The Synairgen (LSE: SNG). Recent increases in Synairgen share prices have been unprecedented. The company’s stock has risen by over 85% in the past two weeks, pushing it to an all-time high. Investors have also seen an almost 300% return in the past 12 months. This is a remarkable growth rate in a very short time. Should I add this business to my portfolio then?
The rising Synairgen share prices
I have already explored Synairgen’s business. As a reminder, Synairgen is a drug development firm that focuses on finding new treatments for respiratory disease. The management team immediately began to deploy resources to develop a new treatment when Covid-19 spread.
This R&D effort resulted in a drug called SNG001. It is not a vaccine but a treatment that reduces the severity of symptoms in patients with critical conditions. There are many competing medications on the market. SNG001 is unique because it’s administered by inhalation rather than injection. This allows for the direct absorption of the drug within the lungs.
The Synairgen share prices explosion over the past year may be due to the new treatment progress. As far as I know, the recent rise in share prices is due to another progress update on its development. In vitro Studies revealed that SNG001 reduced the levels of Covid-19 to undetectable levels. It was also effective against the South-African and Kent variants of the virus.
This is, of course, a very positive development. Understandably, Synairgen shares have taken off.
These promising results aside, there is still much to be done. Synairgen is currently recruiting for phase 3 trials, which will conclude in October. SNG001 has been approved by FDA quickly, which could dramatically reduce the time it takes to launch.
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It is important to keep in mind that obtaining regulatory approval can be a very difficult task, even if the drug has reached phase 3. Most of the tests to date have been done in a laboratory or with a select group of people. It is possible that SNG001’s phase 3 clinical trials will not yield similar positive results.
The Synairgen share prices has been inflated by the possibility of future revenue from the drug. Any adverse outcomes will likely cause volatility. It could even plummet to pre-pandemic levels. This is a pre-revenue company.
The bottom line
If SNG001 makes it to the market, Synairgen’s share price may rise to even higher levels. However, it is not certain. Its future is uncertain. It is extremely risky at this point. This is why I will keep this business on my watchlist.