Orthocell Ltd (ASX: OCC) set the local stock market alight in July this year as its shares soared 236% in a matter of weeks, climbing from 29.5 cents to a high of 99 cents.
The euphoria soon wore off with the stock recently dipping as low as 50 cents, but it wasn't long before investors were back on the scene to take advantage of the sharp plunge.
Orthocell's shares have again risen 23.3% over the last three trading days and are trading at 63.5 cents. They hit a high of 67 cents earlier in the session but have retreated marginally since.
So what has caused the latest rebound, and is it worth taking a closer look at the company itself?
Orthocell is a tiny biomedical group based at Murdoch University, Western Australia. The company provides innovative approaches to the regeneration of tendon, cartilage and soft tissue injuries.
Source: CMC Markets
The stock's incredible July rally can largely be associated with a publication that appeared in a popular medical journal which provided peer reviewed support for a similar approach to cartilage regeneration as that undertaken by Orthocell.
This ultimately led to excitement surrounding the company's potential, which soon wore off (although it maintained a gain of more than 60% over the space of two months).
However, the stock has taken off once again following an announcement made to the market on Tuesday that a new study supports Orthocell's innovative intellectual property around the generation of 'tissue specific' growth factors for the regeneration of cartilage and bone, whilst also showcasing Orthocell's "exciting pipeline opportunities". Notably, this does not relate to Orthocell's primary product focuses, but rather a pipeline opportunity.
Elsewhere in the sector, Sirtex Medical Limited (ASX: SRX) and ResMed Inc. (CHESS) (ASX: RMD) are trading 2.3% and 0.1% higher today, respectively.
Should you buy?
Orthocell is a very speculative company. Should everything go according to plan, the returns could be enormous but like any biomedical group, there is also a very large element of risk.
At today's price, investors willing to take on a little extra risk in the hope of superior returns could look to put a small amount of money to work although it remains imperative that they maintain a properly diversified portfolio, with most of their funds allocated to well-established companies to provide a solid base for their wealth.
