While most of Wall Street focuses on large and mega cap stocks, as they provide a degree of safety and liquidity, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the low-to-mid hundreds, all the way up to over $1,000 per share. At those steep prices, it’s pretty hard to get any decent share count leverage.
Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a winner, as you can always sell half and keep half.
We screened our 24/7 Wall St. research database and found five biotech stocks trading under the $10 level that could provide investors with some solid upside potential. While more suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential.
Galmed Pharmaceuticals
This off-the radar pick could be poised to be a huge winner. Galmed Pharmaceuticals Ltd. (NASDAQ: GLMD) is a clinical-stage biopharmaceutical company. It focuses on the development of the liver-targeted stearoyl-coenzyme A desaturase-1 modulator Aramchol, novel, once-daily, oral therapy for the treatment of nonalcoholic steatohepatitis (NASH) for variable populations, as well as other liver-associated disorders.
The Aramchol is a synthetic conjugate of cholic acid, or a type of bile acid, and arachidic acid, or a type of saturated fatty acid, both of which, in their non-synthetic forms, are naturally occurring.
The analysts at SunTrust love the stock and have a towering $27 price objective. The Wall Street consensus target is even higher at $32, and the shares were trading on Friday’s close at $8.46 apiece.
La Jolla Pharmaceuticals
This biopharmaceutical company has been mentioned as a possible takeover candidate and the stock has been battered over the past six months. La Jolla Pharmaceuticals Co. (NASDAQ: LJPC) engages in the discovery, development and commercialization of therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases.
Giapreza, formerly known as LJPC-501, was approved by the U.S. Food and Drug Administration (FDA) on December 21, 2017, as a vasoconstrictor indicated to increase blood pressure in adults with septic or other distributive shock.
LJPC-0118 is La Jolla’s investigational product for the treatment of severe malaria. LJPC-401 (synthetic human hepcidin), a clinical-stage investigational product, is being developed for the potential treatment of conditions characterized by iron overload, such as hereditary hemochromatosis, beta thalassemia, sickle cell disease, myelodysplastic syndrome and polycythemia vera.
SunTrust’s Buy rating on the shares comes with a whopping $20 price target. The consensus target price is $20.50, and the shares were trading at $7.64 on Friday’s close.
24/7 Wall St.Inovio Pharmaceuticals
This micro-cap company could also be a big winner for investors. Inovio Pharmaceuticals Inc. (NASDAQ: INO) is a late-stage biotechnology company that engages in the discovery, development and commercialization of DNA-based immunotherapies and vaccines.
The company focuses on the development of SynCon immunotherapy, which helps break the immune system’s tolerance of cancerous cells, and Cellectra, which facilitates optimized cellular uptake of the SynCon immunotherapies.
The analysts at Stifel rate the shares at Buy, but their $7 price target is lower than the huge consensus target of $10.57. The stock closed on Friday at $3.52 per share.
MannKind
This stock once traded over $50 a share, and it could be a fallen angel gem for investors. MannKind Corp. (NASDAQ: MNKD) focuses on the development and commercialization of inhaled therapeutic products for patients with diseases such as diabetes and pulmonary arterial hypertension.
The company currently is commercializing Afrezza (insulin human) Inhalation Powder, its first FDA-approved product and the only inhaled rapid-acting mealtime insulin in the United States, where it is available by prescription from pharmacies nationwide.
Leerink Swann recently started coverage with an Outperform rating and a $3 price target. The posted consensus target is $3.50, and the shares were last seen trading at $2.20 apiece.
Viking Therapeutics
This small-cap biotech could have monster upside potential. Viking Therapeutics Inc. (NASDAQ: VKTX) focuses on the development of therapies for metabolic and endocrine disorders. Its clinical program, VK5211, is an orally available drug candidate that is in Phase 2 clinical trial for acute rehabilitation following non-elective hip fracture surgery. VK5211 is a non-steroidal selective androgen receptor modulator.
The company’s second program is focused on the development of orally available small molecule thyroid hormone receptor beta agonists. Its two molecules are VK2809 and VK0214. The former is an orally available, tissue and receptor-subtype selective agonist of the thyroid beta receptor that is entering Phase 2 development for the treatment of patients with hypercholesterolemia and fatty liver disease.
SunTrust is very positive on the shares and noted this past week after the company reported fourth-quarter results:
Viking reported fourth quarter 2018 earnings results and provided an update on pipeline development. The company announced positive additional data from a 5mg dose cohort of VK2809 in a Phase II NAFLD study. Similar to 10mg cohort, VK2809 led to statistically significant reduction in liver fat content relative to placebo with no serious adverse events. Initiation of a Phase IIb biopsy-confirmed NASH trial is expected in 2H19 after completion of ongoing animal toxicity studies. Low doses will likely be included due to strong efficacy, not safety concerns.
The SunTrust team has a massive $28 price target, which compares the posted consensus target of $26.63. The shares ended the week at $7.86.
Five stocks for aggressive accounts that look to get share count leverage on companies that have sizable upside potential. While not suited for all investors, they are not penny stocks with absolutely no track record or liquidity, and major Wall Street firms have research coverage on them. With that caveat noted, readers should be reminded that these small biotechs are very risky plays as clinical failures could prove fatal.
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