By Jonathan Weil
Regencell Bioscience Holdings, a small Hong Kong company, is grappling with a struggling business and a Justice Department investigation. Yet for reasons that remain a mystery, its Nasdaq-listed shares have been surging again.
Despite recurring losses, no revenue and no salable products, Regencell finished last week with a $15.5 billion stock-market value, up 50% since year-end and 126-fold since its initial public offering in 2021. For context, only 20 of the 261 companies in the Nasdaq Biotechnology Index had a greater market value; the index doesn't include Regencell.
Speculative fever persists in many parts of the investing world, from the silver mania and artificial-intelligence boom to cryptocurrencies and Pokémon cards. There also has been a flood of new listings on U.S. stock exchanges in recent years -- mostly on Nasdaq -- by obscure overseas companies with dubious financial prospects. But even in the delirium of meme-stock trading, Regencell is an outlier.
Last Friday, it jumped 22% in the opening minutes of trading, only to give back its gains by noon. The day before that, the stock rose 40% on no new information. As recently as Jan. 7, the market value was $26 billion, after more than doubling in three trading sessions for no readily apparent reason.
Regencell's wild ride illustrates how disconnected from reality some of the market's fringes have become. The company says it is developing traditional Chinese medicine, primarily herbal formulas, to treat autism spectrum disorder and attention-deficit hyperactivity disorder.
In a written response to questions, Regencell's chief operating officer, James Chung, said, "Our CEO was patient #1 and he had remarkable results with the ADHD/ASD treatment and his aim is to make it accessible to everyone." He said Regencell's chief executive, Yat-Gai Au, "firmly believes that the company's shares have consistently been a target of short selling from our IPO to present." Chung said "we cannot comment beyond our existing public disclosures on market activity, the company's valuation, or any third-party investigations."
In its fiscal 2025 annual report, filed in October, Regencell said "there is substantial doubt regarding our ability to continue as a going concern," and its outside auditor opined the same. The company, which is incorporated in the Cayman Islands, said it spent less than $1 million last year on research and development, mostly to pay salaries and benefits. It noted that the average R&D cost to bring a new medicine to market is nearly $4 billion and can sometimes exceed $10 billion.
It also flagged that, according to the U.S. Centers for Disease Control and Prevention, "there is no cure for ADHD and ASD." But it framed the lack of effective conventional medicine, along with adverse side effects of existing drugs, as an opportunity, and said "we are well-positioned to become the leader in providing the treatment for ADHD and ASD."
To put it mildly, skepticism is warranted. The company had just 10 employees, according to its latest disclosure.
A year ago Regencell's stock price was 11 cents, adjusted for a 38-for-1 stock split last June. On Monday it was about $29, giving it about a $14 billion market value, with daily trading volume averaging about 455,000 shares. The peak closing price was $78 in mid-June, after the stock split, when its market value surpassed $38 billion.
In October, Regencell said it had received a subpoena from the Justice Department as part of an investigation into the trading of its shares. The company said it was cooperating, and that the department had sought records about its operations, finances and accounting.
It is unclear how long Regencell can hang on. Cash and investments were $4.9 million as of June 30, down from $8 million a year earlier, and Regencell said it expected to incur significant costs related to the Justice Department probe. The company reported a $3.6 million net loss for fiscal 2025, compared with $4.4 million the year before.
Despite these precarious fundamentals, for all but the most daring traders Regencell isn't actionable. Shorting it could be even riskier than holding it. Its chief executive owns 89% of the company, meaning the public float is thin, and the stock is prone to explosive short squeezes. The cost of borrowing the shares for a short sale is exorbitant, if an investor could find someone to lend them.
Nonetheless, Regencell's example speaks volumes about the capital markets' current state. There remains a tremendous appetite for absurd risk, along with plenty of easy marks waiting to be separated from their money.
Write to Jonathan Weil at jonathan.weil@wsj.com
(END) Dow Jones Newswires
January 27, 2026 05:30 ET (10:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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