What happened

Shares of AnaptysBio (NASDAQ:ANAB) rose more than 12% last month, according to data provided by S&P Global Market Intelligence. The jump came on the heels of positive top-line data from a phase 2a study investigating the company's lead drug candidate as a potential treatment for a severe type of asthma. The antibody etokimab was shown to work after just a single dose and delivered gradually improving breathing function through the 64-day follow-up of the ongoing trial.

So what

Equally important to effectively improving the quality of life of asthma patients is the fact that etokimab didn't cause any serious adverse events, which bolsters its safety profile. Other antibodies developed to treat asthma have been shown to (ironically) cause severe allergic reactions in some patients, so AnaptysBio might have an edge if the biologic drug continues to shine in the ongoing phase 2b study and potentially upcoming phase 3 trial.

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Image source: Getty Images.

Investors are hoping that's the case, especially after a mixed bag of results from previous studies testing etokimab against other allergic conditions. However, past failures from the company's throw-it-at-the-wall-and-see-what-sticks approach aren't too surprising considering the complex mechanisms involved in various allergic and immune conditions. In other words, failure in one indication is unlikely to be a predictive factor one way or the other for the drug candidate's potential in another.

While investors are patiently waiting to learn if several clinical milestones expected in the next 12 months become major catalysts (including complete results from the ongoing phase 2a trial in asthma by the end of 2018, the move to a phase 2b trial in asthma in early 2019, and results from an ongoing phase 2b trial for etokimab in eczema in the second half of 2019), there won't be much need to worry about finances. AnaptysBio wisely took advantage of the mid-September run-up in its stock price to raise $270 million in gross proceeds from a stock offering in the final days of last month.

Now what

The timing of the share offering actually worked out pretty well for the business and investors, as AnaptysBio stock has fallen 20% in the first two weeks of October -- mostly as a result of the slide of the broader stock market. That said, shares are now trading 15% below the price of the stock offering, and the company likely ended the third quarter of 2018 with around $500 million in cash and short-term investments.

While the prerevenue company will burn cash quickly, the budding pipeline is somewhat derisked thanks to a healthy balance sheet and formidable partnerships. If etokimab delivers in its ongoing mid-stage trials in asthma and eczema, then AnaptysBio figures to be worth more than its current $2 billion market cap one year from now. Long-term investors with an appetite for risk (this is still a binary biopharma stock, after all) might want to take a closer look.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.