It seems the beast that is the coronavirus will not go away. In the UK, there is a new Covid-19 strain that has led to the government placing London and the South-East into a Tier 4 lockdown. Although Pfizer has released its vaccine for distribution, it is clear is that other drug firms need to follow.
Synairgen (LSE: SNG) shares have recently come onto my radar. The stock started 2020 at 6p and, as I write, is trading at 148p. That is a return of 2360%.
With these stellar gains, I think Synairgen shares could double from current levels in 2021. Let’s consider the investment case.
What does Synairgen do?
Synairgen is an AIM-listed drug discovery and development company. It is a university spin-off firm that was founded in 2003 by three University of Southampton professors.
Synairgen develops drugs for respiratory diseases including asthma and more recently, Covid-19. While the company is much smaller that the likes of GlaxoSmithKline, its treatment for the coronavirus, I believe, is likely to be game changing.
SNG001 – Covid-19 treatment
The reason why Synairgen shares are now on the radar for many investors is due to its SNG001 drug, which has been proven effective in treating Covid-19.
It is still early days for SNG001 to be rolled out to the masses. The treatment is undergoing Phase II trails, which involves using the drug on a sample of patients and assessing the results. While there is no guarantee of SNG001 being successful in the subsequent phases, I am optimistic of the results generated by Synairgen so far.
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Synairgen shares have potential
In July 2020, Synairgen shares shot up by 420% in one day. This was after it released positive results from a trial of SNG001 in hospitalised Covid-19 patients.
This study involved 101 patients from nine specialist hospital sites in the UK. It showed that those who received SNG001 were twice as likely to recover to the point where their daily activities were not compromised through having been infected by Covid-19. In addition, the treatment significantly reduced breathlessness, one of the main symptoms of the disease.
In December, Synairgen announced that its application to the US regulator, FDA, to evaluate SNG001 as a treatment for Covid-19 had been approved. This means that the company can conduct further trials in the US.
The breaking news from the statement was that the FDA had also awarded SNG001 a fast track status, which means that the review timelines with the regulator will be shortened. Synairgen shares rallied on the back of this and I believe this is a milestone for the firm.
In recent months, Synairgen has successfully raised money to develop its SNG001 drug. Despite the capital boosts, it is still a small, loss-making company. I think Synairgen could get snapped up by a large pharmaceutical competitor.
While the focus is currently on Covid-19, Synairgen’s research could also lead to developing drugs for other respiratory diseases.
So would I buy Synairgen shares? Yes. I think the company has bags of potential and the fact that the FDA has fast tracked SNG001 speaks volumes. While Synairgen is still a risky prospect, I think the shares could double if its Covid-19 treatment continues to deliver positive results.
The post Synairgen shares: here’s why I think the stock could DOUBLE in 2021 appeared first on The Motley Fool UK.
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Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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