Watch Cara Therapeutics into osteoarthritis pain results
Cara Therapeutics (CARA) has soared this month amid the wider biotech rally, but research firm Janney argues the stock could continue higher on a pending release of data from a study of its potential treatment for osteoarthritis pain.
BACKGROUND
Cara Therapeutics is a clinical-stage researcher focused on treating pain and pruritus, or itching, by targeting the body’s so-called “kappa” #opioid receptors.
The company’s pipeline includes #CR845 and #CR701, the former of which is in advanced studies for both oral and intravenous forms.
In its most recent earnings report on May 4, Cara said it expects top-line data from the Phase 2b trial of oral CR845 for osteoarthritis-related pain in Q2, and the company confirmed on its conference call that the trial is “now fully enrolled at 480 patients and on track for a data readout later in Q2.” Cara’s second quarter ends June 30.
JANNEY SEES BIG POTENTIAL MOVE
Janney’s Ken #Trbovich said Wednesday he expects “significant volatility” in Cara Therapeutics as investors await the Phase 2 osteoarthritis data.
Highlighting the stock’s all-time highs on the back of the biotech rally and Friday’s announcement of “breakthrough therapy” designation, the analyst nevertheless says positive osteoarthritis data can “easily justify” a move into the $31-$36 range, though he warns that negative results could take the stock to $10-$15.
The long-term potential of oral #CR845 in chronic pain is “tantalizing” for a company whose market cap remains below $1B — with Trbovich offering Nektar’s (NKTR) 42% surge on the back of Phase 3 opioid data as an example — but the analyst cautions that the pending results are only mid-stage and that “a portion” of the potential upside has already been priced in.
Modeling the company on a discounted cash flow basis while factoring any potential dilution necessary to fund and launch oral CR845, Trbovich ends up at $31-$34 per share assuming peak sales of just over $1B.
On the other hand, he expects a retrace to $15 if data is negative, or even as low as $10-$12 if results are particularly bad and investors apply the news to Cara’s pain program for intravenous CR845.
POSITIVE HINT FROM UNRELATED TRIAL
H.C. #Wainwright analyst Corey Davis wrote June 22 that the osteoarthritis data is “expected any day.” #Davis added that Cara’s announcement that week of continuing its Phase 3 trial of I.V.
#CR845 in postoperative pain after an interim analysis — while largely unconnected from the osteoarthritis trial — is “still a slight positive indicator” given the lack of futility or safety signals.
PRICE ACTION:
CARA last traded at $27.72.
See our recent post on CARA.
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