Synairgen (LON:SNG) has just announced success in a preliminary trial of treatment for Covid-19. The share price has jumped 382% on the news. The new drug in called beta interferon and is administered by an inhaler. Whilst the trial results have not been reviewed by peers, and the trial numbers are small (101 patients recruited), the market seems to like this new treatment. If the trial results are confirmed and the drug is approved for use in Covid-19, this could be good news for all drug companies that manufacture beta interferon - beta interferon has actually been around for years and is not a new product - it is the application that is new. For those of us - most of us I'd guess - who haven't got shares in Synairgen (LON:SNG) it's likely that this news will provide a boost to the whole pharmaceutical and biotech sector. DYOR.
citywire thoughts on the issue.
Star UK small-cap stock picker Paul Jourdan has hailed Synairgen’s (SNG) announcement of a positive trial of its Covid-19 drug as a ‘truly fantastic’ result that is ‘better than anyone could have hoped for’.
Shares in the Alternative Investment Market biotech stock, which Jourdan backed in a March fundraise at 35p per share through his £144m Amati AIM VCT (AMAT), have soared 457% to 203p this morning.
Jourdan responded to the trial results by buying the shares for his £410m Amati UK Smaller Companies fund.
‘If it works the upside is huge. It is genuinely good news on a wider level,’ he said. ‘If I was suffering from Covid-19 I would want to have their inhaler.’
The Citywire AAA-rated fund manager was among a number of investors to take part in Synairgen’s oversubscribed fundraising in March, conducted shortly after the company had announced plans for a phase II trial of its Covid-19 treatment.
‘It felt important for the VCT to support it,’ Jourdan said, describing the investment in the search for a potential coronavirus treatment as part of his ‘civic duty’.
‘We took a little bit more risk than we normally do,’ he said, pointing to the binary outcome ahead of the trial, adding the investment was smaller than the stakes he normally buys for the venture capital trust.
Jourdan said the upside for the stock would now depend on how quickly Synairgen could secure regulatory approval for the drug and manufacture sufficient doses.
‘It’s impossible to tell until we know if it gets emergency use approval,’ he said, but suggested this could proceed quickly.
‘Most clinical trial proceed at such a snail’s pace,’ he said. ‘Because of Covid-19, these things are happening in the space of days which might otherwise have taken months.’
The safety of the drug, which allows patients to inhale interferon beta, a protein that occurs naturally in body, could also lead to quick approval, he said. Interferon beta has long been used to treat cases of multiple sclerosis.
Synairgen expects to be able to produce tens of thousands of doses per month by August and up to 1m doses by the end of the year.
A second trial of the drug is due to take place to assess its impact on Covid-19 patients who have not been hospitalised, potentially widening its possible use. The trial announced this morning was a study of more than 100 hospitalised patients, showing those treated had a 79% lower risk of developing severe disease.
FinnCap analyst Mark Brewer said the potential sales of Synairgen’s drug, should it attain regulatory approval, could dwarf the compay’s market capitalisation, which even after the shares’ surge today stands at £314m.
‘It is within the realms of possibility that Synairgen will receive orders from governments ahead of the winter flu season and potential second ave of Covid-19 infections,’ he said.
‘Based on pricing points for [potential Covid-19 treatments] Rebif and Avonex and Gilead’s remdesivir ($2-3,000 per treatment) and the prospect of Synairgen being able to supply up to 1m doses by the end of 2020, it is not inconceivable that an order book of $2-3bn could be generated by the year-end,’ he said.
