Against a broadly positive backdrop due to cooling inflation data, Baudax Bio (NASDAQ:BXRX) nevertheless managed to resoundingly steal the spotlight, skyrocketing into triple-digit percentage gains. The pharmaceutical company — which focuses on innovative products for acute care — announced the acquisition of Teralmmune, a privately held biotechnology firm focused on autoimmune disease therapies. Though BXRX stock soared on the accretive implications, it remains an overall speculative venture.
Still, for the moment, investors have focused on Teralmmune’s potential ability to drive clinical progress. “This combination blends the world class scientific expertise of the TeraImmune team with the Baudax team’s proven ability to execute clinical development programs, which we believe is a win for the shareholders of both companies,” said in part Baudax CEO Gerri Henwood.
According to the accompanying press release, Henwood will serve as the CEO of the combined entity.
“This merger adds TeraImmune’s TI-168 asset to the Baudax portfolio—a promising next-generation, autologous FVIII TCR-Treg cell therapy candidate to eliminate clotting factor VIII (FVIII) inhibitors in Hemophilia A patients,” added the head executive.
Moreover, leveraging the TI-168 platform, Baudax believes that it commands potential for clinical application in the management of myasthenia gravis, pemphigus vulgaris and combination therapies addressing various autoimmune diseases.
BXRX Stock Jumps on the Expanded Addressable Market
By the numbers, the treatment market for the global hemophilia space accounted for $12.2 billion in 2021. According to Acumen Research and Consulting, analysts project that the sector will expand at a compound annual growth rate (CAGR) of 6.9% from 2022 to 2030. At the forecast culmination, this treatment industry could hit a valuation of $21.9 billion. On paper, that’s a huge positive for BXRX stock.
For context, even with the massive spike in Baudax shares, the company only carries a market capitalization of $7.22 million. That makes BXRX stock almost a nano-cap play within the nano-cap subsegment, which refers to publicly traded enterprises with a market value below $50 million.
Of course, with such a diminutive profile, BXRX stock represents an extremely risky venture. However, the fundamental backdrop, at least in theory, facilitates a blue-sky opportunity. For example, BCC Research noted that the global market for autoimmune disease treatments — Baudax’s core target area — reached a valuation of $53.2 billion in 2019.
Even more compelling, analysts project that this sector will expand at a CAGR of 11.2% between 2019 through 2024. At the culmination point, the segment should hit $90.7 billion. Again, that’s a massive total addressable market for such a small enterprise.
Why It Matters
Despite the enormous rally, investors must still exercise extreme caution. Even with the triple-digit gains, BXRX stock hemorrhaged about 67% of equity value since the January opener. In the trailing one-year period, it’s down roughly 97%.
Unsurprisingly, only one analyst presently covers shares as a pensive “hold” with no price target published.
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On the date of publication, Josh Enomoto 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.