Corbus Pharmaceuticals (NASDAQ:CRBP) is up 29% at 1:18 p.m. EDT after an analyst at Cantor Fitzgerald initiated coverage of the biotech with a buy rating.
Cantor Fitzgerald is only the fourth investment bank to follow the company, so it's not too surprising that a new initiation would spur interest in the company.
And there's plenty to learn about Corbus Pharmaceuticals. The biotech only has one drug, resunab, but it's testing the anti-inflammatory drug in multiple indications: cystic fibrosis, systemic sclerosis, dermatomyositis, and lupus.
Corbus is currently running phase 2 clinical trials testing resunab in three of those indications with the first phase 2 clinical trials in cystic fibrosis and systemic sclerosis expected to read out this quarter, and the dermatomyositis clinical trial producing data in the first quarter of next year. A phase 2 trial in lupus is scheduled to begin in the first quarter of next year.
At a market cap around $400 million after today's move, Corbus still has plenty of room to run if the phase 2 clinical trials are successful.
But investors should keep in mind that, while having multiple shots on goal seems like it would reduce the risk, Corbus is still counting on the same mechanism of action to treat all of the diseases. If resunab can't reduce chronic inflammation and fibrosis in one of the diseases, it won't be a good sign for the other diseases. Of course, the reciprocal is also true, and shares of Corbus might shoot up on the first positive phase 2 trial more than is really deserved because investors are factoring in success in other indications.
Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
What to Expect From Corbus Pharmaceuticals in 2018
Will the new year bring great results like Corbus had in 2016, or another dismal performance like in 2017?
This Marijuana Stock, With Its Eggs in 1 Basket, Popped 14% Last Week
Talk about betting the farm on a single developing drug.
Here's Why Corbus Pharmaceuticals Holdings Inc. Jumped Today
Shares rally after the company reports encouraging results from a phase 2 trial.