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Why Mustang Bio Stock Is On Fire Today

George Budwell, The Motley Fool

What happened

Shares of the tiny gene therapy company Mustang Bio (NASDAQ: MBIO) erupted higher in premarket trading this morning, gaining a jaw-dropping 358% at its peak in early-morning action. What fueled Mustang's surging stock this morning?

Mustang's shares are blasting off in response to the news that an experimental gene therapy, MB-107, for "bubble boy" disease -- also known as X-linked severe combined immunodeficiency, or XSCID for short -- reportedly cured eight boys with the deadly condition. Equally critical, Mustang said that the boys are showing no signs of unintended side effects from the therapy -- an issue that has derailed prior gene therapies for XSCID. Mustang licensed MB-107 from St. Jude Children's Research Hospital. 

Businessman sitting at desk appearing to be pleased after throwing hundred dollar bills into the air.

Image Source: Getty Images.

So what

Bubble boy disease is a rare genetic condition that results in a severely impaired immune system. As a result, patients with XSCID are extremely susceptible to infections, which often forces them to live in sterile environments. If these promising efficacy and safety results hold, however, this high-profile genetic disease might finally have a viable treatment option -- perhaps even a cure. Given this breakthrough result, it's no wonder investors are piling into this small-cap gene therapy stock today.      

Now what

Investors shouldn't get overly excited at this early juncture, however. Mustang still needs to wait for additional data prior to filing for MB-107's regulatory approval, and that's not an issue to take lightly. Many once-promising gene therapies, after all, have gone haywire at the last second.  

That's not to say that Mustang's bubble boy treatment is destined to hit a speed bump, but caution is always warranted when it comes to early-stage studies that yield seemingly game-changing results. Stated simply, Mustang's stock is arguably only suited for ultra-aggressive investors at this stage -- despite these highly encouraging trial results. 

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.