You've probably heard of most of the 100 most popular stocks on Robinhood. Many of them are household names. But there are also a handful of stocks that are widely held by investors on the trading platform that won't be familiar to most investors.

Tonix Pharmaceuticals (NASDAQ:TNXP) stands out as a good example of these under-the-radar stocks. With the small biotech recently making it onto the most popular list, Robinhood investors are clearly buying the company's stock. But should you?

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Why Tonix is popular with Robinhood investors

Tonix doesn't have any products on the market yet. However, Robinhood investors appear to be especially interested in the drugmaker's lead pipeline candidate and one of its preclinical programs.

The company's currently evaluating lead candidate TNX-102 SL in a late-stage study as a potential treatment for fibromyalgia. Tonix reported positive results in December 2020 from one pivotal study of the experimental drug. It expects to announce results from a second phase 3 study later this year. If those results are also positive, the company plans to file for U.S. Food and Drug Administration (FDA) approval in 2022.

Tonix thinks that TNX-102 SL could also be effective in treating other neurological disorders. The drug is "phase 3 ready" in treating post-traumatic stress disorder (PTSD) and ready for phase 2 testing in treating agitation in Alzheimer's disease patients and alcohol-use disorder.

In addition to TNX-102 SL, Tonix has another clinical program, TNX-1300, which is being evaluated in a phase 2 study for treating cocaine intoxication. It also plans to advance TNX-1900 into phase 2 testing in the third quarter of 2021 as a potential prophylactic treatment for chronic migraine.

But Robinhood investors are perhaps most excited about Tonix's COVID-19 vaccine candidate TNX-1800. The company's shares soared a few weeks ago after Tonix announced positive results from a preclinical study of the experimental vaccine in nonhuman primates.

TNX-1800 is a modified horsepox virus that's engineered to express a protein from the novel coronavirus that causes COVID-19. Live attenuated (weakened) viruses have achieved long-term immunity in other infectious diseases. Tonix hopes to advance TNX-1800 into a phase 1 study in humans in the second half of this year.

Several significant risks

Like any clinical-stage biotech, Tonix Pharmaceuticals faces several significant risks. The most obvious one is that its pipeline candidates might flop in clinical testing.

That's arguably less of a concern for TNX-102 SL. After all, the drug has already demonstrated positive results in one late-stage study. Its key ingredient cyclobenzaprine has been on the market in oral form for years. 

Tonix's COVID-19 vaccine candidate, though, hasn't even begun clinical testing yet. There's a lot that can go wrong that could prevent the vaccine from winning approval. 

Even if the company's products do win approval, there's no guarantee that they'll be commercially successful. Several drugs are already on the market for treating fibromyalgia and at least four others are in clinical testing. Multiple safe and effective COVID-19 vaccines are also already widely available with more potentially on the way.

Investors also have to worry about the potential for dilution. In January, Tonix sold 50 million new shares. It followed up the next month by selling another 58.3 million shares. These moves dilute the value of existing shares. And while the company now has a hefty cash stockpile, it may need to resort to more stock offerings to raise cash in the not-too-distant future with increased costs related to new clinical trials.

A Tonix for success?

Despite its big gains this year, Tonix Pharmaceuticals' market cap remains below $400 million. That doesn't seem too high considering the company has a late-stage candidate and other promising pipeline programs.

It's possible that TNX-1800 can deliver long-lasting immunity that provides years and even decades of protection against COVID-19. If so, Tonix could be a big winner in the COVID-19 vaccine market down the road.

However, most investors should stay away from clinical-stage biotech stocks. They're simply too risky. I think that's true of Tonix, even with its potential. All of the reasons to buy the stock are couched in "ifs" and "maybes."

Having said that, my view is that Tonix is a stock to keep on your radar. I'll be closely watching what happens as the company seeks to advance its horsepox-based COVID-19 vaccine through clinical testing.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.