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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


(ATHX) - Get Athersys Inc. Report

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) - Get Catalyst Pharmaceuticals Inc. Report

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

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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


( 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) - Get Cyclacel Pharmaceuticals Inc. Report

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.

6. Luna Innovations (LUNA)

Market Cap: $24.14 million

Luna Innovations

(LUNA) - Get Luna Innovations Incorporated Report

is engaged in research, development and commercializing of technologies in two primary areas of focus: test and measurement, sensing, and instrumentation products and health care products. Luna shares have gained an impressive 196.8% since the end of Aug. 2009 despite the dip share prices have taken this summer. Don't count out the long-term earning potential for this Roanoke, Va.-based small-cap.

7. Neuralstem (CUR)

Market Cap: $90.72 million


(CUR) - Get Neuralstem, Inc. Report

is focused on developing and commercializing of treatments for central nervous system disease based on transplanting human neural stem cells and small molecule drugs. The future could be bright as the company continues to work into their clinical trials to treat Lou Gehrig's disease; shares of this Rockland, Md.-based Neuralstem have gone up in value 80% since this time last year.

8. AVI BioPharma (AVII)

Market Cap: $246.311 million

AVI BioPharma

( AVII) is a biopharmaceutical company specializing in the discovery and development of ribonucleic acid (RNA) based drugs targeting a range of diseases. AVII shares have been on an impressive climb this summer and shareholders have already enjoyed 54% gains since June. The Washington-based company has also beat earnings estimates during two of the past three quarters and is getting the attention of savvy investors looking to add some stability to their portfolio.

9. DUSA Pharmaceuticals (DUSA)

Market Cap: $55.44 million

DUSA Pharmaceuticals

(DUSA) - Get Davis Select U.S. Equity ETF Report

is a vertically integrated dermatology company that is developing and marketing Levulan photodynamic therapy and other products for common skin conditions. With 99% increases in DUSA share value from one year ago, investors who haven't heard of this small-cap stock will likely be taking notice of the high-value and low financial commitment involved in DUSA stock.

As of this writing, Louis Navellier did not own a position in any of the stocks named here.

One of Wall Street's renowned growth investors, Louis Navellier is the editor of four investing newsletters: Emerging Growth (formerly known as MPT Review), Blue Chip Growth, Quantum Growth and Global Growth. His longest-running publication, Emerging Growth, has a track record of beating the market nearly 3 to 1. Navellier is the author of a BusinessWeek bestseller, "The Little Book That Makes You Rich," and the chairman and founder of Navellier & Associates, Inc.