What happened
Shares of the clinical-stage biotech Biomea Fusion (BMEA 5.12%) have been on fire this week. Specifically, the pre-revenue biotech's stock gapped up by a stately 99.8% over the first three and a half days of trading this week, according to data provided by S&P Global Market Intelligence.
The big gain came in response to encouraging mid-stage data for its type 2 diabetes candidate BMF-219. Initial data showed that a whopping 89% of patients in cohort 3 of the study achieved a reduction in A1c after four weeks of once-daily 100 mg dosing.
A1c is a measure of a person's average blood sugar levels over the prior three months. In addition, Biomea noted in the press release that BMF-219 was well tolerated over the study period.
So what
Type 2 diabetes is one of the largest and fastest growing pharmaceutical markets in the world. As a result, a drug capable of lowering a person's blood sugar levels over a sustained period, without major side effects, could easily generate blockbuster level sales.
Such a drug would also likely be a top acquisition target. So, while Biomea still has a lot of work to do to prove that BMF-219 is a safe and effective treatment for type 2 diabetes, there is a real chance the company may have an enormous value driver under its roof in the wake of these promising mid-stage results.
Now what
Is Biomea stock still a buy? It all depends on your tolerance for risk. These mid-stage data are indeed promising, but BMF-219 still has to pass muster in larger trials to gain market access. A lot can go wrong in the meantime.
That doesn't mean that Biomea won't ultimately score a major breakthrough with this experimental diabetes treatment, but clinical trials are an inherently risky proposition. This small-cap biotech stock, in turn, is probably only suited for investors who are comfortable with risk.
