Bringing an experimental treatment or drug to the market can be a wild rollercoaster ride. Take Praxis Precision Medicines (NASDAQ:PRAX) as a case in point. The company went public in the fall of 2020, with excitement around its lead treatment candidate helping to drive the share price up over $900 at one point, only to have it plummet down to $26 when the lead candidate failed in a Phase 2/3 trial.
Since then, the company turned to other treatments in the pipeline and now has a promising candidate (Ulixacaltamide) for late-stage development. The stock is on a high again and up over 100% year-to-date. Investing in clinical-stage biopharma is a speculative endeavor with a high failure rate, but when it hits, it can hit big. Investors willing and able to bear the risk may find this opportunity compelling.
Praxis’ Promising Pipeline
Praxis Precision Medicines is a clinical-stage biopharmaceutical firm focused on leveraging insights from genetic epilepsies to develop therapies for central nervous system (CNS) conditions characterized by an imbalance in neuronal excitation-inhibition. The company uses its proprietary small molecule platform, Cerebrum™, and antisense oligonucleotide (ASO) platform, Solidus™, to discover and develop treatments for both rare and common neurological disorders.
Praxis has a diversified CNS portfolio, with numerous programs covering movement disorders and epilepsy. It currently has four clinical-stage product candidates. The company is advancing the Phase 3 program for its lead candidate, Ulixacaltamide, which targets the treatment of essential tremor (ET).
Top-line results are anticipated to be released in the second half of 2024, and a New Drug Application (NDA) submission is planned for 2025, with the company estimating the ET U.S. market at $4 billion.
Recent Financial Results & Outlook for Praxis
Praxis has shared its Q1 2024 results, revealing a revenue of $431,000, 73.40% less than the anticipated estimate of $1.62 million. Research and development expenses rose to $27 million, primarily due to increased personnel expenses and costs related to the drug development platform. The company reported a net loss of $39.6 million for the first quarter of the year. Earnings per share of -$2.84 fell short of the analyst estimates of -$2.08.
The company held two underwritten public offerings this quarter—one in January, netting approximately $161.6 million, and another in April, accruing about $215.8 million. As a result of these offerings, the company’s cash, cash equivalents, and marketable securities stood at $451.2 million as of April 30, 2024. These resources are anticipated to fund operations until 2027.
What Is the Price Target for PRAX Stock?
Analysts covering the company have been quite bullish on the stock. Robert W. Baird analyst Joel Beatty recently initiated coverage of Praxis, issuing an Outperform rating and $117 price target, noting the company’s promising pipeline and upside potential.
Praxis Precision Medicines is considered a Strong Buy based on seven Wall Street analysts’ ratings and price targets over the past three months. The average price target for PRAX stock is $132.00, with forecasted targets widely ranging from $40 to $270, representing a 194.84% upside from current levels.
The stock has been on an upward trajectory over the past year, climbing 183%, and currently trades in the middle of its 52-week price range of $12.45-$67.21.
Conclusion on Praxis
Praxis has overcome the ups and downs of clinical trials on various potential candidates to arrive at a promising spot with its current pipeline of treatment candidates. Enthusiasm is building based on the lead candidate, which has the potential to be a blockbuster drug if it can successfully demonstrate efficacy in its Phase 3 trials and gain FDA approval. It is a speculative play, high risk- high reward, that biopharma investors may find compelling.
