For investors, biotech stocks remain one of the most dynamic sectors out there. On one hand, you have some of the largest pharmaceutical firms on the planet with multi-billion-dollar blockbuster drugs filling their coffers. On the other, you have the more stereotypical “lotto ticket” biotech stocks of clinical or early production stage firms. These are the firms that live and die by the FDA’s decisions and their cash balances.
And there’s nothing wrong with these stocks.
In fact, betting big on some of these smaller biotech stocks could be great news for your portfolio. The key is in finding those smaller biotech stocks that have the ability to actually get through clinical trials and start marketing drugs.
With that, here are 5 entry level biotech stocks that are big buys under $10 per share.
Big Biotech Stocks to Buy Under $10 #1: Novavax (NVAX)
Share Price: $2.10
Everyone gets colds. But some colds are worse than others. And 9 times out of 10 those bad colds are really Respiratory syncytial virus (RSV). Most people get over RSV in about two weeks. However, the virus can be pretty serious for infants and older adults — with death being a possibility. So, preventing RSV is a must. And smaller biotech stock Novavax, Inc. (NASDAQ: NVAX) is working to do just that.
NVAX has developed a vaccine for RSV and is currently running through clinical trials in both infants through maternal immunization and the elderly. The vaccine has shown significant promise during its phase three trials for infants and could be a lifesaver in preventing RSV-related deaths.
But unlike some small biotech stocks, NVAX isn’t a one-trick pony. The firm is also using its technology to develop other respiratory vaccines. And that includes fighting influenza. The firms NanoFlu therapy reported better-than-expected results in its latest trial. That came as a shock for investors as most of its future had been linked to RSV. NVAX could have two blockbusters on its hands.
There are some risks — such as its future capital requirements. But at just $2 per share, it’s worth the gamble for biotech investors.
Big Biotech Stocks to Buy Under $10 #2: Dermira Inc (DERM)
Share Price: $8.56
Want a prime example of what FDA approvals/trials can do to biotech stocks? Just ask investors in Dermira Inc (NASDAQ:DERM).
DERM is focusing 100% on skin care and health. This included a hefty dose of acne treatments. Many of the current acne drugs on the market are actually pretty hard on the body and an approval for Demira would have been meant of the first new acne drugs in decades. After reaching phase two trials, however, Dermira was forced to end development of the drug based on poor results.
Shares cratered 63% on the news.
But that drop could be an interesting buying point for investors. For one thing, DERM has two more drugs in development — which look at atopic dermatitis and hyperhidrosis. Neither condition has as large a market as acne, but both are still very underserved in the medical community. These plus other skin-related diseases that the firm is investigating could eventually produce a blockbuster.
And Dermira has plenty of time to figure it out. DERM has more than $13 per share in cash. Even after subtracting debt, that’s an incredible amount of working capital for a clinical biotech stock and provides it with a long lead time to get more drugs in development.
With a current trading price of less than its cash on hand, DERM is one biotech tech stock to buy now.
Big Biotech Stocks to Buy Under $10 #3: Pieris Pharmaceuticals Inc (PIRS)
Share Price: $7.46
What do AstraZeneca plc (ADR) (NYSE:AZN), Allergan plc (NYSE:AGN), Sanofi (NYSE:SNY), Roche AG, and Daiichi Sankyo have in common? They all count small-cap biotech stock Pieris Pharmaceuticals Inc (NASDAQ:PIRS) as a development partner.
PIRS is a clinical-stage biotech that is focusing on anemia, immuno-oncology and respiratory diseases. The key is in its anticalin technology which allows it to engineer proteins to target diseases rather quickly. Big pharma has taken notice of this and after a series of big milestones in 2017, PIRS stock has surged more than 437%.
Even with that surge, PIRS can be had for less than $8 per share. That’s mostly because it has no marketed drugs and its candidates are only in stage two or lower. But it does have more than 12 drugs in development using its proprietary tech on the docket. With positive trial data, patented tech and some big partners throwing cash/development deals its way, Pieris’ sub-$8 share price tag isn’t a real reflection of its true potential.
This is one biotech investors should snag before it takes off.
Big Biotech Stocks to Buy Under $10 #4: Aurinia Pharmaceuticals (AUPH)
Share Price: $5.46
Lupus remains one of the least understood auto-immune diseases. With lupus, the body’s immune system mistakenly attacks healthy tissue in many parts of the body. That’s a problem in of itself. However, a majority of patients will develop lupus nephritis (LN) — which leads to life-threatening kidney damage. This even affects people who currently take other lupus treatments.
And as if those with the disease needed it any worse, many of the treatments for lupus come with nasty side effects.
So small-cap biotech stock Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) could have a serious blockbuster on its hands. AUPH is developing voclosporin — a drug that works by inhibiting an enzyme that activates immune cells. Phase two trials for voclosporin were great and showed that 71% of patients given voclosporin with standard LN treatments experienced a complete remission during the 48-week trial. That’s a huge positive for AUPH and getting its drug through trials.
There were some safety concerns when 13 people died during or after one part of the trials clinical trials. However, all of these deaths were caused by the disease, not the drug (patients in the control arm of the study died as well). And later phases raised no new safety concerns. That could help explain why you can get shares for just over $5.
Big Biotech Stocks to Buy Under $10 #5: Progenics Pharmaceuticals (PGNX)
Share Price: $8.30
Constipation is providing funding for cancer therapies. That’s the gist for Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX).
PGNX developed a drug called Relistor — which is marketed by Valeant Pharmaceuticals Intl Inc (NYSE:VRX). Relistor helps fight constipation due to opioid pain medication. Sales of the drug have continued to grow and PGNX is expected to receive milestone payments in addition to its royalty rates this year.
The steady stream of royalties for Progenics is nice regardless, but in this case, it really helps fund the biotech company’s cancer drug development. The firm has a rare adrenal cancer medication in Phase III trials and is currently working on various cancer imaging agents for prostate cancer. If approved, its adrenal cancer medications are estimated to see $300 million in annual peak sales, while its cancer imaging agents will provide a steady stream of revenues much like Relistor.
At $8.30 per share, investors are getting some blockbuster potential mixed with steady revenues. And at that cheap price, PGNX could be a great biotech stock to bet on.
Disclosure: Aaron Levitt is long AUPH and PGNX.