Excitement over meme stocks has been effective in helping to send biotech penny stocks on wild moves higher. But as that trend continues to fade, names in this category are going to lean more on company-specific catalysts to move the needle. Those catalysts will include progress and updates regarding their candidates in the pipeline for Food and Drug Administration (FDA) approval.
It’s approval itself from this regulatory agency that enables these new therapies, treatments, and vaccines to become available for sale in the U.S. That’s why biotech investors watch these developments carefully.
FDA approval paves the way for a windfall, such as a licensing and partnership deal, or a takeover offer at a big premium from an established pharmaceutical company. These companies are priced on potential rather than on their current underlying value, so any news of failure to get approval can send prices to dramatically lower prices.
With these seven biotech penny stocks, some are still waiting for the FDA to say yes or no. For others, the FDA has already said “thanks, but no thanks,” but have left the door open for another submittal. Either way, each one could see tremendous gains if subsequent news is in its favor:
- Atossa Therapeutics (NASDAQ:ATOS)
- Clovis Oncology (NASDAQ:CLVS)
- Mind Medicine (NASDAQ:MNMD)
- PharmaCyte Biotech (NASDAQ:PMCB)
- Sesen Bio (NASDAQ:SESN)
- VBI Vaccines (NASDAQ:VBIV)
- vTv Therapeutics (NASDAQ:VTVT)
Penny Stocks to Watch: Atossa Therapeutics (ATOS)
So far this year, Atossa Therapeutics has seen considerable attention from the Reddit trading community. It’s no surprise why, given that it’s not only a short-squeeze play, it’s also a biotech play with timely Covid-19 treatments in its pipeline.
That said, after pulling back more than 60% since the second meme stock wave ended in late June, ATOS stock needs something more substantial to send it “to the moon” again. FDA approval for either its Covid-19 candidates would do it. So would approval of the candidate it’s been working on the longest, breast cancer treatment candidate Endoxifen.
However, with all the treatments in its pipeline in phase-1 or phase-2 of clinical trials, it’s going to be a while until it has positive news to share from the FDA. In the meantime, as meme traders lose confidence in its short-squeeze potential, expect shares, still being priced on hope and hype today, to continue making their way toward lower prices.
With a Sept. 9 opening price of $3.48, now may not be the most opportune entry point for ATOS stock. Much of its possible upside from its pipeline is already factored into its share price. But if it makes its way back to what it traded for between “meme stock” waves, patient investors may want to give it another look.
Clovis Oncology (CLVS)
Clovis Oncology may have already made it past the clinical stage. Its flagship product, ovarian cancer treatment rucaparib (marketed as Rubraca), is already FDA-approved for several uses.
But as a Seeking Alpha commentator discussed back in July, it may be in for some more label expansion. It all comes down to the readouts from three phase-3 studies (Athena monotherapy, Athena combination, and Triton3) in the coming quarters. Positive results could pave the way for expanded approval, and materially higher sales. The company could even hit profitability by the start of 2023.
That’s not all. There’s another pipeline catalyst that could help out CLVS stock: FAP-2286. This candidate, developed to target FAP (fibroblast activation protein) in tumors, is starting up its phase-1/2 trials. Data from its upcoming early trial could give investors further reason to bid up shares back toward the high levels seen earlier this year.
It’s likely won’t be until 2022 that Clovis Oncology stock takes off again. For now, shares could continue to tread water between $4 and $5 per share. But if you’re looking for a biotech penny stock with potential to gain big on FDA news, this may be one of your best options.
Penny Stocks to Watch: Mind Medicine (MNMD)
A stock market uplisting and growing interest in psychedelics plays have resulted in a turbocharged performance for MNMD stock from late 2020 to mid 2021. Yet its move from being sold over-the-counter (OTC) to the Nasdaq exchange brought an end to its incredible run. Since then, it’s slid from around $5.75 per share to well under $3 per share.
Sporting a market capitalization of just under $1 billion against zero revenue, Mind Medicine (or MindMed for short) remains overvalued. Or is it? As I wrote back in May, a commentator on r/WallStreetBets posted a deep dive that there’s more to this stock than just hype.
Why? Comparing the potential FDA-approved treatments that could result from its current research, the company could be worth substantially more than where the stock sits today. For example, one of its more high-profile initiatives, Project Lucy (which is studying the benefits of using LSD to treat anxiety), could result in a blockbuster drug on par with famed treatments like Prozac, Lexapro, and Zoloft, all of which had peak annual sales in the billions of dollars.
Full-on approval for any possible treatments remains far away. But progress otherwise with the FDA continues, such as the company putting in its Investigational New Drug (IND) application, which it is slated to do this quarter. Is MNMD stock high-risk and richly-priced? Yes. But it may be worth it as the chances of eventual commercialization grow.
PharmaCyte Biotech (PMCB)
You may recall PMCB stock zooming last month thanks to its own move from OTC over to Nasdaq. Shares subsequently plunged after the company announced plans to launch a highly dilutive direct offering.
This move may have burned a lot of investors. Even so, this may still be a situation you’ll want to keep an eye on. A developer of cellular therapies to treat cancer and diabetes, this is another one of the biotech penny stocks that could make big moves once it has updates from the FDA.
In the case of PharmaCyte Biotech, it’s all about its quest to lift a clinical hold placed on its IND application last year. Per a recent statement from the company, its efforts remain a work-in-progress. Yet with the $70 million it’s raising from the aforementioned direct offering along with its $15 million offering announced before its uplisting, this clinical stage company may now have the capital it needs to keep the lights on and make progress with its pipeline, created with its flagship Cell-in-a-Box live-cell encapsulation technology.
With the recent dilution, and the enthusiasm around it still fading, you may not want to buy it today, around $3.76 per share. However if the pullback continues, it may become more worth the risk.
Penny Stocks to Watch: Sesen Bio (SESN)
In recent weeks, Sesen Bio shares have been a prime example of what happens when an FDA decision has gone the wrong way. In mid-August, the stock took a tremendous dive following news the agency rejected its bladder cancer drug Vicineum.
On the day of the news (Aug. 13), shares fell 57%, with SESN stock taking another steep dive the following days. Despite both epic plunges, it’s continued to drop lower. Trading for as much as $6 per share just before the unfortunate news, it’s at just over $1 per share as of this writing.
So, with its flagship candidate down, is the stock out as a buying opportunity? Not necessarily, as our Louis Navellier made the case late last month. His view: the bad news is already priced into the stock. Any subsequent good news, like progress with its follow-up efforts after the rejection, could result in a tremendous move higher for the stock.
It may take time for it to get anywhere near the levels it traded for before the FDA gave Vicineum the thumbs-down. But if you’re looking for a play that could shoot to the moon if its situation improves, SESN stock may be a speculative biotech play worth buying.
VBI Vaccines (VBIV)
Buzz around VBIV stock today is nowhere near where it was in 2020. You may remember this being one of many penny stocks bid up aggressively by speculators thanks to its Covid-19 vaccine catalyst.
However, with the front-runners making it to the finish line late that year, VBIV stock gave up a big chunk of its pandemic-related gains. VBI Vaccines is still working on vaccines to tackle Covid-19 and other coronaviruses.
But what could send this biotech play soaring or sinking in the coming months is future FDA-related developments regarding its hepatitis B (HBV) vaccine candidate, known as Sci-B-Vac. Just a few months from now (Nov. 30), investors will know whether the FDA gives it the go-ahead or not to begin selling it in the United States. Along with Sci-B-Vac, another key non-Covid-19 candidate is its glioblastoma (GBM) vaccine, VBI-1901.
Granted fast-track designation by the FDA in June, it’s currently being studied in a Phase 1/2a clinical trial. Further progress with this candidate could also give shares a boost. News of its own dilutive at-the-market public offering may put more pressure on it. But with many paths to a payoff, VBIV stock is worth keeping an eye on at today’s prices (a bit under $3.50 per share).
Penny Stocks to Watch: vTv Therapeutics (VTVT)
Shares in vTv, a developer of oral drugs for diseases including psoriasis and Type 1 diabetes, have already gotten a jolt from FDA news this year. As InvestorPlace’s Chris MacDonald detailed back on April 13, that day the regulatory agency gave breakthrough therapy designation to its TTP399 diabetes drug.
Yet since that spike in the spring, VTVT stock has made a considerable move lower. After hitting prices as high as $3.79 per share, shares have since sunk to around $1.79 per share as of this writing. That’s not much of a surprise, given it still needs to make its way through clinical trials.
Pretty soon, though, the company is set to release data from its phase-1 trial of the drug. The company is also making progress with other candidates in its pipeline, like psoriasis drug HPP737. Along with both these candidates, vTv also has many candidates it is developing in partnership with established pharmaceutical makers. Several of these, like Type 2 diabetes drug TTP273, are currently in phase-2 trials.
It may not be until 2022 that there’s another bit of game-changing news. Yet TTP399 could become an alternative to insulin for patients with Type 1 diabetes. The possible big demand for it if it makes it to FDA approval may mean this penny stock is worth a look.
On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.