Throughout the month, penny stocks continue to gain steam. Whether it’s micro-caps or small cap stocks, the focus is on making quick profits. One of the top sectors to watch has been biotech. Now, I know what you might be thinking, it’s because of coronavirus. While that may be the case for some penny stocks, the broader focus is simply on novel treatments. This can be anything from pain management to cancer treatment and everything in between. But when it comes to biotech stocks, there are a few things to keep in mind.
It can definitely be exciting seeing these high-flyers make such explosive moves. But therein lies the risk. Biotech stocks, in general, are volatile on their own. Just look at higher-priced companies like Rocket Pharmaceuticals (RCKT Stock Report). Quite literally overnight, shares jumped from around $32 to highs of nearly $64 within the first few minutes of trading on Wednesday. The momentum stemmed from positive data from its Phase I Trial for its Danon disease treatment. That’s a move of 100% overnight. Those returns aren’t something that you usually see with stocks trading above $30.
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But it is 2020 and a whole new market is in place. Now, if RCKT stock is on your list right now, be aware that the company took full advantage of this move and announced a $175 million public offering Wednesday morning. So there could be a potentially dilutive event to keep in mind down the road. The company simply proposed the offering, it didn’t come out with a formal issuance price yet. Nonetheless, the news sparked a massive rally in the stock. It also attracted plenty of analyst attention as well.Are Biotech Penny Stocks Worth The Risk?
Here’s where the fuel gets poured on the fire. I said that biotech stocks, in general, were volatile. Now, couple that with the volatility of penny stocks, and you could have a perfect storm for crazy swings. A $32 move for a $32 stock is big. But considering a $0.30 is just as big for a $0.30 stock also says a lot. Where the $32 stock can drop a few bucks and not experience a massive loss, even a drop of 10 cents for that $0.30 stock could become a huge blow to the position value. So if you’re looking for biotech penny stocks to buy, keep all of this volatility risk in mind.Biotech Penny Stocks To Watch: China SXT Pharmaceuticals
China SXT Pharmaceuticals (SXTC Stock Report) is not one of the names with analyst coverage right now. However, it has attracted the attention of traders this month. Since the beginning of December SXTC stock has climbed as high as $0.455. Even the small jump from December’s opening price of $0.292 equated to a 56% move in the stock’s price. SXTC stock pulled back over the last 3 sessions but Wednesday’s trading appears to see a turnaround in that trend. Early momentum took shares up to nearly 33 cents a share as trading volume increased in the market.
Last week the company entered into a 12 million share securities purchase agreement with one of its investors. The gross proceeds of that transaction were $7.2 million. While the company itself has been relatively quiet on the news-front, China SXT may have found itself in the mix of coronavirus stocks. Unlike other pharma stocks related to traditional medicine, China SXT focuses on Chinese medicine. This includes different powders, scales, and other traditional Chinese medicines.
While the company hasn’t come out to explicitly state this, the topic of traditional medicine in mainland China had come up early on when coronavirus had first started making headlines this year. Whether or not this is simply a speculative trend based on the large investment last week is to be seen. However, momentum has picked up on Wednesday and the penny stock broke away from its prior 3-day downtrend.Biotech Penny Stocks To Watch: Evogene Ltd.
If you’ve read our commentary for a few months, you may already be familiar with Evogene Ltd. (EVGN Stock Report). The company is more of a diversified biotech company. It has focused on myriad treatment pipelines and indications via its operating businesses. The ones in the headlines this quarter were its Biomica and Canonic companies.
Biomica focuses on microbiome therapies. These are things like live bacterial products. Biomica’s BMC128 has been the most recent focus and is advancing in production stages after the completion of early R&D phase of its development. The approach taken with BMC128 is a means for enhancing anti-tumor immune activity. Early results have shown that both prior to and in combination with immune checkpoint inhibitors, there was a significant improvement in anti-tumor activity in mice.
Evogene’s Canonic subsidiary, however, may be gaining more of the spotlight. That’s in consideration of the recent excitement in marijuana stocks. Canonic recently received approval from the Israeli Medical Cannabis Agency to propagate medical cannabis seedlings. Canonic can move forward with the execution of its commercialization plan aiming to release its first product in Israel in 2022.
Unlike SXTC, EVGN stock has analysts following it right now. Cantor Fitzgerald has a Buy rating on the stock. Furthermore, its $9 price target shows that the firm’s EVGN stock forecast is more than 100% higher than current levels.Biotech Penny Stocks To Watch: ADMA Biologics
ADMA Biologics (ADMA Stock Report) has begun attracting day traders in December. Since the start of the month, ADMA stock has climbed from around $2 to as high as $2.37 this week so far. While this 18% move is great in the short term, analysts at HC Wainwright foresee something a bit more bullish. The firm has a Buy rating on the stock. however, as far as the ADMA stock forecast is concerned, HC placed a price target of $12 earlier this year. That’s over 400% higher than the current trading levels.
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December has been a much stronger month for ADMA. The last few days, in particular, have been ones to highlight. Why are traders paying attention to ADMA right now? This month the company has been expanding its operating footprint. It began collecting plasma at its newest location in Tennessee. It also submitted a Biologics License Application to the FDA for gaining approval of its 3rd plasma collection center. If you remember earlier this year when convalescent plasma was a big topic of discussion, ADMA benefited.
This week the company entered into a $100 million credit facility loan amendment with its lender, Preceptive Advisors, which provided another $15 million to the company. This ultimately increased the size of the original loan showing optimism from Perceptive in ADMA. The money allows the company to continue executing on strategic priorities, “including supply chain enhancement initiatives and plasma center expansion, in addition to generating considerable near-term and ongoing revenue growth,” said Adam Grossman, President and Chief Executive Officer of ADMA. So with strong support from its lender and a bullish outlook from analysts, will ADMA stock be on your list this week?Biotech Penny Stocks To Watch: ViewRay Inc.
ViewRay Inc. (VRAY Stock Report) has actually surpassed analyst estimates recently. The highest price target given this quarter was $4. This came from both B. Riley and Piper Sandler. During the first few weeks of December, VRAY stock managed to climb as high as $4.61 so far and is now coming close to testing 52-week highs. Right now that target sits around $4.66.
Unlike other names on this list, ViewRay focuses on the bio-technology side of the sector. Its MRIdian SMART MRI radiation therapy has been used for treating 1000s of patients. In fact, last month the company announced its 1000th treated patient at the Amsterdam UMC. The Medical Center also has collected clinical evidence through these treatments supporting use for touch-to-treat cancers. This includes pancreatic, liver, lunch, kidney, and even prostate cancer.
This month the company is participating in the SABR symposium to discuss emerging indications in Stereotactic and MR-guided radiotherapy. Since that is set to take place on Saturday morning, it’s interesting to see the latest surge in upward momentum for the penny stock. Is this a “buy the rumor” event or are traders expecting something bigger?