Valirx: an investment or a bet?

Shares are up six-fold in the last month, but were ten times more valuable two years ago, is it a rollercoaster? No, it’s the Valirx share price

Article updated: 18 December 2017 10:00am Author: Michael Baxter

If you are an expert in non-small cell lung cancer, you may be able to make an informed decision on whether Valirx is a good investment.

If you are not an expert, or don’t have the time to read reams of informed analysis by experts, then, or so it seems to me, an investment in Valirx is an investment in the dark. But, even an expert needs to temper his or her enthusiasm with diversification.

The share price has seen an extraordinary run. In April 2015, it was trading at less than a fifth of a penny. By the middle of June in that year it was up to 50p. Then it steadily fell, down to a penny or so a few weeks ago, but since then the price has surged, six-fold.
Michael Baxter

If only we could see into the future – or in the case of Valirx, just be able to see into the future in a very focused way. A thousand pounds invested with good timing, then sold, and then invested again, could have turned into almost £2 million and in just 30 months.

Why, oh why, can’t we go back in time? Come to think of it, if we could, I guess we would all be rich, but then the markets would price this in and we would be back to square one.

The question is, why?

The rise and the falls in the share price have had a lot to do with trials, regulators and maybe with a little bit of impatience thrown in. Maybe investors suffer from the flaw that they get too exuberant and overreact one way, then, when nothing much happens for a while, they get overly pessimistic.

Come to think of it, perhaps ‘maybe’ doesn’t come into it and one way to make bucks quickly is to second guess the investor mood cycle.

In the case of Valirx, shares seem to rise with positive results from clinical trials, or good news from regulators, and often fall, during a quiet period.

This happened again recently, when The Medicines and Healthcare Regulator Agency and Research Ethics Committee agreed to accelerate and expand its cancer treatment, or to be more precise, to expand its VAL201 trial for the Phase I/II Dose Escalation Study in Patients with Locally Advanced or Metastatic Prostate Cancer and other Advanced Solid Tumours.

Guessing

But no one can say for sure what the results of trials will be in advance, or second guess a regulator’s decision.
So, is investing in a company like Valirx little more than guesswork?

Change

In one respect it isn’t. Thanks to technology advances, I do expert to see major breakthroughs in health tech over the next few years. Investors who pick winners, will do well.

For that matter, investors who pick a lot of losers, but a few winners will do well. Maybe a portfolio that has exposure to lots of Valirx type companies will flourish. I made a similar point recently when I wrote about Physiomics.

Tried and tested

But then there are experts that are already doing this – investing in or working with a diverse range of companies, some of whom may have the next drug to change the world.

These experts are called pharmaceuticals, the likes of GSK. For exposure to the exciting world of bio and health tech, they may represent a much safer bet – good potential upside – maybe less spectacular – and less downside.


These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.