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Investing in biotechnology stocks is similar to the drug development process itself. That is, investors frequently experience long periods of nothing much happening, interrupted by periods of sharp movement. |
This is particularly true of small-cap biotech stocks. In many cases, these are unprofitable companies with little to no revenue. However, these are also the companies that can provide the highest return for risk-tolerant investors. |
The risk with these stocks is that the company can deliver poor clinical trial results. In some cases, promising medicine never gets through the rigorous Food & Drug Administration (FDA) process. Even if they do, there's always the risk of competitors getting to market faster. |
MarketBeat has made it easier for investors to manage the risk in biotech stocks with its new FDA Events tool that allows investors to stay on top of critical catalysts for these stocks. That information, combined with bullish analyst sentiment, can point you to stocks that may be ready for a breakout. Here are three small-cap biotech stocks to consider. |
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Precision Drug Delivery for Urologic Cancers |
UroGen Pharma Ltd. (NASDAQ: URGN) is a small-cap biotech company focused on treating urologic cancers and diseases. The company's flagship drugs, Jelymyto and Zusduri, feature UroGen's proprietary RTGel technology. This allows the drugs to stay in the urinary tract longer, which can improve their efficacy. |
UroGen stock is up approximately 43% in 2025 as the company has applied to expand the Jelymyto label to include low-grade bladder cancer. This would significantly expand the drug's addressable market to include the 6th most common cancer in the United States. Phase 3 trial results are due in the second half of 2025. |
The UroGen analyst forecasts on MarketBeat give URGN stock a $32.86 price target, a gain of over 115% from its closing price on July 18. Investors should note that much of the stock's aggressive price movement in the last three months is likely due to short covering. Over 42% of the URGN stock float is sold short, which could keep gains in check until a new catalyst exists. |
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A Comeback Play With Focused Pipeline and Partnerships |
Nektar Therapeutics (NASDAQ: NKTR) is an example of why investing in biotech stocks carries significant risk. Even after a 78% gain in 2025, NKRT stock is still down over 93% in the last five years. The stock slide is largely due to several high-profile clinical trial failures. |
However, investors are bullish about the company's latest candidate for treating systemic lupus erythematosus and ulcerative colitis, among other conditions. The company delivered positive Phase 2b clinical trial results, which also resulted in a Fast Track designation from the FDA. |
The Nektar Therapeutics analyst forecasts on MarketBeat have an $88.33 consensus price target on the stock, a 254% increase from its closing price on July 18. However, a pullback is likely with NKTR stock up over 100% in the last 30 days. |
Short interest is around 10% and has jumped over 104%. On the other hand, after a series of asset sales and cost reductions, the company has extended its runway to get its drugs through the clinical trial process. |
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Using the Promise of Gene Editing to Prevent Heart Disease |
Gene editing is one of the most tantalizing fields of study in the biotech sector. Verve Therapeutics (NASDAQ: VERV) is at the forefront of using gene editing to treat cardiovascular disease. Verve is still a clinical-stage company, so its product revenue is primarily from partnerships and equity offerings. |
However, the company was approved for a Phase 1b U.S. clinical trial for its lead candidate, VERVE-102, in early 2025. This is a CRISPR-based editing therapy designed for one-time use. The drug targets the PCSK9 gene that drives high cholesterol and atherosclerosis. |
Unlike the other two stocks on this list, VERV stock has the lowest ceiling. Analysts have a consensus price target of $14.57 on the stock. That's still a 33% upside, but that's significantly lower than the potential in the other two stocks. |
Analysts are likely considering the long-term nature of clinical trials. However, it's worth noting that short interest has dropped over 30%, which is typically a sign that bearish sentiment is waning. |
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Written by Chris Markoch |
Read this article online › |
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