutics (NASDAQ:AKBA) vadadustat is hoping to become the first approved drug of its kind after FibroGen Inc’s (NASDAQ: FGEN) drug was not given approval by the FDA in July.
On the expectation of approval, Christopher Raymond at Piper Sandler has given the stock an Overweight rating with an $8 price target, reflecting a potential upside of over 170% from the current stock price.
Just like Akebia Therapeutics Inc. (NASDAQ:AKBA), Pfizer Inc. (NYSE:PFE), Moderna, Inc. (NASDAQ:MRNA), and BioNTech SE (NASDAQ:BNTX) are some of the biotech stocks gaining positive analysts’ ratings.
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Disclosure: None. 10 Best Biotech Stocks Under $5 is originally published on Insider Monkey.