Don’t Miss Out, Buy These 2 Hot Biotech Stocks Under $3

Most of my day is taken up by researching, investing in and writing about the lucrative but extremely volatile biotech sector. It is not an area for the timid, the faint of heart or for investors that like to keep volatility low within their investment portfolios. However, when you purchase a stake in a small, speculative and promising concern that delivers successful trial results the returns can be outstanding.

This fact was brought home once again when a recent Biotech Gems recommendation (shameless plug) Tracon Pharmaceuticals (NASDAQ: TCON) rallied over 35% on the 17th. The trigger for the rally was an announcement by the company that a patient with an aggressive form of uterine cancer is experiencing an ongoing complete response after being treated with the company’s investigational TRC105 in combination with blockbuster drug Avastin (bevacizumab). The patient received this investigational combination under a “compassionate use” exception.

Although this potentially lucrative new compound is still in early stage trials, the investment case for Tracon has strengthened as the company has some upcoming catalysts that could lead to even more capital appreciation. By year end, this drug “TRC105” should have initiated a Phase II trial for this type of uterine cancer. The company also plans to apply for Orphan Drug Status for this indication and soft tissue sarcoma by the end of the year with the FDA.

Obviously most early stage trials do not deliver this sort of impressive result and most drugs fail somewhere along their rigorous journey to approval. This is why it is crucial that investors must be widely diversified within this portion of their portfolio dedicated to “risk on” and high beta small biotech stocks. Because, when a trial at a company you own blows up in your face – and it will sooner or later, trust me on this, having a widely diversified portfolio will mitigate the fallout.

I have long dubbed this philosophy “Shotgun Investing” and it involves taking myriad smaller stakes in attractive but speculative concerns in a variety of treatment areas that comprise biotech/biopharma research at the moment. That being said, here are a couple of these smaller concerns that are in my portfolio and have been on the move lately. Both should have significant further capital appreciation potential if upcoming catalysts prove to be positive. Both stocks currently go for approximately $3.00 a share.