The Synairgen share price shot up by over 400% on 20 July after positive results from a trial of a potential Covid-19 treatment. The current price – of around 220p – is the highest that shares in the drug discovery and development company have traded at since 2005.
Potential investors will no doubt be asking if they have missed the chance to profit from Synairgen stock. To answer that question, let us first consider what the treatment was and what the successful trial results mean.
Interferon-beta (IFN-beta) coordinates immune responses. There is evidence that decreased production of INF-beta in the lungs makes people more susceptible to severe lung disease with viral infections. There is also evidence that viruses, including the coronavirus, have mechanisms to suppress INF-beta production.
Synairgen developed an inhaled formulation of INF-beta, called SNG001. SNG001 is already proven to be well tolerated in asthma and COPD patients. The results reported by Synairgen on 20 July concern 100 patients hospitalised with Covid-19. In addition to other therapy, they were randomised to receive either a placebo or SNG001. Patients treated with SNG001 were less likely to develop severe disease, and twice as likely to recover.
Synairgen share price rise
The methodology of the trial was sound but the sample size was small. Nevertheless, the results were encouraging and made it more likely that SNG001 will be approved for use in the treatment of lung disease with Covid-19 infections. This is why the Synairgen share price rose by over 400%. If formal approval is granted it could boost the share price further. Also, results are awaited from another part of the same trial: 120 Covid-19 patients treated in the community with SNG001 are still under investigation.
It is the community patient part of the trial that I find more compelling. It aims to discover if SNG001 prevents Covid-19 patients from deteriorating to the point that they need hospital care. A positive result here would substantially expand the size of the market for SGN001 – since relatively few Covid-19 patients end up in the hospital – and could drive the share price higher.
But investors do need to bear something in mind with SNG001. AstraZeneca licensed it for use in all respiratory indications in 2014. Synairgen received $7.25m up-front with $225m worth of potential milestone payments plus tiered royalties up to the mid-teens depending on future sales. AstraZeneca was looking at SNG001 in the main as a treatment for asthma and COPD. These are chronic respiratory conditions that affect around 1 in 13 and 1 in 15.7 people, respectively.
The highest the Synairgen share price got on the back of the AstraZeneca deal was 86p. Eventually, AstraZeneca returned all rights to SNG001 back to Synairgen, after disappointing progress in trials for the treatment of asthma. The Synairgen stock price eventually retreated to under 10p.
Synairgen is likely looking for another licence agreement for SNG001, predicated on its use as a treatment for Covid-19. Will they get a better deal than the original AstraZeneca one? What I am getting at is that the reaction to last week’s news might have been over the top. But, if the reaction to future positive news is as exuberant, then the Synairgen share price could move even higher.
The post Synairgen share price: Is it too late for investors to profit after the 400% price rise? appeared first on The Motley Fool UK.
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James J. McCombie has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020