3 Small-Cap Biotech Companies With Potential Breakthroughs in 2024

There’s a reason many biotech investors prefer to stick with large-cap stocks. Investing in small-cap biotechnology stocks is not suitable for risk-averse investors. Many are still clinical-stage companies, meaning they are neither profitable nor generating revenue.

As investors have seen in 2023, as the cost of capital becomes cheaper, bankruptcy will become a real option. Last year, two dozen biotech companies filed for bankruptcy protection. In 2024, others have joined that list.

However, if you are looking for multi-bagger stocks, you will rarely find them with large-cap biotech or pharmaceutical stocks.

While there is no “sure thing” in biotech investing, MarketBeat’s tools can help you make a more informed decision, such as using the stock screener on the biotech stocks page.

Additionally, look for companies that address a condition with a large addressable market and generate positive analyst sentiment. This is the case for the three small biotech stocks we cover.

Amylyx could get Relyvrio approved in Europe

While small-cap biotech stocks carry risks, Amylyx Pharmaceuticals Inc. NASDAQ:AMLX may be suitable for investors less inclined to risk. The company already has a commercially approved therapy. In September 2022, the U.S. Food & Drug Administration (FDA) approved Relyvrio, a leading treatment for ALS.

Since then, Amylyx has started generating revenue and has posted positive earnings for the past three quarters. However, AMLX stock is still down more than 58% over the previous 12 months. But the situation could change. The stock is up 3.9% since January 2024. One concern is short interest, which is about 11% overall and is up about 5% over the past month.

Investors may also be concerned about the slowing pace of revenue growth. However, this would change if Relyvrio is approved by the European Medicines Agency (EMA). A key step in making this happen could come in the second quarter of 2024. At that time, Amylyx will present Phase 3 studies of its PHOENIX clinical trial, which will include additional safety and efficacy data.

Puma Biotechnology is preparing for the mid-phase trials of an anti-cancer drug

If Amylyx is a “safe” pick among small-cap biotech stocks, Puma Biotechnology Inc. NASDAQ:PBYI it’s on the other side. Puma Biotechnology is a penny stock that trades for just $4.88 as of this writing.

The company specializes in researching cancer treatments. Like Amylyx, Puma Technologies has a drug on the market. Neratinib (NERLYNX) was approved by the FDA in 2017 for two breast cancer indications. This is helping the company generate steady, but not necessarily growing, revenue. Nonetheless, the company has reported three consecutive quarters of rising earnings.

But that’s not why PUMA stock is up 75% in the last 90 days. For this, you need to look at the company’s pipeline. Its lead candidate, Alisertib, has been approved to begin mid-stage studies for lung and breast cancer indications.

Short interest has increased over the last 30 days and analysts do not cover the stock extensively. However, the stock has a “buy” rating with a price target of $8 63% above its closing price on February 5.

Cassava is close to having another tool to fight Alzheimer’s disease

Cassava Sciences Inc. NASDAQ: SAVA it’s rare among small-cap biotech stocks. Despite having a market capitalization of less than $1 billion, the company has a stock price of over $20 despite not having a product on the market. That’s not something you get very often with a clinical-stage company.

The company is working on a cure for Alzheimer’s disease. In recent years, new treatments have been developed to slow the progression of this insidious disease instead of simply treating the symptoms. Cassava’s lead candidate, Simufilam, is nearing Phase 3 trials.

Simufilam is different from drugs that try to clear amyloid from the brain. Instead, it targets the altered filamin A protein found in the brains of Alzheimer’s patients. The drug is in a one-year Phase 3 study, and the company expects to report topline results by the end of 2024.

Cassava owns exclusive worldwide rights to Simufilam and its related technologies. Small-cap companies often enlist third parties to help push a drug over the finish line. The absence of this third-party report is likely a major reason why SAVA shares are up more than 280%.

Before you consider Amylyx Pharmaceuticals, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Amylyx Pharmaceuticals wasn’t on the list.

While Amylyx Pharmaceuticals currently has a “buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here