Cara Therapeutics Inc. (NASDAQ: CARA) may not be a household name, but the company is working toward an approval. The company saw its shares scream higher on Thursday after clearing Phase 2 trial data for its next-generation kappa opioid receptor therapy.

Cara’s CR845 topline data demonstrated that it hit the primary endpoint in a small study of uremic pruritus. The target here is for a chronic itch suffered by some dialysis patients. Why investors care here is that the data were strong enough to allow Cara to move toward its second late-stage study.

Another reason to care is that the potential market is huge if this can go beyond this indication. Cara projected that there are over 400,000 U.S. patients and 2.2 million global patients undergoing hemodialysis. They also estimate that as many as 50% suffer from renal or uremic pruritus, and there are currently no approved products in the United States for the condition.

One of the reasons that Cara is less known by many investors is that it is still a fairly recent IPO. Also, its early 2014 IPO was a mere a $55 million in size and the company did not have the largest powerhouse underwriters in its syndicate.

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The company’s kappa opioid analgesic effectively bypasses the central nervous system. Why this matters is that it is designed to block pain at the source rather than numbing the entire body, and of course the other added benefit if it all works as expected is that users get to avoid the nausea and the opioid addiction that is such a serious issue today. Another hope is to qualify for the least restrictive classification by the Drug Enforcement Agency for controlled substances.

Cara’s press release showed that the primary endpoint of the Phase 2 trial was the change from baseline of the average worst itching during the second week of treatment, as recorded on a visual analog scale. Patients receiving I.V. CR845 experienced a 54% greater reduction in worst itch scores than those receiving placebo, with an average reduction of -48% from baseline as measured by the visual analog scale.

Investors were happy to see Cara’s news, sending shares up 35% at $21.55 on Thursday afternoon. Shares hit a new year high, and the new 52-week range is $7.53 to $21.71.

Cara’s consensus price target is around $23.50, and the range of the seven analysts with price targets for the stock was $20 to $30. Cara now has a market cap of about $490 million and revenue is expected to be nearly zero in 2015 and 2016.

This is a novel approach to traditional opioid treatments. If the drug class can be moved to other indications without serious side-effects, then Cara could end up being a much larger company than it is today. That being said, the approval process of any pain treatment is often long and challenging.

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