What happened

Shares of Relmada Therapeutics (NASDAQ:RLMD), a clinical-stage biopharmaceutical company, popped in response to a positive clinical trial readout with the company's lead candidate. Investors excited about REL-1017's positive human abuse potential trial results pushed the stock 37% higher at its peak this morning.

Relmada Therapeutics has settled down since its early morning pop. The stock was up by just 3.6% as of 11:25 a.m. EDT on Tuesday.

So what 

In the U.S. alone, around 20 million adults experience a case of major depressive disorder (MDD) annually, and available treatments often fail to restore patients to their preferred state. Relmada Therapeutics stock is jumping today because the study made it clear that REL-1017 is far less addictive than oxycodone.

Scientist looking up at a sample tube in a lab.

Image source: Getty Images.

During Relmada's successful study, recreational opioid users who received a 25-milligram dose of REL-1017 ranked its likability at 53 points out of a possible 100, which was right in line with a score of 52 recorded by patients given a placebo. Patients randomized to receive oxycodone gave it an average likability score of 85 points, while those given 150 milligrams of REL-1017 gave it 65 points on average.

Now what

Relmada's candidate is essentially a purified isomer of methadone, a synthetic opiate traditionally used by recovering heroin addicts. Since methadone's still classified as a narcotic with potential for abuse, marketing REL-1017 could be an uphill battle if it eventually earns approval. Successful results from today's abuse potential trial are a step in the right direction.

Unfortunately, today's results don't tell us much about REL-1017's ability to treat MDD. This is why investors want to tread lightly with this risky biotech stock until they see a little more data.

In April, Relmada began the second of two pivotal trials with MDD patients who already had an inadequate response to at least one available antidepressant. Success could drive the stock higher, but investors should understand that treatment-resistant depression is especially difficult to care for. There just isn't enough evidence yet to be confident about REL-1017's ability to succeed where most antidepressants fail.

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