IPO season continues today with another exciting entrant. PaxMedica (NASDAQ:PXMD) is the newest company to make its public debut. The IPO priced at $8.1 million and includes$1.5 million shares at the individual price of $5.25. So far, PXMD stock has rallied far above that price.
PaxMedica describes itself as a “clinical-stage biopharmaceutical company focused on developing innovative treatments for unmet needs in neurodevelopmental disorders.”
While it’s still early in the day, PXMD stock is off to an excellent start. As of this writing, it is up more than 40%. This could be the next hot IPO that investors have been searching for. The question remains: Just how high can it go?
Let’s take a look at the company in more detail to properly asses its potential.
Is PXMD Stock Worth Watching?
In short, yes. PXMD stock is definitely a name that investors should be following.
But let’s dig in a little deeper. When small, little-known companies surge when they start trading, they almost inevitably come down as momentum cools. Therefore, investors should be analyzing PXMD’s growth potential in both the long and short term.
GigaCloud Technology (NASDAQ:GCT) surged in its trading debut last week, but it has plunged by more than 57% since then. Before that, Innovative Eyewear (NASDAQ:LUCY) launched its IPO. It failed to gain any serious momentum and LUCY stock hasn’t rebounded, falling 35% since.
This isn’t the first time that PaxMedica has tried to come public, either. In July 2020, it sought to raise $15 million in an IPO that ultimately did not launch. This may have been due to capital problems. “PXMD is thinly capitalized with an unorthodox trial effort, so I’ll watch the IPO from the sidelines,” reported one Seeking Alpha contributor.
Renaissance Capital notes that “After not updating its prospectus since September 2020, the company revived its plans for an IPO with a new blank filing this past January and set new terms earlier this month.”
As noted, PaxMedica operates in the biopharmaceutical space. What sets the company apart from its peers is the fact that its working on treating conditions for which little to no progress has been made. Its lead programs target Autism Spectrum Disorder (ASD) and Fragile X-associated Tremor / Ataxia (FXTAS).
As PaxMedica’s webpage notes, “There are no FDA approved treatments for the core symptoms of ASD and no FDA approved treatments at all for FXTAS.”
These are clear areas of opportunity. The question is just how fast is PaxMedica moving forward. The company reported positive results for a Phase 2 Trial of PAX-101 (IV suramin) in children with Autism Spectrum Disorder (ASD) in early 2021. Its most recent news, from the first week of 2022, involves progress in its treatment for patients with long Covid-19 syndrome.
What Comes Next
PaxMedica is operating in a space where little progress has been made. If it can get one of its treatments to market ahead of competitors, it will gain a significant market share. While PXMD stock is likely to come down after an impressive trading debut, it is certainly worth watching. If it makes any sort of progress in the coming months, shares will soar.
On the date of publication, Samuel O’Brient 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.