5 Buy-Rated Small-Cap Biotech Stocks to Add to Your Watchlist

In addition to playing a significant role in the fight against the deadly COVID-19 virus, biotech companies are now focusing on developing viable drugs and therapies to treat other fatal diseases by integrating advanced technologies. Furthermore, given rising demand for healthcare from an aging population, the industry is well-positioned to grow significantly. 

Investor optimism in biotech stocks is evidenced by the iShares Nasdaq Biotechnology ETF’s (IBB) 6.1% gains over the past month versus the benchmark S&P 500’s 3.6% returns.

While many large-cap biotech stocks are trading at expensive valuations now and could witness a price pullback in the near term, the industry’s solid growth prospects and the ongoinglow-interest-rate environment should drive the performances of small-cap stocks Vanda Pharmaceuticals Inc. (VNDA), Anika Therapeutics, Inc. (ANIK), Tarsus Pharmaceuticals, Inc. (TARS), BioDelivery Sciences International, Inc. (BDSI), and Champions Oncology, Inc. (CSBR). We think these companies’ impressive product portfolios and strong balance sheets make their stocks worth betting on now.

Click here to checkout our Healthcare Sector Report for 2021

Vanda Pharmaceuticals Inc. (VNDA)

VNDA is a Washington, D.C.-based biopharmaceutical company that focuses on developing and commercializing a portfolio of clinical-stage, small molecule product candidates for central nervous system disorders. The company’s famous products are HETLIOZ and Fanapt. It has a $926.38 million market capitalization.

VNDA’s total revenues increased 9.2% year-over-year to $67.90 million in its  fiscal second quarter, ended June 30, 2021. The company’s income from operations came in at $12.37 million for the quarter, representing a 34.8% rise from the prior-year period. While its net income increased 10.8% year-over-year to $9.65 million, its EPS increased 6.3% to $0.17. As of June 30, 2021, VNDA had $57.24 million in cash and cash equivalents.

Analysts expect VNDA’s EPS to increase 63.6% year-over-year to $0.18 in the current quarter, ending September 30, 2021. A $74.25 million consensus revenue estimate for the current quarter reflects a 23.1% increase year-over-year. VNDA surpassed the Street’s EPS estimates in each of the four trailing quarters. The stock’s EPS is expected to grow at a 76% rate per annum over the next five years. The stock has gained 59.3% in price over the past year to close yesterday’s trading session at $16.65.

VNDA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

VNDA has an A grade for Value, and a B grade for Quality. In the 506-stock Biotech industry, it is ranked #9.

To see additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for VNDA, click here.

Anika Therapeutics, Inc. (ANIK)

With a $624.52 million market cap, ANIK in Bedford, Mass., is a joint preservation company that creates and delivers meaningful advancements in early intervention orthopedic care and develops minimally invasive products. It also offers a line of surgical implant and instrumentation solutions that surgeons use to repair and reconstruct damaged ligaments and tendons.

On July 01, 2021, ANIK announced the limited launch and first surgery performed with its WristMotion Total Wrist Arthroplasty (TWA) System to alleviate pain and restore function, mobility, and rotational freedom to an arthritic wrist joint. This major advancement in total wrist replacement will likely gain widespread recognition across the industry.

In its  fiscal second quarter, ended June 30, 2021, ANIK’s revenue increased 24.3% year-over-year to $38.15 million. The company’s adjusted gross profit was  $26.65 million, up 37% from the prior-year period. Its income from operations came in at $9.18 million for the quarter, versus  a  $9.54 million loss in the prior-year period. ANIK’s adjusted net income was  $1.36 million, up 11% from the prior-year period. Its adjusted EPS stood at $0.09. The company had $14.22 million in cash and cash equivalents as of June 30, 2021.

A $36.32 million  consensus revenue estimate for the current quarter, ending September 30, 2021, indicates a 14.6% rise from the year-ago period. Moreover, ANIK has surpassed consensus EPS estimates in three of the four trailing quarters. ANIK’s EPS is expected to grow at a 10% rate per annum over the next five years.

The stock has gained 11.2% in price over the past six months and 5.6% over the past month. ANIK closed yesterday’s trading session at $42.49.

ANIK’s POWR Ratings reflect this promising outlook. The stock has an overall B rating , which translates to Buy. In addition, ANIK has a B grade for Growth, Value, and Quality. Moreover, it is ranked #22 in the Biotech  industry.

In addition to the POWR Rating grades we’ve highlighted, one can see ANIK’s ratings for Stability, Sentiment, and Momentum here.

Tarsus Pharmaceuticals, Inc. (TARS)

With a $541.10 million market capitalization, TARS is a clinical-stage biopharmaceutical company that develops and commercializes novel therapeutic candidates for ophthalmic conditions. Its lead product candidate is TP-03, a novel therapeutic in Phase IIb/III for the treatment of blepharitis caused by the infestation of Demodex mites and to treat meibomian gland disease. TARS is based in Irvine, Calif.

On July 24, 2021, TARS announced the new, successful data from its Saturn-1 Phase 2b/3 pivotal trial and Titan real-world collarette prevalence study reflecting the potential solid clinical utility of TP-03 for the treatment of Demodex blepharitis in all-comer eye care patients. These compelling results for TARS’ TP-03 are likely to gain widespread recognition across the industry.

TARS’ income from operations for the fiscal second quarter, ended June 30, 2021, came in at $7.28 million, versus a  $3.26 million loss. The company’s net income came in at $6.35 million, versus a $3.25 million net loss from the prior-year period. Its EPS was  $0.29, compared to a $1.23 loss in the year-ago period. As of June 30, 2021, the company had $176.74 million in cash and cash equivalents. TARS has gained 17% in price over the past month and ended yesterday’s trading session at $26.30.

TARS’ POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.

The stock has an A grade for Sentiment, and a B grade for Value and Quality. Click here to see the additional ratings for TARS (Growth, Momentum, and Stability).

TARS is ranked #17 in the Biotech  industry.

BioDelivery Sciences International, Inc. (BDSI)

BDSI is a Raleigh, N.C.-based specialty pharmaceutical company that develops and commercializes pharmaceutical products for chronic conditions, aimed principally at the areas of pain management and addiction. The company offers BELBUCA, BUNAVAIL, and ONSOLIS. It has a $380.59 million market capitalization.

On August 4, 2021, BDSI entered an agreement with Dr. Reddy’s Laboratories Limited, an Indian multinational pharmaceutical company, to acquire the U.S. and Canadian rights to ELYXYB, the only FDA-approved ready-to-use oral solution for the acute treatment of migraine, with or without aura, in adults. This agreement enables BDSI to diversify its product portfolio by expanding into the dynamic migraine and neurology market.

For its fiscal second quarter, ended June 30, 2021, BDSI’s total revenues increased 13.3% year-over-year to $41.44 million. The company’s income from operations came in at $11.38 million for the quarter, representing a 287.5% rise from the prior-year period. BDSI’s non-GAAP net income was $12.50 million, up 29.7% from the prior-year period. Its EPS came in at $0.09, representing an 800% improvement from the year-ago period. As of June 30, 2021, the company had $119.85 million in cash and cash equivalents.

Analysts expect the stock’s EPS to improve 11.8% year-over-year to $44.08 million in the current quarter, ending September 30, 2021. It surpassed the Street’s EPS estimates in three of the four trailing quarters. BDSI’s EPS is expected to grow at a 25% rate  over the next five years. BDSI has gained 8.1% over the past three months to end yesterday’s trading session at $3.86.

It’s no surprise that BDSI has an overall B rating, which translates to Buy in our POWR Ratings system. In addition, the stock has an A grade for Value, Sentiment, and Quality. It is ranked #14 in the Biotech industry.

Click here to see additional POWR Ratings in Growth, Momentum, and Stability for BDSI.

Champions Oncology, Inc. (CSBR)

With a $139.52 million market capitalization, CSBR develops and sells technology solutions and products to personalize the development and use of oncology drugs. The Hackensack, N.J.-based  company markets its products through the internet, word of mouth, and a sales force.

On July 26, 2021, CSBR announced an expansion of its corporate strategy by entering the drug discovery and development space. With the help of Lumin Bioinformatics’ Lumin Analytic Engine, CSBR’s computational approach leverages a more complete data set derived from tumor models with a more authentic tumor cell biology and heterogeneity. CSBR expects to witness promising growth in the coming months.

CSBR’s oncology services revenue for the full year, ended April 30, 2021, increased 27.8% year-over-year to $41.04 million. The company’s income from operations came in at $366,000, compared to a $1.92 million loss from the prior-year period. CSBR’s net income was  $362,000, versus a  $2.09 million loss in the prior-year period. Its EPS came in at $0.02, versus a $0.18 loss per share in the year-ago period. As of April 30, 2021, the company had $4.69 million in cash. CSBR has gained 5.5% in price over the past three months and ended yesterday’s trading session at $10.39.

CSBR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.

The stock has a B grade for Growth and Sentiment. We also have graded CSBR for Value, Quality, Momentum, and Stability. Click here to access all CSBR ratings.

It is ranked #16 in the Biotech industry.

Click here to checkout our Healthcare Sector Report for 2021

VNDA shares were trading at $16.61 per share on Friday afternoon, down $0.04 (-0.24%). Year-to-date, VNDA has gained 26.41%, versus a 22.02% rise in the benchmark S&P 500 index during the same period.

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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