Little-known drug manufacturer Regencell Bioscience (NASDAQ:RGC) saw its shares skyrocket on Tuesday on no apparent catalyst. However, it’s possible that the exceptionally distinct business profile — specializing in traditional Chinese medicine (TCM) for the treatment of neurocognitive disorders — caught the attention of speculators. While TCM offers some hope for medical utility, RGC stock remains a highly speculative investment.
Heading into the final stretch of the Tuesday session, Regencell gained about 345% of equity value. Naturally, the fervor over RGC stock caused the Nasdaq to halt trading multiple times today. As of this writing, the number of forcible halts amounted to 20 occurrences.
No news item appears to be responsible for the sentiment boost. Per Fintel, the short interest sits at only 0.06% of the float, with the short interest ratio coming in at only 1.64 days to cover. It’s unlikely, then, that short-squeeze speculation sparked the lift in RGC stock. Therefore, it’s possible that interest in Regencell’s almost-unique business catalyzed the jump higher.
While the first documented practice of TCM dates back to 200 BCE, it’s rare to find publicly traded companies that specialize in the field. Aside from RGC stock, China SXT Pharmaceuticals (NASDAQ:SXTC) is one of a small handful of enterprises that offer TCM products.
RGC Stock Enjoys Some Rational Basis for Optimism
To underscore the wildness of RGC stock, it’s barely profitable over the past 52 weeks. That goes to show prospective investors the magnitude of red ink that long-term stakeholders have suffered. Still, it would also be unfair to declare that Regencell and the underlying TCM practice is completely speculative.
For one thing, TCM has a long history of use. That’s not to say that the practice doesn’t generate side effects because adverse reactions have been noted. However, some patients may feel more comfortable with the natural fundamentals of traditional solutions.
In addition, preliminary research into TCM shows that such therapeutics can spark positive changes in brainwave activity, thus improving behavioral challenges such as hyperactivity, impulsivity and learning difficulties in subjects affected by attention deficit hyperactivity disorder (ADHD). Such research is aligned with Regencell’s core focus, which targets ADHD and autism spectrum disorder.
Further, the TCM market is a growing one. According to Persistence Market Research, global revenue generated by the sector landed at $28.7 billion in 2022. By 2033, the ecosystem could be worth $49.6 billion, implying a compound annual growth rate of 5.1%.
Still, it should be noted that TCM lacks rigorous standardized research and testing. Therefore, investors should approach RGC stock with extreme caution.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
