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Why Corbus Pharmaceuticals Holdings Inc Shares Skyrocketed Today

By Brian Orelli, PhD – Oct 5, 2016 at 7:48AM

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A new analyst rating for an underfollowed biotech.

Image source: Getty Images.

What happened

Corbus Pharmaceuticals (CRBP 11.45%) is up 29% at 1:18 p.m. EDT after an analyst at Cantor Fitzgerald initiated coverage of the biotech with a buy rating.

So what

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.

Now what

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. 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.

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