Yahoo Finance 13 Best Biotech Stocks To Buy Under $20
In this article, we're going to take a look at 13 best biotech stocks to buy under $20. To see more stocks that made the list, you can skip ahead and jump straight to the top 5 best biotech stocks to buy under $20.
When it comes to investing, few industries are as exciting to look into as biotechnology. Biotechnology refers to various processes that rely on using living organisms or parts of living organisms to improve various aspects of our lives, mainly health, but it is also used in agriculture and even energy (for production of biofuel). However, in the context of this article, we will mainly refer to biotechnology application in healthcare sector. Therefore our list of best biotech stocks to buy under $20 includes exclusively companies operating in the healthcare sector.
Generally speaking, healthcare is one of the most stable sectors to invest in, because no matter the macroeconomic environment, people get sick and need treatment. On the other hand, biotech is one of the most volatile industries. It usually encompasses companies that are in the process of developing new drugs, therapies and vaccines for various conditions. Often, these companies need capital to maintain their operations and they frequently rely on the stock markets to raise funds. This provides investors with opportunity to buy shares of companies with a huge upside potential and see them skyrocket.
A close-up of a biotechnology machine working on an oncology therapy.
There are many examples of biotech stocks that rewarded their investors handsomely and often in a short amount of time. A good example that everyone is familiar with comes from the COVID-19 pandemic. Moderna Inc (NASDAQ:MRNA)'s shares were trading at less than $20 in January 2020. By September 2021, Moderna Inc (NASDAQ:MRNA)'s stock surged to $449 on the back of the company releasing a vaccine against COVID. The same happened with Novavax Inc (NASDAQ:NVAX), whose shares climbed from $4 to nearly $300 in the same period.
Nevertheless, there are also major risks involved. If a company fails its trials and/or runs out of funding before being able to release a product on the market, it usually goes under. The risk of failure is especially high when it comes to biotech companies. It usually takes around a decade to produce a drug on the market and the failure rate is estimated at around 90%.
Given the fact that progress never stops, biotech industry is embracing the growth and it expected to have a compound annual growth rate (CAGR) of around 14% by 2030. There are plenty of opportunities to invest in biotech stocks and given the phase of the economic cycle many companies can be picked up on the cheap. For example, until a couple a months ago, two biotech-focused ETFs, SPDR S&P Biotech ETF (NYSEARCA:XBI) and iShares Biotechnology ETF (NASDAQ:IBB) were in the red year-to-date amid raising interest rates increasing the cost of capital needed to fund biotech companies. Nevertheless, as the Fed is expected to reverse its approach and start cutting rates later this year, both ETFs reclaimed the losses and are well in the green.
So the question remains, if one is willing to invest in biotech stocks, which companies they should look into. It gets particularly difficult to analyze biotech stocks because many companies, especially early-stage ones, don't have any revenue, so the only way to assess their potential is by looking at what these companies are working on, how successful they've been so far, the market they're aiming for and what share of it they might amass when successful. Things complicate even further if we take into account that the lingo used by biotech companies can be quite complex to comprehend for non-experts.
In this way, looking at the smart money can get you an upper hand. Hedge funds invest millions in various companies, so they have the resources to hire experts and deep dive into biotech stocks. By using a consensus approach we can identify best biotech stocks to buy. In fact, this strategy can apply to pretty much any industry, as we have identified that that the top 10 consensus stock picks among hedge funds outperformed the S&P 500 by more than 140 percentage points over the last decade (see the details here).
Our Methodology
To identify the best biotech stocks to buy under $20, we ranked all biotech stocks based on their popularity among hedge funds as of the end of September. After that we narrowed down the list based on the prices that the shares of these stocks traded at recently and picked what might be some of the most undervalued biotech stocks you can invest in now.
13. Uniqure NV (NASDAQ:QURE)
Price: $5.22
Nr of Hedge Funds Shareholders: 28
We kick off our list with Uniqure NV (NASDAQ:QURE), which saw 28 funds tracked by Insider Monkey holding long positions as of the end of 2024, including Ryan Wilder's Vestal Point Capital and Nantahala Capital Management, led by Wilmot B. Harkey and Daniel Mack, which own 3.93 million shares and 2.96 million shares, respectively.
Uniqure NV (NASDAQ:QURE) is focused on gene therapy. Its pipeline includes therapies for diseases such as Huntington's, Fabry, Temporal Lobe Epilepsy, ALS, and Hemophilia B. In its latest report, the company highlighted promising clinical data from the Phase I and II studies of its product for the treatment of early-stage Huntington's disease. Uniqure NV (NASDAQ:QURE) said that patients showed evidence of preserved neurological function following treatment with its AMT-130 candidate. Moreover, the company reported revenue of $15.8 million for 2023, down from $106.5 million a year earlier (which included $100 million of license revenue). Uniqure NV (NASDAQ:QURE) ended the year with $617.9 million in cash, cash equivalent and investment securities, up from $392.8 million in 2022. The company expects its cash position to cover its operations into the second quarter of 2027.
12. Amicus Therapeutics, Inc. (NASDAQ:FOLD)
Price: $12.30
Nr of Hedge Funds Shareholders: 28
Amicus Therapeutics, Inc. (NASDAQ:FOLD) is a biotechnology company focused on developing therapies for rare diseases. The company has two commercially-available therapies, Galafold, which is used for the treatment of Fabry diseases and Pombiliti + Opfolda, a two-component therapy for the treatment of patients with late-onset Pompe disease. In 2023, Amicus Therapeutics, Inc. (NASDAQ:FOLD) recorded an 18% increase in sales of Galafold to $387.78 million and sales of Pombiliti + Opfolda surged to $11.58 million from $187,000 in 2022.
There were 28 funds in our database bullish on Amicus Therapeutics, Inc. (NASDAQ:FOLD) at the end of 2023. Among these investors, the top shareholders of the company are Joseph Edelman's Perceptive Advisors, Kurt Von Emster's VenBio Select Advisor, and Jeremy Green's Redmile Group, which own 28.06 million shares, 27.40 million shares, and 14.83 million shares, respectively.
11. TG Therapeutics Inc (NASDAQ:TGTX)
Price: $16.78
Nr of Hedge Funds Shareholders: 29
Then there's TG Therapeutics Inc (NASDAQ:TGTX), which at the end of 2022 saw its multiple sclerosis drug Briumvi approved by the FDA, with the sales launched a month later. In this way, the company said sales of Briumvi for 2023 amounted to $89 million. For this year, TG Therapeutics Inc (NASDAQ:TGTX) expects sales to be between $220 million and $260 million, respectively. In addition, this year, the biotech company plans to launch a trial to determine whether the drug can be used as a therapy in other autoimmune diseases.
At the end of December, there were 29 funds in our database long TG Therapeutics Inc (NASDAQ:TGTX), up by one over the quarter. One fund that added TG Therapeutics Inc (NASDAQ:TGTX) to its equity portfolio during the fourth quarter is Abhishek Trehan's Darwin Global Management, which disclosed ownership of 4.05 million shares in its latest 13F filing.
10. 89bio Inc (NASDAQ:ETNB)
Price: $12.93
Nr of Hedge Funds Shareholders: 30
89bio Inc (NASDAQ:ETNB) is focused on developing therapies to treat people suffering from liver and cardiometabolic diseases. Its lead candidate is pegozafermin, which is studied as a treatment for Nonalcoholic steatohepatitis (NASH) and severe hypertriglyceridemia (SHTG). The company has received the Breakthrough Therapy Designation from the FDA for the treatment of NASH with fibrosis. 89bio Inc (NASDAQ:ETNB) is currently in the planning of phase 3 trials for pegozafermin in patients with NASH and has an ongoing phase 3 trial for SHTG.
ETNB is also among the stocks insiders are buying now.
Among the hedge funds tracked by Insider Monkey that are long 89bio Inc (NASDAQ:ETNB) are Peter Kolchinsky's RA Capital Management, Aaron Cowen's Suvretta Capital Management, and Mark Lampert's Biotechnology Value Fund, which disclosed ownership of 11.42 million shares, 4.88 million shares, and 4.05 million shares, respectively.
9. Gossamer Bio Inc (NASDAQ:GOSS)
Price: $1.38
Nr of Hedge Funds Shareholders: 31
At just $1.38 per share, Gossamer Bio Inc (NASDAQ:GOSS) is the least expensive in the list of best biotech stocks to buy under $20. During the fourth quarter of 2023, the company saw an decrease in popularity among hedge funds tracked by Insider Monkey, as the number of bullish investors declined by two to 31.
Gossamer Bio Inc (NASDAQ:GOSS) is developing a drug for the treatment of pulmonary arterial hypertension. Its only candidate Seralutinib (GB002) is currently at the beginning of the phase 3 trial. The company had launched enrollment sites around the globe. In its latest financial report, Gossamer Bio Inc (NASDAQ:GOSS) reported cash and cash equivalents of $296 million and expects the reserves to cover its operations into the first six months of 2026.
8. Immatics NV (NASDAQ:IMTX)
Price: $12.27
Nr of Hedge Funds Shareholders: 31
Then there's Immatics NV (NASDAQ:IMTX), in which there were 31 funds in our database holding positions according to the last round of 13F filings. Recently, the company has announced an underwritten public offering of nearly 16 million shares at $11 apiece, with underwriters also having an option to purchase around 2.39 million shares additionally.
Immatics NV (NASDAQ:IMTX) develops targeted therapies for the treatment of cancer. Last year, it inked a deal with Moderna Inc (NASDAQ:MRNA) to advanced the development of cancer vaccines, valued at $120 million in cash and additional milestone payments. In its latest earnings report, the company said it had roughly $390 million in cash and cash equivalents (which excludes the Moderna payment) and it expects to have enough cash to sustain its operations into 2026.
7. Day One Biopharmaceuticals Inc (NASDAQ:DAWN)
Price: $15.56
Nr of Hedge Funds Shareholders: 32
Day One Biopharmaceuticals Inc (NASDAQ:DAWN) managed to capture the attention of 32 smart money investors tracked by Insider Monkey. At the end of December, there were 32 funds in our database bullish on the company, up by five over the quarter. Among Day One Biopharmaceuticals Inc (NASDAQ:DAWN)'s shareholders are Peter Kolchinsky's RA Capital Management, Alex Karnal's Braidwell LP, and Andreas Halvorsen's Viking Global, which own 7.81 million shares, 4.22 million shares, and 2.56 million shares, respectively. Moreover, earlier this year, RA Capital Management got a seat on the company's board of directors.
Day One Biopharmaceuticals Inc (NASDAQ:DAWN) is a clinical-stage company focused on therapies for pediatric cancer. It has three candidates in its pipeline, with one in particular being at a quite advanced stage in the trial. Tovorafenib, a drug for the treatment of low-grade glioma, the most frequent among pediatric cancers. In October, the US Food and Drug Administration (FDA) accepted the New Drug Application for tovorafenib, with the deadline for the decision being set on April 30. In its fourth-quarter earnings release, Day One Biopharmaceuticals Inc (NASDAQ:DAWN) said it had recorded $366.3 million in cash and equivalents, and it believes the resources to cover its operations until at least 2026.
6. BioCryst Pharmaceuticals Inc (NASDAQ:BCRX)
Price: $5.43
Nr of Hedge Funds Shareholders: 32
Another biotech stock to buy under $20 is BioCryst Pharmaceuticals Inc (NASDAQ:BCRX), which develops therapies for rare diseases. The company has several products in its pipeline, one of which, Orladeyo (berotralstat), is approved for adult use and commercially available. In its preliminary results, BioCryst Pharmaceuticals Inc (NASDAQ:BCRX) said it recorded sales of $326 million last year, an increase of 30% from the previous year. For the current year, it expects sales of Oraldeyo to be between $380 million and $400 million.
Among 32 funds bullish on BioCryst Pharmaceuticals Inc (NASDAQ:BCRX), the top position is held by Kurt Von Emster's VenBio Select Advisor, which owns 13.05 million shares as of the end of December.
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