Enter Hemogenyx Pharmaceuticals (LSE: HEMO). For the first few months of 2020, this tiny biotech firm looked like the typical penny stock. It’s been showing no profits, and the Hemogenyx share price was wobbling around a penny or two.

Hemogenyx has been researching blood cancers and autoimmune diseases. Then, in April, the firm announced the start of its Covid-19 project. And the Hemogenyx share price took off. Before I look at the investment case, what’s the technology all about?

Hemogenyx uses humanised mice or, in technical terms, Advanced peripheral blood Hematopoietic Chimera (ApbHC). They “were developed to model blood and autoimmune diseases and to test treatments.”

Covid-19 research

These mice were already being used to research antibodies for use as antiviral therapies. So the leap to Covid-19 seems an obvious one. In the company’s words: “As part of its studies, Hemogenyx will transplant cells from blood samples from patients who are either recovering or have already recovered from Covid-19 into its ApbHC humanized mice. The process will allow the Company’s scientists to recreate a set of anti-SARS-CoV-2 virus antibodies which could be used for the treatment of Covid-19.“

Some people react severely to Covid-19 infection, while some experience mild or even no symptoms. And the first stage is to try to find out why.

Hemogenyx share price flying

In the week following the announcement, the Hemogenyx share price soared from 1.83p to 10.8p. That was a quick six-fold increase, and a massive gain since April’s low of 0.95p.

Since then, the shares remained around that level until very recently. On 20 August, the price started to pick up again. And we’ve only had news of a research agreement unrelated to the coronavirus. As I’m writing, I’m looking at a further 24% rise on the day so far. I’m having to change my headline as the hours progress.

Hemogenyx has certainly caught the attention of investors, but I’m very cautious. Some experienced growth investors will see genuine potential here for long-term gains. They’ll understand the attached risks and will be prepared to take them on. After all, just one multi-bagger in every five or six punts can be enough to make some decent money.

But there must also be some ‘get rich quick’ investors chasing the Hemogenyx share price upwards too. And that’s rarely a strategy for success.

More gains to come?

Right now, I have no way of evaluating the chances of Hemogenyx making the big breakthrough. Humanised mice are nothing new in themselves. But I don’t have the expertise to know whether the Hemogenyx ones are especially promising. And there must be a possibility that an effective vaccine could render this research largely obsolete.

And then there’s the current profitless nature of the company, which makes it impossible for me to put a value on it. The share price might be up at 14.5p now (or even higher by the time you read this — or maybe it’s already crashed). But to me it still has all the characteristics of a penny stock, and the Hemogenyx share price looks like a pure gamble.