Immutep Ltd (ASX: IMM) shares are having a rare breakout session on Wednesday.
After spending most of the year under relentless selling pressure, the biotech stock has suddenly sprung back to life.
At the time of writing, Immutep shares are rocketing 89.74% to 7.4 cents in afternoon trade.
Trading volumes have also lifted well above recent averages, showing how quickly sentiment has shifted on the update.
The rebound looks even more significant because the shares had still been down about 82% in 2026 before today's rally.
That leaves this as one of the market's biggest turnarounds of the week.
Here's what got investors moving back into the stock.
FDA grants a valuable rare disease designation
According to the release, Immutep has received Orphan Drug Designation from the US Food and Drug Administration (FDA) for eftilagimod alfa in soft tissue sarcoma.
Soft tissue sarcoma is a rare cancer with limited treatment options, which makes this a positive step for its long-term commercial potential.
The FDA program offers regulatory support, tax credits, fee waivers, and up to seven years of US exclusivity if approved.
The FDA's decision was backed by positive Phase II trial results, where efti was used with radiotherapy and Merck's Keytruda in soft tissue sarcoma patients.
The trial's 38 evaluable patients delivered a 51.5% major pathological response rate. That was comfortably ahead of the 35% target set by the study and well above historical benchmarks.
Chief executive Marc Voigt said the designation could help support a direct move into a late-stage study after the company completes its ongoing review of the discontinued TACTI-004 program.
Why the rally is so aggressive
The share price reaction makes more sense in the context of what happened last month.
Immutep shares were smashed after its flagship Phase III lung cancer trial was discontinued following an interim futility review.
That update effectively wiped out the company's biggest near-term value driver and crushed confidence in the lead program.
With investor sentiment already heavily damaged, today's update has been enough to trigger a strong rebound.
Investors now have another pathway to focus on, while the orphan designation also strengthens the sarcoma program's long-term commercial appeal.
Foolish takeaway
I think today's move shows the market had pushed Immutep too low after the lung cancer setback.
The sarcoma program now gives investors a new reason to stay interested, especially with FDA support making the commercial upside more attractive.
The key from here is whether management can turn this momentum into a credible late-stage development pathway.
The post Why this ASX biotech stock just rocketed 89% today appeared first on The Motley Fool Australia.
Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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