Investing in clinical-stage biotech companies can lead to unimaginable profits. In fact, one of these penny stocks from the biotech sector has a chance at 130% growth.
These startups work to change the world with new drugs, therapies, and treatments. If any of them has a breakthrough - such as a new innovation, successful trial, or FDA approval - it could double your money.
You can make life-changing wealth from buying these penny stocks. But if you don't have a degree in biotechnology or some specialized field of medicine, odds are it can lead to catastrophic losses as well.
There are hundreds of these small companies out there, and most of them will fail at some stage of the journey. The percentage of ideas that turn into treatments is minuscule.
Some of them could be life-changing for patients and investors alike. Most will not.
Fear not - there is a way to maximize your chance at profit and limit your losses by choosing the right penny stocks. It's a matter of collecting as much information as possible.
Proven, successful biotech hedge funds have made that easy for us with their research. Let's steal from their portfolios to separate the gems from the rubble...
A Penny Stock Working to Cure Cancer
Verastem Inc. (NASDAQ: VSTM) is a biopharmaceutical company focused on discovering and developing proprietary small molecule drugs for cancer stem cells (CSCs) in breast and other cancers including ovarian cancer.
One of its current projects is working to find effective treatments for low-grade serous ovarian cancer. This a cancer that mainly attacks younger women and is a slow-growing cancer that can leave patients in treatment for as long as a decade. Often serious pain and discomfort are experienced by patients during this time.
There are limited treatments available for this form of cancer right now, so advances by Verastem could be a potentially a blockbuster drug for the company.
Verastem also doles the global rights to its approved drug for leukemia-relapsed patients, Copiktra, to Secura Bio for $70 million in cash and potentially additional payments and royalties based on sales.
We won't pretend we know the ins and outs of how this company's drugs work. We do know that some wildly successful biotech investors have been buying the stock.
You can buy Verastem stock for just $2.38 today. But these next stocks could be more likely to double your money.
Insiders Are Buying This Penny Stock
Baker Brothers Advisors and The Biotechnology Value Fund have both delivered high long-term returns for their investors in biotech companies for decades. Both funds are large shareholders and recent buyers of the stock.
Baker Brothers, along with Boxer Capital, have been recent buyers of a British biotech company that is working on treatment for cancer and some rare diseases - Mereo BioPharma Group Plc. (NASDAQ: MREO). Its cancer candidates are trying to treat solid tumors and late-stage ovarian cancer.
Rare disease projects include a possible treatment for OI, a rare genetic disease also known as brittle bone disease. There are no known treatments for this condition yet. Mereo bought this drug from Novartis AG (NYSE: NVS), which had already had some successful results in limited trials.
This treatment is being developed in a partnership with Ultragenyx Pharmaceutical Inc. (NASDAQ: RARE). The deal gives Mereo up-front payments as well as potential milestone payments and royalty payments based on sales.
Again, the most important information is that investors who have a long history of making big money in biotech have been buyers of the stock recently.
Mereo trades for $4.35 today with a chance at $8 over the next few months. Not quite the doubling power of our top penny stock to buy now...
The Best Penny Stock Today
Leap Therapeutics Inc. (NASDAQ: LPTX) is another clinical-stage biotech that is working on drugs to fight several different forms of cancer. As is the case with our other small biotech stocks, what is most interesting to us is who owns the stock.
Baker Brothers is one the best-performing hedge funds of the last decade, and it also owns this stock. So do Hill House Capital Advisors, Healthcare Ventures, Artal Group, and Sphera Funds Management. All of them are biotech investors with spectacular track records.
Its largest shareholder is Beigen, a clinical-stage biopharmaceutical company based in the Cayman Islands. U.S.-based Pharmaceutical giant Eli Lilly and Co. (NYSE: LLY) is also a large shareholder.
Leap's partners in developing some of the drugs include New York University, Massachusetts General Hospital, Bristol-Meyers Squibb Co. (NYSE: BMY), and Roche.
There are lot of people who know a lot about biotechnology and drug development willing to invest in and partner with Leap Therapeutics.
At the current prices, it makes sense for us to place a small bet that could turn into a small fortune if one or more the drugs ends up getting approved.
This one trades for $2.33 with an average analyst target of $5.30. That's 130% potential growth.
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