What happened

Shares of Kiniksa Pharmaceuticals (NASDAQ:KNSA) jumped over 36% today after the company announced that its lead drug candidate earned the coveted Breakthrough Therapy designation from the U.S. Food and Drug Administration (FDA). 

The regulatory decision was based on promising phase 2 results for rilonacept as a potential treatment for recurrent pericarditis that were presented at the American Heart Association (AHA) Scientific Sessions on Nov. 16. Importantly, the designation provides a smoother path to market for the drug candidate, perhaps as soon as mid-2021. 

As of 1:30 p.m. EST, the small-cap stock had settled to a 21.6%% gain.

A cluster of white paper airplanes ascending as a red paper airplane leads the pack.

Image source: Getty Images.

So what

Breakthrough Therapy designation is granted to drug candidates aimed at treating serious diseases and that appear to demonstrate significant improvements over available care. While investors can never expect any drug candidate to earn the coveted status, today's news isn't too surprising after reading through the phase 2 data. 

Rilonacept, a recombinant fusion protein that inhibits interleukin-1alpha and interleukin-1beat signaling (read: two proteins involved in inflammation), reduced pain and inflammation and improved quality of life when administered to individuals with recurrent pericarditis. The condition is characterized by inflammation of the pericardium, the protective layers of skin that surround the heart, and is often treated (unsuccessfully) with corticosteroids or other pain medications. 

Kiniksa Pharmaceuticals also reported that weekly injections of rilonacept significantly reduced the number of pericarditis episodes over the six-month phase 2 study and allowed many individuals to taper or discontinue corticosteroid treatment, which can have short- and long-term side effects, on top of failing to provide much relief. 

A phase 3 study is currently enrolling individuals and should have top-line results available in the second half of 2020. If successful, then the biologics license application (BLA) for rilonacept may receive an expedited decision from regulators to increase patient access thanks to its new breakthrough status. 

Now what

Today's news is welcomed by investors who have endured a 55% decline in shares of Kiniksa Pharmaceuticals since the initial public offering (IPO) in 2018. But a market cap of less than $500 million suggests investors aren't necessarily that optimistic about the market potential of rilonacept. That said, perhaps the opinion of the company and its relatively deep, albeit early-stage pipeline, will begin to change.