What happened

Shares of Ocean Biomedical (OCEA -4.35%) were up more than 118% as of 2:45 p.m. Thursday. The preclinical-stage biotech, which began publicly trading on the NASDAQ on February 15, focuses on deadly diseases, including malaria, numerous cancers, and pulmonary fibrosis.

The reason for the surge was a talk at Brown University's Legorreta Cancer Center by Ocean Biomedical's scientific co-founder, Dr. Jack A. Elias, who presented details regarding potential therapies to suppress tumors on various cancers.

So what

Elias focused on his company's work in understanding how the protein Chitinase 3-like-1 (CHI3LI) is involved in the progression of lung cancer. He also spoke about how his discoveries show that certain monospecific and bispecific antibodies can be used as therapies to treat non-small cell lung cancer (NSCLC) and glioblastoma multiforme (GBM). The company hopes to speed these discoveries into phase 1 trials.

The reason for the excitement over such preliminary news is that the target groups for both diseases are quite large.

  • According to Cancer.net statistics, NSCLC is the leading cause of cancer death and is the second-most diagnosed cancer in the United States, affecting approximately 236,740 people.
  • GBM, according to the National Library of Medicine, is the most common primary brain tumor in adults. It is incurable and has an average survival period of 15 months.

The news comes on the heels of an announcement by the company on February 28 that co-founder Dr. Jonathan Kurtis had been awarded a patent for the discovery of third parasite target PfCDPK-5, which could be used to halt the parasite in various stages of the malaria cycle.

Now what

The jump on Thursday was enormous, but bear in mind that this is a newly traded small-cap stock with no marketed drugs and no clinical trials. Ocean Biomedical hasn't even released a quarterly report yet. While the stock might present a good long-term opportunity, the risk level is exceptionally high. Investors would be wise to see how the company progresses before diving in.