The 4d Pharma (LSE: DDDD) share price has surged in value since the middle of July. Shares in the early-stage biotech business have risen around 200% during the past six weeks.
The performance has put the company on the radar of most small-cap investors. This improving investor sentiment towards the business could send the 4d Pharma share price even higher in the coming weeks and months.
As such, if you’re interested in owning a share of this high-growth small-cap, here’s what you need to know before investing.
Interested in the 4d Pharma share price?
Shares in this early-stage biotechnology business have rallied over the past six months on the back of two developments.
First off, in the middle of July, the company raised nearly £8m to fund its operations until the beginning of 2021. According to management, the funds will be used for at least four clinical studies of treatments in the pipeline. These include 4d’s MRx-4DP0004 Phase II Covid-19 trial and its MRx0518 Phase I clinical biomarker study.
The company was also planning to use some of the funding to pursue a US market listing. I think this is a sensible decision. US-listed pharmaceutical and biotechnology businesses tend to attract higher valuations as this increases the number of investors who can buy the shares. US listings also make companies more attractive as acquisition targets.
The second development that has helped the 4d Pharma share price recently is the publication of the results from a recent trial of its MRx0518 treatment. This product is a “single strain live biotherapeutic” that has the potential to help people with cancer.
The results of Part A of its Phase I/II trial were positive. Nearly half of the trial participants saw a “meaningful benefit” from the drug when combined with another treatment. A quarter of the participants saw their tumours shrink by around 30%.
These results are positive, but they are not conclusive. The study only involved 12 subjects. So, a lot more work needs to be done before 4d Pharma can bring the product to market.
Still, these early results are encouraging. They should help improve investor sentiment towards the business, which could lead to greater access to funding in the months and years ahead.
While the above might have sent the 4d Pharma share price surging in recent weeks, there’s no guarantee this will continue. The company’s recent fundraising showed that the business is still not self-sufficient. It is unlikely to be so until its primary treatments come to market. That could take years.
As such, while the 4d Pharma share price may look attractive at current levels, I think it may be best to hold the stock as part of a diversified portfolio. Doing so would allow investors to profit from any upside growth while minimising downside risk.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.