Top Biotech Penny Stocks to Watch Out for in August 2025

Biotech penny stocks are low-priced shares in small pharma and drug development and treatment companies. It’s normal for a biotech penny stock to spike after good study results or drug pipeline news. But this volatility cuts both ways — these sketchy stocks often dilute their float to raise cash, hurting their share value in the process.

5 Biotech Penny Stocks to Watch in August 2025

My top 5 biotech penny stocks to watch for August 2025 are:

• NASDAQ: BTAI — BioXcel Therapeutics Inc — The Phase 3 Study Biotech Spiker
• NASDAQ: TNXP — Tonix Pharmaceuticals Holding Corp — The Government Contract Biotech Stock
• NASDAQ: SNGX — Soligenix, Inc. Common Stock — The Rare Disease Breakthrough Biotech Penny Stock
• NASDAQ: PBM — Psyence Biomedical Ltd — The Psychedelic Stock With an Exciting Update
• NASDAQ: FDMT — 4D Molecular Therapeutics Inc — Positive Study Results and a $25 Price Target

Don’t get too excited – biotech stocks are NOTORIOUS for diluting immediately after their runs …

There is no such thing as a sure thing. That goes double for the biotech sector.

These aren’t stock “picks.” They’re stocks I’m watching to see if they fit my patterns.

That’s what trading is. Don’t burn yourself out on low-potential plays. Be safe, and wait for the truly Grade-A setups …

There’s no guarantee that any of my watchlist picks will be tradeable. But if something happens, smart traders should be ready.

Here’s some background info on biotech penny stocks:

• What is the most promising biotech penny stock?

A stock with a lot of volatility like BioXcel Therapeutics Inc (NASDAQ: BTAI) is a good bet for the most promising biotech penny stock. Remember, we’re traders, not investors. We’re watching the stocks on this list for short-term moves, not predicting which of these stocks will still be around in 2030.

• What are the top 3 biotech penny stocks to buy now?

My top 3 biotech penny stocks to buy now (as long as their price action is strong) are BioXcel Therapeutics Inc (NASDAQ: BTAI), Tonix Pharmaceuticals Holding Corp (NASDAQ: TNXP), and Soligenix, Inc. Common Stock (NASDAQ: SNGX).

• Which biotech penny stocks have a “Strong Buy” analyst rating?

Analysts don’t give any biotech penny stocks “strong buy” ratings. These stocks are sketchy and unstable, and should never be investment targets. Always trade with a plan.

Now, let’s get to the top biotech penny stocks to watch this month!

Top Biotech Penny Stock Picks

My top biotech penny stock picks for August — rated on chart pattern, price action history, and news — include the following:

Stock Ticker	Company	Performance (YTD)
NASDAQ: BTAI	BioXcel Therapeutics Inc
NASDAQ: TNXP	Tonix Pharmaceuticals Holding Corp
NASDAQ: SNGX	Soligenix, Inc. Common Stock
NASDAQ: PBM	Psyence Biomedical Ltd
NASDAQ: FDMT	4D Molecular Therapeutics Inc

The biotech penny stocks on this list are some of the wildest movers on the market …

Trading any of these stocks should be approached with a clear strategy and an understanding of the risks involved. I don’t trade until I see a setup I like.

Jump ahead to get to my trading plans for these top biotech penny stocks!

Best Biotech Penny Stocks for August 2025

These are the top 5 biotech penny stocks to watch in August 2025 …

No, that doesn’t mean that I’ll trade them. Learn the patterns that work best for you — you might see a chance to use them with these stocks!

#1: BioXcel Therapeutics Inc (NASDAQ: BTAI) — The Phase 3 Study Biotech Spiker

My first biotech penny stock pick is BioXcel Therapeutics Inc (NASDAQ: BTAI).

BTAI exploded in August after announcing the final patient visit in its pivotal SERENITY At-Home Phase 3 trial. The trial is a major step toward expanding the label for IGALMI, its AI-developed agitation treatment.

This wasn’t just a lab update. This has real market potential.

The trial targets at-home use for patients with bipolar disorder and schizophrenia — a game-changer if approved.

Read more about BTAI momentum in August.

Plus, StocksToTrade shows the float is just 5 million shares. That’s fuel for volatility, and traders lit the match after the news dropped.

Now all eyes are on topline data expected this month, which could spark another major move — especially with biotech and AI themes heating up.

Why I Like It

This is a classic low-float biotech setup with a clear near-term catalyst.

The chart is still consolidating below $4, but any confirmed breakout could trigger another wave of momentum.

Trade Potential:

• Bullish Scenario: A clean move above $4 on volume could push toward $6–$7 — key levels from the last spike in February.
• Bearish Scenario: Failure to hold $3 could set up a dip back to $3 or $2.50 — a potential bounce zone.

The key catalyst to look for is the Phase 3 data drop expected this month.

BTAI checks every box for a biotech runner: low float, news cycle, and market buzz. Keep it on radar.

#2: Tonix Pharmaceuticals Holding Corp (NASDAQ: TNXP) — The Government Contract Biotech Stock

My second biotech penny stock pick is Tonix Pharmaceuticals Holding Corp (NASDAQ: TNXP).

TNXP surged 570%* in 2025 — and the fire’s still burning.

There’s a major catalyst at play here: A five-year contract with the U.S. Department of Defense, awarding up to $34 million to develop TNX-4200, an oral, broad-spectrum antiviral for biological threat environments.

The deal came via the Defense Threat Reduction Agency (DTRA) — a big win in the government-backed biotech race.

The float is just 7 million shares, making this a classic low-float mover with explosive upside potential.

Beyond the DTRA deal, Tonix is also in the spotlight after being added to the Russell 2000® and 3000® indexes, which often brings fresh institutional interest and volume.

And there’s another major catalyst ahead — the company is awaiting an FDA decision on TNX-102 SL for fibromyalgia by August 15, 2025. It already has Fast Track designation, raising the stakes for a potential approval.

Read more: TNXP’s Race Against Time.

Why I Like It

This is a biotech stock with multiple catalysts, a tiny float, government funding, and chart momentum heading into a key breakout.

Trade Potential:

• Bullish Scenario: A breakout above $50 could launch a squeeze into the $60–$70 zone, especially if positive FDA news drops.
• Bearish Scenario: Failure to break $50 could lead to a pullback toward $35 — an area of prior support and volume consolidation.

TNXP is a biotech battleground stock. And when the catalysts align, it can fly. With DoD funding, FDA momentum, and index inclusion all in play, this is one to watch closely.

#3: Soligenix, Inc. Common Stock (NASDAQ: SNGX) — The Rare Disease Breakthrough Biotech Penny Stock

My third biotech penny stock pick is Soligenix, Inc. Common Stock (NASDAQ: SNGX).

SNGX exploded after announcing positive Phase 2a results for SGX945, its lead candidate for Behçet’s Disease — a rare, chronic inflammatory disorder with limited treatment options.

The study showed that just 4 weeks of SGX945 treatment delivered comparable outcomes to 8 weeks of apremilast (Otezla®) — a drug already approved for the same condition.

That’s a huge signal of biological efficacy, especially in a rare disease market where the bar for approval is lower and unmet need is high.

With only 3 million shares in the float, the stock rocketed 330%* after the news was announced. 

Now it’s consolidating near $3, setting up a potential breakout over $5.

Soligenix Stock Shoots Up: Time to Dive In?

Why I Like It

SNGX fits the classic biotech penny stock setup: low float, high-impact news, and early-stage validation in a rare disease space.

If SGX945 advances into later-phase trials or receives regulatory interest, the upside could be massive.

Trade Potential:

• Bullish Scenario: A confirmed breakout above $5 could send SNGX into a massive squeeze.
• Bearish Scenario: A breakdown under $3 could trigger profit-taking, with $2 as the next support.

I’m looking for continued data analysis or a Phase 3 trial announcement that could add fuel to the move.

Rare disease plays with strong early data and tiny floats are a recipe for big moves. SNGX just showed that it can run …

Now it’s about volume, narrative, and timing. Keep it on radar.

#4: Psyence Biomedical Ltd (NASDAQ: PBM) — The Psychedelic Stock With an Exciting Update

My fourth biotech penny stock pick is Psyence Biomedical Ltd (NASDAQ: PBM).

PBM surged 120%* in July before pulling back hard — losing nearly 80% of it’s value into August.

But with volume returning and a tiny 706k share float, the setup is getting interesting again.

On August 4, the company released a corporate update with bullish developments:

• $11.4 million in cash and no debt.
• Nasdaq compliance regained after a reverse split.
• Clinical trial progress — three sites activated and expanded eligibility.
• PsyLabs alliance strengthened with GMP-aligned Ibogaine production.

PBM is pushing deeper into the $3.3 billion projected psychedelics market, with a focus on naturally derived psychedelic therapies for mental health, including PTSD, anxiety, and palliative care.

Its lead candidate, PEX010, is currently in Phase IIb trials for anxiety, depression, and adjustment disorder in patients with terminal diagnoses.

Read more: Psyence Biomedical’s Fresh Breakthrough.

Why I Like It

This is a low-float psychedelic play that’s down big — but not dead.

With fresh news, clinical progress, and no debt, this could become a high-risk, high-reward bounce setup.

Trade Potential:

• Bullish Scenario: A push above $2.25–$2.50 on volume could trigger a reversal rally back toward $4+ — especially if sentiment heats up in the sector.
• Bearish Scenario: Failure to hold $1.50 could drag the stock toward its post-spike lows.

This is a beaten-down stock with a strong cash position, clinical momentum, and one of the smallest floats in the market. That’s a recipe for fireworks — but timing is everything.

#5: 4D Molecular Therapeutics Inc (NASDAQ: FDMT) — Positive Study Results and a $25 Price Target

My fifth biotech penny stock pick is 4D Molecular Therapeutics Inc (NASDAQ: FDMT).FDMT surged 48% in August after releasing 60-week data from its SPECTRA Phase 2a trial for 4D-150, targeting diabetic macular edema (DME) — a major vision-loss condition.

4D Molecular: Time to Buy After Recent Surge?

The treatment showed strong durability, dose-dependent activity, and zero intraocular inflammation.

Most impressive: The Phase 3 dose cut treatment burden by 78% versus standard care. That’s a massive edge in a space dominated by repeat injections.

Adding to the momentum, the company has regulatory alignment with both the EMA and FDA, which means only one Phase 3 trial may be needed for approval.

The market liked it. And so do analysts: Chardan Capital reiterated a $25 price target, and the stock is now consolidating above $5, with a clear breakout level at $6.50.

Why I Like It

FDMT has real data, institutional coverage, and a lead therapy moving closer to Phase 3.

The gene therapy angle and growing interest in ophthalmic biotech only add more fuel.

Trade Potential:

• Bullish Scenario: A breakout over $6.50 on volume could trigger another breakout over $7. There’s resistance at that level from earlier in 2025.
• Bearish Scenario: A drop below $5 could signal fading interest and lead to a fade back toward $4.

FDMT is one of the few small-cap biotechs with positive late-stage data and regulatory momentum.

Plus, Wall Street’s price target is 5x above the current levels. If volume returns, this could be a huge runner in the gene therapy space.

*Past performance does not indicate future results

Biotech Stocks Under $5

The allure of hot sector stocks, especially when they’re also penny stocks, is undeniable. These stocks present a unique blend of opportunity and volatility. The biotech industry is booming, with advancements and applications spreading across various sectors, from drug development to gene editing, making biotech stocks a magnet for investors looking for the next big breakthrough. The gains here can be proportionately greater than those from more established stocks, mainly because even minor positive developments or clinical trial results can send their prices soaring.

However, it’s crucial to approach these opportunities with a clear strategy and an understanding of the risks involved. The volatility of penny stocks, combined with the speculative nature of biotech ventures, means that while the potential for rapid gains is significant, the risk of losses is equally high. Conduct thorough research, looking beyond the hype. And never invest in these stocks — only trade them.

Remember, the key to success in trading biotech stocks under $5 is not just about jumping on every opportunity but being selective and strategic. It’s about leveraging the explosive potential of the biotech sector while managing risk meticulously. By focusing on companies with the potential to lead in their niche, traders can capitalize on the disproportionate gains that these penny stocks offer, all while keeping their investment strategy tight and cutting losses quickly.

Upcoming Biotech Companies

Keep an eye on the news for upcoming biotech companies. These are often the ones that have the most potential for high returns. But be cautious; not every new biotech company will be a winner. Always do your due diligence before adding any stock to your watchlist.

It’s also a good idea to keep tabs on the overall market. Monitoring the market isn’t just about checking prices; it’s about understanding trends and identifying potential breakout stocks. This proactive approach can give you a leg up in making profitable trades. If you’re looking for a curated list to help you get started, check out these stocks to watch.

What Are Biotech Penny Stocks?

Biotech penny stocks are shares of small biotechnology companies that trade at relatively low prices, typically under $5 per share. These companies are often in the early stages of development, focusing on innovative medical treatments and technologies. The low price point makes these stocks accessible to many traders, but it also means they come with significant risks.

These companies are heavily involved in the discovery and development of new medicines and therapies for diseases and disorders. For example, they may be working on groundbreaking treatments for conditions like Alzheimer’s disease or cancer. Due to the speculative nature of these ventures, biotech penny stocks can exhibit high volatility, offering both substantial upside potential and considerable downside risk.

The allure of biotech penny stocks lies in their growth potential. A successful product candidate can lead to massive gains if it reaches commercialization. However, the path to success is fraught with challenges, including rigorous testing and regulatory approvals. Understanding the inherent risks and rewards is crucial for anyone considering trading in this sector.

Biotech stocks can be highly rewarding, but they’re not the only option in the healthcare sector. Diversifying your investments can help you manage risk better. Healthcare stocks offer a broader range of opportunities and can be a great addition to your portfolio. For a deeper look into the potential of healthcare stocks, check out my watchlist on Healthcare Stocks.

How Do Biotech Penny Stocks Work?

Biotech penny stocks operate in the high-stakes arena of medical research and development. These stocks represent companies that are often in the process of testing new drugs or medical devices. The success or failure of these tests can dramatically affect the stock price. Positive results in clinical trials can lead to significant price spikes, while negative outcomes can cause sharp declines.

Risks of Investing in Biotech Penny Stocks

First of all — never invest in any penny stock. You only want to be trading these stocks… here’s why…

You’ll need to understand the ins and outs of penny stocks if you’re gonna survive in this niche. Penny stocks can offer significant growth potential at a lower cost — but you NEED to know the warning signs that tell you when things are about to go sideways.

Check out my overall Penny Stocks Watchist for a better idea of what I look for — and the dangers I guard against…

Higher Failure Rates

Biotech companies often have higher failure rates, especially when it comes to clinical trials. If a drug doesn’t get the approval or shows poor trial results, share prices can tank.

Regulatory Uncertainties

The biotech sector is heavily regulated. Companies need to go through multiple phases of clinical trials before they can bring a product to market. Any hiccup in this process can be disastrous for the stock price.

Limited Financial Resources

Many biotech penny stocks have limited financial resources. They’re often dependent on investor funding, and if the money dries up, the company will dilute its shares.

Top Tips for Buying Biotech Penny Stocks

When it comes to biotech penny stocks, you’ve got to be on your A-game. You need to analyze everything from clinical trial results to market cap.

Here are my top tips beyond the numbers and data!

• People make a company go. Understand the management team behind the company and their track record.
• You need a reliable trading platform that gives you quick access to the market. Your account should offer robust securities to protect your investment. And speaking of investments, always consider the value of the stock against its potential growth and revenue. Don’t just listen to brokers who might be pushing their own picks.
• Patients are the end-users of biotech products, so pay attention to patient response during clinical trials. This could be a good indicator of the stock’s future value. But remember, you’re not a medical expert. Always read the disclaimer before making any moves.
• In the biotech world, every “cell” counts, literally. Sales growth can be a good indicator, but it’s not everything. Look at the overall revenue and how it’s trending.
• Just like in any penny stock, don’t underestimate the power of a ticker symbol. Traders
• And of course — do your due diligence and make informed decisions!

Research the Company

Before you invest in biotech penny stocks, research the pharmaceutical companies behind the stocks. Look at their pipeline, check their financials, and read up on their management team. The more information you have, the better your chances of making a profitable trade.

Understand How You Are Going to Trade

Are you looking for quick gains, or are you in it for the long haul? Understanding your trading strategy will help you pick the right stocks.

Look into the Biotech Industry

Understanding the biotech industry as a whole will give you a better perspective on individual stocks. Keep an eye on growth trends, breakthrough therapies on “big-name” diseases like Alzheimer’s disease, and upcoming IPOs.

Never Believe in OTC/Pink Sheet-Listed Penny Stocks

Over-the-counter (OTC) and pink sheet stocks are not subject to the same regulatory oversight as stocks listed on major exchanges. They’re riskier and more susceptible to manipulation.

Trade Promotional Pumps Carefully

Be wary of stocks that are being heavily promoted in the media or online forums. These are often pump-and-dump schemes designed to inflate the stock price.

Only Trade Penny Stocks with Volume

Look for stocks with high trading volume. Low volume stocks are more susceptible to price manipulation.

Understand the Hit and Run Approach

In the world of biotech penny stocks, it’s often better to be a trader than an investor. Take your profits and move on to the next opportunity.

How To Make Money in Biotech Stocks

The key to making money in biotech stocks is research, timing, and a solid trading plan. I’ve been trading these stocks for years, and while they’re risky, they offer some of the best opportunities for high returns. But remember, always trade with money you can afford to lose.

Once you’ve gained some experience, you might start thinking about day trading as more than just a hobby. It’s a significant step, requiring a different level of commitment and strategy. If you’re considering this path, you’ll need to understand the nuances that come with making day trading your primary income source. For a comprehensive guide on how to make this transition, here’s how to day trade for a living.

Have you traded biotech penny stocks? Write “I always trade with a plan” in the comments!

FAQs

How Do I Invest in Biotech Stocks?

Investing in biotech stocks starts with research. Look for companies with promising pipelines, strong financials, and experienced management teams.

Why Do Investors Buy Penny Stocks?

Investors buy penny stocks for the potential of high returns. These low-priced stocks offer an opportunity for significant profits, but they come with higher risks.

How To Avoid Penny Stock Risk?

The best way to avoid penny stock risk is through research and due diligence. Understand the company you’re investing in, the risks involved, and have a clear trading strategy.