The Jacksonville Jaguars have long been one of the worst professional sporting teams in America. They just completed another dreadful season with only one solitary win to go along with 15 losses. Unfortunately, biotech firm Jaguar Health (NASDAQ:JAGX) has had a similar level of ineptitude. Over the past few years, on a split-adjusted basis, JAGX stock has imploded, plunging from more than $1,000 per share to just $3.21 now.
However, the ailing company has looked a little healthier at the beginning of 2021. JAGX stock has leapt back from under a dollar per share to its current level. That has traders wondering if Jaguar Health is enjoying a sustainable turnaround or if this is just a dead-cat bounce.
Shifting Toward Covid-19 Response
At the time of its initial public offering (IPO).Jaguar Health was originally named Jaguar Animal Health Back then, it intended to be a veterinary biotech company. People are spending more and more money on their pets, so there should be a robust market for medicine for cats and dogs. Jaguar Animal Health’s first drug candidate was a product to treat diarrhea in dogs.
That product hasn’t produced tangible results yet. So the firm has started working on trying to fight inflammatory diarrhea in humans. Jaguar Health is developing a drug candidate, crofelemer, for this condition.
And, recently, Jaguar decided to begin pitching crofelemer as a diarrhea treatment for people with lingering symptoms from Covid-19 after they are no longer infected with the virus. The company is looking to get conditional marketing approval for crofelemer for that indication from the European Medicines Agency (EMA). As Jaguar’s CEO, Lisa Conte, stated, this could be a huge market opportunity for the company, as many Covid-19 patients end up having long-term health problems after being infected with the disease. Conte said that:
“With the appearance of more transmissible mutated strains of COVID-19, the potential population of post-COVID-19 recovery patients suffering from gastrointestinal distress associated with long-hauler syndrome may expand significantly. It’s estimated that as high as one-third of COVID-19-infected patients develop chronic or chronic episodic long-hauler syndrome – a constellation of post-viral infection symptoms.”
With potentially tens of millions of such patients in Europe alone, this could be a game-changer for Jaguar. And as Conte explained, Europe has created a favorable regulatory and financial environment for emergency Covid-19 medications.
Will this strategy work? Jaguar’s past history is not inspiring. But given the urgency of the Covid-19 pandemic, Jaguar Health has a second chance now.
Recent Positive Developments
Jaguar Health has made several other positive announcements. For one, it struck a $6 million royalty deal for crofelemer. The revenue from the agreement isn’t huge, but the deal is a real validation of the product’s potential. Given the company’s catastrophic stock chart in recent years, the news is reassuring..
On top of that, JAGX stock has been climbing for a little while. . Thus, the company postponed a planned reverse split of its shares. Reverse splits tend to lead to downward pressure on stock prices.
Jaguar’s shares need to recover a lot more to make the company’s longer-term investors whole. That said, Jaguar Health may be turning the corner and its elimination of the risk of a reverse split is another step forward.
The Verdict on JAGX Stock
Jaguar is a clinical-stage biotech company. And it has not been particularly promising, at least not until very recently.
But give the company credit for continuing to try to make something happen. The royalty deal shows that Jaguar’s management team is working hard. Meanwhile, the attempt to get crofelemer approved as a treatment for long-term Covid-19 symptoms gives traders another reason to remain interested in JAGX stock.
That said, the stock probably isn’t appropriate for most investors. Given the company’s operating losses, it will likely have to raise more money. And it could be years, if ever, before the company can start generating large-scale revenues. Any prospective investor should be well aware of those risks before taking a position in the stock.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.