Two UK small-caps shares I’d buy in my portfolio are Synairgen (LSE: SNG) and Sensyne Health (LSE: SENS). Both stocks have links to the coronavirus pandemic. Covid-19 is far from over and I think these companies could be a great way to play this theme.
#1 – Synairgen
Synairgen is a UK small-cap share that I think is taking a very different stance on Covid-19. Rather than developing a vaccine, it’s developing a treatment called SNG001.
The SNG001 treatment was fast-tracked in the US by the regulator, the FDA, at the end of last year. It has successfully passed Phase I and II trials for treating hospitalised patients and now has moved onto Phase III. There’s no guarantee that SNG001 will be successful in the next phase of testing. This involves using the treatment on a bigger group of test subjects.
I should highlight that it’s still early days for Synairgen, as it’s loss-making. I reckon Synairgen is focusing all of its attention on SNG001. It could be game-changing for the company but any negative news could impact the share price.
What I’m really excited about is the company’s latest announcement. Synairgen has said that it’s testing an inhaled version of SNG001 on patients who are suffering with Covid-19 at home and who don’t require hospitalisation. If this is successful, I think it could have a lot of potential.
Even after Covid-19, Synairgen could by a potential takeover target by one of the larger pharma companies.
#2 – Sensyne Health
Another UK small-cap share I’d buy right now is Sensyne Health. In summary, the company uses artificial intelligence to analyse data. Sensyne Health’s discovery science division is the main business. This is where it analyses anonymised data from NHS trusts using algorithms.
The reason why I like this UK small-cap stock is that I think it bridges the gap between the NHS and the pharma industry. The company can use its analysis to get a better understanding of diseases. The NHS has limited resources and I reckon the pharma industry would like someone else to do the hard-core number crunching.
I think Sensyne Health’s software products are also a key growth driver. It creates digital health products that help clinicians with patient care. What I also like is that these products collect data, which can be used by Sensyne Health for research purposes.
There are risks with the stock. Sensyne Health is incurring costs and hence is currently loss-making. I reckon these research and development costs could continue and hinder future profitability.
One of Sensyne Health’s software products is MagnifEye. Last week Sensyne Health signed a £470,000 agreement with the Department of Health & Social Care to conduct a study of its MagnifEye technology for use with COVID-19 tests. It follows on from another license Sensyne Health signed with Excalibur Health. Here MagnifEye will be used with Excalibur Health’s Covid-19 antigen test.
So what does this mean for Sensyne Health? Well, its software products are gaining traction. The fact that Sensyne Health’s products are gaining visibility means that in the long term this could boost revenue generation and profitability.
It’s still early days for the company but I think things look promising for this UK small-cap share. Hence I’d buy the stock in my portfolio.
Nadia Yaqub has no position in any of the shares 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.