Synairgen share price has been in a tight range after it gapped lower in February this year. It was trading at 19p, which is in the same range it has been for most of the year. This price is about 92% below its all-time high of 258p. So, is SNG a good penny stock to invest in?
What is Synairgen and what does it do?
Synairgen is a small biopharmaceutical company that emerged from the University of Southampton in 2003. Since then, the firm has been developing an inhaled formulation for the treatment of respiratory diseases, including Covid-19. The drug will be used to treat people with a broad-spectrum antiviral for people with severe lung infections, people with Covid-19, and for future pandemics.
Synairgen share price has collapsed amid rising concerns about the drug the firm is working on. In September, the company said that its phase 3 sprinter trial for Covid-19 patient did not meet the key endpoints. It only showed an encouraging signal in reduction n the relative risk of death within 35 days.
The challenge for the company is that Covid-19 risks have eased in the past few weeks since vaccines have worked well. At the same time, several large companies like GlaxoSmithKline, Gilead Sciences, and Amgen have developed similar therapies.
Synairgen is burning cash fast. Net assets in June were over 24.9 million pounds, down from 37 million in December. Funds have likely dropped sharply since then, which means that the firm will likely raise cash soon.
Synairgen share price forecast
The weekly chart shows that the SNG stock price made a deep dive in February this year as the company’s risks rose. It dropped by more than 80% in a single day. Before then, the stock had formed a rising wedge pattern that is shown in black.
Since then, the stock has remained in a consolidation phase while the overall volume has dropped sharply. At the same time, the Relative Strength Index (RSI) has moved slightly above the oversold level.
The Synairgen share price will likely remain under pressure in the coming days. A decline to the important support level at 9.72p cannot be ruled out. A move above the resistance at 36p will invalidate the bearish view.
