The words ‘roller-coaster ride’ get thrown around a lot when talking about shares. But there are roller coasters and then there is Angle (LSE: AGL). This penny stock is more like a bucking bronco!

In early 2024, it surged more than 100% in a single day, then lost half its value in a month. Now the share price has risen by 79% in four weeks to sit at 21p. But it’s still 78% lower than it was just two years ago.

I have a very small position in the stock. Should I add to it?

What does the firm do?

AIM-listed Angle is a cancer diagnostic company that has developed a potentially groundbreaking technology called the Parsortix system. This provides a unique approach to capturing and analysing circulating tumour cells (CTCs) from the blood of cancer patients.

The system appears to represent a significant advancement in liquid biopsy (a blood test that allows the detection and analysis of cancer cells or fragments of the tumor’s DNA).

Cancer treatment often relies on understanding the specific characteristics of a patient’s tumour. Yet these can change over time. So the ability to capture CTCs and analyse them effectively allows the monitoring of cancer patients’ responses to treatments.

This is potentially a great development for patients and outcomes. But how will the company benefit?

Why is the stock up?

Well, in April, Angle announced a deal with FTSE 100 pharma giant AstraZeneca to develop a CTC test for DNA damage. The six-month development phase is worth an initial £150,000 to the firm.

Then in May, it signed another deal with Astra to develop a new CTC assay to detect androgen receptor (AR) status in prostate cancer patients.

Using Angle’s technology, clinicians can assess the effectiveness of prostate cancer therapies while a patient’s treatment is ongoing.

These were the catalysts for the recent share price explosion. The company is seemingly on the road to commercial lift-off.

Should I buy more shares?

Now, while this could eventually be a very lucrative market opportunity, investors should be realistic about the near term.

The two deals announced so far with AstraZeneca are collectively worth less than £1m. Meanwhile, the development of the AR assay isn’t expected to be completed before 2025.

Moreover, the company will probably need to issue more shares to raise cash in the next couple of years, which could cause volatility.

Today, the firm is hardly generating any revenue, yet has a market cap of £55m. This means the stock is trading on a price-to-sales (P/S) ratio of 32.

Clearly, the firm is being valued on its high future potential. But with its groundbreaking technology being validated with blue-chip partnerships, I do expect much large contracts to be announced moving forward.

If this does happen, then the share price could keep heading higher. But as things stand, this is a speculative and high-risk stock. It is only suitable for investors with a high risk tolerance.

On balance, I’m going to stick with my holding. If the stock reaches its potential and flies higher, a small position is all I will need. If it crashes, then that will be all I want.