In my view, few investment sectors are as frustrating as the pharmaceutical industry. One moment, you could be riding high on bullish momentum. The next, you could be staring at unfathomable losses. For stakeholders of Constellation Pharmaceuticals (NASDAQ:CNST), though, theyre enjoying the positive end of this dynamic. Year to date, CNST stock is up a blistering 846%.

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Most of these bonkers gains came within the last two months. Since the beginning of October, Constellation Pharmaceuticals stock has jumped nearly 400%. And in this month alone, CNST is up over 68%. Seemingly, this company has no downside, inspiring others to jump aboard this extreme momentum name. Should you follow suit?

Unlike other speculative gambles, a fundamental case exists for the massive skyrocketing of CNST stock. Among the underlying companys therapies is an experimental drug called CPI-0610, a treatment for myelofibrosis. According to pharma giant Celgenes (NASDAQ:CELG) website, myelofibrosis is a rare blood cancer. Only 5,000 people in the U.S. are diagnosed with the illness each year.

Further, myelofibrosis starts in the stem cells of the bone marrow, leading to the production of faulty blood cells. Prior efforts in treating this illness have not produced substantive results. However, Constellations CPI-0610 has performed exceptionally well in a phase II study; hence, the massive surge in Constellation Pharmaceuticals stock.

In fact, all four patients that participated in the study responded positively to the drug. Because of the positive data that came from the clinical trial, Constellation will expand the study to include more patients. This, of course, suggests supreme confidence in the CPI-0610 therapy, and that could ultimately represent a paradigm-shifting breakthrough.

Still, I think you should consider the long road ahead before jumping aboard CNST stock.

By their very nature, rare diseases are difficult to address. And among this class of debilitating conditions, myelofibrosis is particularly nasty. According to Dr. Ruben Mesa, myelofibrosis is a variable disease. This means that medical doctors must apply custom-tailored treatments for different patients.

Thus, while Constellation may have won the initial round in its Phase II study, the real work is coming ahead. With many more test subjects, the chances that CPI-0610 could be considered ineffective or even adverse jump significantly.

In other words, the enthusiasm were seeing now with CNST stock could quickly go the other way.

Theres also the little matter of the economics and politics of addressing myelofibrosis. As you might imagine, combating rare diseases without financial incentives wouldnt make much economic sense. But the Orphan Drug Act, passed in 1983, encouraged pharmaceuticals to address rare diseases through various incentive programs.

Unfortunately, like anything involving government action, good intentions gave way to hellish results. Pharmaceuticals gamed the system the Orphan Drug Act created, pocketing massive profits for rare-disease therapies. Since the patients had no recourse in this monopolized environment, they (and their insurance companies) foot the bill.

Underlining the current bullish thesis for CNST stock is the idea that Constellation will become the only viable myelofibrosis player. Celgene is trying but is coming up short. Essentially, Constellation can charge what they want for their drug if theyre successful.

But even if they are successful and thats a huge if the political environment for price-gouging pharmaceuticals is extremely unfavorable.

No matter how great a scientific achievement Constellation has made, diving into Constellation Pharmaceuticals stock seems risky. With shares gaining 400% in the past month and a half, most of the good news is surely baked in.

Of course, we could hear even better results once the company expands its myelofibrosis study. But that too is a risky perspective.

For those who are not familiar with the pharmaceutical industry, I highly recommend reading Dr. Mario Beauregards book Brain Wars. Among the many topics that Dr. Beauregard covers, a central motif is the mysteries of the mind. Compelling evidence indicates that our mental state can generate healing.

But a flipside to this concept is that an alarming number of pharmaceuticals fail the placebo test; that is, many if not most drugs are no more effective than patients belief in their efficacy.

Soon, well see how good CPI-0610 really is. For those that cant handle extreme price swings, you should stay away from Constellation Pharmaceuticals stock.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

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CNST Stock Is Particularly Risky After Its Recent Run - Investorplace.com