What happened
Shares of the clinical-stage biotech Oramed Pharmaceuticals (ORMP 3.86%) are having a banner day today. Specifically, the company's stock price rose by as much as 40% on extremely high volume early on in Tuesday's trading session. The biotech's shares have cooled off as the day has progressed. But Oramed's stock was still up by a respectiable 16% as of 1:23 p.m ET Tuesday afternoon.
What's causing investors to rush into this small-cap biotech stock? Oramed's shares have been racing higher ever since management released a letter to shareholders last Friday.
Image source: Getty Images.
So what
This letter stated that the company is in a relatively strong financial position, and two major data readouts for nonalcoholic steatohepatitis (NASH) and type 2 diabetes are coming down the pike. Short sellers, in turn, appear to be covering their positions in the stock after piling into this name over the prior nine months.
What's the big deal? The upcoming mid-stage NASH data could set Oramed up to launch a pivotal-stage trial for indication by next year. What's important to understand is that most industry insiders think NASH will be a $30 billion market by the end of the decade.
Now what
Does Oramed's stock have more room to run? I believe so. But it will depend on upcoming trial results. The long and short of it is that Oramed's lead product candidate, ORMD-0801, could be a franchise-level drug within a few short years. That's a notable value proposition for a company with a sub $400 million market cap at the time of this writing.
