Earlier this week, I screened the UK stock market for penny stocks (those with share prices under £1 and markets-caps under £100m) that have strong share price momentum at the moment. It’s fair to say that some interesting companies appeared.
Here, I’m going to look at one of those – Poolbeg Pharma (LSE: POLB). Is this AIM-listed stock, which is currently trading for just 13.45p, worth buying for my portfolio as a high-risk, high-reward investment?
An innovative biopharmaceutical business
Poolbeg Pharma is an under-the-radar biopharmaceutical company that’s developing medicines to address unmet medical needs.
Areas of focus include cancer immunotherapy-induced Cytokine Release Syndrome (CRS), infectious disease, and metabolic conditions like obesity (it’s currently developing an oral weight-loss drug).
On its website, Poolbeg notes that it leverages innovative technologies, such as artificial intelligence (AI), to accelerate drug discovery.
This all sounds interesting to me, especially the AI side of things.
I’m also really interested in the obesity drug angle. Recently, I have bought a few weight-loss drug stocks for my portfolio as I believe this is likely to be a huge investment theme over the next decade.
Huge share price gains
Now recently, this stock has been on fire. Over the last six months, it has risen about 50%.
Most of these gains have been down to news around the company’s POLB 001 drug, which has been shown to reduce cancer immunotherapy-induced CRS in an in vivo model.
Earlier this month, the company announced it had received approval from the US Patent Office for its product. This should strengthen the company’s intellectual property, enhancing the value and attractiveness of POLB 001 to potential pharma partners.
We believe POLB 001 holds immense promise in addressing unmet medical needs in cancer immunotherapy-induced cytokine release syndrome and severe influenza, positively impacting patients and healthcare systems alike. Its impressive data package and strong patent portfolio, coupled with the promising $10bn+ market opportunity in cancer immunotherapy-induced CRS alone, strengthens our confidence in its potential to positively impact global health and generate value for our shareholders.
Poolbeg Pharma CEO Jeremy Skillington
Another factor that’s helped the share price is the appointment of co-founder and substantial shareholder Cathal Friel as Executive Chairman. Friel has an excellent track record in the capital markets, having previously been a co-founder of hVIVO (which is having a lot of success today) and Amryt Pharma, which was acquired for $1.5bn in 2023.
Should I buy?
Looking at recent developments here, my view is this is an exciting company. I think it has lots of potential.
Having said that, it’s really risky from an investment perspective. Today, the company doesn’t have revenues or profits. And there are no guarantees it ever will. That’s the thing about drug development. It’s notoriously unpredictable.
For me personally, the penny stock’s a bit too risky right now. So I won’t be buying it.
But I will be keeping it on my watchlist. When there’s a bit more clarity on the viability of its drugs, and its producing revenues and earnings, I could be interested in investing here.
