Regencell Bioscience (RGC 1.10%) is an early-stage bioscience company. That alone should be enough to keep most investors on the sidelines, given the risks involved if the medicines the company is working on fail to produce positive results. However, there's another small wrinkle here. Regencells Bioscience is working on something it calls TCM. What is TCM?
A high-risk, high-return sector
Early-stage healthcare companies are fraught with risk. In essence, they are companies that believe something could be a valuable product, but they still have to test it to make sure. It costs huge sums of money to develop, test, and get medicines approved for human use. So companies like Regencell Bioscience often tap the capital markets for cash.
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Investors provide money in the hope that whatever the company is working on will eventually turn into a worthwhile product. However, the big risk is that nothing comes of the research. In that situation, investors can be left with nothing to show for their investment but capital losses. That's why only the most aggressive investors and those deeply knowledgeable about the pharmaceutical sector should be even considering Regencell Biosciences.
What exactly is Regencell working on?
Even then, however, you might want to tread with extreme caution. As the investor site explains:
Regencell focuses on the research, development and commercialization of TCM for the treatment of neurocognitive disorders and degenerations, specifically ADHD and ASD, and infectious diseases affecting people's immune system, such as COVID-19.
NASDAQ: RGC
Key Data Points
Sounds exciting, but what is TCM? It isn't clear until you look at the annual report for this foreign-based company. There, you are told that "TCM refers to Traditional Chinese Medicine." While there's nothing wrong with traditional Chinese medicine, and it could be a fertile ground for research, it seems a bit risky to invest in a pharmaceutical company that is entirely focused on this category. If there are material opportunities, larger pharmaceutical companies would likely be examining the space.
Even if you assume that larger drug makers are missing out on this opportunity, Regencell Biosciences is clear about where its products stand. Again in the annual report: "Currently, our standardized TCM formula for ADHD and ASD patients are under research and development. None of the formula is currently in the process of regulatory approval and commercialization." Basically, there's no product yet, and it's unclear whether there ever will be one.
Regencell Bioscience is a shockingly risky investment, and most investors should probably avoid it.
