In the midst of l’affaire GameStop (GME) , the most ridiculous reaction of the online brokers was Robinhood’s decision last week to publish a daily list of stocks that were either unavailable to trade, available for position-closing only, or, most frequently, subject to severe restrictions on the number of shares that could be traded in a Robinhood account. This whole thing has been such a black eye on my industry, and I believe that the most important duty we have in the industry is to counter the legion of stock-pushers and Robinhood-plunderers with cold, hard facts and good, old-fashioned equity analysis.
For a company to be on one of the Robinhood restricted lists is actually something of a badge of honor in 2021. While perusing one of Robinhood’s many press releases, I actually saw the ticker for a company with which I am familiar: (JAGX) , Jaguar Health. JAGX is not subject to any Robinhood restrictions currently, as best as I can tell, but its presence on the list was a sign that people are paying attention to this little company, which may actually be a good thing.
Jaguar Health, through its wholly-owned subsidiary, Napo Pharmaceuticals, produces crofelemer, branded as Mytesi in the U.S. Mytesi was approved by the FDA in 2012 for for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. With that relatively narrow indication Mytesi does currently generate revenues, to the tune of $3.8 million in 3Q2020, the last reported period. Also, last October, Mytesi began Phase Three clinical trials for a broader indication, prophylaxis of diarrhea in adult cancer patients receiving targeted therapy.
Jaguar is a small company with a patented drug, and the question is, how large is the possible market for this drug? Well, for obvious reasons, noninfectious diarrhea is not a topic of frequent conversation among most, but now the game has changed dramatically for Jaguar, thanks to Covid-19.
One of the clinically-noted, but rarely discussed side effects of Covid, is what is known as “long-hauler syndrome.” As this excellent article in Scientific American notes about long-hauler syndrome:
The persistent effects were wide-ranging and included cognitive issues like “brain fog” and memory or attention problems, shortness of breath, a racing heart, nausea, diarrhea, intermittent spiking fevers–on and on.
As it is a “new” disease, we are all still learning the real impacts of Covid-19 on those infected with it. To be sure, though, Jaguar is faced with the potential for rapid growth in patients that exhibit the key symptom treated by crofelemer, noninfectious diarrhea.
We are facing a pandemic that has unforeseen consequences, but we are also in 2021 in a world that is much more attuned to sustainable sourcing of pharmaceuticals. Thus is where Jaguar checks all the important boxes, especially for ESG-sensitive fund managers, which seems to be all of them these days. Crofelemer is sourced from the sap –locals call it dragon’s blood — of the tree croton lechleri, which is native to South America. Jaguar not only has a drug that not only is impactful against a key symptom of Covid-19 long-hauler syndrome, but is responsibly and ethically sourced, as well.
JAGX checks all the boxes. The stock was trading at $0.30-$0.40 per share as recently as December, even triggering a minimum bid price compliance warning from Nasdaq. Well, the hunt by investors for anything that might be used to fight Covid-19 took care of that, and after a torrid run in December and January to above $4 per share, JAGX has pulled back slightly and sits at about $2.81 today.
As I mention when I discuss any small stock on RM, you should absolutely do your homework before considering an investment in JAGX. Smaller stocks require bigger due diligence. But crofelemer could be a gold mine for JAGX. To that end, and to more fully exploit the demographically-attractive market of Western Europe, Jaguar has announced plans to license crofelemer to a European subsidiary of Napo Pharmaceutical, Napo EU, which, it has been proposed, will then become the subject of an acquisition by a non-related SPAC, the Post Pandemic Recovery SPAC.
Treatment of Covid-19 — as opposed to possibly preventing it via vaccines — is going to be an investment theme for 2021 and, in my opinion, for many years to come. Jaguar Health offers a way to play that, so ignore the Robinhood noise and do your own research on JAGX.