Biotech investors know that small companies can make massive moves on big headlines, and we’re seeing such a move in Enveric Biosciences (NASDAQ:ENVB) today. Shares of ENVB stock are up more than 120% in early afternoon trading today after the company put forward a press release highlighting plans to license three classes of its compounds.
This little-known biotech stock is one that’s garnering attention around this deal as Enveric looks to out-license three classes of its compounds. The company currently has a library of more than 1,000 “novel molecules generated using the Company’s Psybrary™ platform and proprietary computational chemistry and artificial intelligence (AI) drug-discovery system (PsyAI™).” So, there’s an AI angle to this deal, which provides another layer of excitement for certain investors.
Notably, this move comes on very heavy volume. As of 1:15 p.m. EST, more than 163 million shares of ENVB stock have traded hands, which is substantially higher than the stock’s average trading volume of around 335,000 shares. And given the company’s micro-cap status even after today’s rise (currently valued at a market capitalization of just over $5 million), it’s possible similar moves could be coming on the horizon.
Let’s dive into this announcement and what investors may want to make of this little-known biotech name today.
Why Is ENVB Stock Surging Today?
Enveric Biosciences is in the business of developing “novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, and addiction disorders.” The company’s research and development techniques appear to be of interest to other major players, and this out-licensing deal certainly provides some validation for the work the company has done thus far in its field.
Now, the company did announce that the three term sheets it signed could result in up to $200 million in revenue for the company, assuming certain milestones are met. These would include the ultimate approval of investigational new drug applications, and successful completion of Phase 1 through 3 trials. So, there’s still a long way to go on this front, and plenty of execution-related risks exist with this company at its current stage.
That said, this deal is certainly a big one for a company with a market capitalization significantly smaller than the total potential of this licensing deal. If more future deals are announced and other competitors jump on board, it’s also entirely possible that Enveric could become a takeout target in short order. At least, that’s what the market appears to be pricing in today.
Suffice it to say, this was a company that wasn’t on my watch list yesterday but is today. I anticipate many investors will begin to follow this company more closely as it works with partners to develop its novel compounds.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
