The global stock market has been enjoying a solid run in 2025. Both the FTSE 100 and the S&P 500 have climbed by around 10% so far this year, boosted by strong corporate earnings, surging demand for artificial intelligence (AI), and a boost in aerospace and defence budgets.
For many investors, it has been a productive start to the year.
But one tiny penny stock is making those gains look pedestrian. Shield Therapeutics (LSE: STX), a £57.8m micro-cap pharmaceutical company, is up a staggering 108% year to date. That’s more than 10 times the growth of the broader market!
However, massive price jumps are not uncommon for micro-cap stocks. With a relatively small number of shareholders and limited liquidity, one small investment could make a big difference.
So I decided to find out if the gains are warranted.
A niche pharma stock
Shield is a speciality pharmaceutical firm focused on treating iron deficiency, with its lead product, Accrufer, already on the market. At the time of writing, the shares trade at just 5.6p — a remarkable leap from a low of 2p earlier this year.
Looking further back, the picture is less rosy. The share price has tumbled around 96% from its all-time high roughly five years ago. Since its inception in 2008, it has experienced several sharp rallies, including a climb from 28p to £1.84 in 2019.
But now, there are signs the business could be gearing up for another chapter of growth.
The company remains loss-making, but it is moving in the right direction. Its latest results showed a reduced loss of £21.3m in 2024, down from £40m the year before. Revenue surged 139% year on year, while earnings per share (EPS) improved from -4p to -2p.
That’s not profitability yet, but it is progress.
A look under the bonnet
Shield’s balance sheet shows around £21m in debt against £45.9m of assets, with no free cash flow at present. A quick ratio of 0.99 suggests it can barely cover its short-term liabilities, but there isn’t much wiggle room.
The company has been active in shoring up its finances. It recently raised £10m in equity funding from its largest shareholder, AOP, and renegotiated a £20m debt facility on more favourable terms. It has also launched a new digital marketing campaign for Accrufer in the US, where it sees significant growth potential.
Management’s ambition is to become cash flow positive by the end of 2025.
The verdict
This is an intriguing story: a beaten-down penny stock now sprinting ahead of the broader stock market thanks to surging sales and a renewed growth strategy. The market it operates in is niche but important — iron deficiency remains a widespread and often underdiagnosed condition, especially in certain patient groups.
Still, Shield is a high-risk proposition. It is concentrated on a single flagship product and its financial position leaves little margin for operational missteps. But for investors comfortable with micro-cap volatility and keen on the healthcare sector, it might just be one worth considering.
If the current momentum in sales continues, I think this could be one of 2025’s more memorable stock market comeback stories.
