Pharmaceutical and biomedicine stocks have been riding a Covid-19 vaccine and treatment high over the past 12 to 18 months, and the Synairgen [SNG.L] share price is no exception.
Prior to the coronavirus pandemic, not many investors or traders would have heard of Synairgen, a drug development and discovery company that was spun out of research at the University of Southampton back in 2003. But the Synairgen share price has rocketed by more than 2,700% since the end of 2019, through to 165.3p at the close on 24 September.
Synairgen share price rallies on SNG001 success
The stock hit an all-time high of 258.46p in August 2020 following the publication of promising results from the phase two trial of SNG001, a drug designed to be inhaled to treat lower respiratory tract illnesses caused by viruses.
The Synairgen share price has since deflated slightly. This is to be expected, as pharma stocks tend to fluctuate based on these type of announcements. The Synairgen share price fell to a year-to-date low of 95.4p in mid-May, before rising again on 24 May after the company revealed laboratory results had shown SNG001 could be effective against emerging variants of Covid-19.
“As expected, these data confirm that SNG001 is a broad-spectrum antiviral product now also demonstrating applicability against SARS-CoV-2 variants,” Richard Marsden, CEO of Synairgen, said in a press release at the time.
“Alongside vaccines, our lines of defence against this pandemic and future outbreaks rely in part on access to effective antivirals with broad-spectrum activity against a range of viruses and variants.”
Future success rests on final trial results
Synairgen’s phase three trial of SNG001 is ongoing, but the company’s interim results for the six months to the end of June, to be held on 30 September, should provide some insight into how things are progressing.
Given the nature of Synairgen’s business and the fact SNG001 is still in development, investors and traders shouldn’t expect much in terms of revenue.
The company ended fiscal 2020 with an operating loss of £17.74m, compared with a loss of £4.82m in 2019. This can be attributed to research and development expenditure ballooning from £3.46m to £15.5m.
The company raised an initial £14m in equity in March 2020 to kick off its clinical trials, before raising a further £87.1m in October to fund the phase three trial of its respiratory drug, as well as manufacturing and regulatory activities, and to strengthen its balance sheet. It ended the year with a cash balance of £75m versus £2.5m at the end of 2019.
The most recent financials look robust enough, but the company could need more cash over the next six to 12 months if it continues to invest in drug development. The interim results should also provide Synairgen with an opportunity to shed light on ramping up commercialisation and manufacturing plans for SNG001.
As investors and traders await news of the phase three results, there is the caveat that even if further trials are successful, there can be no guarantee if, or when, SNG001 will receive regulatory approval.
Synairgen currently has just one price target, according to MarketBeat. Issued back in January, Numis Securities has set the Synairgen share price a target of 990p, implying a 498.9% upside from the 24 September closing price.
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