If one grouping of penny stocks that’ve gained attention in the markets, it has been biotech stocks. These companies focus on novel treatments and develop groundbreaking platforms addressing unmet medical needs worldwide. Obviously, coronavirus headlines have captivated many of the biotech headlines during the last year. This is likely one thing that actually familiarized the millions of new traders with the volatile world of pharma-related stocks.
Now, a year later, traders know that these are just more than “coronavirus companies.” Many are advancing treatments for everything from cancer and immune disorders to neurology and pain management. What’s more, is that unlike your mainstream industries, biotech has plenty more “events,” and let me explain. A typical company in a popular industry like communications may have earnings, for example. This is usually an event that builds anticipation and speculation. But after earnings are gone, traders need only to rely on sporadic news or filings that might come about.
In the case of biotechnology stocks, there are much more than earnings dates to pay attention to. With the FDA usually involved in some way, these companies go through numerous clinical phases to develop novel treatments. Many regulatory filings need to be made and approved.Are Biotech Penny Stocks Worth The Risk?
For example, to begin a phase 1 trial, a given biotech company needs to 1. plan on filing forms with the FDA, 2. the FDA needs to confirm receipt of form 3. the FDA needs to give comments/approvals of the form, 4. Phase trials begin accepting trial patients, 5. phase trials begin dosing.
Now, that is a very (and I mean very) simplistic breakdown of the process. But even with that as the case, it involved 5 potential catalysts for traders to consider. Then, you’ve got each phase trial to repeat the process essentially. Compared to only 1 “earnings catalyst,” biotech penny stocks have a considerably higher number of catalysts to consider.
Then again, these catalysts aren’t always beneficial to the companies or their shareholders. Missing endpoints can send shares plummeting. In some cases, results can be so bad that the company abandons the drug platform development altogether. So just as much as there are chances for bullish catalysts to propel biotech penny stocks, the potential for bearish catalysts still exists. Herein lies the opportunity for traders and explains why research plays a huge role, especially when talking about biotech penny stocks to buy.
Following Tuesday’s market sell-off, attention appears to be back on certain small-cap biotech stocks. Will any of these names be on your list of penny stocks to watch before next week?
- Xenetic Biosciences Inc. (NASDAQ: XBIO)
- Avinger Inc. (NASDAQ: AVGR)
- Citius Pharmaceuticals Inc. (NASDAQ: CTXR)
Late last year, Xenetic hit plenty of traders’ scanners following a major update from the company. You’ll see what I’m talking about on the stock chart. This is one of those positive catalysts I was explaining above. Xenetic announced data from a partner’s Phase 3 trial. It utilized the company’s PolyXen® to develop a treatment for anemia in patients with chronic kidney disease. Since selling off briefly at the end of 2020, XBIO stock has actually held a strong uptrend in the market (aside from Tuesday’s broad sell-off).
Fast-forward to this month and more news has helped give XBIO a boost. Last week, Xenetic announced its partner, PJSC Pharmsynthez reported that it began the registration phase of Epolong by filing a registration dossier to obtain approval of Epolong in Russia for the treatment of anemia in patients with chronic kidney disease.
The dossier was based on previously reported data from Pharmsynthez’s Phase 3 clinical trials of Epolong in Russia. It reportedly demonstrated the efficacy of Epolong and its potential to reduce side effects.
“The registration filing in Russia for Epolong represents an important advancement for Pharmsynthez and the Epolong program. If accepted and approved in Russia, Epolong would be the first approved product incorporating our propriety PolyXen delivery platform technology,” commented Jeffrey Eisenberg, Chief Executive Officer of Xenetic.#2: Avinger Inc.
Another one of the penny stocks that broke out at the end of 2020 & that we’ve discussed recently was Avinger. If you look back in late-December, you’ll see the initial jump. This came as the company announced its annual meeting results. Commentary from CEO Jeff Soinski resonated with the market.
“In January, we expect to begin the full commercial launch of our Tigereye CTO device. In order to drive further growth, we continue to advance our next generation Lightbox 3 imaging console, clinical studies in support of our products, and the development of new image-guided catheters for peripheral and coronary applications.”
The company ultimately began its device’s full commercial launch and further expanded its IP portfolio with 19 US and international patents issued and allowed in 2020. This month, not much has happened as far as headlines. Avinger raised over $14 million to put toward things like acquisitions of complementary products, technologies, or businesses or to repay principal on its debt.#3: Citius Pharmaceuticals Inc.
One of the more consistent gainers of the past few months is CTXR stock. The late-stage pharmaceutical company has been working on several new products aimed at the critical care sector. This includes a large portfolio of anti-infectives as well as cancer care products. With the focus on biotech companies as a result of Covid, CTXR has seen more investors taking interest in it over the past few months.
The company announced the closing of a $76.5 million registered direct offering only a week ago or so. The deal contains roughly 75 million shares in a total of common stock, sold at $1.505 and warrants at $1.70 per share. With this, investors should take into consideration the effects of share dilution.
[Read More] 5 Biotech Penny Stocks To Watch For March 2021
This is an extensive offering for a company of its size, but it is definitely not unheard of. Oftentimes, biotech companies will engage in fundraising methods like these to secure financing for the long term. The bullish interest in biotech penny stocks has also resulted in an influx of capital for many companies.
Since the start of the year, shares of CTXR are up by over 130%, which is no small feat. And since the beginning of last week, shares have jumped by over 60%. While CTXR is somewhat speculative, it could be worth watching in the short or long term.