I like quite a few of the 100 most popular stocks on Robinhood. My investment portfolio even includes over a dozen of them -- all of which are large-cap stocks or big exchange-traded funds (ETFs).
Although several penny stocks are widely held by investors on the trading platform, I typically avoid such stocks because they're usually too speculative. However, that doesn't mean that there aren't some intriguing opportunities with really low share prices. Here's a popular Robinhood penny stock you'll want to have on your radar.
The best kind of clinical-stage biotech
Tonix Pharmaceuticals Holding (TNXP -17.41%) barely makes Robinhood's most-popular list, currently ranking in the last spot in the top 100. Most investors have probably never heard of Tonix, but the company has an interesting story.
There are three broad categories of biotechs: commercial-stage, clinical-stage, and preclinical-stage. Tonix belongs to the middle group. And it's arguably the best kind of clinical-stage biotech.
The earlier a clinical-stage biotech's pipeline candidates are in development, the riskier it is. Tonix already has a program in late-stage testing with non-opioid painkiller TNX-102 SL. Even better, the company announced positive results from one phase 3 study for the experimental therapy in treating fibromyalgia in December 2020.
Tonix expects to report interim results from a second late-stage study of TNX-102 SL in treating fibromyalgia in Q3 of this year and top-line results in the fourth quarter. Assuming all goes well, the company will likely file for U.S. regulatory approval in 2022.
Many biotechs with promising late-stage programs have valuations that are sky-high. However, Tonix's market cap is still under $400 million. Some clinical-stage biotechs are also one-trick ponies with a single candidate in clinical testing. Tonix's pipeline includes one other experimental drug in clinical testing with plans to advance another program into clinical testing this year. It's also targeting several other neurological indications for TNX-102 SL.
A couple of intriguing "lottery tickets"
Tonix's candidates focused on central nervous system disorders would be enough on their own to merit attention from investors. However, the company also has a couple of intriguing "lottery tickets" that just might pay off in a spectacular fashion.
In March, Tonix announced positive preliminary results from a preclinical trial evaluating COVID-19 vaccine candidate TNX-1800 in nonhuman primates. To be sure, there's a long way to go from preclinical testing to potentially getting a new COVID-19 vaccine on the market. And that market is already getting somewhat crowded.
What's interesting about TNX-1800, though, is that it's a single-dose vaccine that could provide long-term immunity. It uses a live modified horsepox virus vaccine that's designed to express the spike protein found on the surface of SARS-CoV-2, the coronavirus that causes COVID-19.
Yes, Tonix would be late to the party at best even if all goes well with its development of TNX-1800. However, it's at least possible that the company could carve out a position for itself in the global COVID-19 vaccine market if TNX-1800 meets expectations.
In addition, Tonix recently struck a deal with OyaGen to license TNX-3500, an experimental antiviral drug that could treat COVID-19 and other viral infections. The news caused Tonix's share price to jump because of investors' excitement about the potential for TNX-3500. In a head-to-head comparison with Gilead Sciences' Veklury (remdesivir), TNX-3500 was found to be around 65 times more effective at inhibiting the SARS-CoV-2 virus.
Although I think that Tonix exhibits several of the characteristics found in the best clinical-stage biotech stocks, it's still quite risky. There's no guarantee that its lead candidate will win regulatory approval or be a commercial success even if it does. The odds are even greater against Tonix's COVID-19 programs enabling investors to win the biotech jackpot.
I don't think Tonix is the kind of stock that most investors would be comfortable buying at this point. But if there's a penny stock to have on your radar, I think Tonix is it.