Coralville, Iowa-based KemPharm Inc. (KMPH) is a clinical stage pharmaceutical company. It has no products on the market and no revenues. Yet, its stock has been on an impressive upswing recently, including a 25% rise over the past five days and a 15% spike on Wednesday alone. And it’s not entirely clear why.
KemPharm was one of the biggest gainers of the day on heavy trading that’s approximately four times its usual volume. It closed at $18.68 on Wednesday versus an all-time high of $23.63 last fall. It began trading on the NASDAQ about a year ago.
There doesn’t appear to be a single discrete event which easily explains the stock’s gains. But a number of recent announcements and regulatory actions may help explain some of the recent enthusiasm for the company’s shares.
For instance, the FDA accepted an Investigational New Drug application from KemPharm at the end of last month for KP511, an abuse-deterrent extended release opioid painkiller. The therapy is a so-called prodrug, meaning that its ingredients remain inactive until certain chemical interactions occur in the body.
KemPharm hopes that such a molecular structure may prevent overdoses for chronic pain patients who suffer enough to require constant medication, and the company hopes to launch human trials in the next three months. The only more recent announcement from the firm came on Tuesday, when KemPharm announced that it will be presenting at the Needham & Company Healthcare conference in New York City next week.
Brokers who cover the company have also issued strong buy ratings for the firm, with an average share target price of $26.75. However, that’s been the case for at least three months. There’s been a flurry of share pickups by KemPharm execs, too, as CEO Travis Mickle picked up 2,450 shares last week and director Danny Thompson snatched another 13,333 shares on April 4.
The broader NASDAQ Biotechnology Index closed up 6% on Wednesday.
Correction, April 7, 2016: A previous version of this article misstated the company’s name.