Clinical-stage biopharmaceutical firm PaxMedica (NASDAQ:PXMD) is experiencing a full range of emotions following an initial spike in the market today. Earlier this morning, the company announced encouraging top-line results from its Phase 3 trial of PAX-101 (intravenous suramin), which met its primary endpoint. PXMD stock popped up on the news, although shares have since given up most of their gains.
According to the official press release, PaxMedica — which focuses on the “development of novel anti-purinergic drug therapies (APT) for the treatment of Autism Spectrum Disorder (ASD) and other serious conditions with intractable neurologic symptoms” — announced positive top-line data for the use of PAX-101 to treat Stage 1 African Sleeping Sickness. This condition is also known as Human African Trypanosomiasis Brucei Rhodesiense, or TBR HAT.
Specifically, PAX-101 demonstrated “better health outcomes when compared with a natural history control group of patients evaluated and treated from 1900-1910, prior to the availability of suramin in Africa.”
PaxMedica CEO Howard Weisman stated the following about the news:
“We’re excited to have completed this important real world evidence study that demonstrated both statistically significant and clinically meaningful results, and confirmed over 100 years of clinical experience with suramin as a life-saving medication in this potentially fatal infection.”
Moving forward, PaxMedica will file a new drug application (NDA) with the U.S. Food and Drug Administration (FDA) for the use of PAX-101 to treat the aforementioned disease.
PXMD Stock Still Presents a Hefty Risk
On paper, PXMD stock should enjoy sustained momentum given the potential viability of the company’s underlying therapeutic. According to the World Health Organization (WHO), for the period between 2016 and 2020, the population at risk for this illness stood at 55 million people. Therefore, PaxMedica appears to enjoy a large addressable market.
However, the WHO also stated that within that at-risk population, just 3 million people stood at “moderate-high risk.” Further, HAT incidences differ strongly by country and by region. Many of the countries reporting the most cases — for instance, the Democratic Republic of the Congo at 61% of cases — suffer from less-than-ideal socioeconomic conditions.
For PXMD stock specifically, investors shouldn’t overlook its extreme risk profile. Trading at only 82 cents per share as of this writing and featuring an average trading volume of 241,000 shares, PXMD is vulnerable to wild price swings. Therefore, even compelling news like today’s announcement may not be enough to sustain interest.
Since the start of the year, PXMD has suffered a loss of almost 58%. Over the past one year, shares have also given up more than 83% of market value. Unfortunately, investors have every incentive to extract any profits and leave.
Why It Matters
According to TipRanks, no analyst presently covers PXMD stock. Looking at information provided by Gurufocus, PaxMedica is also a pre-revenue enterprise. Therefore, shares are dependent on the underlying narrative turning favorable, which may add to investor concerns.
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On the date of publication, Josh Enomoto did not hold (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.
