Investing 30-05-2024 18:04 5 Views

Humacyte (HUMA) stock price is pumping but 1 key risk remain

Humacyte (NASDAQ: HUMA) stock price has surged hard since I wrote about it in April. It soared to a high of $9.35 on Thursday and is now trading at its highest point since December 2021. It has risen for seven straight weeks and is up by almost 370% from its lowest swing this year.

The initial reason for the surge was that Senator Tommy Turbeville of Alabama acquired it in March. This was notable since the senator sits on the influential Senate Armed Services Committee and the company is researching on products that will be used by the Department of Defense (DoD).

Precisely, Humacyte is working on a solution that will introduce implantable bioengineered human tissues. The goal is to address numerous diseases, injuries, and chronic diseases. Its products are being tested in the ongoing war between Ukraine and Russia. 

Humacyte stock chart

Humacyte has achieved a lot in the past few months. For example, it received a FDA approval of its Biological License Application (BLA) and completed its Budget Impact Model that highlighted the value its Human Acellular Vessel (HAV) products would bring to its clients. 

Analysts are upbeat about the company. In a recent note, analysts at Cowen noted that HAV could be approved by August 10th of this year. If this happens, the company could start commercial launch by the end of the year. The analyst noted the following:

“Humacyte is poised to gain significant share for surgical procedures requiring vascular grafts, including reconstruction due to trauma, vascular access for dialysis patients, peripheral arterial disease repair, and, eventually, coronary artery bypass grafts.”

If Humacyte is successful, it has two options available. It could decide to do the commercialization itself, which is often an expensive endeavor. Alternatively, it could receive an acquisition offer, from some of the top players in the wound care industry like Smith & Nephew and ConvaTec.

Humacyte has also soared because of its growing popularity in social media platforms like Reddit and StockTwits. It has been one of the most trending stocks in these platforms recently, attracting a sense of FOMO.A likely risk that Humacyte investors face is a potential dilution now that the stock has gone parabolic. It ended the last quarter with over $115 million in cash and short-term investments and had a net loss of over $31.9 million during the quarter.

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