The rapid spread of COVID-19 is crushing the stock market. On March 9, the S&P 500 fell by about 7.5%, making it its worst day since 2008. What's more, there are good reasons to think things will get worse before they get better.

The World Health Organization (WHO) declared COVID-19 a pandemic, and issues surrounding the potentially deadly disease will likely continue to drag down global equities. Amid this chaos, though, some companies have actually performed well since the year started. For instance, shares of BioXcel Therapeutics (NASDAQ:BTAI) are up by 33% year to date. The main catalyst behind BioXcel's recent performance was an analyst recommendation, but can the clinical-stage biotech company keep up this pace?

What BioXcel Therapeutics is all about

BioXcel focuses on developing treatments for conditions within the fields of immuno-oncology and neuroscience. The company especially targets conditions with "significant unmet medical need and large market opportunity." BioXcel also seeks to utilize Artificial Intelligence (AI) to make the development process for its treatments faster and less costly. BioXcel's pipeline boasts such products as BXCL701, a potential treatment for pancreatic cancer; BXCL701 is currently in phase 1/2 testing. BioXcel's most promising pipeline product, though, is BXCL501. This product is being investigated as a treatment for acute agitation (psychological and behavioral symptoms) associated with psychiatric conditions such as schizophrenia and bipolar disorders. 

Hand stacking wood blocks with arrows pointing up.

Image Source: Getty Images.

BioXcel argues there's a huge potential in this market for two major reasons. First, about 9.4 million patients experience acute agitations per year out of a pool of approximately 18.9 million patients who suffer from some psychiatric disorder and are at risk of experiencing agitations. Second, BioXcel claims that current treatments for acute agitation associated with psychiatric disorders are either ineffective or come with severe side-effects (or both). BioXcel is preparing to launch a phase 3 trial to investigate the efficacy of BXCL501 as a treatment for acute agitation in patients with schizophrenia and bipolar disorder. 

BioXcel's financial position

Like many clinical-stage biotech companies, BioXcel is currently unprofitable. For the fiscal year 2019, the company did not generate a single dollar in revenue, and BioXcel recorded a loss from operations of $33.6 million, as well as a net loss of $32.9 million. At the end of 2019, the company had a cash balance of about $32.4 million. In addition, BioXcel recently announced a common stock offering to raise capital. The company sold 2 million shares for a price of $32 per share, thus raising $64 million in the process. Investors were not thrilled with the common stock offering, which caused BioXcel's stock to plunge by about 17%

Should you buy?

BioXcel is subject to the same risks as other clinical-stage biotech stocks. The company could run into regulatory roadblocks or some of its clinical trials could fail to return positive results. Even if its current pipeline candidates sail relatively smoothly through these potential headwinds, none of them will hit the market before next year, at best.

Further, BioXcel's financial position isn't particularly strong at the moment. For all those reasons, and despite BioXcel's strong performance year to date -- the company seems far too speculative right now. Investors looking to buy shares of biotech stocks had better look elsewhere.