What happened

Shares of the clinical-stage cancer company eFFECTOR Therapeutics (EFTR -3.61%) are up by a noteworthy 16% as of 10:55 a.m. EDT Thursday morning. Following this latest surge higher, Effector's shares have now gained a whopping 266% since the start of the week.  

While the exact cause of the biotech's rapid rise isn't altogether clear, it appears to be the result of big pharma's sudden interest in working with small-cap oncology companies over paying top dollar to acquire well-established commercial entities, along with a healthy dose of interest in the stock on various social media platforms. 

A doctor talking to a cancer patient in a hospital room.

Image source: Getty Images.

So what

This newly public cancer company is likely grabbing attention on social media this week for two key reasons:

  1. eFFECTOR's oncology platform, which concentrates on selective translation regulation inhibitors, is both novel and potentially game changing as a treatment modality for various cancers. What's important to understand is that big pharma has shown a keen interest -- through either licensing deals or buyouts -- in this type of company over the past two years. 
  2. eFFECTOR already has an ongoing collaboration with Pfizer (PFE -0.38%). Pfizer is flush with cash from its COVID-19 vaccine sales and a serial acquirer within the realm of oncology, and the pharma giant has a well-established history of buying out its smaller partners, especially in oncology. 

Now what

Is eFFECTOR's stock still a buy? The social media crowd is clearly counting on big pharma's appetite for novel early-stage cancer drugs to drive shares higher in the near term. The biotech, after all, appears to be at least two years away from a regulatory filing. Although it is entirely possible that a suitor could be waiting in the wings, these types of business development deals are hard to predict. Conservative investors may want to watch this story unfold from the sidelines for now.