What happened

Shares of Ra Pharmaceuticals Inc. (NASDAQ:RARX), a clinical-stage biopharmaceutical company, are on the rise after its lead candidate hit the mark in a mid-stage study for the treatment of myasthenia gravis. The stock climbed 20.3% before settling back to a 9.4% gain as of 2:46 p.m. EST on Monday.

So what 

Myasthenia gravis (MG) progressively weakens the muscles of around 60,000 U.S. adults and the only therapy specifically approved to treat the disorder is Soliris. This blockbuster treatment generates billions in top-line revenue for Alexion Pharmaceuticals (NASDAQ:ALXN), and positive results from a phase 2 study with Ra's lead candidate, zilucoplan, suggest it could become a new option for this group down the road.

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Ra's stock price probably would have risen further, but the effects observed weren't strong enough to feel confident about funding a much larger study. Investigators measured MG symptom reductions that were just strong enough to be considered statistically significant between patients given a higher dose of zilucoplan compared to the group given a placebo.

Now what

Soliris earned approval to treat MG after improving patients' quantitative MG scores by 4.6 points, or 188% better than the placebo group. Zilucoplan produced a 6.0-point improvement, but that was only 88% better than a placebo group that performed surprisingly well. 

There were just 44 patients in Ra's phase 2 zilucoplan study, which means we need to see more data before we can decide whether this program has legs or not. A meeting with the FDA to discuss the design of a phase 3 trial will probably take place early next year.

Ra finished September with $81 million in cash after losing $49 million during the first nine months of the year. It's hard to predict how well a phase 3 study with zilucoplan will work out, but we can be sure that Ra Pharmaceuticals will need to raise more capital to pay for it.

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