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Funds are buying these 7 biotech stocks under 10 dollars with buy ratings

By James Dennin for Kapitall

Biotech stocks have had a troubled year . Part of the problem is the huge gains that they made last year, and another part stems from a complete reshaping of the pharmaceutical industry aimed at cost-cutting.

That's because a lot of companies hit patent walls in the last two years for many of their best-selling products-and Obamacare statutes are pressuring them to offer more low-cost drugs. As companies have tried to contend with the new landscape, they've ushered in an unprecedented wave of consolidatation.

In 1988, there were 44 companies registered with the pharmaceutical industry's largest lobbying group. Today that number's down to 11 . And the uncertainty has dampened enthusiasm for biotech plays, which can sometimes be risky bets on the future of FDA approval.

The Dow Jones US Biotechnology Index was down 20% at a mid-April low, although there are new signs that the drop has made biotech shares more attractive again.

We decided to screen for companies in the biotech industry that are also experiencing spikes in institutional purchasing from groups like pensions or hedge funds. Since there were a lot of companies that fit that description, we narrowed the screen further to stocks priced between $5 and $10 dollars. We also screened out all the companies that had a 'hold' rating or lower, according to Finviz.

That left us with 7 healthcare, biotechnology, and medical device stocks that are experiencing a surge in institutional purchasing this year. Do you see a healthy future for the biotech industry? Use the list below to begin your analysis and let us know what you think in the comments.

Click on the interactive chart to view data over time.

1. AcelRx Pharmaceuticals, Inc. ( ACRX , Earnings , Analysts , Financials ): AcelRx Pharmaceuticals, Inc., a development stage specialty pharmaceutical company, engages in the development and commercialization of therapies for the treatment of acute and breakthrough pain in the United States and internationally. Market cap at $422.33M, most recent closing price at $9.71.

Net institutional purchases in the current quarter at 3.2M shares, which represents about 16.99% of the company's float of 18.84M shares.

Major holders include BlackRock Fund Advisors at a 2.72% stake.

2. Alimera Sciences, Inc. ( ALIM , Earnings , Analysts , Financials ): Engages in the research, development, and commercialization of prescription ophthalmic pharmaceuticals. Market cap at $190.02M, most recent closing price at $5.19.

Net institutional purchases in the current quarter at 2.8M shares, which represents about 18.94% of the company's float of 14.78M shares.

Major holders include Polaris Venture Management Co IV LLC at a 7.81% stake.

3. Ampio Pharmaceuticals, Inc. ( AMPE , Earnings , Analysts , Financials ): Develops drugs for metabolic, eye, kidney, inflammation, and central nervous system diseases. Market cap at $382.68M, most recent closing price at $7.25.

Net institutional purchases in the current quarter at 2.4M shares, which represents about 7.75% of the company's float of 30.98M shares.

Major holders include BlackRock Institutional Trust Company, N.A. at a 2.78% stake.

4. BioCryst Pharmaceuticals, Inc. ( BCRX , Earnings , Analysts , Financials ): Designs, optimizes, and develops small-molecule pharmaceuticals that block key enzymes involved in infectious diseases, cancer, and inflammatory diseases. Market cap at $469.13M, most recent closing price at $7.71.

Net institutional purchases in the current quarter at 4.7M shares, which represents about 10.63% of the company's float of 44.20M shares.

Major holders include BlackRock Institutional Trust Company, N.A. at a 1.18% stake.

5. BioScrip Inc. ( BIOS , Earnings , Analysts , Financials ): Provides pharmacy and home health services in the United States. Market cap at $495.15M, most recent closing price at $6.99.

Net institutional purchases in the current quarter at 4.7M shares, which represents about 8.05% of the company's float of 58.41M shares.

Major holders include Gilder, Gagnon, Howe & Co. at a 4.52% stake.

6. Cardiome Pharma Corp. ( CRME , Earnings , Analysts , Financials ): Engages in developing proprietary drugs to treat or prevent cardiovascular and other diseases. Market cap at $140.59M, most recent closing price at $8.41.

Net institutional purchases in the current quarter at 3.7M shares, which represents about 29.11% of the company's float of 12.71M shares.

Major holders include Westfield Capital Management Company at a 1.82% stake.

7. Dyax Corp. ( DYAX , Earnings , Analysts , Financials ): Engages in the discovery, development, and commercialization of novel biotherapeutics for unmet medical needs in the United States. Market cap at $877.27M, most recent closing price at $6.73.

Net institutional purchases in the current quarter at 14.5M shares, which represents about 11.75% of the company's float of 123.37M shares.

Major holders include Federated Investors, Inc. at a 10.78% stake.

(List compiled by James Dennin. Monthly returns sourced from Zacks Investment Research. Institutional data sourced from Fidelity. All other data sourced from Finviz.)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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