Are These 5 Cheap Biotech Penny Stocks Worth It?
With only a week or so left in January, penny stocks remain a hot item in the market. As an investor, it’s important to monitor certain trends. Right now could the time to find some biotech penny stocks to watch. Many of these cheap stocks are trading well below their book values due to the pandemic. With a vaccine being distributed worldwide, some investors believe that we could see an eventual bounce back. Also, some investors believe that certain penny stocks could reach higher than their pre-pandemic levels.
Aside from this, the overall theme right now seems to be: when will the pandemic come to an end? And, there is really no answer to this question, other than it will take time. Meanwhile, we could see a slow return to normal operations for many industries around the world. During this time, many biotech companies are in high gear, either producing drugs for the coronavirus or producing their standard pipeline compounds. How this affects stock prices is what keeps traders interested.
Last year, we also saw many biotech IPOs. It seems as though Covid has positively affected both the price of biotech stocks and the attention that they are receiving. With more than 95 million virus cases worldwide, pandemic related penny stocks are the talk of the town right now. As mentioned earlier, investors are placing their attention on vaccine-related companies, in addition to the entire biotech sector as a whole. So as January comes to an end, are these four penny stocks worth it?
Biotech Penny Stocks to Watch
- MannKind Corp. (NASDAQ: MNKD)
- Cerecor Inc. (NASDAQ: CERC)
- Evofem Biosciences Inc. (NASDAQ: EVFM)
- Adamis Pharmaceuticals Corp. (NASDAQ: ADMP)
- Neos Therapeutics Inc. (NASDAQ: NEOS)
Pushing up by around 8% on Thursday, January 21st is MannKind Corp. This gain comes on the heels of a 106% move over the past six month period. So with all of this momentum, what does MNKD do? Well, MannKind is a biopharmaceutical company focused on the production of treatments for diabetes and pulmonary conditions. This includes its flagship product known as Afrezza, which is an inhalable form of insulin. Additionally, the company is in a licensing agreement with United Therapeutics Corp to develop a dry version of the drug treprostinil.
Afrezza currently stands as the company’s first FDA-approved drug and is currently commercialized around the U.S. However, MannKind has also begun advancing other pipeline treatments. Last month, the company announced that it had entered into a co-promotion deal with Vertice Pharma regarding the oral solution of Thyquidity. This is a drug used in the treatment of various thyroid conditions and can act as a replacement therapy.
Michael Castagna, CEO of MannKind, stated that “we are excited to co-promote Thyquidity with Vertice Pharma. This arrangement allows us to strengthen our relationships with our current customers, expand into pediatric endocrinology and leverage the talent and capabilities of our sales force and reimbursement support systems.”
Another modest gainer on Thursday, pushing up by around 5% on Thursday, is Cerecor Inc. Since November, shares of CERC stock are up by around 50%. Interestingly enough, Cerecor is currently working on two monoclonal antibodies that may be able to treat Covid-19 as well as Chron’s disease. These treatments, known as CERC-002 and CERC-007, utilize the cytokine TNFSF14 receptor to produce an optimal immune response. Additionally, the company is developing a drug known as CERC-007 that could be used to treat adult-onset Still’s disease and myeloma.
As a biotech company working on a Covid treatment, CERC stock sees more volatility than other similar penny stocks. But, it’s work on treating this pandemic also could make it a penny stock to watch. The company recently announced that it is engaging in a fundraising plan to offer around 14 million shares of common stock.
The announcement from January 20th revises the original deal, adding roughly $4.3 million in proceeds. This brings the gross value of the offering to $40.7 million. Fundraising opportunities like these are quite common in the biotech industry. This is because they allow companies to access capital on a needed basis. Whether or not this will result in share dilution remains to be seen.
Evofem Biosciences Inc.
Evofem Biosciences Inc. is a commercial-stage biopharmaceutical company working on several new drugs. Its focus is on the women’s health and reproductive health industry, which includes various compounds. Its flagship product, Phexxi, is a hormone free-substance that can prevent pregnancy. Additionally, the company is in Phase 3 clinical trials for the compounds known as EVO100 or Evoguard. This drug can treat and prevent Chlamydia and Gonorrhea infections in women who need it. While this market may seem specialized, there is quite a lot of opportunity for companies like Evofem.
Additionally, Evofem has several drugs in the commercialization stage, not something all biopharmaceutical companies can say. A few weeks ago, the company announced that it had entered into an agreement with Medicare and Medicaid to participate in a National Drug Rebate Program or NDRP for its substance, Phexxi.
Saundra Pelletier, CEO of Evofem, stated that “contraceptive choice should not be a luxury available to only some women…We are proud to participate in the NDRP, ensuring that millions of women across the nation who rely on Medicaid for healthcare coverage have access to Phexxi.”
Adamis Pharmaceuticals Corp.
While Adamis Pharmaceuticals stock was down by around 11% during midday trading, it’s after-hour gains on January 21st were strong. After the market closed, ADMP stock added around 52% in value, bringing its share price to $1.27. The gain comes as the company announced the submission of an investigational new drug application to the FDA. This application pertains to its Tempol IND substance, which could be used to treat and prevent Covid-19.
The drug serves to target Acute Respiratory Distress Syndrome or ARDS in more advanced cases of coronavirus. This happens to be one of the leading causes of death from the virus as well. In recent studies, Tempol showed efficacy in lowering platelet aggregation and dropping restive oxygen species levels.
In order to treat Covid-19, drugs need to target both hypoxia and a symptom known as a cytokine storm. If it is able to do both of these successfully, it could be a major winner in the fight against the coronavirus. Additionally, this drug could be used in a wide variety of other respiratory illnesses outside of Covid.
Over the past twelve months, shares of ADMP stock have shot up by almost 200%, including this week’s gain. One thing to keep in mind is that gains like this are quite unsustainable, and can often be driven purely by speculation. But, Adamis Pharmaceuticals does look like it is working on becoming a larger part of the coronavirus industry. With that considered, is ADMP on your list of penny stocks to watch?
Neos Therapeutics has been on the move since the start of the 4th quarter last year. This year has been relatively quiet on the news front. However, Neos President & CEO Jerry McLaughlin did present last week at the H.C. Wainwright BioConnect Conference. One of the driving points of speculation has been concerning a pending merger deal with Aytu BioScience.
Last month, the two signed a definitive agreement whereby Neos will merge with a wholly-owned subsidiary of Aytu in an all-stock transaction.
“This is a truly transformative transaction, elevating the newly combined company to a $100 million revenue…The combination of Neos with the Aytu business further increases our footprint in an attractive pediatric medicine market, following our acquisition of the Cerecor pediatric Rx assets late last year. This transaction is an excellent strategic fit with our market expansion plans and we believe creates strong stockholder value.”Josh Disbrow, Chief Executive Officer of Aytu BioScience.
Right now this merger is set to close by the second quarter of this year.
Biotech Is Hot This Year
These are just a few of the many popular biotech penny stocks to watch right now. Thanks to strong industry momentum and continued attention, many companies are benefiting in a big way thanks to the pandemic. If you look at some of the top penny stocks of 2020, you’ll see plenty that experienced explosive moves in the market. While that’s obviously exciting, you still need to keep in mind that these cheap stocks are inherently volatile. We’re not talking about large-cap companies. Small- and micro-cap stocks can shift quickly. So it’s important to keep the risk/reward of each trade in mind.