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NASDAQ Penny Stocks with Short Squeeze Potential

As a low float stock with a revenue  of €30.3 million in 2020, Biofrontera Inc. (NASDAQ: BFRI) has stirred up talk among investors this week. Listed on both the Frankfurt Exchange (B8F) and Nasdaq, BFRI is a global innovative biopharmaceutical company focused on the development and sale of dermatological drugs and medical cosmetics. On December 23rd, BFRI saw a 30% increase amidst a short squeeze frenzy. Given that the stock has a low float of 3.42 million, investors are speculating its price could go up to $20 or higher within the next 12 months – making BFRI one of the NASDAQ penny stocks to watch heading into the new year.

BFRI Stock News

Upon uplisting to NASDAQ in late October, BFRI announced an IPO of 4,140,000 warrants to purchase common stock at a PPS of $5 – exercisable upon issuance and for a period of five years after closing. As of December 20th, the company exercised 2,106,010 of the warrants previously issued, leaving an outstanding 2,033,990 warrants. This prompted a major short squeeze as an increasing number of short sellers held positions in the stock – leading to run up. Today, BFRI is number one on Fintel’s short squeeze list and is on investors’ radar given that short interest is already over 80%. 

BFRI is a prominent player in the global photodynamic therapy (PDT) market, which is projected to reach $2.3 billion by 2028. With a portfolio of FDA-approved products that treat Actinic keratosis (AK) – the most common pre-cancer that forms on skin due to chronic exposure to ultraviolet (UV) rays – the growing global demand for BFRI’s products has prompted the company’s rapid growth.

Today, the company’s lead product is made up of Ameluz – a topical prescription drug – and BF-RhodoLED – a medical device. These products have been assigned by the FDA for the lesion and field-directed treatment for AK of mild-to-moderate severity. Currently, Germany is the company’s largest EU market with about 800,000 treatments for AK annually and a PDT market that’s been doubling since 2018. BFRI has taken advantage of this growth through its strategic label expansion and captured a 62% share of the market – making Ameluz a leading product in the country.

After dominating this market, BFRI is looking to further establish its presence globally. The company’s recent NASDAQ listing has allowed it to raise the resources needed  to address other huge markets effectively. Research has shown that the future of BFRI lies in the U.S. market given that this is where the products face the greatest commercial potential. In fact, it appears that AK currently affects an estimated 58 million Americans with 13 million patients requiring annual treatments. With that in mind, the US represents a multi-billion dollar addressable market for BFRI.

The company’s market expansion strategy mainly relies on generating awareness of its products through medical recognition, data driven sales strategies and a dynamic marketing approach. Under Erica Monaco’s leadership, BFRI is penetrating the US market through three main steps. Firstly, by expanding sales of its lead product – Ameluz in combination with the BF-RhodoLED – and positioning Ameluz as the leading PDT product in terms of sales and marketing. Secondly, by increasing its sales of that for treatment of impetigo and improving the market positioning of the licensed product. Lastly, by leveraging the potential for future approvals and label extensions of the pipeline products through existing license agreements.

To reiterate its commitment to growth, BFRI recently issued a notice of allowance for two US patents. The first titled “Illumination for Photodynamic Therapy” aims at protecting the company’s innovative, pain-reducing illumination protocol for photodynamic therapy (PDT). Meanwhile, the second patent: “Illumination device for photodynamic therapy, method for treating a skin disease and method for operating an illumination device” aims to protect a number of innovations relating to the RhodoLED XL lamp. The technical improvements declared in this patent will position BFRI for better standardization and more compliance for PDT with its lead combination product. 

Monaco highlights the importance of these patents saying: “This strengthens Biofrontera’s competitiveness for our FDA-approved combination product, Ameluz together with our PDT-lamp BF-RhodoLED and its successor model RhodoLED XL in the U.S. by providing an opportunity to pursue label expansion to include more patient-friendly protocols.”

In light of its growing product portfolio and constant expansions, the company has had steady annual sales since 2016. Even though 2020 has seen lower product sales due to the pandemic, the difference was compensated by a one-time payment of €6 million from a license agreement. With this in mind, Roth Capital analyst, Jonathan Aschoff, is bullish on BFRI saying, “We are initiating coverage of BFRI with a buy rating and a 12-month price target of $20”. Aschoff’s 20 year experience as a sell-side analyst and record portfolio of awards in the biotechnology and pharmaceutical sector has increased investors’ confidence in BFRI as one of the best NASDAQ penny stocks this week. 

To date, BFRI continues to collaborate with healthcare providers to advance treatment options and patient care. In fact, the company just announced the start of a clinical study program that is focused on establishing and optimizing the US market positioning of Ameluz for photodynamic therapy (PDT) by aligning the product with the needs of patients and health care professionals. 

On December 13th, the company  announced the enrollment of its first patient in a Phase 2b clinical trial. This study is meant to evaluate the efficacy and safety of Ameluz-PDT by testing it in respect to incubation periods of one and three hours compared to placebo. Given that seven sites are participating in this study, BFRI is ensuring the collection of highly consistent data by combining clinical assessments performed by the physicians with cutting-edge, FDA-approved, AI analysis platforms that will provide a lesion count along with a severity assessment. 

Monaco believes that this study is an “important component of BFRI’s clinical development strategy that aims to expand the FDA-label of our licensed product Ameluz. She also adds that utilizing AI to further enhance results “aims at unlocking Ameluz’s full therapeutic and market potential in the US.” Going into 2022, the company has plans to undergo an additional Phase 3 clinical trial for the treatment of AK on the face and scalp with three tubes of Ameluz and the RhodoLED XL lamp. With that in mind, investors are bullish on BFRI’s potential as it positions itself for expansions and further FDA-approval.

Media Sentiment

Investor @Nasimul1978 is bullish on BFRI given its short interest. If BFRI hits this price target, it could easily be one of the best NASDAQ penny stocks to trade this week.

@SpacTraderinTra highlights how quickly BFRI can move based on its recent price action.

Technical Analysis

NASDAQ penny stocks BFRI Stock chart

BFRI is currently trading at its resistance of $13.13 with a primary support of 9.76 and a secondary support of 6.45. Accumulation is showing a steady downward trend following its major spike in November. MACD is approaching a bullish crossover while the RSI has increased to 67 after cooling off from a spike on December 21st.

These technicals highlight the increasing social media sentiment surrounding BFRI and could be a sign that a short squeeze is forming. Bullish investors with high conviction in BFRI’s potential could find an entry point if BFRI dips after testing this resistance. If BFRI continues its run, averaging up may prove worthwhile if a short squeeze forms. Although BFRI is one of the NASDAQ penny stocks with great potential, this could be a risky play considering the downside if short squeeze momentum dies off.

BFRI Stock Forecast

With a solid portfolio of FDA-approved products and a mission centered on becoming a leading U.S. dermatology company, BFRI could be a good investment. Clearly, there is a growing medical need for field therapy of AK, and with an FDA-approved product portfolio with unrivaled efficacy, BFRI could be on its way to expanding further.

In addition, the anticipated short squeeze has driven major price action recently which could generate substantial returns for short term investors. With price targets of $20 and more, BFRI is one of the Nasdaq penny stocks to watch this week.

If you have questions about BFRI stock and where it could be heading next feel free to reach out to us in our free alerts room!


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