Shares of Corbus Pharmaceuticals (NASDAQ: CRBP), a company developing new drugs that target the endocannabinoid system, started jumping this afternoon after an investor presentation at Oppenheimer (NYSE: OPY). The bank also began analyst coverage with an outperform rating and a price target that implies a 300% gain. As a result, the stock was up 11.9% as of 3:22 p.m. EDT on Tuesday.
Corbus Pharmaceuticals hasn't received much attention for its endocannabinoid system targeting approach to treating chronic autoimmune diseases. Following Oppenheimer's enthusiastic prediction, though, investors will begin taking notes whenever Corbus moves a muscle.
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Corbus' lead candidate, lenabasum, is a synthetic drug that acts on CB2 receptors expressed on immune cells, instead of the CB1 receptors in the brain that cannabis consumers are most concerned with. The unique approach appears to shut down inflammation without actually suppressing the immune system the way some of today's top-selling biologics do.
Elegant-sounding solutions rarely work out in the long run, but lenabasum has a pretty good chance to succeed in an ongoing pivotal trial as a treatment for systemic sclerosis. Corbus has started a second late-stage study with dermatomyositis patients and its lead candidate. Later this year, a second candidate, CRB-4001, will begin clinical-stage testing as a potential treatment for nonalcoholic steatohepatitis (NASH).
The positive exposure Corbus received today was probably well earned, but investors should bear in mind that Oppenheimer was one of five investment banks that collected fees for managing Corbus' secondary offering in January.
It's also a good idea to remember that analyst price targets for clinical-stage biotech stocks are adjusted for risk. In other words, there's still a chance that the solid results we saw in lenabasum's 41-patient midstage study might not happen again during the 354-patient pivotal study.
Corbus Pharmaceuticals' market cap has swelled to $545 million at recent prices, and it will rise several times over if lenabasum can pull off a repeat performance during the pivotal Resolve study. Until we see those trial results early next year, though, investors should tread lightly.
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