Home World Economy Cara Therapeutics Breaks Out to Fresh Highs

Cara Therapeutics Breaks Out to Fresh Highs


Cara Therapeutics, Inc. (CARA) shares have rallied more than 20% over the past two sessions after the company secured a “Breakthrough Therapy” designation for IV CR845 from the U.S. Food and Drug Administration (FDA) on Friday morning.

The company’s IV CR845 is a treatment for moderate-to-severe uremic pruritus in chronic kidney disease patients undergoing dialysis. With the new FDA designation, Cara Therapeutics will be able to expedite the development and review process for the therapy. The company also hopes to develop the drug for the wider pain market, as the treatment provides non-opioid pain relief that is free from respiratory depression and/or intestinal tract inhibition. (See also: Cara Therapeutics Stock Could Break Out on IV CR845 Data.)

The news comes shortly after the company posted favorable top-line results from its Phase II/III clinical trial showing a 68% reduction in itching scores and a 100% improvement in quality of life. While investors were initially tepid on these results, the stock soared more than 10% following the update as the information was fully digested.

Technical chart showing the year-to-date performance of Cara Therapeutics, Inc. (CARA) stock

On a technical level, the stock broke out from R2 resistance at $20.06 to fresh highs toward the middle of its price channel. The relative strength index (RSI) points to overbought conditions with a reading of 81.63, but the moving average convergence divergence (MACD) experienced a sharp bullish crossover.

Traders should watch for some consolidation in the middle of its price channel following the multi-day rally, while maintaining a bullish bias given the favorable fundamental and technical picture. The next area of major resistance lies at the upper end of its price channel, and support levels remain at around $20.00 per share at its prior highs and near R2 resistance. (For more, see: Can Cara Therapeutics Stock Sustain Its Rally?)

Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.


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