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Few investments have the profit potential of penny stocks, which are stocks that trade under $5 per share.
Just take a look at Marathon Patent Group Inc. (Nasdaq: MARA), which climbed an astounding 341% during the four trading days of Thanksgiving week.
Biotech penny stocks are especially attractive since successful clinical trial results for their drugs can often send their share prices soaring 300%-plus.
That’s why today we’re giving you five of the top biotech penny stocks to buy that are all reporting clinical trial results this month.
If a stock’s clinical trial results are positive, then the stock can soar. For example, the first stock on this list shot up 213% in July after the U.S. Food and Drug Administration (FDA) accepted the resubmission of its New Drug Application (NDA) for one of its drugs.
Receiving FDA approval for an NDA is typically the last major benchmark a drug must pass before it can be launched.
While these stocks have huge profit potentials, you must keep in mind that penny stocks are very speculative investments. They often see big pullbacks after making large gains.
That’s why Money Morning recommends that no more than 2% of your stock portfolio consist of such risky investments.
But if you’re willing to take the risk, some of these stocks could bring you profits of over 300% next year.
No. 5: Aeterna Zentaris Inc.
Currently trading at $2 per share, Aeterna Zentaris (Nasdaq: AEZS) makes the drug Macrilen as a potential treatment for growth hormone deficiency in adults.
On July 18, the company announced the FDA accepted its NDA for Macrilen for review. This news sent AEZS shares up from $1.02 to $3.20 in just three trading days, for a gain of 213%.
Still, before Aeterna can launch the drug Macrilen, its resubmitted NDA must be approved by the FDA. The FDA will announce if it approves Aeterna’s resubmitted NDA on Dec. 30.
Company officials are confident the company will be able to launch Macrilen sometime in the first quarter of 2018.
Up next is a stock with a drug that has three chances to pass phase 3 clinical trials…
No. 4: Axsome Therapeutics Inc.
Currently trading at a little under $5, Manhattan-based Axsome Therapeutics Inc. (Nasdaq: AXSM) makes drugs to treat depression, Alzheimer’s disease, and chronic pain.
Unlike other biotech penny stocks, shares of AXSM aren’t “all in” on just one drug’s results.
Axsome has at least three different drugs in clinical trial testing, meaning it has a greater chance of having at least one of its drugs pass. This makes shares of AXSM less risky than a biotech penny stock with only one drug in development.
Specifically, we’re going to focus on Axsome’s AXS-02 drug, which is in two separate phase 3 clinical trials to treat complex regional pain syndrome and knee osteoarthritis associated with bone marrow lesions. The results for these two clinical trials are expected in early January.
If the AXS-02 drug passes phase 3 clinical trials, the stock could jump significantly.
The company also has a second drug, AXS-05, currently in phase 3 clinical trials for the treatment of treatment-resistant depression. Those results are expected sometime in the first half of 2018, so it’s likely that AXS-02’s results will come out first.
The next company we’ll show you is the cheapest on this list…
No. 3: BioLine Rx Ltd.
Currently trading at $1.09 per share, BioLine Rx Ltd. (Nasdaq: BLRX) develops a broad range of drug candidates to treat cancer, liver fibrosis, and even dry eye syndrome.
BioLine has partnerships with major pharmaceutical companies that help bring some of these drugs to launch once they gain some initial success in clinical trials. These partners include Novartis AG (NYSE: NVS) and Merck & Co. Inc. (NYSE: MRK).
Like Axsome Therapeutics, BioLine is less risky than other biotech penny stocks that only have a single drug in development or single partner. But BioLine’s risk profile is even more diverse, with eight drugs in development and multiple major partnerships to help support it.
The company’s leading drug BL-8040 is being tested in three different phase 2 clinical trials in 2018. The first trial is for the drug’s treatment of pancreatic cancer. Partial data of the trial will be presented between Jan. 18 and 20 at the ASCO 2018 Gastrointestinal Cancers Symposium.
Next up is a company which makes a drug that could provide millions of Americans with the relief they so deserve…
No. 2: Synergy Pharmaceuticals Inc.
Synergy Pharmaceuticals Inc. (Nasdaq: SGYP) is developing a drug called Trulance, which treats chronic idiopathic constipation (CIC) and irritable bowel syndrome (IBS).
Trulance is already being used to treat CIC and is under FDA review for the treatment of IBS.
SGYP shares currently trade at $2.25
On June 7, the FDA accepted Synergy’s NDA for Trulance and will announce whether it approves it on Jan. 24.
Although Synergy Pharmaceuticals only has one drug in development, it’s likely that the FDA will approve the NDA for Trulance to treat IBS. According to a company press release, more than 2,100 patients were tested in phase 3 clinical trials, and the results met the FDA’s requirements.
And now, the last company on this list makes drugs to treat some of the most horrible neurodegenerative diseases on the planet…
No. 1: Axovant Sciences Ltd.
Currently trading at $5.20, Axovant Sciences Ltd. (Nasdaq: AXON) makes drugs to treat dementia and related neurological disorders.
In the first quarter of 2018, the company is expecting four separate phase 2 clinical trial results for two of its drugs, Intepirdine and Nelotanserin.
Axovant’s drug Intepirdine is in two phase 2 clinical trials. One is for the treatment of balance impairments in dementia, and the other is for the treatment of dementia with Lewy bodies (DLB).
DLB is a type of dementia which worsens over time, similar to Parkinson’s or Alzheimer’s diseases.
The results for Intepirdine will be announced sometime in January.
Axovant’s drug Nelotanserin is in two phase 2 clinical trials for the treatment of visual hallucinations in patients with DLB and DLB patients with REM sleep behavior disorder.
The results for Nelotanserin’s treatment of visual hallucinations in patients with DLB are expected in January. The results for the drug’s treatment of DLB patients with REM sleep behavior disorder are more ambiguously expected sometime in Q1 2018.
AXON shares are probably the riskiest play on this list. Intepirdine already failed in phase 3 clinical trials for the treatment of Alzheimer’s disease in September, which sent its shares plummeting 81.5%, from $27 to $5.
However, the company has multiple chances to get it right, and if AXON does succeed, investors could see its shares climb back near $25, for a potential gain of 400% from current levels.
The Bottom Line: Biotech penny stocks can provide some of the fastest profits in the market. You could turn a small stake of $500 – 2% of a $25,000 portfolio – into as much as $2,500 off a single catalyst that you can mark on your calendar.