A Look at Biotech Penny Stocks
Did you know that more people are interested in penny stocks, and many of those people are new to investing? One of the reasons it’s so attractive to folks is that it is a relatively low cost compared to traditional stocks. You also do not need to work with a brokerage firm most of the time.
Penny stocks are shares that are sold and traded for less than $5 a share.
These are often traded on the over-the-counter market (OTC), which is not a part of the stock market. The OTC market involves trades directly between buyers and sellers. You will also find these stocks on NASDAQ and NYSE on Wall Street.
So, why are we looking at the biotech industry and penny stocks? The biotech sector and all manners of technology is a growing industry that is one of the fastest in the country. New investors, and even some experienced ones, are often a little lost on what biotechnology is.
Biotechnology uses organisms and living systems to create products that benefit human health. The most common biological advance is creating vaccines, something that has become important to us during the pandemic. It’s also applicable in all sorts of industries, such as genomics, agriculture, refinery, biopharma, food production, and industrial processes.
This information alone might have you excited to get started investing. Before committing to an investment, it’s important to research the company and the market. You may not be setting aside a large chunk of money, but there is always a risk.
Historically, biotech stocks do very well when they are on the verge of a breakthrough. People get excited, stocks are bought, and the value rises. This is one of the few investing arenas that can see incredible growth over a relatively short period of time.
As with many stocks, prices do fall. The drops can be pretty dramatic when considering the reliance on an excellent turnaround of clinical trials and FDA approval. FDA involvement can make or break a biotech company. In 2006, Threshold Pharmaceuticals stocks dropped in value by 82% within a matter of weeks. All because the FDA shut down their clinical trials.
In this article, we are going to help you do your research. We will review the biotech penny stocks you should keep your eye on and learn more about.
What to Know Before Investing in Biotech Penny Stocks
Before we jump into the top stocks to watch this year, it’s good to know a bit more about the process and the risk involved. Whether you have found a company you want to invest in, or you want more information before diving in, this information is important. Do not invest your money into anything until you have assessed these possible risks for that company.
One of the greatest things about pharmaceutical companies in biotechnology is how fast discoveries are made, and things change. It is also one of its biggest downfalls. Pharmaceuticals take a long time from development to clinical trials and then getting FDA approval. Many medications don’t stay on the shelves long due to competitors finding new, more effective treatments along the way. This means your vaccine candidate may change as information and pathogens change.
Loss of Funds
Biotech companies lose money regularly. They have their funds, and they often run out of money during their clinical trials. In extreme cases, the company will have to file bankruptcy. Fortunately, this is a rare case, but the loss of funding does impact your stock’s outcome. If a company cannot raise the funds to complete clinical trials, it won’t receive FDA approval, which will cause the stock to drop.
While getting FDA approval is wonderful for a biotech company, sometimes it can work against the stock market. If the FDA shuts down clinical trials, the stocks will drop. If the FDA requires more clinical trials and delays the release of a new drug, that can also impact share value. It can also give the competitors more time to beat the clock and outdate a drug that hasn’t made it yet.
Binary risk is related to how successful clinical trials are going. These are clearly defined as positive or negative. Positive clinical trials are what you want, as that means the drug is likely to get approval, and drug administration will follow. Negative indicates that the medicine is not functioning as it was believed to and will result in denial from FDA or even having the clinical trials shut down. Considering that the FDA approval process takes a long time, and anything can change during clinical trials, it can still be hard to assess this risk.
Which Biotech Penny Stocks Should You Keep an Eye On?
We have discussed risks and the importance of research; this is all a part of learning how to invest your money wisely. Now, we get to talk about the fun part—the recommendations we provide to help you start your investing journey. Some of the current breakout biotech penny stocks are listed below, in no particular order:
- Seelos Therapeutics, Inc. (NASDAQ: SEEL)
- Iterum Therapeutics PLC (NASDAQ: ITRM)
- Therapeutic Solutions International, Inc. (OTCMKTS: TSOI)
- SINTX Technologies, Inc. (NASDAQ: SINT)
It is important to give you a quick disclaimer: any stock prices mentioned are reflective of the day of writing and change daily. Always check stock prices on the market before investing.
Seelos Therapeutics, Inc. (NASDAQ: SEEL)
Seelos Therapeutics is a company dedicated to neurological and psychiatric disorders in the life sciences. Their current projects include:
- Acute suicidal ideation in folks with Major Depressive Disorder and PTSD
- Treatments for Lou Gehrig’s disease
- A collaboration to treat Sanfilippo disease
Raj Mehra began the company in 2016, and their headquarters are located in New York, New York. Their stock has grown over the last year, but the largest growth has been since 2021. A year ago, the stock price was barely over fifty cents, and at the time of this publishing, it’s hovering around $5. Their pattern shows bullish tendencies, meaning it’s likely to gain more value.
Iterum Therapeutics PLC (NASDAQ: ITRM)
Iterum Therapeutics PLC has been in the healthcare sector since June of 2015. Under the guidance of CEO Corey Fishman, the company focuses on meeting medical needs in our communities. They also strive to create therapies that treat pathogens that are resistant to multiple medications. Their pipeline shows clinical trials for two therapies for urinary tract infections and one for intra-abdominal infections.
Headquarters is located in Chicago, Illinois, and the company stock over the past year is maintaining a neutral pattern. Stock value remains low, and there have been decreases in the price. In June 2020, they saw their biggest decrease, which is probably due to the global pandemic. While they are slowly gaining value again, we predict that they will see growth as vaccines roll out, and we see more activity as our lives return to normal.
Therapeutic Solutions International, Inc. (OTCMKTS: TSOI)
Headquartered in Oceanside, CA, Therapeutic Solutions International is quietly working on immunotherapy that controls the immune system. Since 2007, they have looked at how to upregulate (or make active) or downregulate (or make less active) the immune response. Both are important for underactive or overactive immune systems that damage the body and avoid homeostasis. They also are working on a complementary product to the COVID-19 vaccine.
The stock has maintained a neutral pattern over the past year. At the beginning of February 2021, there was a significant increase, and about one month later, it had a dramatic drop. The value did not drop far enough to be at the same low level before February’s dramatic increase. Since then, the stock has held steady, but we believe it will increase again after the latest press release from last week.
They just announced that the StemVacs-V iPSC product stimulates distinctive immune mechanisms responsible for anti-cancer activity in animal subjects.
SINTX Technologies, Inc. (NASDAQ: SINT)
SINTX Technologies came on the scene in 1996 with the idea to provide quality medical devices. They work with silicon nitride material to create devices to assist with hip replacements and other joint surgeries. They have expanded to include SN-Peek and antipathogen powders for biomedical, industrial, and energy industries.
The company’s stock value is showing a bearish pattern, meaning it’s likely to drop in value soon.
This may be due to their work with anti-pathogen powders and the coronavirus. They have had some decreases over the past year, but overall growth has been steadily positive. As the pandemic continues with less volatility than it did a year ago, it’s not unlikely to see the drop.
Does that mean you should avoid investing in SINTX? Not really. One should watch the company to see what moves they make next. More than likely, they have plans to expand on the work they already do or expand their product line.
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One other company to consider is Cocrystal Pharmaceuticals (COCP), a biopharmaceutical company. They have been showing a substantial growth in share value without burning through their cash too quickly. It appears that they will raise more funds for future endeavors, making them less likely to crash and burn, literally. This shows how hot this market truly is; there is enough taking place that anyone can invest and come out with a little extra cash. Creating your own watch list will give you the practice you need.
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