Corbus Pharmaceuticals (NASDAQ: CRBP) Gives a Bold Buy Signal

It's easy to brush aside a small firm as a bad investment. It's even easier when it's a small pharmaceutical firm. But what would you say to a small pharmaceutical that's increased its value five-fold in the space of as many years? That's the proposition you get with Corbus Pharmaceuticals (NASDAQ: CRBP), a company which has made some impressive gains but took one heck of a ride to get there.

Huge Gains in a Short Time

Looking at the charts for Corbus Pharmaceuticals tells one amazing story. The last 12 months with Corbus featured the company kicking off September 2019 at $5.09 per share. Not bad for a small company, but nothing especially great. The stock then manages to stay in a fairly tight grouping for the rest of the year and into 2020, holding between $4 and $6, but usually somewhere in that $5-and-change range. It actually manages to break the $7 mark in January, but then you know what comes along, and sends the stock careening downward to hit a new 12-month closing low of $3.44 on March 16.

After that, though, the stock launches upward, very nearly tripling its value from March 16 to hit its last closing price of $9.28. It wasn't a straight path upward—there are plenty of up-and-down jags between—but Corbus traces a clear path upward.

Moreover, when you pull back to the five-year charts, the difference is even more pronounced.  It spent large chunks of 2015 and 2016 trading around $3, before hitting an impressive upward draft in September, when the stock price nearly doubled in the course of one month. It then spent the better part of the next four years bouncing between high and low ranges, ultimately coming out where we are today.

...But Why All The Volatility?

The charts tell of an extremely volatile company whose stock price bounces around in an objectively narrow, but relatively large, range; a company whose share price is $5 loses 20% of its value when it drops to $4. A few weeks ago, back at the start of August, the company rolled out its second-quarter results and a bit of forward-looking content.

The forward-looking material, meanwhile, told a potentially great story, if it actually comes off; it hasn't been chasing Covid-19 cures like many other businesses, but rather, the company has been pursuing treatments for other diseases. For instance, it expects results from its Phase 3 study for systemic sclerosis. Immediately after, it's looking for results in its Phase 2b study on cystic fibrosis, both of which are perfectly valid diseases for which to pursue treatments.

Not bad at all, especially if something hits; if even just one of these turns up some good news this company could triple again or even better. It's also picked up new capital to back up these pursuits; the company not only has a debt financing agreement in place for up to $50 million total—it's drawn the first $20 million already—but it's also posted sales of $71 million from its at-the-market offering. That gives it a maximum of $121 million in new capital to work with, and it's only pulled about $20 million of that so far.

It's the Background Trades That Get You, Though

Okay, still not bad. The company has some interesting drugs potentially in the pipeline and it's got cash enough to go fishing. Our own research recently turned up another exciting piece of potential: call options. The company normally sees about 8,720 call options taken out on it, but recently, that number jumped to 13,953. That's about 60% higher than normal, which suggests that someone suspects that something is about to give.

Given the potential news on Phase 3 trials for systemic sclerosis, that could be the needle in the haystack. The cystic fibrosis news that's set to follow might be a bigger draw—it's a more familiar name—but it's not as far along. Further, there's a consensus rating of “buy” on the stock, with eight out of eight analysts suggesting that this is the route to go. The consensus price target is even more staggering at $38.50, around a four-fold increase from current levels.

Essentially, there's a lot of potential lurking behind Corbus Pharmaceuticals, and that potential could go off in a very big way. If so, that earns a lot of cash for investors, even if they've just purchased options. For those who have a strong stomach, meanwhile, Corbus might well be your lucky strike, turning in big results on weapons to tackle serious diseases.