Pliant Therapeutics (NASDAQ:PLRX) closed up 33% today to $21.30, after pricing its initial public offering (IPO) at $16 per share. At one point today, shares were as high as $25.

Pliant raised $144 million in the IPO, which priced at the high end of the $14 to $16 range the company had set for itself. There was clearly substantial demand for the IPO, since it was upsized to 9 million shares from an initial plan to sell just 6 million shares.

Finger touching a screen that says IPO

Image source: Getty Images.

The biotech is testing its lead clinical candidate, PLN-74809, as a treatment for idiopathic pulmonary fibrosis (IPF) and primary sclerosing cholangitis (PSC). IPF is a lung disease and PSC affects the liver, but the connection is that both diseases are facilitated by inflammation and scarring caused by the immune system. PLN-74809 works by inhibiting integrins that are responsible for activating immune cells that cause the damage. A phase 2a clinical trial in IPF is under way, and Pliant plans to start a phase 2a study in PSC in the second half of 2020.

Pliant is also developing PLN-1474 in conjunction with Novartis (NYSE:NVS) for the treatment of liver fibrosis in patients with non-alcoholic steatohepatitis. The companies started a phase 1 study of the drug last month.

Last year, Novartis paid $80 million up front, including an equity investment, when it licensed PLN-1474 and up to three additional drugs targeting integrins. Novartis also participated in the IPO, purchasing an additional $10 million of shares in a private placement at the IPO price.

Pliant also has a couple of additional preclinical assets, but given their early stage, it's hard to assign much value to those pipeline candidates. Of course, at a market cap around $750 million, the biotech doesn't need much beyond PLN-74809 and PLN-1474 to support its valuation.

While its clinical-stage valuation seems reasonable, investors should keep in mind that it'll be while -- multiple years -- before Pliant will be able to generate revenue from an approved drug, so it's most appropriate for a long-term investor.

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