This 13p penny stock’s on fire! Should I buy it?

This UK penny stock has been making investors a lot of money in recent months. Is it worth buying today as a speculative investment?

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Earlier this week, I screened the UK stock market for penny stocks (those with share prices under £1 and markets-caps under £100m) that have strong share price momentum at the moment. It’s fair to say that some interesting companies appeared.

Here, I’m going to look at one of those – Poolbeg Pharma (LSE: POLB). Is this AIM-listed stock, which is currently trading for just 13.45p, worth buying for my portfolio as a high-risk, high-reward investment?

Created with Highcharts 11.4.3Poolbeg Pharma Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

An innovative biopharmaceutical business

Poolbeg Pharma is an under-the-radar biopharmaceutical company that’s developing medicines to address unmet medical needs.

Should you invest £1,000 in Poolbeg Pharma Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Poolbeg Pharma Plc made the list?

See the 6 stocks

Areas of focus include cancer immunotherapy-induced Cytokine Release Syndrome (CRS), infectious disease, and metabolic conditions like obesity (it’s currently developing an oral weight-loss drug).

On its website, Poolbeg notes that it leverages innovative technologies, such as artificial intelligence (AI), to accelerate drug discovery.

This all sounds interesting to me, especially the AI side of things.

I’m also really interested in the obesity drug angle. Recently, I have bought a few weight-loss drug stocks for my portfolio as I believe this is likely to be a huge investment theme over the next decade.

Huge share price gains

Now recently, this stock has been on fire. Over the last six months, it has risen about 50%.

Most of these gains have been down to news around the company’s POLB 001 drug, which has been shown to reduce cancer immunotherapy-induced CRS in an in vivo model.

Earlier this month, the company announced it had received approval from the US Patent Office for its product. This should strengthen the company’s intellectual property, enhancing the value and attractiveness of POLB 001 to potential pharma partners.

We believe POLB 001 holds immense promise in addressing unmet medical needs in cancer immunotherapy-induced cytokine release syndrome and severe influenza, positively impacting patients and healthcare systems alike. Its impressive data package and strong patent portfolio, coupled with the promising $10bn+ market opportunity in cancer immunotherapy-induced CRS alone, strengthens our confidence in its potential to positively impact global health and generate value for our shareholders.

Poolbeg Pharma CEO Jeremy Skillington

Another factor that’s helped the share price is the appointment of co-founder and substantial shareholder Cathal Friel as Executive Chairman. Friel has an excellent track record in the capital markets, having previously been a co-founder of hVIVO (which is having a lot of success today) and Amryt Pharma, which was acquired for $1.5bn in 2023.

Created with Highcharts 11.4.3hVIVO Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Should I buy?

Looking at recent developments here, my view is this is an exciting company. I think it has lots of potential.

Having said that, it’s really risky from an investment perspective. Today, the company doesn’t have revenues or profits. And there are no guarantees it ever will. That’s the thing about drug development. It’s notoriously unpredictable.

For me personally, the penny stock’s a bit too risky right now. So I won’t be buying it.

But I will be keeping it on my watchlist. When there’s a bit more clarity on the viability of its drugs, and its producing revenues and earnings, I could be interested in investing here.

Pound coins for sale — 31 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon 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.

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