What happened

Shares of Mustang Bio (MBIO 3.10%) were galloping 13.3% higher as of 3:43 p.m. EDT on Tuesday. The big gain came on the heels of two developments. Mustang Bio and cancer research and treatment center City of Hope announced the first patient dosing in an early-stage clinical study evaluating MB-101 in treating leptomeningeal brain tumors. Also, investment firm BTIG initiated coverage on the stock with a buy rating and a price target of $11.

So what

As Mustang CEO Manuel Litchman said, "The successful dosing of the first patient in this clinical trial of MB-101 is an important milestone in Mustang's development program." He's right. The company doesn't have any products on the market yet. Investors applaud any significant progress with the clinical testing of its pipeline candidates.

Scientist looking at PC and another scientist looking through a microscope

Image source: Getty Images.

The bigger catalyst for the biotech stock, though, was probably BTIG's initiation of coverage. In April, three analysts surveyed by Refinitiv had buy recommendations for Mustang Bio with another analyst rating the stock as a strong buy. The average price target for those four analysts was $10.25.

BTIG's price target represents a 285% premium to Mustang's closing price on Monday. It will also boost the consensus price target for the stock.

Now what

Mustang Bio and City of Hope plan to enroll up to 30 patients in the study of MB-101. The biotech expects to soon enroll its first patient in a phase 2 study of another pipeline candidate, MB-107. It hopes to also file an Investigational New Drug (IND) application in the second quarter to advance MB-207 into a phase 2 clinical study.