I’ve written about Synairgen (LSE: SNG) shares before. The stock has had a good run since the beginning of the year on the back of the firm’s potential Covid treatment. But do I expect this to continue? I believe so. I continue to like Synairgen shares, even though I know that it doesn’t come without risks. Here are five reasons why I’d be happy to buy the stock in my diversified portfolio.
#1 – Experienced founders
Synairgen isn’t a recent company that was launched in response to creating a treatment for Covid-19. It’s 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. What gives me comfort is that the founders are still active in the company and come from an academic background. The treatments are likely to be based on significant research and are created by experts in their field. To me, this makes Synairgen’s products credible.
#2 – Covid-19 treatment
Yes, there are Covid-19 vaccines available. But what Synairgen is doing is creating a treatment for the coronavirus called SNG001. In a nutshell, Synairgen’s treatment should be effective where vaccines aren’t.
It could also prove useful for those who don’t get vaccinated and in case the virus mutates to the point where vaccines become less effective. I reckon this makes Synairgen shares different to larger peers such as Pfizer and AstraZeneca, who have created vaccines.
I should emphasise that it’s still early days for SNG001. Synairgen is still a loss-making company. And I think it’s placed all of its eggs in one basket by focusing on SNG001. The treatment is being trialled and hasn’t yet received regulatory sign-off to be used when treating Covid-19. Any negative news about the treatment could impact the shares.
#3 – Successful trials
SNG001 has successfully completed Phase I and II trials, which involves using the treatment on a sample of hospitalised patients and assessing the results. The US regulator, the FDA, awarded SNG001 a fast track status in December 2020. This means that the FDA’s timelines to review the treatment would be shortened. If successful, the treatment could be available to the public shortly.
Last month, Synairgen reported that the first UK patient had been given the SNG001 treatment as part of its global Phase III trial for hospitalised Covid-19 patients.
Again, I should stress that’s there’s no guarantee of SNG001 being successful in subsequent trials. As I mentioned before, any negative news from the trials could impact the shares.
#4 – More trials
Synairgen recently announced that as part of its Phase II/III trails, it’s now testing SNG001 on patients who are suffering with Covid-19 at home and don’t require hospitalisation.
If this is successful, it’ll mean quicker treatment. This could reduce the need to transport infected patients and reduce virus exposure to healthcare workers.
#5 – What next for Synairgen shares?
I think Synairgen could eventually be a takeover target. Covid aside, the research could prove useful for other respiratory disease. To me, this makes Synairgen a likely candidate to be snapped up a large pharmaceutical company. But I wouldn’t buy a share just for its takeover potential. I also believe in its product and prospects on its own. That’s why I’d buy Synairgen shares in my diversified portfolio.
