Investing in biotech penny stocks is somewhat like pursuing a career in TV acting: It’s not easy to succeed, but if you do so, your rewards can be truly fantastic.

Further, just as many unsuccessful actors make little or no money in the professions,  many unsuccessful biotech ventures will go bankrupt.

Still, when it comes to investing in biotech penny stocks, there are some ways to dramatically increase your chances of success and to give yourself a good chance of becoming a millionaire or even a multimillionaire in the process.

One such method may sound simple, but many investors do not embrace it:  pick biotech names that are developing one or more drugs which meet a large, unmet need.

That way, if your company’s drugs do get approved by the FDA and other countries’ drug regulatory agencies, their treatments will almost definitely generate truly needle-moving revenue for them.

Another key to success is picking companies whose drugs have already received positive news from regulatory agencies or at least have announced positive data from late-stage clinical trials.

When agencies issue upbeat feedback on a drug,  it often means that they see the treatment as important and likely to be successful. Positive news on later-stage clinical trials, meanwhile, greatly increases the chances of a drug being approved.

These three biotech penny stocks meet these criteria:

Zosano Pharma (NASDAQ:ZSAN)

Celsion Corporation (NASDAQ:CLSN)

vtv Therapeutics (NASDAQ:VTVT)

Biopharma Penny Stocks: Zosano Pharma Corporation (ZSAN)

At the end of May, the company announced positive data from a long-term study of its drug for migraine headaches, Qtrypta, which is delivered through a patch.

“In this long-term study, participants experienced on average about two migraine attacks per month and achieved meaningful relief with Qtrypta recurrently without serious side effects,” Associate Professor of Neurology at Thomas Jefferson University Dr. Stephanie J. Nahas said.

The company reported that the drug achieved pain relief at two hours post-dose in 81% of migraine attacks, eliminated it in 44% of attacks and treated the worst, most bothersome symptoms in 62% of attacks

The results were consistent with those of a previous Phase2/3 study carried out by the company.

With standard-of-care options, many migraine sufferers have been unable to get pain relief within two hours. Additionally, triptans, which are often used as migraine treatments, are contraindicated for many patients

Globally, over 4 million people are estimated to suffer from migraines.

Despite the positive data, the shortcomings of current migraine treatments, and the high number of migraine sufferers, the shares have a market capitalization of just $100 million.

Celsion (CLSN)

In February, the company announced that GEN-1, its immunotherapy treatment for advanced ovarian cancer, had been granted fast-track status by the FDA.

Ro resection refers to surgery in which an entire tumor, including microscopic elements of it, is removed. Neoadjuvant chemotherapy, or NACT, is chemotherapy used to shrink a tumor prior to surgery.

As of April 1, interim data on an ongoing Phase I/II study showed “R0 resections in 14 of 17 patients, or 82%, in the GEN-1 + NACT arm, compared with seven of 12 patients, or 58%, in the NACT alone arm.”

“We view R0 resections as a good predictor of survival, and R0 resections in the GEN-1 + NACT arm are encouraging thus far,” Dr. Premal Thaker, Study Chair of the OVATION 2 Study and Professor of Obstetrics and Gynecology, Director of Gynecological Oncology Clinical Research, Division of Gynecologic Oncology, Washington University School of Medicine.

Despite the strong data and the fast-track designation, Celsion’s market capitalization stands at just $108 million.

Biopharma Penny Stocks: vTv Therapeutics (VTVT)

In April, the company announced that the FDA had granted its Type 1 diabetes drug, TTP399, breakthrough status.

In a Phase 2 trial, the drug meaningfully improved the blood sugar levels of Type 1 diabetes patients ad reduced the number of times they experienced major  hypoglycemia by 40%.

There are currently no other approved medicines  in the U.S. for Type 1 diabetes besides insulin.

In Q3, vTv plans to report data on a Phase I trial intended to explore the impact of  TTP399 “on ketone body formation during a period of acute insulin withdrawal.”

In Q4, vTv intends to launch “the first of two pivotal, placebo-controlled, six-month clinical trials of TTP399 in subjects with type 1 diabetes.”

In more promising news, vTv recently announced that it had licensed its Azeliragon drug to Cantex.

The latter company said that it would evaluate the drug’s efficacy for treating “a number of complications associated with cancer.” vTv will receive an undisclosed amount of any profits that Cantex obtains from the drug.

Despite the huge potential of TTP399, the market capitalization of vtv is less than $200 million.

On the date of publication, Larry Ramer held a long position in VTVT.   

Larry has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful contrarian picks have been solar stocks, Roku, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.