What happened

Cara Therapeutics (NASDAQ:CARA), a clinical-stage biotech focused on drugs that relieve pain, rose by nearly 10% during August, according to data from S&P Global Market Intelligence. The jump was caused by management;s sharing some upbeat news with investors during its second-quarter earnings report.

So what

Here's a review of the financial highlights from the second quarter, as well as a few key upcoming milestones:

  • Net loss was $9.3 million, or $0.29 per share. That was much lower than the $0.62 loss analysts had projected.
  • Cash balance at quarter end was $112 million.
  • Management has a meeting scheduled with the FDA to finalize its phase 3 trial design of I.V CR845 in treating chronic kidney disease-associated itching in hemodialysis patients.
  • A phase 1 trial using oral CR845 in CKD-aP non-hemodialysis patients is expected to start in the fourth quarter.
  • Enrollment for the company's phase 3 trial of I.V. CR845 for the treatment of acute postoperative pain (CLIN-3001) is expected to be completed in the fourth quarter.

While Cara's stock rose sharply in response to this earnings report, it gradually fell back to earth in the following weeks. However, Cara ended August on a high note, after the company announced that it would be presenting clinical data at two upcoming medical conferences. That news was apparently enough to get traders interested in the stock once again. 

A man in a suit gives a thumbs up

Image source: Getty Images.

Now what

President Trump recently declared that the opioid epidemic has become a "national emergency" and instructed his administration to focus on dealing with the crisis. Since Cara's lead compound, CR845, is a painkiller that targets receptors outside the central nervous system, it holds promise to offer pain relief without making patients addicted to the drug. That's an enormous benefit that could be helpful in fighting the opioid epidemic and could help the company receive a great deal of support from Washington if the drug proves successful in the clinic.

However, there are still some question marks related to the effectiveness of CR845, which makes Cara a very speculative bet. Nevertheless, I'm quite bullish on CR845 and the rest of the company's pipeline. For that reason, I think Cara is a great stock for risk-loving investors to put on their watchlist.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.