Is Azitra IPO a Good Buy?

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Contributor, Benzinga
May 23, 2023

Addressing the often-quiet pain and desperation that dermatological diseases impose, early-stage clinical biopharmaceutical company Azitra Inc. extends a critical lifeline to scores of patients worldwide. Leveraging innovative solutions involving engineered proteins and live biotherapeutic products, Azitra provides precision dermatology. With the company scheduled to make its public market debut soon, prospective investors should start conducting their due diligence.

Fundamentally, the biopharma benefits from a large total addressable market. In the U.S. alone, the American Academy of Dermatology Association (AAD) notes that 84.5 million people in the U.S. — or one in four — suffered an impact from skin disease. This disease category costs the national healthcare system $75 billion in medical, preventative and prescription and non-prescription drug costs.

On the other end of the equation, the market for new public listings presents serious ambiguities. Once a blistering-hot arena, many private enterprises have decided to hold out regarding their public launches. In addition, Azitra would enter the open market hovering above the nano-capitalization delineator, bringing with it a distinct set of challenges.

Below are the pros and cons to consider.

What Does Azitra Do?

Founded on Jan. 2, 2014, Azitra represents a synthetic biology company focused on screening and genetically engineering microbes of the skin, according to its Form S-1 disclosure document filed with the U.S. Securities and Exchange Commission (SEC). The company’s main directive centers on the discovery and development of novel therapeutics to create a new paradigm for treating skin disease.

According to Azitra’s website, the biotechnology firm attempts to solve the challenges of skin diseases through three core strategies:

  • Leverage the use of its proprietary microbial library
  • Engineering microbes for microbial drug delivery
  • Use advanced genetic engineering protocols

Primarily, Azitra harnesses the beneficial properties of skin commensals or microorganisms that reside on human skin. In normal circumstances, humans do not derive benefits from skin commensals. However, Azitra flips this narrative on its head, engineering specific bacterial strains found in these commensals for direct delivery to affected skin regions. To achieve this transmission, the company uses genetic engineering tools designed in collaboration with Chemia Biosciences, Inc., a research and development group from Carnegie Mellon University.

Currently, Azitra’s product pipeline includes two live biotherapeutic product candidates and one protein candidate for precision dermatology. Management anticipates beginning a first-in-human trial of its engineered microbe, ATR-12, for Netherton syndrome — a disorder that affects the skin, hair and immune system — later this year.

When is the Azitra IPO Date?

Scheduled to make its initial public offering (IPO) — or the first time a private company offers its equity shares to retail investors — on May 25, 2023, those interested in participating in Azitra’s launch need to start assessing the opportunity shortly. Shares will trade on the NYSE American exchange under the ticker symbol AZTR.

According to Renaissance Capital, Azitra on March 20, 2023, announced plans to raise $12 million through the distribution of 2.4 million shares at $5 each. At the proposed price, the biopharma would command a fully diluted market value of $70 million. More recent data from the IPO calendar indicates that the biotech firm will price shares in a range between $4.50 to $5.50.

Although an enticing prospect for those interested in acquiring shares in an innovative pharmaceutical company, market participants must take extra precautions. For one thing, the IPO market can be cruelly capricious. Even for professionals, public debuts carry significant risks. Ultimately, it is never certain how retail investors will respond, thus possibly leading to high volatility.

Another factor to consider is the slowdown in global IPOs during the first quarter of 2023. From a CNN Business report, in the three months ending March 30, 2023, 299 companies across the globe went public, a tally that slipped 8% compared to the same period last year. More worryingly for IPO traders, the funds raised from new listings landed at $21.5 billion, a staggering loss of 61% on a year-over-year basis.

Mainly, the culprits cover the usual suspects of the post-pandemic new normal: higher costs of living tied to stubbornly high inflation and the Federal Reserve’s hawkish monetary policy that has spiked borrowing costs because of higher benchmark interest rates.

Specifically for Azitra, AZTR stock will enter the fray just above the nano-cap stock level, which cuts off around the $50 million mark. To be sure, such a small valuation may facilitate robust mobility in the price chart. At the same time, the lackluster response from the retail investment community toward new listings warrants a prudent approach.

What Analysts Are Saying About Azitra IPO

As an extremely small enterprise that has yet to make its public debut, Wall Street analysts have not yet weighed in on Azitra. However, AZTR stock benefits from its relevant therapeutics along with a massive addressable market.

The AAD reported that one in four Americans have been impacted by skin disease. Only one in three with skin disease was seen by a dermatologist, which implies a significant opportunity for Azitra. In other words, a direct and effective regimen may help convince skin condition sufferers to seek clinical help, thus potentially bolstering AZTR stock.

Another factor to consider is the global burden of skin disease. According to research published by the National Library of Medicine, the Global Burden of Disease project has demonstrated that skin diseases continue to the be fourth leading cause of nonfatal disease burden worldwide. However, the association notes that “research efforts and funding do not match with the relative disability of skin diseases.”

Stated differently, skin diseases disproportionately impose non-fatal disabilities in resource-poor regions. Presumably, as Azitra’s innovations advance and accrue the benefits of economies of scale, the biotech could potentially help address the global market for skin-related ailments.

To put hard figures into the mix, Grand View Research stated that the global dermatological drugs market reached a valuation of $17 billion in 2021. Further, analysts expect the segment to expand at a compound annual growth rate (CAGR) of 10.8% from 2022 to 2028. At the culmination of the forecasted period, sector revenue should stand at $34.9 billion.

Naturally, the burgeoning arena bodes well for AZTR stock. On the flip side, investors need to consider several risk factors. As alluded to earlier, Azitra barely rises above the nano-cap realm. Plus, a poor debut could easily see its valuation sink, perhaps even sparking a delisting warning from the NYSE American exchange.

In addition, as an early-stage biopharma, Azitra faces market risk and clinical vagaries. Even if the company progresses through the early phases with encouraging results, a bad outcome is never too far away, especially with the aspirational and experimental nature of genetic engineering protocols.

Finally, the current market environment offers only a tepid invitation to high-risk, high-reward ventures like AZTR stock. For instance, with investors closely watching the debt ceiling crisis amid a worsening geopolitical framework, taking potshots on near-nano-cap entities might not be particularly judicious.

Azitra Financial History

For most investors, the financials represent the make-or-break moment before making the critical decision to buy or pass. With Azitra, the numbers aren’t unusual for a firm of its size and nature. Nevertheless, market participants will want to pay close attention to the details before participating in this IPO.

Per its Form S-1 disclosure, Azitra posted total revenue of $284,000 for the fiscal year ended Dec. 31, 2022, an increase of 158% against the prior year. However, management posted general and administrative expenses of $3.64 million and research and development expenses of $6.1 million. Therefore, Azitra’s loss from operations landed at $9.45 million, expanding unfavorably from the prior year’s loss of $9.22 million.

Factoring in other line items, net loss came out to $10.68 million, a conspicuous expansion of red ink from the $8.94 million net loss posted in fiscal year 2021.

On the balance sheet, Azitra’s total assets on Dec. 31, 2022, amounted to $7.167 million, a noticeable reduction from the $10.2 million posted one year ago. Moreover, total liabilities last year came out to $9.73 million, resulting in a total stockholders’ deficit of $36.26 million (when factoring in equity-related transactions). Therefore, investors should think carefully before jumping aboard this market debut.

Azitra Potential

On the surface, AZTR stock appears compelling. Commanding advanced genetic engineering protocols, Azitra extracts certain beneficial properties of microorganisms, directly applying them to impacted areas of patients suffering from various skin diseases.

In addition, the total addressable market for the biopharma suggests a promising framework. With so many people suffering from skin-related ailments both in the domestic market and abroad, Azitra may very well leverage the paradigm shift its management team seeks.

At the same time, investors need to be brutally realistic about the Azitra IPO. For one thing, the broader market and economic environment don’t support speculative ideas. Should circumstances worsen, Wall Street may see a rotation to risk-off assets, which might devastate AZTR stock.

Plus, extremely small biotech enterprises generally tend to be volatile because of their vulnerable financial position along with the unknowns associated with clinical testing. Ultimately, investors must think carefully before moving ahead with AZTR stock.

Where to Buy Azitra IPO Stock

If you want to participate in Azitra’s IPO, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of the best brokers to consider.

AZTR Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

AZTR Pre-IPO

For those interested in acquiring AZTR stock on a pre-IPO basis (that is, acquiring shares at their initial offering price as opposed to their open-market price), ClickIPO offers the ability to do just that.

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.