Why Celladon Corp. Shares Are Pumped Up

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Celladon (CLDN +0.00%), a clinical-stage biopharmaceutical company developing therapies to treat heart failure, jumped as much as 26% after receiving the highly coveted breakthrough therapy designation from the Food and Drug Administration for Mydicar.

So what: According to Celladon's press release, Mydicar, an experimental genetic enzyme replacement therapy used to correct a deficiency in the SERCA2a enzyme, was granted the breakthrough therapy designation "for reducing hospitalizations for heart failure in NYHA class III or IV chronic heart failure patients who are NAb negative." The breakthrough designation will give Celladon the opportunity to work more closely with the FDA, and potentially speed up its review and development process. Mydicar is currently being evaluated in its phase 2b CUPID 2 study to determine its effectiveness at reducing the frequency of, and/or delaying, heart failure-related hospitalizations. The company expects to report its mid-stage results in April 2015.

Now what: The breakthrough therapy designation isn't a guarantee that a drug will be approved, so shareholders will want to keep that in mind. However, the crucial win for Celladon, should Mydicar perform as well as expected in reducing or delaying heart failure-related hospitalizations, is that its expedited review process could save millions in clinical trial costs. Initial results from its previously phase 2a CUPID 1 trial looked promising. Over the three-year follow-up period, the risk of cardiovascular events in the presence of terminal events was reduced by 82% with Mydicar viewed as safe and tolerable. In short, it's a small-cap stock worth keeping an eye on.