Are you paying attention to biotech stocks; penny stocks in particular? If you haven’t looked at the sector yet, then it might be time to. Let me be clear, I’m not talking about the broader healthcare industry. Biotech stocks in particular are on fire right now. Just take a look at the NASDAQ Biotech ETF (IBB). Not only did it reach new all-time highs earlier this week, but the ETF was also closing back in on those levels once again on Friday.
I highlight the “healthcare vs biotech” topic because if you look at the Healthcare ETF (XLV), you’ll see an almost direct opposite trend over the last few days. They say that the trend is your friend and right now that’s pointing to this sector. But there’s more, and no, it’s not a set of steak knives. What I’m talking about is the broader market; the S&P, for instance.
Vaccine uncertainty combined with a lack of stimulus has shaken the markets a bit. If you look at the S&P 500 ETF (SPY), you’ll see that the last few days have experienced selling pressure. Granted, the SPY reached new, all-time highs on Wednesday but since then it has slowly dipped.
On the opposite side of this coin is the small-cap niche in the market. While the SPY dropped since reaching those all-time highs, small-caps have not. Look at the benchmark for small-cap stocks in general, the Russell ETF (IWM). Over the last 3 days, the trend is sideways more than anything else.Are Small Cap Biotech Stocks The Focus For December?
Furthermore, the IWM continues hovering right around those all-time high levels. Would small-cap biotech stocks be something to watch right now? You be the judge but with the latest surge in things like mushroom stocks, the biotech space is gaining big attention for more than just COVID vaccines. Will these be on your biotech stocks to buy list or will they sell-off this month?Biotech Penny Stocks To Watch
- Catabasis Pharmaceuticals Inc. (CATB Stock Report)
- Ampio Pharmaceuticals Inc. (AMPE Stock Report)
- Oncternal Therapeutics Inc. (ONCT Stock Report)
Catabasis Pharmaceuticals Inc. first hit our scan during the first few days of December. One of the things we pointed out was the company’s Phase 3 PolarisDMD trial result of its edasalonexent drug trial for Duchenne muscular dystrophy. It missed its primary endpoint and, as a result, the company said it was stopping activities related to the development of edasalonexent.
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Catabasis’ plan was to work with advisors to evaluate alternatives. The company engaged Ladenburg Thalmann & Co. Inc. to act as its strategic financial advisor. Not much had been outlined since. However, what we do know is that the potential strategic options could include a merger or licensing deal among others.
This week an 8-K was filed showing something interesting. Catabasis approved a workforce reduction of roughly 48% as part of its restructuring. The company expects the restructuring to result in approximately $2.8 million in reduced annualized workforce expenses once the plan is fully implemented. While no one ever likes seeing a decrease in workforce due to events like this, it may be in the best interest of shareholders as it reduces costs dramatically for the company.
Aside from that, the thing to pay attention to is the recent uptick in trading activity. Friday’s action saw CATB stock trade more than 5 million shares in one of its highest volume days of the month so far. The big question: will this continue into next week?Biotech Penny Stocks To Buy [or sell]: Ampio Pharmaceuticals Inc.
Ampio Pharmaceuticals Inc. is another one of the biotech penny stocks trading higher on Friday. Initially, it gapped up during early morning trading prior to the open. AMPE stock reached highs of $1.54 and slid back to $1.23 by the opening bell. However, throughout the session, the stock ended up rallying strongly. AMPE stock reached highs of $1.50 during the regular session on significantly higher trading volume than seen Thursday. This also marked a new 52-week high for the penny stocks.
The fourth quarter has been a big one for Ampio thanks to several key developments you should note. Much of this had to do with its Ampion treatment for COVID-19 patients with respiratory distress. The phase 1 clinical trial for inhaled Ampion started toward the end of October. This lead drug is backed by a patent portfolio with intellectual property protection extending through 2032.
This month the company completed its enrollment of COVID-19 patients in the trial. Clearance by the Safety Monitoring Committee found Ampion to be safe and well-tolerated after reviewing results from the first three treatment groups. The trial now goes forward to completing enrollment of the remaining 34 patients at the speed of recruitment.
Beyond COVID, the company has other indications for Ampion. What’s more is that this week, the company entered into collaborative research agreements to dive into new indications for Ampion. These include rare inflammatory pediatric diseases and kidney disease research. However, in light of the recent attention seen with COVID-related headlines, AMPE stock could be a bigger focus for those hunting for names related to coronavirus speculation right now.Biotech Penny Stocks To Buy [or sell]: Oncternal Therapeutics
Oncternal Therapeutics Inc. is another decent gainer in December. the company is a biopharmaceutical company focused on producing various treatments for cancer. These treatments are produced to solve unmet needs in the oncology sector. We discussed this company earlier in the week citing positive interim data from a Phase 1/2 trial of its lymphoma treatment, Cirmtuzumab and Ibrutinib. The company presented this data at the American Society of Hematology meeting on Monday morning.
James Breitmeyer , M.D., Ph.D., Oncternal’s President and CEO also explained, “We are in active dialogue with FDA on pivotal study design in order to define the path to approval in MCL.”
On Wednesday, the company stated that it increased its bought deal offer to around $75 million, or 16,666,667 common shares. The goal of this fundraising method is to help offer new capital for research and development as well as the various approval processes for its pipeline.
With the recent developments and interim data presented, ONCT stock has hit the radar of countless traders. Friday afternoon the penny stock ended up graduating out of the sub-$5 level. Will that stay the case heading into next week?