Dermata Therapeutics IPO (DRMA) Stock

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Contributor, Benzinga
August 19, 2021
$0.44
-0.03[-6.38%]
Last update: 6:07PM (Delayed 15-Minutes)
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Open0.470Close0.453
Vol / Avg.249.625K / 821.671KMkt Cap1.557M
Day Range0.431 - 0.50852 Wk Range0.211 - 4.800

After two years of lockdowns, face masks and social distancing, arguably most Americans are ready for society to reclaim normalcy. Not surprisingly, pent-up demand for vacations, get-togethers and other interactive experiences catapulted various activities, resulting in spikes in traffic data.

However, for the millions of Americans suffering from skin diseases — 84.5 million to be exact — returning to business as usual may ignite insecurities that the COVID-19 pandemic temporarily buried. To help restore confidence and dignity to these individuals, Dermata Therapeutics actively researches and develops novel approaches to skincare, driving relevance for its stock offering.

When Did Dermata Therapeutics IPO?

Dermata IPO’d on August 13, 2021 at an initial price of $7 per share.

Dermata Financial History

For anyone that has suffered the trials and tribulations of skin problems, current medicinal and over-the-counter solutions leave much to be desired. Typically only addressing the outer symptoms of the disease rather than the root of the problem, the various ointments, creams and pads can leave your skin feeling overly dry and raw. Moreover, sufferers must apply the solutions daily — and in some cases, multiple times over a 24-hour cycle.

Fortunately, Dermata proposes a treatment plan that brings skincare out of the depths of anachronism and into modernity. Featuring Spongilla lacustris — a naturally growing freshwater sponge found in North America, Europe and Asia — Dermata leverages the sponge’s unique chemical and mechanical attributes to penetrate a patient’s skin. From there, the sponge creates microchannels within the dermis, ultimately killing the bacteria responsible for acne as well as facilitating natural rejuvenation of the skin.

As such, Dermata’s therapeutic has three key advantages over traditional skincare solutions.

  • Effectiveness: The Spongilla lacustris-based therapy penetrates the skin, addressing the root cause of skin conditions rather than merely the symptoms.
  • Convenience: Because of its efficacy and its comparatively long-lasting effect, Dermata’s topical solution only needs to be applied once per week.
  • Diversity: Contrary to standard skincare treatments that only address a specific disease or condition, Dermata’s solution addresses multiple disorders, thereby being a one-stop shop.

To be fair, DRMA stock will require patience and significant risk tolerance. For starters, Dermata is a pre-revenue company, implying heavy reliance on positive clinical data. Should slip ups occur in the process, it could devastate shares.

Second, medical researchers have long explored Spongilla lacustris as a skincare solution but have failed to bring viable products to the commercial market. One possible headwind is that longer-term safety profiles of this therapeutic approach is questionable.

Still, medical breakthroughs are occurring all the time, with the rapid-fire distribution of COVID-19 vaccines representing the most recent example. Therefore, if Dermata succeeds in its mission, it could change the paradigm of the global skincare industry.

Management upgraded the terms of the IPO just before it went live, offering 2.57 million shares at a per-unit price of $7, resulting in gross proceeds of $18 million for the IPO, minus underwriting discounts and expenses related to the market introduction. The pricing occurred on Aug. 12, and Dermata inked its debut on the IPO calendar 1 day later.

Shares trade on the Nasdaq exchange under the ticker symbol DRMA. Maxim Group LLC, a full-service investment bank, acted as the sole bookrunner.

Although Dermata uses an intriguing technology to provide skincare solutions for underserved patients, DRMA stock did not quite have the debut management was hoping for. Shares opened its first public session at $5.80, dropping to an intraday low of $4.66 before climbing back up to finish the day at $5.19.

Subsequent trades have been lackluster, with the Aug. 17 session closing at $5.10, more than 27% below DRMA’s initial offering price. This disappointment serves an important lesson — always be vigilant with IPOs as they really can go either way in the early phase.

Nevertheless, prospective investors should note that the Aug. 13 intro date featured multiple new offerings, thereby competing for attention. Additionally, the speculative nature of the current market environment — note the record levels of trading on margin — may have prevented traders from appreciating Dermata’s long-term addressable market.

Dermata Potential

Primarily, interested investors can easily justify the bullish thesis of Dermata stock through the numbers. According to the American Academy of Dermatology Association, 50 million people in the U.S. suffer from acne, making it the most common skin condition in this country. Further, the condition can occur in any stage of life, imposing confidence issues for both young students and professionals.

Further, 7.5 million Americans have psoriasis, while rosacea impacts another 16 million individuals. Standard treatment options dictate that patients purchase condition-specific medicine, which can be costly. Also, some skin conditions have similar symptoms, which may result in unnecessary spending for ineffective treatments. Therefore, the potential for Dermata addresses both efficacy and monetary considerations.

More importantly, Wall Street appears to be ignoring the pandemic-related catalyst for DRMA stock. Due to the mandating of face coverings (which can breed bacteria) and work-from-home or learn-from-home initiatives, millions of people who suffer from various skin conditions enjoyed a social reprieve. However, it’s unlikely that remote operations will be the norm.

Even before the pandemic, many high-profile companies that offered telecommuting began recalling their employees. An overriding theme is that communication and operational management is much quicker and easier with in-person interactions. Cynically, with nowhere to hide, Dermata’s therapeutics should enjoy significant demand — assuming of course that it succeeds in bringing its products to market.

How to Buy Dermata Therapeutics (DRMA) Stock

If you already know how to buy stocks, you can start trading right away. If not, just follow the simple steps below.

Step 1: Pick a brokerage.

Unlike prior generations, the present popularity of personal investing sparked intense competition among online brokers. Today, most key incentives such as commission-free trading are standard. Therefore, you can focus your search for the best brokers on attributes that matter most to you, such as access to different financial products and interface mobility.

Step 2: Decide how many shares you want.

Since stocks are inherently volatile, you’ll want to manage this risk through a balanced share count. Select a number that affords you adequate gains in case of a rising trade but limits downside should circumstances move against you.

Step 3: Choose your order type.

Before taking your shot, familiarize yourself with these market concepts.

  • Bid: The highest price a buyer will offer, the bid is always lower than the ask.
  • Ask: The lowest price a seller will accept, the ask is always higher than the bid.
  • Spread: The spread indicates market liquidity and risk. Narrower spreads imply higher liquidity and lower risk, while the opposite is true for wider spreads.
  • Limit order: Limit orders allow specified-price transactions, which offers price transparency but no execution guarantees.
  • Market order: Conversely, market orders guarantee fulfillment but only at the prevailing rate, which may fluctuate considerably.
  • Stop-loss order: A damage-mitigation mechanism for your portfolio, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only execute at a predetermined price, ensuring total control of your risk management protocol. However, such orders carry the same nonfulfillment risk as limit orders.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

An Offering that’s More than Skin Deep

While skin disease may seem like a superficial concern, in reality, it imposes a significant economic impact. As well, such conditions are responsible for mental health issues that may impact confidence and performance in academic and professional institutions.

Unfortunately, current skincare options are both ineffective and inconvenient. That’s why Dermata Therapeutics offers a potential paradigm shift with its 1-size-fits-all therapeutic that only needs to be applied once every 7 days. As society gradually returns to normal, Dermata’s solution could be just what the doctor ordered for millions of Americans.

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About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.