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Apr. 8, 202422 min read

Top Biotech Penny Stocks to Watch Out for in April 2024

Tim BohenAvatar
Written by Tim Bohen

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.

Top Biotech Penny Stock Picks

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

Stock Ticker Company Performance (YTD)
NASDAQ: VNDA Vanda Pharmaceuticals Inc + 7.85%
AMEX: IBIO Ibio Inc + 53.62%
NASDAQ: MESO Mesoblast Limited +163.89%
NASDAQ: CYTO Altamira Therapeutics Ltd – 43.35%
NASDAQ: XTLB XTL Biopharmaceuticals Ltd + 232.65%

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!

What Are Biotech Penny Stocks?

Biotech penny stocks are low-priced shares of small biotech companies. They operate in the biotech sector, focusing on developing therapies, drugs, and treatments for various medical conditions.

They’re not your typical blue-chip stocks; they’re more like the wild west of the stock market. But if you’re up for the challenge, they can offer some serious upside.

How Do Biotech Penny Stocks Work?

News plays a significant role in the success or failure of a biotech stock. When a biotech company releases positive trial results or gains FDA approval, its stock can soar. But remember, these stocks are volatile. One piece of bad news — or equally likely, a new share offering — can send them plummeting.

Benefits of Investing in Biotech Penny Stocks

Investing in biotech penny stocks can be a rollercoaster, but it’s one that can pay off big. I’ve seen some of my students make substantial returns in this sector. But like any investment, it comes with risks and rewards.

Potential for Higher Returns

The potential for high returns is one of the most attractive aspects of biotech penny stocks. When a small biotech company makes a breakthrough, its share prices can skyrocket. But keep in mind, the opposite is also true. High rewards come with high risks.

Innovative Breakthroughs

Biotech companies are at the forefront of medical innovation. From cancer treatments to vaccines, they’re working on solving some of the world’s most pressing health issues. Investing in these companies gives you a chance to be part of something bigger.

 

Market Volatility Opportunities

The biotech sector is known for its volatility. For traders like me who thrive on quick moves, this is where the action is. But remember, volatility cuts both ways. You can make money fast, but you can lose it just as quickly.

Diversification

Adding biotech penny stocks to your portfolio can offer diversification. But don’t go all-in; these should only be a small part of a well-rounded investment strategy.

It makes sense to check out other sectors — like the emergent sector of penny stocks that Robinhood traders are locked in on. Robinhood has gained popularity for its user-friendly interface and zero-commission trades. However, its user-friendly approach has led to many traders treating it like a video game. These traders sometimes converge on the hottest Robinhood penny stocks — and when they do, these stocks can really take off.

Biotech Investing for Beginners

If you’re new to the world of biotech investing, start with research. Look into companies, read up on their pipelines, and understand the risks involved. And don’t forget to use the right trading tools. I’ve been teaching beginners how to navigate this complex sector, and the right tools can make all the difference.

5 Biotech Penny Stocks to Watch in April 2024

My top 5 biotech penny stocks to watch for April 2024 are:

  • NASDAQ: VNDA — Vanda Pharmaceuticals Inc — The FDA Approval Bipolar Play
  • AMEX: IBIO — Ibio Inc — The AI Obesity Drug Penny Stock
  • NASDAQ: MESO — Mesoblast Limited — The FDA Approval Pain Play
  • NASDAQ: CYTO — Altamira Therapeutics Ltd — The Vaccine Biotech Penny Stock
  • NASDAQ: XTLB — XTL Biopharmaceuticals Ltd — The AI/Nasdaq Compliance Crappy Penny Stock

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 Vanda Pharmaceuticals Inc (NASDAQ: VNDA) 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 Vanda Pharmaceuticals Inc (NASDAQ: VNDA), Ibio Inc (AMEX: IBIO), and Mesoblast Limited (NASDAQ: MESO).

  • 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!

Best Biotech Penny Stocks for April 2024

These are the top 5 biotech penny stocks to watch in April 2024 …

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: Vanda Pharmaceuticals Inc (NASDAQ: VNDA) — The FDA Approval Bipolar Play

My first biotech stock pick is Vanda Pharmaceuticals Inc (NASDAQ: VNDA).

The price spiked 50% on April 3 after an announcement from the afternoon before. The FDA approved the company’s treatment of bipolar disorder.

FDA news is a great catalyst for a penny stock.

Always remember that these stocks are trading cheap for a reason: The companies are trash.

Occasionally we’ll see a penny stock announce some bullish news and the price spikes. Like VNDA’s announcement of FDA approval. That’s our sign to start planning a trade. But don’t fall for the story … The price will crash eventually.

We use popular trade patterns to play the short term volatility. And VNDA’s 50% spike on April 3 is considered a small move in our niche.

In fact, there’s a chance that VNDA pushes higher in the next few days … 

On the chart below, notice the news catalyst that started the spike. More importantly, the price is consolidating around support at $5. That’s a hint the price could rally.

Every candle represents 10 minutes:

VNDA chart multi-day, 10-minute candles Source: StocksToTrade

The chart shows a breakout level of $6.

Keep an eye on the price action. A push past $6 with high trading volume could result in a massive spike upward.

#2: Ibio Inc (AMEX: IBIO) — The AI Obesity Drug Penny Stock

My second biotech stock pick is Ibio Inc (AMEX: IBIO).

IBIO spiked 330% in two days starting March 27. It’s another cheap biotech stock that announced some bullish news:

  • A $15 million private placement.
  • Ibio and AstralBio announced a business collaboration using AI to develop antibodies for obesity.

The stock is sinking a bit at the moment. But there are at least three reasons I’m still watching this ticker:

  1. It’s a volatile biotech stock. Biotechs have been hot ever since the market switched directions in early 2023. It’s a strong sector right now for traders.
  2. The news has legs. There’s clear value added and an AI partnership. As if the biotech sector wasn’t enough, this stock is also in the AI sector.
  3. The float is well below our goal of 10 million shares or fewer. StocksToTrade shows the float has 3.4 million shares. The low supply helps prices spike higher when demand increases.

Here’s a chart of the IBIO spike thus far, every candle represents 15 minutes:

IBIO chart multi-day, 15-minute candles. Source: StocksToTrade

We want the price to push back toward the breakout level at $5 before we plan a trade. Watch for obvious support and consolidation after a spike upward.

#3: Mesoblast Limited (NASDAQ: MESO) — The FDA Approval Pain Play

My third biotech stock pick is Mesoblast Limited (NASDAQ: MESO).

MESO announced the FDA recognized its phase 3 trial of remestemcel-L. The treatment aims to help leukemia patients that respond improperly to more conventional steroid treatments.

You can see the price react on the chart below. It spiked 230% following the news. Every candle represents 15 minutes:

MESO chart multi-day, 15-minute candles. Source: StocksToTrade

MESO is still trading near the highs. And there’s clear support at the $5.50 level. It’s possible the price squeezes higher after this period of consolidation.

It’s already on an eight-day run. Some of the stocks in our niche can run for weeks.

We still have to trade with a plan:

Taking random positions will give you random results.

Instead, approach these setups with a calculated trade process.

#4: Altamira Therapeutics Ltd (NASDAQ: CYTO) — The Vaccine Biotech Penny Stock

My fourth biotech stock pick is Altamira Therapeutics Ltd (NASDAQ: CYTO).

On March 25, CYTO announced a new business collaboration with Univercells Group to develop mRNA vaccines. The stock spiked 100% intraday.

The price action since then has been less than stellar … Shares sank almost 50% in value. But I’m still watching the stock because it has a fantastic history of running.

Here’s the 760% spike in November 2023:

CYTO chart multi-month, 1-day candles Source: StocksToTrade

Here’s the 490% spike in December 2020:

CYTO chart multi-month, 1-day candles Source: StocksToTrade

StocksToTrade shows that CYTO only has 344k shares in the float.

That’s even smaller than IBIO’s float of 3.4 million shares.

We know that it can spike with volatile news thanks to the mRNA news from March 25 and all the previous spikes. All we have to do now is wait for the next hyped-up press release to spike the price.

#5: XTL Biopharmaceuticals Ltd (NASDAQ: XTLB) — The AI/Nasdaq Compliance Crappy Penny Stock

My fifth biotech stock pick is XTL Biopharmaceuticals Ltd (NASDAQ: XTLB).

There are two main aspects of this play that you need to know about … 

  1. On March 20 the company announced an acquisition of the AI company The Social Proxy Ltd. and prices spiked 160% that day.
  2. On April 2 we learned the stock regained Nasdaq compliance by trading above $1 for 10 consecutive days. This is a crappy company that managed to satisfy Nasdaq listing requirements.

There’s a bullish catalyst mixed with the reminder that this is a crap company struggling to stay listed. Keep that in mind as you trade these plays.

There’s a chart of the stock’s run since March 20 below. It shows a lot of good consolidation day after day, every candle represents 15 minutes:

XTLB chart multi-day, 15-minute candles Source: StocksToTrade

The breakout level is $5.

Get ready for another leg up … This prolonged sideways momentum is a great sign for future bullish price action.

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.

Risks of Investing in Biotech Penny Stocks

Investing in biotech penny stocks is not without its risks. I’ve had my share of losses in this sector, and it’s crucial to understand what you’re getting into.

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 can go under.

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. But it’s not just about numbers and data; it’s also about people. Understand the management team behind the company and their track record.

Let’s talk platforms. 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.

Lastly, don’t underestimate the power of a ticker symbol. It’s more than just an identifier; it’s a quick way to access a wealth of information about a company. So, do your due diligence and make informed decisions.

Research the Company

Before you invest in any biotech penny stock, research the company. 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 market trends, breakthrough therapies, 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.

See the Stocks I’m Watching

This is a sector-specific watchlist. I put a few of these together each month.

But it’s even more important to keep an eye on general movers and shakers. Every week I put together a list of the hottest stocks in the market, regardless of sector.

And I include a detailed analysis of each pick. That way you can follow my thought process and learn to pick stocks yourself.

Sign up for my NO-COST weekly watchlist here!

Conclusion

Penny stock trading is a great way to build your account as a new trader. Biotech penny stocks are some of the hottest movers on the market — but this volatility can cut both ways.

The right catalyst can supercharge stock runs. That’s great news for prepared traders. But you have to know what to watch … like trial results or FDA approvals.

Key Considerations:

  • A lot of biotech penny stocks are shady. Risk in biotech penny stocks can be heightened due to limited company information and unsavory promotion. When the price gets up high enough, nine times out of 10 these companies will do new share offerings, tanking share price.
  • There’s a possibility for big gains. I trade biotech penny stocks because they can go for big gains. A disciplined trading plan can cut down on risk while capturing some of those gains.
  • These companies are often young. Some biotech penny stocks are newer companies, and can dramatically shift their market trajectory and valuation.

There are a ton of ways to build day trading careers… But all of them start with the basics.

Before you even think about becoming profitable, you’ll need to build a solid foundation. That’s what I help my students do every day — scanning the market, outlining trading plans, and answering any questions that come up.

You can check out the NO-COST webinar here for a closer look at how profitable traders go about preparing for the trading day!

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.