Thanks to the incredible innovations that we have seen in recent decades, the biotechnology space has offered both hope for patients and profitability potential for stakeholders. At the same time, biotech stocks are not an appropriate arena for every investor, particularly when you’re dealing with speculative names. Though the potential to make gobs of money exists, the probability of doing so is suspect.
Mainly, this comes down to how few therapeutic solutions are approved by the Food and Drug Administration. To be fair, Forbes notes that the period between 2011 and 2018 saw the FDA approve 309 new drugs, which is an average of more than 38 per year. That’s the highest sustained productivity in the modern era. However, it’s also fair to point out that there are many contenders, particularly biotech penny stocks, that have evaporated during this time.
Frankly, the business of picking out winners and losers among biotech stocks is a frustrating one. This market subsegment has its own rhythm, according to an article published in the Journal of Commercial Biotechnology. Authors Sandra Vanderbyl and Sherry Kobelak stated the following:
The decision to invest in biotechnology requires looking at risk in terms of people, technology and the market. Morgenthaler Ventures’ partner Ralph Cristofferson estimates that only 10 per cent of the overall risk levels are tied to the market. This is attributed to theefact [sic] that research is generally conducted on unmet medical needs so the only risk is threat of competition of another company working on the same disease. Approximately 40 per cent of the risks are attributed to the technology, since biotechnology products are inherently biologically unpredictable. Fully half of the risk lies in the expertise of the biotechnology management team. The credibility of the CEO and CFO is reflected on the company as the whole, and impacts the investor’s confidence that the business plan will be successful.
In other words, the variables for biotech stocks have their own variables. Additionally, as the novel coronavirus pandemic demonstrated, getting to advanced-stage clinical trials is no guarantee that you won’t encounter hiccups. As the New York Times reported, heavyweights Johnson & Johnson (NYSE:JNJ), AstraZeneca (NASDAQ:AZN) and Eli Lilly (NYSE:LLY) recently suffered setbacks for their Covid-19 vaccines or therapeutics.
Then again, very few sectors offer the astounding profitability potential of biotech penny stocks. Though terribly risky, it’s the reason why people continue to flock to this market. If that’s you, here are seven ideas that could jump higher.
- Vaxart (NASDAQ:VXRT)
- Can-Fite Biopharma (NYSEAMERICAN:CANF)
- InflaRx (NASDAQ:IFRX)
- Tonix Pharmaceuticals (NASDAQ:TNXP)
- GT Biopharma (OTCMKTS:GTBP)
- vTv Therapeutics (NASDAQ:VTVT)
- Five Prime Therapeutics (NASDAQ:FPRX)
However appealing these companies are, remember that you are dealing with multiple unknowns. And even the best science in the world sometimes can’t overcome the unexpected headwind. Therefore, it’s imperative that you don’t spend a dime more than you can afford to lose. With that understanding, let’s take a look at these speculative biotech stocks.
With so much of our economic recovery tied to the re-escalating coronavirus pandemic, demand for a Covid-19 vaccine has fundamentally never been higher, irrespective of the volatility impacting individual biotech stocks. However, even if a vaccine is approved, there’s still many questions about distribution and administration. If, for instance, a vaccine requires extensive storage requirements, that could pose problems for regions with less-than-ideal healthcare infrastructure.
In that context, Vaxart may be able to sneak into the discussion at some point. Unlike the majority of vaccine candidates, Vaxart’s proposal doesn’t involve an injection but rather an oral administration. That could be a huge factor given that millions of Americans are scared of needles. And I’d say that quite a few more would prefer an oral vaccine over an injected one. Hence, VXRT stock has some relevance that makes it distinct.
Plus, oral tablets can be stored at room temperatures, whereas many of the Covid-19 vaccine candidates require frozen storage. This greatly enhances logistical viability, making VXRT stock a worthwhile idea, but only with “dumb” speculation money.
Can-Fite Biopharma (CANF)
According to the latest data from the Centers for Disease Control, the seven-day moving average of new daily Covid-19 infections reached 74,532. If current trends keep up – and there’s no reason to doubt that it won’t – the weekly average of cases will exceed that of the peak single-day case total registered during the summer surge.
Essentially, we need a mixture of vaccines and treatments as the second wave (or many are calling it the third wave) is already upon us. Therefore, Can Fite Biopharma could end up being one of the biotech stocks that could gain resurgent relevance. Currently, its drug piclidenoson is undergoing clinical trials to examine its efficacy in treating patients with moderate Covid-19 symptoms.
Piclidenoson demonstrates promise because it’s a small-molecule inhibitor that targets enzymes that cause inflammation. Thus, it works similarly to Gilead Sciences’ (NASDAQ:GILD) remdesivir, which is now marketed as Veklury. Although a long shot, CANF stock is positioned to benefit if piclidenoson receives favorable clinical results.
Still, you want to be careful with CANF stock. As with other penny stocks in this space, it’s been all over the map.
One of the reasons why Covid-19 should be taken seriously is that once the infected reach a certain threshold, the prognosis becomes grim. This can be tied to the cytokine storm, or an extreme immune response where the body starts to attack its own cells and tissues rather than just the virus. According to an article from Frontiers in Immunology:
The current evidence showed that severely ill patients tend to have a high concentration of pro-inflammatory cytokines, such as interleukin (IL)-6, compared to those who are moderately ill. The high level of cytokines also indicates a poor prognosis in COVID-19.
Where InflaRx comes into play is that the company’s antibody therapeutic IFX-1 may help those with severe Covid-19 symptoms; in other words, those that are already in that critical phase. Encouragingly, a report from The Lancet finds that “IFX-1 appears to be safe in patients with severe COVID-19.” That’s good news for IFRX stock.
Another factor that could lift InflaRx from other biotech stocks is the resurgent cases. With so many people having coronavirus infections, we’ll need whatever we can get to address severe symptoms. While a risky narrative, this could boost IFRX stock.
Tonix Pharmaceuticals (TNXP)
On paper, you might be tempted to view Tonix Pharmaceuticals as yet another one of the biotech stocks that have pivoted toward Covid-19 solutions. Sure enough, the company offers TNX-1800, which is a live modified horsepox virus vaccine designed to express the spike protein of SARS-CoV-2 to elicit a T-cell response. While the media focus has been on antibodies, T-cells play a significant role in the overall immune response.
As well, the horsepox virus vector (or carrier) is an interesting concept that may benefit TNXP stock in the long run. According to Tonix, this methodology offers strong immunogenicity as well as low risk of genomic integration in the host. These are positives as the broader healthcare industry desperately tries to find the key to this nasty virus.
Additionally, Tonix has teamed up with Columbia University “to examine the immune responses to COVID-19 in healthy volunteers who have recovered from COVID-19 or were asymptomatic.” This research could be vital to both vaccines and treatments. Therefore, even if Tonix doesn’t win out in the vaccine race, TNXP stock remains relevant thanks to its research value.
GT Biopharma (GTBP)
One of the true biotech penny stocks on this list, shares of GT Biopharma are currently priced at 21 cents. While the science is compelling, you’ve got to remember that you’re dealing with a wildly volatile name. So, don’t approach GTBP stock lightly or with money that you really (or even modestly) need.
Still, many speculators are taking a shot with GT Biopharma and that’s because of its single-chain, trispecific scFv recombinant fusion protein conjugate called GTB-3550. Long story short, GTB-3550 activates natural killer cells and enhances their effectiveness for patients suffering from acute myelogenous leukemia, or AML.
Of note for GTBP stock is that under a specified dosage level, GTB-3550 demonstrated an increase in natural killer cell activity while producing no adverse effect during a Phase I/II clinical trial. Potentially, this could drive up shares since once the pandemic fades, demand for treatments of chronic conditions and diseases will return.
But again, this is also a shot in the dark, even compared to risky biotech stocks. If you want to gamble, please do so responsibly.
vTv Therapeutics (VTVT)
By the end of this year, the U.S. Census Bureau projects that 5.8 million older people in the U.S. will have Alzheimer’s disease. Ten years later, this figure will rise to 8.4 million. And by 2050, 13.8 million older Americans will suffer from the debilitating condition. It’s truly a heartbreaking situation as many of us have seen family members wither away mentally.
Thus, despite vTv Therapeutics’ status as one of the speculative biotech stocks, many investors are actively rooting for it, and not just from a profitability standpoint. While the company has many drug candidates under its pipeline, much attention is paid toward azeliragon (TTP488). According to the company’s website, this is an “orally bioavailable small molecule that inhibits the receptor for advanced glycation endproducts (RAGE) being developed for dementia.”
We should see some preliminary data of azeliragon’s phase 2 trial the day after the Nov. 3 election at the 13th Clinical Trials on Alzheimer’s Disease event. Depending on the data, VTVT stock could move either way so only speculators need apply here.
However, in the case of volatility, you may want to consider VTVT stock simply on the basis of dementia treatment demand.
Five Prime Therapeutics (FPRX)
One of the biggest challenges with small-capitalization biotech stocks is access to funding. This is hardly a sector where a eureka moment translates into a therapeutic that reaches the market the following day. More often that not, it’s a long drawn out process that often leaves players struggling for financial support, irrespective of the underlying science.
Hence, the appeal for Five Prime Therapeutics and FPRX stock is that it’s better positioned than most biotech penny stocks. The company has partnered with pharmaceutical giant Bristol-Myers Squibb (NYSE:BMY) on programs that demonstrate potential for decreasing tumor growth. Since Bristol-Myers Squibb isn’t likely to want to abandon its investment, it’s reasonable to assume that Five Prime should have a relatively stable cash situation.
Generally speaking, FPRX stock has been stable relative to risky penny stocks in the sector. Still, I wouldn’t let that convince you to let your guard down. Five Prime is not something you want to mess around with on money that you can’t afford to lose.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.