One Letter Away, But 789% Returns: Japan Investors Buy Tella, Not Tesla

(Bloomberg) -- Tesla Inc. might be hot, but the stock Japanese retail investors really want is just a letter away.

Tella Inc., a hitherto obscure biotech venture, is the bigger gainer this year by far out of any of the almost 4,000 companies listed on Japan’s main markets. It’s risen an astonishing 789%, with the stock surging ever since it announced it was teaming up with the Japanese arm of a Las Vegas-based anti-aging clinic to develop a coronavirus treatment.

While there’s no suggestion that investors are buying the stock because of the similar name, Tella is benefiting from the same retail frenzy that has propelled Tesla stock this year. Tella is frequently cited alongside the likes of AnGes Inc. and Precision System Science Co. as once-unknown stocks that Japanese retail investors -- a group that has grown during the pandemic -- can’t get enough of. And those buyers are hanging on every announcement from Tella related to trials.

Tella and its partner, Cenegenics Japan, say they’re conducting clinical trials in Mexico using two types of stem cells. Tella said on June 22 that all 10 patients on ventilators who received an endometrial stem cell treatment saw improvements in their symptoms. Full results are expected at the end of July.

But buyer beware: Tella Inc. has posted a net loss for seven straight years, and had just 200 million yen ($1.9 million) of revenue last fiscal year. The stock trades at a dizzying 180 times sales. The company is passed over by most analysts and it hasn’t given forecasts this year.

And even should its therapy work, there’s always the risk of being beaten to market. Shares fell 7.5% on Tuesday after promising results from a coronavirus vaccine in development by the University of Oxford and AstraZeneca Plc., while stock in Daiichi Sankyo Co., a $58 billion pharma giant in talks to produce the Oxford vaccine in Japan, jumped 5.6%.

©2020 Bloomberg L.P.