We recently published a list of The 10 Best New Penny Stocks to Buy Now. In this article, we take a look at how Acelyrin, Inc. (NASDAQ:SLRN) compares to the other new penny stocks.
Fears of a recession in the US are growing, sending stock markets tumbling and investors worldwide on edge. The US Bureau of Labor Statistics (BLS) released worse-than-expected employment figures for July. It showed that only 114,000 new jobs were created in July, compared to the 175,000 forecast. This data alarmed investors, as did disappointing recent earnings from tech giants. As a result, US manufacturing hit an eight-month low and the unemployment rate hit a three-year high of 4.3% due to a decline in new orders.
Monday was the worst day for Wall Street in nearly two years, as major indexes fell on worries about a U.S. recession. The average of the 500 largest publicly traded companies plunged 3% to 5,186.33. However, the 500 large companies are still up more than 10% for the year.
Chris Weston of US online stockbroker Pepperstone said global markets were “at a really important inflection point”. “What really matters now is whether asset managers and traders feel that sentiment has become too pessimistic, or whether this deleveraging and risk aversion translates into even greater volatility and an even deeper decline.”
Analysts’ opinions on the severity of the problem vary. James St Aubin, chief investment officer at Ocean Park Asset Management, said “we are experiencing the effects of the curse of high expectations,” while Art Hogan, chief market strategist at B. Riley Wealth, said markets may be overreacting. He explained:
“This is not a Category 3 hurricane, but we are seeing markets reacting to signs that the economy is returning to normal after the recovery in the first half of the year.” “Markets sometimes overreact and investors use anything as an excuse to take profits.”
The 500 largest companies have gained more than 15 percent this year despite recent setbacks.
Market concerns may be compounded by the possibility that fewer initial public offerings (IPOs) may take place this year. However, 154 IPOs were listed on the U.S. stock exchange in 2023, which was 85% less than the record-breaking 1,035 IPOs in 2021 and 15% less than the 181 IPOs in 2022, 82.5% less than in 2021. A total of 6,203 IPOs took place between 2000 and 2024. The year 2009 had the fewest, with only 62. With a total of 1035 IPOs, 2021 set an all-time record, surpassing the previous high of 480 in 2020.
George Chan, EY Global IPO Leader, says:
“In 2024, participants in the IPO market are entering uncharted territory. IPO candidates are being influenced by the recent shift in investor preference toward proven profitability in a changing interest rate landscape, and are doing so while facing the complex dynamics of a heightened geopolitical climate and the hype surrounding AI. To succeed in this changing environment, IPO candidates must remain flexible and be ready to seize the right moment for their IPO debut.”
Recent data from EY Global IPO Trends Q2 2024 shows that the US IPO markets saw a strong start in 2024, boosting global proceeds. Asia Pacific, on the other hand, had a poor start, impacting overall global volumes. In the first half of 2024, the industrial (21%), technology (19%) and materials (11%) markets led global IPO issuances, with India dominating in deal volume. Meanwhile, the technology (21%), health and life sciences (17%) and industrial (15%) markets topped the IPO proceeds rankings, with the US attracting the lion’s share of these sectors. As home to many of the world’s leading technology and healthcare companies, the US has a strong startup ecosystem. Driven by favorable market conditions, expectations of interest rate cuts and innovations in artificial intelligence (AI), IPO transaction values have soared in both markets. In addition, a few large deals helped U.S. IPO proceeds increase by 67% in the first half of 2024.
Methodology:
In this article, we first used a stock screener to list all stocks with high institutional ownership trading below $5 (at the time of writing). We limited our selection to stocks that went public in the past year. From the resulting dataset, we selected 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 920 hedge funds in Q1 2024 to measure hedge fund sentiment toward stocks. We used the stocks’ market capitalization as a decision criterion in case two or more stocks have the same number of hedge funds invested in them.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research shows that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (See more details here)
Close-up of a scientist in a laboratory conducting tests on a humanized immunoglobulin G1.
Acelyrin, Inc. (NASDAQ:SLRN)
Number of hedge fund investors: 24
The American biopharmaceutical company Acelyrin, Inc. (NASDAQ:SLRN) is dedicated to the development and commercialization of advanced drugs against autoimmune diseases. Its lead candidate, Izokibep, is an interleukin-17A inhibitor that is effective against hidradenitis suppurativa (HS) and psoriatic arthritis (PsA). It is a monoclonal antibody for the treatment of hidradenitis suppurativa, a chronic inflammatory skin disease.
Months after a $540 million IPO, Acelyrin’s Phase 3 clinical trial of izokibep failed, triggering an 81% drop in the company’s stock price in September 2023. However, recent trial results show growth after previous setbacks.
SRLN is one of the best new penny stocks to buy now. SRLN’s IPO is set for May 5, 2023. In the first quarter of 2024, 24 of the 920 hedge funds studied by Insider Monkey were among the company’s investors, which is in line with the previous quarter.
Acelyrin has a strong financial position. The company ended the first quarter of 2024 with $678.5 million in cash and equivalents, a cash growth of 134.63% over the same quarter last year, which is expected to fund operations through 2026. Acelyrin, Inc. (NASDAQ:SLRN) reported first quarter fiscal 2024 earnings per share of -$0.36, beating the consensus forecast of -$0.93.
In a recent Phase 2/3 study in PsA, izokibep met the primary goal of ACR50 at week 16 with substantial statistical significance. This is notable considering the increased disease burden compared to previous studies, as the weekly and biweekly 160 mg doses showed better responses in higher hurdle endpoints such as ACR70 and PASI100. Although there were errors in the conduct of the early studies, long-term data in HS also suggest a potential path to market.
Acelyrin’s strategy, supported by the performance of comparable IL-17 inhibitors such as Cosentyx, is designed to differentiate izokibep in the highly competitive PsA market. Effective strategies, such as emphasizing improved safety and efficacy features, are critical for entering new markets. After a 10% increase on the PsA news, the company’s value turned positive, suggesting expansion potential.
The company’s second Phase 3 study for the treatment of izokibep HS has completed enrollment of 258 patients and topline results have been accelerated to Q3 2024 due to faster than expected enrollment. The update on lonigutamab in Phase 1/2 could be beneficial as it will provide more dosing information for a future study in thyroid eye disease. An initial assessment of SLRN-517 is underway. In addition, the company has appointed Mina Kim, who served as Chief Legal and Administrative Officer, to the Board of Directors and appointed her as CEO.
However, risks include that the effectiveness of clinical programs may fall short of expectations and that safety concerns may arise in the Company’s preclinical or clinical projects.
Nevertheless, analysts are optimistic about the stock and rate it as a “Buy” with an average price target of $12.8 and a potential upside of 148.30%.
In summary, Acelyrin, Inc. (NASDAQ: SLRN) has upside growth potential due to its recent positive test results and strong financial position.
General SLRN 1st place on our list of the best new penny stocks to buy. While we recognize SLRN’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than SLRN but trades at less than 5x earnings, read our report on the cheapest AI stock.
READ MORE: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these 10 stocks in June.
Disclosure: None. This article was originally published on Insider Monkey.
