What happened

Shares of Cara Therapeutics (CARA -27.26%), a pre-commercial-stage biopharmaceutical company, slid 28.5% in December, according to data from S&P Global Market Intelligence. During a dismal month for small-cap biotech stocks, investors forgot about the sorely needed new opioid headed for the finish line.

Check out the latest Cara Therapeutics earnings call transcript.

So what 

From the beginning of December through Christmas Eve, the Wells Fargo Small Cap Biotechnology ETF fell 22%. Without any news during the entire month of December to help make spirits bright, it swept Cara Therapeutics downhill as well. 

Sad man looking at a downward-sloping chart.

Image source: Getty Images.

It seems investors forgot how close this company is to its first commercial drug launch. In August 2018, Cara dosed the first patient in a pivotal study with its lead candidate, Korsuva, and top-line data should be ready in a few short months.

Cara's opioid can stop pain and itch signals where they occur, but it's hardly active in the brain. That makes Korsuva a potential option for around 250,000 dialysis patients with bad kidneys that lead to chronic itching. 

Investors sensing a bargain swept in after the company announced significant progress with Korsuva's ongoing pivotal study earlier this month. Cara Therapeutics stock has already risen 20% in the year to date.

Now what

Cara Therapeutics recently completed enrollment of Korsuva's first pivotal trial, and the 12-week study should produce top-line results early in the second quarter. The odds of success seem pretty good. During a mid-stage trial, 64% of patients given Korsuva reported a worst-itch score improvement of three points or better, compared to just 29% of the placebo group.

If pivotal results fall in line with earlier observations and Korsuva earns an approval, Cara has a key marketing partner that could make its first drug launch a successful one. Fresenius Medical Care (FMS -3.15%) is a leading dialysis service provider with clinics across the country ready to sell Korsuva to patients who need it.