10 Biotech Penny Stocks to Watch for August 2017

This month, the 10 biotech penny stocks on our watch list are all up more than 39%. One of them is up more than 130% in the past 30 days.

In addition to this list today, we have a small-cap biotech stock for Money Morning Members that could gain more than 100% in the next 12 months.

Here's the list of the top 10 biotech penny stock gainers for the month...

Company (ticker) % Monthly Gain Price
Aptose Biosciences Inc. (Nasdaq: APTO) 39.25% $1.59
Marinus Pharmaceuticals Inc. (Nasdaq: MRNS) 45.59% $1.91
Capricor Therapeutics Inc. (Nasdaq: CAPR) 45.90% $0.97
Bioblast Pharma Ltd. (Nasdaq: ORPN) 49.65% $0.65
Opexa Therapeutics Inc. (Nasdaq: OPXA) 50.34% $0.89
Verastem Inc. (Nasdaq: VSTM) 53.88% $3.57
Biostage Inc. (Nasdaq: BSTG) 56.79% $0.47
Moleculin Biotech Inc. (Nasdaq: MBRX) 82.73% $2.32
AVEO Pharmaceuticals Inc. (Nasdaq: AVEO) 100.00% $2.47
Aeterna Zentaris Inc. (Nasdaq: AEZS) 133.16% $2.10

While these monthly gains are tempting, they likely won't last. Penny stocks (stocks trading under $5 a share) are extremely volatile, making them too risky for most retail investors.

On top of being highly volatile, penny stocks typically have lower trading volumes. This increases risk because it is hard to buy or sell the stock at the price you are targeting. If the share price falls dramatically, you may have a hard time finding a buyer for your shares.

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For example, Bioblast (No. 4 on today's list) has an average trading volume of just 131,836 shares per day. The stock we are recommending has an average trading volume that's almost four times larger at 508,991 shares per day.

And being a small-cap stock, there is plenty of room for growth. In fact, one analyst sees the stock more than doubling in the next year...

Our Biotech Stock Pick Is Up 30% So Far This Year with Room to Run

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Today, we are recommending Insys Therapeutics Inc. (Nasdaq: INSY). The stock is already up 30% so far this year, while the Dow is only up 10%.

These market-beating gains are expected to continue with its new drug on the market.

Syndros received final FDA approval on May 24, and it is expected to be available as a prescription any day now.

The drug is a cannabis-derived treatment for chemotherapy-induced nausea and vomiting with a huge potential market. Currently, there are about 15 million cancer patients in the United States, according to the National Cancer Institute. And about 80% of those patients suffer from nausea and vomiting due to chemotherapy.

This large potential market is just one reason why Money Morning Executive Editor Bill Patalon recommends the stock.

"With medical marijuana research accelerating, it's highly likely other indications will be found for drugs like Syndros," said Patalon.

When Patalon mentions other indications, he's talking about potential "off-label" uses that are not approved by the FDA but have been proven effective in clinical studies.

In recent studies, Syndros has been shown effective at treating chronic pain.

And the pain treatment market is enormous. It is currently worth $60.2 billion globally. The global pain market is expected to grow to $83 billion by 2024, according to Transparency Market Research.

We're not the only ones bullish on Insys. The five analysts that follow INSY have a one-year consensus target price of $16.40. That's a 37% gain over its current price of $11.95 per share.

One analyst expects the stock to go as high as $26.00 in the next 12 months, for a gain of 118%.

The Bottom Line: While penny stock gains can be tempting, we don't recommend them for most investors because of how risky they are. But Insys is a small-cap stock that has a lot of upside potential, with one analyst expecting INSY to double your money.

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