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Why Longeveron Stock Skyrockted 661.2% in November

By Keith Noonan – Dec 5, 2021 at 2:05PM

Key Points

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The biotech stock is now up 171.5% year to date.

What happened

Shares of Longeveron (LGVN -2.44%) jumped 661.2% in November, according to data from S&P Global Market Intelligence. The stock surged after it was announced that the company received a Rare Pediatric Disease (RPD) designation for its Lomecel-B treatment. 

LGVN Chart

LGVN data by YCharts

Longeveron announced on Nov. 18 that Lomecel-B had received RPD designation for the treatment of hypoplastic left heart syndrome (HLHS) -- a potentially fatally heart condition in infants. The stock surged on the news and attracted attention on social media, and investors got some more good news as the month progressed. 

A person looking in a microscope.

Image source: Getty Images.

So what

After the FDA's RPD designation for Lomecel-B was announced, Longeveron achieved meme-stock status, and its shares posted big gains as investors continued to pour into the stock. The rush of buying activity likely triggered a short squeeze on the stock, pushing its share price even higher as people who bet against the company felt the pressure to close out their positions or face mounting losses. 

Later in the month, the company announced that it had entered into an agreement with two unnamed Japanese institutions to hold phase 2 trails for Lomecel-B as a treatment for adverse aging impacts. Lomecel-B has already underwent phase 1 and phase 2 trials for aging frailty-related conditions in the U.S., but the announcement of additional trials in Japan could signal that the company sees significant promise in the treatment. Lomecel-B is also set for phase 2 testing as treatment for Alzheimer's patients.   

The company also published its third-quarter results last month, reporting a per-share loss of $0.25 on revenue of $200,000. However, Longeveron is a clinical-stage biotech company and is not currently generating significant revenue, so its Q3 report had a relatively minor impact on its share price.  

Now what

Longeveron stock has given up some of last month's gains early in December's trading. The company's share price is down roughly 24.5% this month so far. 

LGVN Chart

LGVN data by YCharts

Longeveron's recently published phase 1 clinical data showed that its Lomecel-B cell treatment had triggered no related infections or major negative cardiac events in HLHS, but there's still a long way to go before the product can be brought to market. If the product receives approval for HLHS or aging frailty and sees meaningful market adoption, the company's valuation could soar. However, there's not much visibility into how subsequent clinical testing will pan out, and the stock looks very high risk at current prices. 

Longeveron now has a market capitalization of roughly $385 million.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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