Hargreaves Lansdown investors are buying Synairgen shares. Should I buy too?

I’ve been bullish on Synairgen (LSE: SNG) shares for sometime. But the stock has been volatile. So far in 2021 the share price is up only 5% but during the past 12 months it has increased by over 280%. Of course, past performance isn’t an indication of future returns.

Even Hargreaves Lansdown investors have turned positive on Synairgen shares. The company was one of the top 10 most purchased stocks last week on the platform.

The AIM-listed firm recently came out with an announcement, which I thought was very encouraging. I’m still bullish on the stock and would buy it in my portfolio.

The announcement

So, last week, Synairgen released a statement saying that its in vitro studies showed that its treatment is effective against key Covid-19 variants. I’m not surprised the stock jumped on this news.

As a quick reminder, the company developed SNG001, which is a treatment for Covid-19. It’s worth adding here that this is not a vaccine. This is used to treat those who are already infected with the coronavirus. So far, the clinical trials of SNG001 have been successful.

But what does this new announcement mean? Well, it’s certainly positive news for Synairgen shares.

Studies were conducted at labs in the Netherlands, confirming that SNG001 “potently reduced”  the coronavirus to “undetectable levels” in cells that were infected with the “Wuhan-like” strain as well as the UK/Kent and South African variants.

My view

I’ve previously commented that I think Synairgen shares have bags of potential. And I think this announcement demonstrates it.

Clearly the emerging Covid-19 variants are of huge concern. They pose a threat to the global economy returning to any kind of normality. While the current vaccines are proving to be effective, I don’t think this is enough. They may not work against future coronavirus variants. It’s great to see that the data confirms that “SNG001 is a broad-spectrum antiviral product”.

What I like about Synairgen is that SNG001 could play a key role in combating seasonal variants and other respiratory diseases. I also agree with CEO Richard Marsden’s comments that it’s pleasing “to see initiatives being put in place to accelerate and support development of antiviral therapeutics as a backstop for patients who are admitted to hospital”.

It means that the company’s products could be at the forefront of treating Covid-19. In my view, it also places Synairgen on the radar as a potential takeover target by a larger competitor once the pandemic is over. The company will start dosing patients at trial sites in India as part of its SNG001 Phase III study imminently.

Risks

Syanirgen shares come with a lot of risk. I only have to look at the stock price chart to see that investors are in for a volatile ride. I’d only invest what I could afford to lose.

The company hasn’t generated any revenue yet and so it’s loss-making. I expect this to be the case for sometime because Synairgen is still conducting clinical trials for SNG001. There’s no guarantee this will be successful, so investors may need to brace themselves.

But I’m aware of the risks involved with Synairgen shares. I think this announcement is positive news and could push the stock higher.