Why Omeros Corporation Shares Jumped

Why Omeros Corporation Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Omeros , a clinical-stage biopharmaceutical company focused on therapies to treat coagulopathies, inflammation, and central nervous system disorders, jumped as much as 15% after receiving the fast-track designation from the Food and Drug Administration for experimental Huntington's disease drug, OMS824.

So what: According to Omeros' press release, OMS824, a drug that selectively inhibits PDE10, an enzyme that's expressed in areas of the brain that are believed to be linked to a number of cognitive-affecting conditions, has tested positively in terms of safety and tolerability in phase 1 studies. The company plans to begin enrollment in a phase 2 study to evaluate OMS824 in Huntington's disease patients within the next few weeks. The fast track designation will allow Omeros more opportunities to work hand in hand with the FDA in OMS824's development and could involve a priority review if it meets its endpoints in studies.

Now what: Not to rain on Omeros' parade, because this is clearly good news today, but shareholders should consider that we're talking about an experimental compound that's only really been assessed for pharmacokinetic safety and tolerability thus far. In other words, it looks as if shareholders are starting to count their chickens before they're hatched. Likewise, cognitive disorders of the brain have proven extremely difficult to treat, with a number of key late-stage study failures in recent years. My thoughts are positive for OMS824, but realistically, it's far too early to be as excited as shareholders appear today over this early-stage drug.

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The article Why Omeros Corporation Shares Jumped originally appeared on Fool.com.

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