Drug Trial Updates Boost Cara Therapeutics Inc, BioMarin Pharmaceutical Inc.

Cara Therapeutics Inc (NASDAQ:CARA) and BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) are trading higher thanks to positive drug developments

by Josh Selway

Published on Apr 20, 2016 at 10:56 AM
Updated on Jun 24, 2020 at 10:16 AM

As the broader stock market searches for direction, drugmakers Cara Therapeutics Inc (NASDAQ:CARA) and BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) are on the rise. Let's take a look at the news sending biotech stocks CARA and BMRN higher. 

After being up as much as 9.5% earlier, CARA was last seen 0.5% higher at $8.26, on news the Food and Drug Administration (FDA) lifted its clinical hold on a critical drug trial. More specifically, the trial concerns the company's main compound, CR845, which is intended to be used for acute pain. On the charts, CARA has been on fire, roughly doubling in value since its all-time lows in late February. As such, the stock's 14-day Relative Strength Index (RSI) was perched at 69 as of last night's close, meaning CARA is on the brink of overbought territory. 

Analysts' expectations toward the biotech are extremely high, as all four brokerage firms that cover the stock say it's a "strong buy." Plus, Cara Therapeutics Inc's (NASDAQ:CARA) average 12-month price target stands at $24 -- all-time-high territory. The stock has its fair share of skeptics, though: Short interest jumped almost 18% in the last reporting period.  

Meanwhile, BMRN has added 4.2% at $89.97, after the company released positive results for its hemophilia treatment. However, the shares are still 14% lower in 2016, and today's rally seems to be stalling near the $90 level that's been containing the stock since early March. 

Still, analysts are bullish on BMRN. Fourteen brokerage firms recommend buying the stock, two deem it a "hold," while none call it a "sell."

This positive outlook has been shared by options traders. Over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2,500 calls have been bought to open compared to fewer than 60 puts, boosting BioMarin Pharmaceutical Inc.'s  (NASDAQ:BMRN) 10-day call/put volume ratio to an annual high of 44.64. This trend is continuing today, with call volume running at five times the normal intraday rate, and arriving in the 99th percentile of its annual range. 

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