Penny stocks are shares of smaller or newer companies, often in their early stages of development. These companies, however, have the potential for massive growth if their underlying business succeeds over time.
Most clinical-stage biotech companies at the drug development stage are penny stocks. Two such penny stocks that Wall Street believes are “strong buys” and expects to soar by 306% to 1,183% in 2025 are biotech companies Intellia Therapeutics (NTLA) and Cabaletta Bio (CABA).
While these bullish forecasts may appear unrealistic now, some artificial intelligence (AI) stocks have risen by 400% to 600% this year. Furthermore, biotech stocks have the potential to rally sky-high once they have one or a few successful drugs on the market.
#1. Intellia Therapeutics
Intellia Therapeutics (NTLA), valued at $1.4 billion, is a clinical-stage biotech company focused on developing treatments for genetic diseases using CRISPR/Cas9 technologies. The company has several programs in the works, focusing on in vivo (inside the body) and ex vivo (outside the body) therapies.
So far this year, Intellia stock has dipped 51.3%, compared to the S&P 500 Index’s ($SPX) gain of 26.2%.
Although the company has no approved products, it continues to advance its portfolio, with notable updates on NTLA-2001 and NTLA-2002.
Notably, NTLA-2001, its lead in vivo candidate for transthyretin amyloidosis (ATTR), has demonstrated promising results in clinical trials and has now progressed to the Phase 3 MAGNITUDE trial. The company has also begun Phase 3 study of NTLA-2002 for the treatment of hereditary angioedema (HAE) this year.
Meanwhile, NTLA-3001, which targets alpha-1 antitrypsin deficiency, is scheduled to begin Phase 1/2 trials by the end of the year.
In the third quarter, the company generated $9.1 million in collaboration revenue. The company maintains a strong cash position of $944.7 million, which is expected to fund operations until late 2026. Intellia's emphasis on expanding CRISPR applications and advancing clinical trials positions it as a leading innovator in gene editing.
Overall, Wall Street rates Intellia stock as a “strong buy.” Of the 27 analysts covering NTLA stock, 19 have a “strong buy” recommendation, two suggest it's a “moderate buy,” and six suggest a “hold.”
The analysts' average price target of $58.8 implies the stock has an upside potential of 306% over current levels. Plus, the Street-high price estimate for the stock is $128.
#2. Cabaletta Bio
Cabaletta Bio (CABA), with a market cap of $91.4 million, is a clinical-stage biotechnology company that has been developing novel cell therapies to treat autoimmune diseases. Its lead program, CABA-201, has shown promising early results in multiple Phase 1/2 trials aimed at conditions such as systemic lupus erythematosus (SLE), systemic sclerosis (SSc), and myositis.
The company believes the candidate could also be useful in a variety of other autoimmune diseases, including rheumatology and neurology. These developments make Cabaletta a notable player in the biotech sector in 2024, which is why Wall Street believes the stock has a huge upside potential.
CABA stock has fallen 91.1% year to date, compared to the broader market.
Cabaletta has expanded its trials to 40 sites in the U.S. and is actively recruiting patients. The European Medicines Agency (EMA) has approved a Clinical Trial Application (CTA) for CABA-201 in lupus, allowing it to enter European markets.
The company reported a cash position of $183 million in Q3 2024, which it believes is sufficient to fund operations through the first half of 2026. This strong financial foundation allows CABA to fund its growing clinical pipeline and international expansion.
Cabaletta Bio has piqued investors' interest with its novel approach to autoimmune disease treatment and impressive clinical trial results. However, as with any clinical-stage biotech, there are currently no approved products. As a result, risks include potential regulatory hurdles and clinical trial failures, among others. Long-term investors may see potential in its cutting-edge therapies and growing clinical footprint. However, clinical-stage biotech stocks are typically suitable for investors with a high-risk tolerance.
Overall, Wall Street rates Cabaletta stock as a “strong buy.” Of the 12 analysts covering the stock, all of them rate it a “strong buy.”
CABA stock is trading at around $1.87 per share now. The analysts' average price target of $24.70 implies the stock has an upside potential of more than 1,183% over the next 12 months.
