MIDAS SHARE TIPS UPDATE: Time to cash in half your shares in Covid drug firm Synairgen
At the start of this year, shares in Synairgen were valued at less than 6p. By July 17, the biotech firm’s share price had risen to 36p, and by close of play on Friday the shares had shot up to £2.04, with some brokers suggesting they should more than double in coming months.
The surge in fortunes has one simple explanation. The group’s key drug could greatly help Covid-19 sufferers.
A study conducted between March and May showed that hospitalised patients who inhaled Synairgen’s product were 79 per cent less likely to develop severe symptoms than those who did not. The study also showed that patients taking the drug were more than twice as likely to recover as those who did not.
Midas first recommended the shares in 2010 at 28p
Synairgen’s study was only carried out on 101 patients and much more work needs to be done, but big investors are clearly optimistic.
They hope that chief executive Richard Marsden will extend his trial to more patients, obtain more positive results and convince health watchdogs that his drug, SNGOO1, should be made available as a treatment for coronavirus.
This would be transformative for Synairgen and for thousands of Covid-19 sufferers. But will everything go according to plan?
Synairgen has promised much in the past. Midas first recommended the shares in 2010 at 28p. By 2014, they had risen to 70p, when the group signed a deal with drugs giant AstraZeneca to use SNG001 on asthma sufferers.
At that point Midas suggested that shareholders should sell half their shares just to play safe. Three years later, the deal went sour and Synairgen shares plummeted to less than 5p.
More recently, the stock became compromised because Neil Woodford was a big fan, owning 14 per cent of the business when his Equity Income Fund was suspended last summer. Administrators in charge of winding down the fund sold those shares in a job lot just weeks ago.
The ill-timed sale was another blow for long-suffering Woodford investors and further depressed Synairgen shares before the Covid-19 announcement.
Looking ahead, Marsden hopes to be able to fast-track coronavirus trials for SNG001.
The group’s drug is also being tested as a treatment for people who catch viruses when they are already suffering from lung diseases, such as emphysema.
Midas verdict: Synairgen has worked immensely hard in recent months and, if its drug makes it to market, the shares should continue to power ahead. But this business has a patchy record and may disappoint readers again. Longstanding investors are already sitting on a tidy profit and should sell at least half their stock to hedge their bets. It is worth retaining some shares, though, just in case Synairgen finally hits the big time.