This Tiny U.K. Drugmaker Has Soared More Than 800% in Stock Rout

(Bloomberg) --

As the world scrambles to fight the deadly coronavirus, a microcap U.K. pharmaceutical company has seen its stock surge.

Shares in Synairgen Plc have soared 845% this year, with gains accelerating in mid-March after the company got approval from U.K. regulators to start trials of its drug, SNG001, in people hospitalized with Covid-19. The company has a market capitalization of just 67 million pounds ($83 million), even after the share-price jump.

SNG001 is a formulation of a naturally occurring protein, known as interferon beta, that Synairgen says may be deficient in those with greater susceptibility to the illness, such as the elderly or those with heart and lung complications or diabetes. The drug is administered via inhalation.

The company, which was founded by three university professors, said in a statement this week that the first patient in the Covid-19 trial had started treatment. It was already studying the drug in other pulmonary conditions. Initial data from the trial are expected in two months, with the timeframe for a product coming to market depending on the outcome of that data, Chief Executive Officer Richard Marsden said by phone.

The jump in Synairgen shares comes as investors -- and medical professionals -- stake hope and energy on finding ways to treat, track and prevent the coronavirus. While several small-cap biotech and health-care companies including iBio Inc., Novavax Inc. and BioCryst Pharmaceuticals Inc. have surged after saying they were working on treatments for the virus, getting drugs on the market is a notoriously tricky business and scientists have cautioned against finding a fast cure.

No Guarantee

The company’s drug has “enormous” market potential, Finncap analyst Mark Brewer wrote in a March 26 research report. Brewer noted that the drug has previously proved beneficial in vitro -- in tests conducted outside of the human body -- against other coronaviruses, including Middle East respiratory syndrome (MERS) and severe acute respiratory syndrome (SARS). The analyst’s 120 pence price target implies the stock could almost double again from Wednesday’s close. Finncap is also corporate broker to the company.

However, Peel Hunt analyst Anchal Verma, who doesn’t have a rating on the stock, cautioned that while repurposed drugs may come with proven safety benefits, clear efficacy must still be established. “Outcomes of clinical trials are far from guaranteed,” she said.

Additionally, while the U.S. Food and Drugs Administration has committed to expediting the approval of treatments for coronavirus, it’s not clear what degree of flexibility Synairgen will be allowed versus standard requirements, Verma added.

Interferon beta tamps down immune system activity and inflammation, and various versions of it are approved to treat multiple sclerosis, a disease where human immune cells attack the nervous system. The World Health Organization is coordinating the use of interferon beta, among other treatments, against coronavirus as part of its international Solidarity trial.

Synairgen sold 14 million pounds of new shares last week in order to fund SNG001 trials and manufacturing.

The company previously partnered with AstraZeneca Plc in 2014 to study SNG001 in severe asthma, but the trial was halted two years later after an interim analysis showed a very low number of reported severe exacerbations. The company also partners with Australia’s Pharmaxis Ltd. on idiopathic pulmonary fibrosis treatment.

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