Aditxt Inc (NASDAQ: ADTX) stock rocketed by more than 75% in early trading on Friday. The huge jump followed the company’s announcement that its therapeutic program, Adimune™, has successfully completed a toxicology study that indicates the safety profile of ADI™-100, the company’s immunotherapeutic technology drug.
The company said that the toxicology findings would provide vital supporting evidence when the company files an Investigational New Drug (IND) application with the regulatory agencies. It advances the drug closer to its first in-human trials.
However, the company's financials might not be sound enough for some investors.
What is Aditxt?
Virginia-based Aditxt Inc is a life sciences company developing technologies specifically focused on improving the health of the immune system through immune reprogramming and monitoring.
The company’s immune reprogramming technology, which is called Apoptotic DNA Immunotherapy™ (ADi™), is designed to retrain the immune system to induce tolerance with an objective of addressing rejection of transplanted organs, autoimmune diseases, and allergies.
Aditxt’s immune monitoring technology, dubbed Aditxtscore™, is designed to provide a personalized comprehensive profile of the immune system.
The company says it is developing ADi™ products for organ transplantation including skin grafting, autoimmune diseases, and allergies, with the initial focus on skin allografts and psoriasis.
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ADTX Investment Risks
While ADTX stock price has rocketed today, it’s worth noting that, at the time of writing, the stock price is still down by almost 90% across the last 12 months. While that could of course mean that there is an opportunity to pick up the stock at a potentially cheap price, any stock that has seen such a monumental drop in price carries a heavy risk to investors.
The company began earning revenue in the quarter ending 31 December 2021, where it brought in $105,034, following this up with $210,279 in the next three-month period. However, this is a drop in the bucket considering that the company racked up operating expenses of more than $6.1m in its most recent quarter.
As such, one of the major risks investors face is the company running out of cash, with Yahoo Finance listing the total cash of the company at just over $2m. Without a huge increase in revenue, ADTX looks like it will require a significant injection of cash to realise its ambitions.
ADTX Growth Potential
Aditxt says that its addressable market is “massive”, with its work having potential applications within treatments within the dermatology, transplant, autoimmune disease and infectious disease spaces.
Is Aditxt a Good Investment?
While Aditxt’s sounds very exciting and its share price has received a huge boost, the share price is extremely deflated compared to heights reached in 2021. Any stock that has lost the attention of investors to such an extent would require extremely careful consideration before taking the chance of investing.
Additionally, a major concern is how the business will fund itself going forwards. Revenue is nowhere near significant enough to cover its current expenses and so the exploration of further funding options seem likely. These could significantly dilute ADTX’s share price.
It’s also worth noting that penny stocks, or companies which trade at a value of less than $1, can be very high risk.