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Why TransCode (RNAZ) Stock Is Going Up, Looks Like a Good Buy

Mohit Oberoi, CFA - Author

Sep. 23 2021, Published 12:02 p.m. ET

TransCode Therapeutics (RNAZ) stock was trading sharply higher in the early price action on Sept. 22. Why is RNAX stock going up and what’s the forecast for the stock? Also, is it a good buy despite the surge?

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TransCode is an RNA oncology company. It thinks that its leading therapeutic candidate TTX-MC138 is effective across multiple tumor types. The company is also deploying capital efficiently and has only spent $7.5 million so far. Clinical stage companies are notorious for their massive cash burn because they have to spend aggressively towards R&D.

Why is RNAZ stock going up?

RNAZ stock is going up after it announced that Cancer Nanotechnology has published preclinical research supporting TTX-MC138. It said, “The key results of the study demonstrated that TTX-MC138, when injected intravenously, accumulated in metastatic lesions.” TransCode also said, “These results suggest that TransCode’s TTX platform delivers its therapeutic candidate as intended and the company believes supports clinical evaluation of TTX-MC138.”

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The mention of RNAZ’s lead candidate in Cancer Nanotechnology is a piece of positive news for the company. Clinical stage companies tend to be very volatile and see massive rises and falls on news related to the products that they're developing.

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Despite the rise on Sept. 22, RNAZ stock is down over 27 percent for the year. It's also trading at a significant discount to its all-time highs of $7 that it hit in July.

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RNAZ stock forecast

Since RNAZ is a newly listed company with a market cap of only about $50 million, none of the analysts are covering the stock. The forecast for RNAZ will eventually depend on the therapeutic candidates that it's developing.

TransCode Therapeutics came up with its IPO in 2021. However, the IPO didn't receive a good response from the markets. TransCode had to price the IPO at $4, which was a significant discount to the original price range of $8–$10.

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It's pretty unusual for a company to cut the IPO price by over half. RNAZ also lowered the IPO size and offered fewer shares than it originally planned. Even after the sharp rise on Sept. 23, the stock only marginally trades above the IPO price of $4.

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In general, IPOs haven't done well in 2021 and the Renaissance IPO ETF is underperforming the markets. However, over the last week, we have seen good listing gains from IPOs like Toast. This is a welcome break for investors since many of the hyped IPOs including Robinhood failed to give listing gains. This is in stark contrast to 2020 when many IPOs doubled on the listing date.

However, markets have been apprehensive about new listings and many of the SPACs also trade below the IPO price. There's a long list of stocks that trade below the SPAC IPO price even after the merger date.

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Should you buy RNAZ stock?

Like all clinical-stage companies, RNAZ is a risky bet before the therapeutic candidate gets approval. However, given the massive market opportunity, RNAZ could be worth a look at these prices.


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