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9 Biotech Penny Stocks to Buy

By Louis Navellier of InvestorPlace

Penny stock investments in the biotech sector abound right now after the recent market turmoil this summer. Healthcare and biotech penny stocks can be volatile, particularly those drug manufacturers that are not yet profitable and are waiting on an important FDA approval notice. But these stocks can be very good investments if you buy at the right time.

My quantitative screens show that a number of biotech penny stocks -- that is, cheap healthcare companies trading for less than $3 a share -- have big upside potential for September as volume picks up on Wall Street. Here are nine top penny stocks in the biotech sector to consider.

1. Athersys Inc. (ATHX)

Market Cap: $49.21 million

Athersys (ATHX) is a biopharmaceutical company engaged in the discovery and development of therapeutic products and is developing pharmaceuticals to treat indications such as obesity, certain cognitive and attention disorders, and narcolepsy or other forms of excessive daytime sleepiness. Shares of ATHX have risen significantly in the past year, gaining 157% and both meeting and exceeding analyst estimates so far in 2010.

2. Catalyst Pharmaceutical Partners (CPRX)

Market Cap: $20.78 million

Catalyst Pharmaceutical Partners (CPRX) is a development-stage biopharmaceutical company focused on the development and commercialization of prescription drugs targeting central nervous system diseases with a focus on the treatment of addiction and epilepsy. CPRX shares are up 70% year-to-date and growth potential seems promising for this small cap drug maker.

3. Rexahn Pharmaceuticals (RNN)

Market Cap: $100.66 million

Rexahn Pharmaceuticals (RNN) is a clinical stage biopharmaceutical company developing and seeking to deliver cures for cancer and disorders of the central nervous system in patients. Rexahn's three clinical stage drug candidates are Archexin, Serdaxin and Zoraxel. With RNN stock up 78% since the start of the year, shareholders may want to keep their eye on this stock and its positive track record for beating EPS estimates.

4. Inhibitex (INHX)

Market Cap: 93.2 million

Inhibitex (INHX) is a biopharmaceutical company focused on the development of differentiated anti-infective products to prevent and treat serious infections. This small-cap pharma stock is showing some good growth potential with year-to-date performance at +63%. In addition to shares surging this summer, prospective investors should note that INHX has beat earnings estimates for three of the past four quarters.

5. Cyclacel Pharmaceuticals (CYCC)

Market Cap: $53.58 million

Cyclacel Pharmaceuticals (CYCC) is a development-stage biopharmaceutical company engaged in the discovery, development and commercialization of mechanism-targeted drugs to treat human cancers and other serious disorders. With shares up 40% since January, CYCC could end up being a bargain at its current price of around $1.45 if it can manage to swing into another uptrend.

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