One of the more exciting yet admittedly risky types of investing is buying into cheap drug developer stocks early in their company life cycle. That’s because the world of drug development and biotech research tends to rely on big market-moving moments like regulatory approvals and clinical trial results.
Thus, these stocks, especially when trading at low prices, have the potential to rapidly increase in value. In such cases, a frenzy can quickly spike the stock, leading to a relatively short-term situation with above-average returns. However, it is important to keep in mind that just as quickly as these stocks rise they can fall as a result of disappointment or regulatory failures.
That said, if investors understand the medical potential of the drug developer they are investing in, the risk can be more palatable. As such, this article will aim to look at three cheap drug developer stocks whose products could rapidly raise their value.
Scynexis (SCYX)
As far as cheap drug developers go, Scynexis (NASDAQ:SCYX) didn’t always fall into that category. Rather, the company once traded over $100 and today is down 98% since its initial public offering in 2014. There have been several reasons for this between its recalls and deal restructurings with GSK (NYSE:GSK). Beyond this, its product pipeline tends to fly under the radar for many investors as its focus on anti-fungal treatments is often misunderstood.
Yet, due to the biology of fungi, treating them is an incredibly difficult feat that could be key to reducing mortality in immunocompromised patients and even preventing a future pandemic. Its current fungal genus that it focuses on is Candida which has several strains and can present in several regions in the body.
While the company already has two effective treatments co-developed and brought to market with GSK, its current experimental Candida treatment called SCY-247 could be a future catalyst, as it could potentially treat drug-resistant strains of the fungus, which are becoming more common.
Atai Life Sciences (ATAI)
Atai Life Sciences (NASDAQ:ATAI) is currently expanding its focus on alternative mental health therapies through an innovative approach to psychedelic compound research. Its pipeline features a range of drugs based on psychedelic substances such as ketamine, psilocybin and DMT. While these compounds are often associated with recreational use, emerging peer-reviewed studies suggest they contain considerable potential for treating mental health disorders.
The company’s current flagship drug, COMP360, is currently in Phase-3 clinical trials in collaboration with Compass Pathways (NASDAQ:CMPS). COMP360 has also shown incredible promise in treating individuals suffering from major depressive disorder who are resistant to other forms of antidepressants. Over 30% of drug-resistant patients saw remission during the 12-week trial period, suggesting breakthrough therapy potential.
Given its current trading price at a 93% discount from its initial public offering, Atai Life Sciences is one of those cheap drug developer stocks investors should not pass up. That’s because any positive developments regarding its drug candidates could significantly boost the company’s value.
Atossa Therapeutics (ATOS)
Unlike many biotechnology companies that prioritize developing treatments for existing diseases, Atossa Therapeutics (NASDAQ:ATOS) focuses on disease prevention. One of its most promising drugs, Karisma-Endoxifen, finished its most recent round of clinical trials. This innovative drug aims to reduce breast tissue density, thereby lowering the risk of developing cancer.
The results of these trials are expected soon, and a positive outcome could significantly enhance Atossa’s stock potential. Additionally, Atossa’s dedicated focus on breast cancer provides stability to its stock, as the company channels all its resources into combating this single disease. Alongside its pharmaceutical treatments, the company has also begun supporting a trial for artificial intelligence-based diagnosis of breast cancer.
Pair these innovations with a relatively flat and consistent trading pattern, combined with the potential for promising trial results, and Atossa earns a buy rating. Furthermore, its low stock price means a small investment could go a long way.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
