The broader markets have disappointed in 2015, with the Dow Jones Industrial Average and S&P 500 posting losses of 2.1% and 0.4% this year, respectively.
But the top biotech penny stocks have posted gains as high as 79% during the same time.
And those gains happened even as the biotech sector has pulled back in recent months. In fact, since July 20, the Nasdaq Biotechnology Index has dipped 24%. But these biotech penny stocks have bucked that trend.
Promising penny stocks in the biotech sector provide investors with an opportunity to get in early on the next blockbuster drug, revolutionary medical treatment, or exciting new compound that could become a buyout candidate by large drug companies.
Still, penny stock investing involves risks. While penny stocks can bring huge profits in a short time period, they can also be highly volatile. That's why Money Morning experts advise that penny stocks should only represent a small percentage of any portfolio. One stock should never account for more than 2% of your investing capital.
Here are four top biotech penny stocks we've been watching for months that have all brought double-digit gains this year...
The 4 Top Biotech Penny Stocks of 2015
Top Biotech Penny Stocks No. 1: Prima BioMed Ltd. (Nasdaq: PBMD) researches, develops, and commercializes medical biotechnology products. Based in Australia, the company develops immunocellular therapeutic products for the treatment of cancer. In early July, the company received positive scientific advice from the European Medicines Agency on the development path for its lead product, IMP321, in metastatic breast cancer. On Oct. 15, H.C. Wainwright rated PBMD "Buy" with a $3 price target. At $1.20, shares are already up 79.1% year to date.
Continue reading for three more of the top biotech penny stocks of 2015...
Top Biotech Penny Stocks No. 2: Oclaro Inc. (Nasdaq: OCLR) designs, manufactures, and markets lasers and optical components, modules, and subsystems for the optical communications, industrial, and consumer laser markets worldwide. The San Jose, Calif.-based company's products generate, detect, combine, and separate light signals in telecom networks. When reporting Q2 2015 results, the company said it aims to be profitable in fiscal 2016. OCLR preannounced its F1Q16 quarter Wednesday, pointing to results significantly exceeding prior guidance. Revenue for the quarter is now expected to be approximately $87.5 million at the high end of the prior guidance of $82 million to $88 million and exceeding consensus expectations of $85.4 million. Thursday, Stifel upgraded OCLR to "Buy" from "Hold" with a $4 price target. At $2.83, shares are up 58.7% year to date.
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Top Biotech Penny Stocks No. 3: Codexis Inc. (Nasdaq: CDXS) is a leading developer of biocatalysts for the pharmaceutical and fine chemical industries. On Aug. 3, the Redwood, Calif.-based company announced it signed a CodeEvolver platform technology license agreement with Merck & Co. (NYSE: MRK). The transaction marked the second such agreement between Codexis and a major pharmaceutical company. It also advanced the technology's business model of multiple sources of revenue. On Oct. 15, CDXS announced it will receive a $5 million milestone payment from Merck in Q4. The company reports Nov. 4 after the close. At $3.21, shares are up 27.4% year to date.
Top Biotech Penny Stocks No. 4: Rigel Pharmaceuticals Inc. (Nasdaq: RIGL) is a clinical-stage drug development company engaged in the discovery and development of small-molecule drugs for the treatment of inflammatory and autoimmune diseases, immuno-oncology-related diseases, and muscle disorders. The San Francisco-based company has a number of product candidates in development and is working with drug giants AstraZeneca Plc. (NYSE: AZN) and Bristol-Myers Squibb Co. (NYSE: BMY). On Sept. 8, RIGL announced the U.S. Food and Drug Administration granted Orphan Drug designation to Fostamatinib, Rigel's oral spleen tyrosine kinase inhibitor, which is currently in Phase 3 clinical studies in patients with chronic immune thrombocytopenic purpura. On Sept. 9, RIGL and Aclaris Therapeutics International signed a license agreement for Rigel JAK Inhibitors to treat skin diseases. At $2.81, shares are up 23.8% this year.
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