Investing in penny stocks with strong business fundamentals is a good strategy to generate game-changing wealth over time. Generally, stocks with share prices of less than $5 are considered penny stocks.
Big tech giants such as Apple (AAPL) and Amazon (AMZN) were once penny stocks that have delivered market-thumping returns to shareholders in the last two decades. Here’s another billionaire-backed penny stock you can consider buying right now.
An Overview of AbCellera Biologics
AbCellera Biologics (ABCL), valued at a market cap of $811 million, develops therapeutic antibodies. Its antibody discovery platform searches, decodes, and analyzes natural immune systems to find antibodies that can be developed to prevent and treat diseases. The company’s pre-clinical products include ABCL635 for metabolic and endocrine conditions and ABCL575 for atopic dermatitis.
According to SEC filings, Baker Bros. Advisors, an investment management firm, acquired 4.6 million shares of AbCellera Biologics in Q1 of 2024, raising their stake in the company to 27.5 million shares. Baker Bros. is managed by billionaire brothers Julian and Felix.
Currently, the biotech stock is down 96% from all-time highs, making it attractive to contrarian investors with a sizeable risk appetite.
AbCellera and Lilly Expand Partnership
AbCellera Biologics has partnered with healthcare giants, including Eli Lilly (LLY), Pfizer (PFE), and Merck (MRK). In fact, it has 13 clinical-stage candidates - and this number could move much higher, as its partners have initiated another 15 programs.
Typically, AbCellera’s partners fund the clinical trials, while the biotech company retains the rights with respect to milestone payments and royalties if the drug is eventually approved by regulators. This business model has helped AbCellera initiate multiple clinical-stage programs, while spending just $162 million on research and development in the last four quarters.
Last week, AbCellera announced that it expanded its existing collaboration with Eli Lilly to discover antibodies for programs in immunology, cardiovascular disease, and neuroscience. The expanded partnership builds on the successful research collaboration established four years back, including eight programs for targets selected by Eli Lilly.
Under the agreement, AbCellera has advanced each of the eight programs, resulting in the emergency use authorization by the U.S. FDA for two COVID-19 antibody therapies co-developed by the companies.
“Lilly has been a terrific partner and is one of the most admired and innovative pharmaceutical companies in the world," said Carl Hansen, Ph.D., founder and CEO of AbCellera. "We are excited to deepen our partnership and potentially increase our impact on patients across multiple therapeutic areas.” Under the expanded agreement, Eli Lilly has the right to develop and commercialize the antibodies.
What's the Target Price for ABCL Stock?
AbCellera Biologics ended Q1 of 2024 with 90 programs armed with downstream revenue potential. While downstream sales have decelerated significantly, they should gain pace in the upcoming decades, given that 13 antibodies are in clinical-stage testing.
AbCellera's operating expenses in Q1 totaled $77 million, and it posted a net loss of $41 million. With $725 million in cash, AbCellera has enough liquidity, as it also has access to $240 million of government funds.
Each of the nine analysts covering ABCL stock has a “strong buy” recommendation.
The mean target price for the penny stock is $14.38, indicating an expected upside potential of 421% from current levels.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
