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Hoth Therapeutics stock price followed the actions of Kala Pharmaceuticals a day earlier. The stock doubled to a high of $13, which was remarkably higher than the year-to-date low of $2.60. Still, the shares crashed by more than 73% from its highest level in 2023, giving it a market cap of over $13 million. Why did HOTH shares fly? Hoth Therapeutics is a small biopharmaceutical firm that is developing drugs focused on cancer illnesses. In a statement on Thursday, the company said that the Food and Drug Administration (FDA) had accepted an Investigational New Dug application for HT-001. HT-001 is a therapeutic drug that will treat rash and skin disorders that are associated with epidermal growth factor receptor inhibitor therapy. These inhibitors are agents for the treatment of other cancers like pancreatic, colorectal, and breast cancer. In a note, the company’s CEO said that: “With no specific treatment currently approved for the treatment of skin toxicities associated with EGFRi therapies, this trial brings us one step closer to a new treatment option for underserved cancer patients.” Hoth Therapeutics took advantage of the stock comeback. In a statement, the firm said that it would raise $10 million by selling 2 million common stock. It also issued warrants to purchase 2.5 million shares at $5. The private placement will complete on Tuesday. In a statement, the firm said that it will use these funds for research and development. The announcement came a day after the FDA gave a similar go-ahead to Kala Pharmaceuticals. In response, KALA shares flew by more than 200% on Wednesday and then by 100% on Thursday. Is Hoth a good buy? Hoth Therapeutics is a high-risk and high-reward company. It spends its financial resources to do research on various drugs and then works to gain approval. If accepted, the company then sells or licenses the drug to a bigger company and then works for the next big hit. Hoth Therapeutics’ pipeline is made up of several drugs in the oncology, neurology, dermatology, and inflammatory areas. The diseases it aims to treat are mast-cell derived cancers, alzheimer’s, acne, asthma, and dermatitis among others. Most of these drugs are in pre-clinical stage while some in dermatology have moved to phase 1 study. It is too early to determine whether some of these drugs will succeed. However, from a risk-reward standpoint, owning a small part of the company is fine. Investors should, however, be aware of the risks associated with small-cap clinical-stage companies. Hoth Therapeutics stock price forecast The daily chart shows that the HOTH stock price went bananas on Thursday. It has been one of the best performers this week. As it rose, it moved above the important level at $9.53, the lowest point in June. It also zoomed above the key level at $10 and the 25-day moving average. Therefore, I suspect that the stock will continue pumping on Friday and then it will recoil in January as enthusiasm wanes. Besides, it takes years for the drug to come to market. If this happens, the stock will likely move below $8 soon.