Regen BioPharma Stock Has Huge Potential and Huge Risk

Regen BioPharma is a small biotechnology company. The stock surged by 571 percent on April 8. While such a huge rally in a trading day isn't unheard of for a penny stock, it's worth investigating the cause and whether the catalyst has long-term potential for the stock. Is Regen-BioPharma (RGBP) stock a buy after the recent rally?

Regen BioPharma is focused on the immunology and immunotherapy space. The company plans to advance novel technologies through pre-clinical and Phase I and II clinical trials. Currently, it's working to advance small molecule therapies for treating cancer and autoimmune disorders. 

The news that propelled RGBP stock more than 500 percent in a day had to do with an announcement from the company that it has secured a licensing deal for its pancreatic cancer treatment. It signed an agreement with Oncology Pharma. According to the agreement, Oncology Pharma will gain access to Regen’s intellectual property pertaining to mRNA to be used in developing a therapy for treating pancreatic cancer.

According to the agreement license, Oncology Pharma will pay Regen:

• a non-refundable fee of $55,000 no later than April 20, 2021
• royalties equal to 5 percent of the net sales
• 10 percent of all consideration received by Licensee from sublicensees, excluding royalties from sublicensees 

On April 7, RGBP’s wholly-owned subsidiary, KCL Therapeutics entered into an agreement with Oncology Pharma. The latter was granted an exclusive right and license for the development and commercialization of certain intellectual property for the treatment in humans of colon cancer for a term of 15 years from April 7, 2021. KCL will get shares of Oncology Pharma and royalties in return. 

Regen BioPharma is a penny stock. Currently, it isn't covered by any Wall Street analysts. This speculative penny stock has started gathering a lot of discussion from Reddit. While the users haven't discussed the fundamentals around the stock, most are pumped up by the stupendous gains in the stock in a matter of hours. 

The recent developments are certainly positive for the company and could help it fund the rest of its product pipeline. The total addressable market for the company’s potential products is also huge. The global colorectal cancer therapeutics market should reach $18.5 billion by 2023 from $13.7 billion, according to BCC Research. 

The pancreatic cancer market is expected to reach $4.2 billion by 2025, according to Grand View Research. A small market share of this market for Oncology Pharma could mean millions in potential revenues for RGBP. However, Regen BioPharma is a speculative investment like any early-stage biopharma company.  

While the stock has climbed by more than 500 percent, it doesn’t seem to be very expensive still. A 15-year royalty deal opens up a whole new dimension for the stock.  However, you should be aware that Regen BioPharma is a very small company and a penny stock. Therefore, its stock price is vulnerable to highly volatile moves, including manipulation by traders. Being a very early-stage biopharma company, regulatory and approval hurdles could derail the stock rally. The stock has the potential to run but the risk is too great to miss.