Penny stocks are defined as stocks that trade at less than $5 a share. While penny stocks continue to be a risky bet, they are still popular among investors. These stocks may be volatile, but with due diligence, some hidden treasures may be found.
Such penny stocks trading at low share prices can translate to huge gains for retail investors in terms of percentage returns.
Using the TipRanks penny stock screener, let us find some of the top penny stocks.
Bolt Biotherapeutics (NASDAQ: BOLT)
The first one on this list is Bolt Biotherapeutics, a clinical-stage biotechnology company founded in 2015 by Dr. Edgar G. Engleman of Stanford University. The company is working on proprietary Boltbody Immune-stimulating Antibody Conjugates (ISACs). These antibody conjugates target tumor cells so that myeloid cells can eliminate them.
Earlier this month, the company presented interim clinical data from its ongoing Phase 1 study of BDC-1001 – Bolt’s lead ISAC candidate for treating tumors. This clinical data for 57 subjects participating in the study indicated “early signs of clinical activity with corresponding biomarker changes in the tumor microenvironment of post-treatment tumor biopsies,” according to the company’s press release.
Edith Perez, M.D., Chief Medical Officer of Bolt Biotherapeutics, indicated in the company’s press release that BOLT was considering exploring a weekly dose to determine “the recommended Phase 2 dose for BDC-1001 as monotherapy, and to initiating combination therapy with a checkpoint inhibitor.”
Checkpoint inhibitors are a type of drug, called immunotherapy drugs, that block proteins, called checkpoints, made by immune system cells.
Jones Trading analyst Soumit Roy pointed out that he did not see any new responses with rising dosage and frequency in the interim clinical data presentation. However, the analyst was optimistic that Bolt’s combination study with Bristol Myers Squibb’s (BMY) Opdivo expected to start by this year-end will be able to show “deeper and durable responses.”
The analyst estimates that BDC-1001’s “monotherapy dose escalation portion” will complete “by mid-2022, with the announcement of RP2D [recommended Phase 2 dose].”
Given the response to the drug trial, Roy reduced the probability of product success (PoS) of BDC-1001 in his financial model from 25% to 20% and reduced the probability of peak adjusted sales to $850 million in 2034.
The analyst has kept a Buy rating but reduced the price target from $45 to $33 (636.6% upside) on the stock. This price target is still almost 8x the closing price of $4.48 as of December 28.
Besides for Roy, two other analysts on the Street are also bullish on the stock with a consensus rating of a Strong Buy. The average Bolt Biotherapeutics stock prediction of $33 implies an upside potential of 636.6% to current levels for this stock.
TRACON Pharmaceuticals (NASDAQ: TCON)
TRACON Pharmaceuticals is a clinical-stage biopharmaceutical company that is focused on developing and commercializing novel targeted therapeutics for cancer. The company has entered into an agreement with Alphamab Oncology and 3D Medicines, which will give TRACON the right to commercialize and develop “envafolimab in soft tissue sarcoma in North America.”
Envafolimab (KN035) is the first subcutaneously injected single-domain antibody invented by Alphamab Oncology. This antibody inhibits PD-L1- Programmed death-ligand 1- a kind of protein that is available in a high amount in some cancer cells.
Recently, the company presented positive results from the Independent Data Monitoring Committee (IDMC) on the efficacy and safety of envafolimab from the ongoing ENVASARC pivotal trial.
According to the company’s press release, the ENVASARC pivotal trial is an open-label, multicenter, randomized, parallel, non-comparative, cohort study at around 25 top cancer centers in the U.S. that began dosing in December last year.
James Freddo, M.D., TRACON’s Chief Medical Officer commented, “We are pleased that envafolimab has demonstrated clear activity as a single agent and in combination with Yervoy even at this early 12-week time point. The increase in dose is supported by the safety profile observed to date, which we believe may further differentiate envafolimab from the current standard of care.”
BTIG analyst Robert Hazlett considers the advancement of envafolimab as of “primary interest to investors in TCON.” The analyst believes that TRACON’s drug development model is “unique” as it does not utilize contract research organizations (CRO) but instead relies “on management’s considerable drug development expertise.”
Hazlett added, “TRACON employs this drug development expertise as a licensing vehicle to bolster its own pipeline.”
The analyst pointed out that this was supported by the company’s partnership with 3D Medicines and Alphamab for the development of envafolimab and thinks that “additional partnerships are possible for TRACON over time.”
Hazlett is upbeat about the stock, with a Buy rating and a price target of $14, almost 6 times its closing price of $2.52 as of December 28. The analyst’s price target indicates a 455.56% upside potential.
When it comes to rest of the analysts on the Street, they are optimistic about the stock, with a Strong Buy consensus rating based on a unanimous 5 Buys. The average TRACON Pharmaceuticals stock prediction of $12.40 implies an upside potential of 392.1% to current levels for this stock.
Compass Therapeutics (NASDAQ: CMPX)
Compass Therapeutics, founded in 2014, is headquartered in Boston, Massachusetts. It is a clinical-stage, oncology-focused biopharmaceutical company that is in the process of developing “proprietary antibody-based therapeutics to treat multiple human diseases.”
The company currently has three product candidates, two of which are in clinical development. Compass’s lead product candidates are CTX-009 (a.k.a. ABL001), an investigational bispecific antibody that blocks both DLL4 (Delta-like ligand 4/Notch) and VEGF-A (vascular endothelial growth factor A) signaling pathways, which are critical to “angiogenesis and tumor vascularization.”
Tumor angiogenesis is the growth of new blood vessels needed by tumors to grow.
The company’s other two product candidates include CTX-471 and CTX-8371. CMPX acquired worldwide rights for CTX-009 through the acquisition of Trigr Therapeutics earlier this year.
Leerink Partners analyst Andrew Berens drew a comparison between CTX-009 and Avastin. Avastin is a brand name for Bevacizumab, a drug used in the treatment of different types of cancers and specific eye disease.
The analyst pointed out that CTX-009 has a chance “to penetrate treatment paradigms where Avastin has become established, while also potentially entering areas where Avastin has failed.”
Elaborating further, Berens noted that while Avastin is almost always used in combination with chemotherapy, CTX-009 has indicated monotherapy activity in many kinds of advanced tumors and can be also used along with chemotherapy.
As a result, the analyst’s financial model assumes CTX-009 could be a “potential multi-blockbuster opportunity.”
Initiating coverage on CMPX, Berens has rated it a Buy with a price target of $12 (310.9% upside) on the stock.
Besides Berens, the rest of the analysts on the Street are also upbeat about the stock, with a consensus rating of 6 Buys. The average Compass Therapeutics stock prediction of $10.20 implies an upside potential of 249.3% to current levels for this stock.
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Disclosure: At the time of publication, Shrilekha Pethe did not have a position in any of the securities mentioned in this article.
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