- Biotech stocks offer investors a clear risk/reward proposition
- Investors should look at the company’s clinical focus and its pipeline
Small-cap biotech stocks are among the riskiest of stocks for investors to own. One reason is that many of these companies are not only unprofitable but are still in the pre-revenue stage of their business.
It all comes down to the pipeline. These companies are typically working on therapeutics and pharmaceutical products for chronic diseases and conditions that have no current treatment or one for which the standard of care needs improving.
If just one of their candidates makes it into production, it could bring billions in revenue to the companies. And that means that the stock price could jump significantly.
That’s the long-term case. Along the way, however, there are many years of clinical trials. These can create short-term opportunities for traders. This article looks at three small-cap biotech companies with stock prices that are making significant moves and have a bright outlook for 2023.
1. Harpoon Therapeutics
Harpoon Therapeutics (NASDAQ:HARP) is a clinical-stage immuno-oncology company that is attempting to harness the killing power of T cells in a pipeline of wholly-owned immunotherapies for patients with hard to treat tumors.
HARP stock is up nearly 135% on December 12. This was one day after the company presented updated interim data from its Phase 1 clinical trial for its single-agent HPN217 candidate. The drug is being developed to treat relapsed/refractory multiple myeloma (RRMM). The company presented its results at the American Society of Hematology Annual Meeting and Exposition in New Orleans.
This is one of three such therapies that Harpoon has in Phase 1 trials. That means the company is years away from commercial production. But, analysts tracked by MarketBeat give the stock a consensus price target of $8.75. The recent price action has moved HARP stock into overbought territory, but risk-tolerant investors may want to keep an eye on this for an advantageous entry point.
2. HTG Molecular Diagnostics
HTG Molecular Diagnostics (NASDAQ:HTGM) stock is following a similar path as Harpoon Therapeutics. This could be a case of two stocks that are riding each other’s coattails. Although there’s no direct news explaining the move in HTGM stock, the company does present investors with a strong long-term case.
HTG Molecular Diagnostics is in the pre-clinical phase of developing therapeutic treatments “focused on RNA-Modifying Proteins and other targets” in areas like oncology, autoimmune and neurodegenerative disorders, and rare diseases. According to BIS Research, the global market for molecular oncology diagnostics is expected to exceed $12 billion in 10 years.
Being in the pre-clinical phase means that HTG Molecular Diagnostics is years away from having a commercially available product. Still, speculative investors could phase into a position as the company moves through the clinical trial phase. Analysts tracked by MarketBeat have a $2.83 price target on the stock.
3. Abeona Therapeutics
Continuing with a theme with small-cap biotech companies, Abeona Therapeutics (NASDAQ:ABEO) is still in the clinical trial stage. However, of the three companies on this list, Abeona is the closest to having a therapeutic brought to market.
Abeona is attempting to develop gene and cell therapies for life-threatening rare genetic diseases. The company’s EB-101 candidate is an “autologous, engineered cell therapy for RDEB.” This is a rare connective tissue disorder that does not have an approved treatment. The company had $26 million in cash as of June 2022 and believes it is funded through the second quarter of 2023.
Analysts are confident that EB-101 will be greenlighted in its Phase 3 trial as they are giving the stock a $22 price target which is a gain of over 1,000% from its current price.