On June 7th, I wrote about a small group of cannabis biotechs currently in a heated race to produce the world’s first $1 billion cannabis drug.
I am expecting the winner of that race to deliver huge returns to shareholders.
This week, I have an important update on that story.
Cara Therapeutics (NASDAQ: CARA) is a young cannabis biotech company headquartered in Connecticut.
Cara has been the talk of the cannabis stock community the last few days after jumping 49% in five days after one of its most promising cannabis drugs achieved breakthrough status from the U.S Food and Drug Administration (FDA).
But before I tell you about that big breakthrough, let me give you a little background on Cara.
Cara doesn’t produce much revenue for now. However, it does have one of the most promising drug pipelines in the industry.
Cara’s entire pipeline has great potential. As you can see, two indications are in phase 3, the last phase before potential FDA approval and commercialization and another indication is in Phase 2 testing.
From this group, one drug and indication stands out – the one that triggered a 49% jump in its share price in five days.
That drug is I.V. CR845 to treat Pruritis CKD-HD in Hemodialysis Patients
On Friday Cara management reported that the FDA had designated “breakthrough therapy” status to the IV formulation of its anti-pain and anti-itch medicine CR845, for uremic pruritis, or chronic itch, in patients with kidney disease. I have the press release from Cara linked below.
Cara Receives Breakthrough Therapy Designation from FDA for I.V. CR845 for the Treatment of Chronic Kidney Disease-Associated Pruritus in Hemodialysis Patients
Right now there are about 500,000 Americans on dialysis for kidney failure. From that group, around 60% of them suffer from uremic pruritus, with 30% to 40% reporting it to be moderate to severe.
Cara’s IV CR 485 received its breakthrough status for one simple reason – a lot of these patients are severely lacking good medication to treat their symptoms.
This breakthrough status doesn’t guarantee final FDA approval. But it does offer Cara additional resources and speed in working its way through the next few stages of testing and reporting.
In the short run -this is a big win for Cara and its shareholders. It moves Cara closer to producing the world’s first ever cannabis blockbuster – meaning annual sales of more than $1 billion.
But on a higher level, and I think this is even more important, this is just a tiny glimpse into the potential of these cannabis and cannabinoid biotechs and drugs. They have massive potential for millions of people who are sick and suffering in the world.
I see Cara’s win here as a huge win for the entire global cannabis industry and particularly cannabis biotechs.
Cara Looks like an Ideal Takeover Target for Big Pharma Hungry for New Drugs
Here’s something else to consider. I wouldn’t be the least bit surprised if a bigger pharma company comes along and tries to buy Cara. Big pharma is hungry for new drugs right now. This breakthrough status and Cara’s small size make it an ideal takeover target.
Despite the recent jump in shares, Cara’s market cap of $858 million is still tiny compared to big pharma.
For example, Pfizer, Inc. (NYSE: PFE), one of the world’s largest pharma companies has a market cap of $201 billion, more than 220X that of Cara.
A buyout offer could send shares of Cara soaring another 25% to 50%.
Cara Shares Just hit a New 52-Week and All-Time High
Cara has been surging on the good news. Shares are up 49% in the last week, hitting a new 52-week and all-time high. Take a look below.
I recommended buying shares of Cara to Cannabis Stock Trades members on January 1. Since then, shares are up 176% – the single largest winner in our model portfolio.
If you’re nervous about buying a cannabis stock sitting on a 49% Gain in five days, don’t worry – there are plenty of other awesome cannabis biotechs to choose from.