An 11.23% jump in Cara Therapeutics Inc (NASDAQ:CARA) on good trading volume of 2.63 million shares drew attention yesterday.
There was no news trigger or any announcement from the company, though the biotechnology and medical research sector in general showed lots of gainers for the day. Cara closed at $8.62.
A reference to Cara’s daily chart, however, shows ample signs that the stock has been likely rising after bottoming out during the period from late February to early September.
Cara is a clinical-stage biotech focused on the development of novel therapies for the alleviation of pain and pruritis by selectively targeting peripheral kappa opioid receptors.
Cara’s CR845 drug is undergoing mid/late stage trials for treatment of acute pain and pruritis.
Cara Therapeutics Inc (NASDAQ:CARA) shows promise after an inverted head-and-shoulders reversal
According to the management, CR845 can become a significant alternative for pain relief compared to the conventional new opioids, without the risks of addiction and abuse.
Further, “CR845 has demonstrated significant pain relief and a favorable safety and tolerability profile in three Phase 2 clinical trials in patients with acute postoperative pain,” Cara claims on its website.
However, the stock suffered an unfortunate downfall commencing early this year after the company received oral notification from the U.S. Food and Drug Administration (FDA) that its adaptive pivotal trial of I.V. CR845 for postoperative pain had been placed on protocol clinical hold pending a pre-specified safety review.
The stock tanked from a high of 17.69 in January to a low of $4.26 by late-February.
Interestingly, the stock has languished around the $5 level until mid-September and created a base from which it has broken out over the past three weeks in a three-white-soldiers pattern.
A close examination of the daily chart shows also that the breakout comes after the stock completed a classic inverted head-and-shoulders pattern. The price surge that penetrated the neckline of the pattern has been supported by rising volume.
Meanwhile, Cara announced September 15 the initiation of patient enrollment in a Phase 2b trial of an oral tablet formulation of CR845 for the treatment of pain associated with osteoarthritis. Data is expected in the first half of 2017 from the trial in 330 patients.
Technically, Cara shows the potential for further upside and the likelihood of positive news.