"The early bird gets the worm." We can apply this familiar saying to investing in stocks. Getting in on a promising company before its shares skyrocket can translate into market-shattering returns in the long run. Of course, many companies haven't garnered much attention yet simply because they are high-risk investments.

It's essential to keep this fact in mind when looking for potential under-the-radar gems. With that said, let's look at a promising biotech that could perform very well in the next six months and beyond: NRx Pharmaceuticals (NASDAQ:NRXP). This company has a market cap of only $535 million -- but if its master plan actualizes, its shares could go through the roof.

Why NRx Pharmaceuticals could skyrocket

NRx Pharmaceuticals is a clinical-stage biotech, but it does have a promising pipeline program. The product in question is called Aviptadil, and it is a potential treatment for COVID-19. Aviptadil is primarily aimed at severe coronavirus patients with respiratory failure. In a phase 2b/3 clinical trial, the 60-day survival rate of critically ill COVID-19 patients treated with Aviptadil was 81%, compared to just 21% for those on the current standards of care.

Doctor and nurse in a hospital both wearing masks.

Image source: Getty Images.

This is a striking difference, and it strongly suggests that if approved, Aviptadil could become yet another important weapon in the fight against this deadly disease. There are still thousands of people hospitalized with COVID-19 every week -- and many of them die due to respiratory failure. That's despite the availability of therapy options such as Gilead Sciences' Veklury and Regeneron's REGEN-COV.

NRx Pharmaceuticals is currently awaiting a decision from the U.S. Food and Drug Administration (FDA) regarding a potential emergency use authorization (EUA) for Aviptadil. Of note, Aviptadil earned EUA in the nation of Georgia in July. Furthermore, NRx Pharmaceuticals is gearing up to submit an application for an EUA for the treatment in Europe.

If regulators in the U.S. and Europe grant this treatment the green light, expect NRx Pharmaceuticals' shares to soar. 

Risks abound 

NRx Pharmaceuticals does not currently have any products on the market, and its performance will depend on perceived clinical and regulatory successes or failures. If the company fails to earn EUA for Aviptadil, its shares will implode. Funding may also be an issue for NRx Pharmaceuticals. Developing life-saving treatments isn't cheap, and since it currently does not generate any revenue, it has to find other ways to raise capital. As of June 30, the company had $13.4 million in cash and cash equivalents, which isn't a lot.

However, NRx Pharmaceuticals has increased its capital since. It acquired an additional $9.2 million through the exercise of warrants, and it racked up $30 million in gross proceeds by issuing roughly 2.7 million new shares in a private placement. 

This news caused its stock price to fall. That's something for investors to keep in mind. The company could easily issue new shares again if its stock rises following positive regulatory news, especially as it gets ready to launch Aviptadil on the market. This decision would put downward pressure on its stock.

All of the above risks are typical for clinical-stage biotechs, but there is one company-specific issue plaguing NRx Pharmaceuticals. Relief Therapeutics, a Switzerland-based biopharmaceutical company, is currently suing NRx Pharmaceuticals. Relief claims that NRx Pharmaceuticals breached the terms of a collaboration agreement the two entities signed in September 2020.

The agreement relates to the development and potential marketing of Aviptadil. However, NRx Pharmaceuticals claims that while Relief was supposed to fund the Aviptadil project, it decided to abandon this program in early 2021 because the medicine had "missed the pandemic." NRx Pharmaceuticals was then left to fund the project by itself, and while Relief claims it still holds rights to the drug, NRx Pharmaceuticals denies this.

 It is difficult to know how this lawsuit will turn out, but investors had better keep it in mind. 

Worth buying? 

NRx Pharmaceuticals has other pipeline programs. Most notably, it is looking to develop a vaccine for COVID-19 called BriLife. Participants in a phase 3 clinical trial for this candidate being conducted in Israel were told by local authorities that they did not need a booster dose of the vaccine since their protection against COVID-19 remained high six months after the second dose. Positive clinical updates regarding BriLife could be another catalyst for NRx Pharmaceuticals' stock -- along with the expected regulatory nod it could earn for Aviptadil soon.

With a $535 million market cap, the company need only generate several hundred million from these two products for its shares to go to the moon. But investors should remember the other side of this coin: Any misstep, especially related to Aviptadil, will sink the company's stock. That makes NRx Pharmaceuticals a decent option for more aggressive investors. Those of us who are more risk-averse might want to look at other biotech stocks

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.