PolarityTE (NASDAQ:PTE) was one of the most popular tickers on Tuesday after the stock nearly doubled in value. It’s said that a series of large transactions followed by social media buzz created the surge rather than a single event. I’m glad this stock has finally gained the traction it deserves after an unjustified patchy period.
PTE’s central aim is to address the diabetic wound care market. Its pilot product, SkinTE, recently gained Food and Drug Administration (FDA) approval for a Phase 3 study that would see the drug tested for “Chronic Cutaneous Ulcer Indication.” As a result, we could see PolarityTE up the ante for the drug’s commercial use after winding down in 2021 after various regulatory clashes with the FDA ramped up operating costs.
Investing in a single product company is a very risky bet, but the signs are that PTE will sequence a range of products over the coming years. Furthermore, the company has aligned itself to a very addressable market. The proportion of undiagnosed diabetes patients stacked up to 44.7% in 2021, leaving much scope for governments and companies such as PolarityTE to address.
Another plus side, PTE has ability to raise capital fairly quickly. This suggests that its investor base is perfectly willing to finance its high operating costs with the belief that its management can curate a life-changing drug. PolarityTE recently issued another $5 million in securities to leave the company with enough cash runway to roll out its plan for sixteen SkinTE operating sites by the end of May.
I’m bullish on the stock, but I’m encouraging my readers to take notice of the magnitude of risk involved. So, only invest if you’re fully aware of the risk that a bioscience stock brings with it. A penny stock bioscience stock at that. However, having said that, PTE stock is trading at a 99.86% discount to its 5-year average price to sales ratio, prompting me to go for it on this one!
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On the date of publication, Steve Booyens did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.