La Jolla leaps on NASH fervor thanks to some preclinical success

Successfully treating a mouse is not usually enough to get investors excited, but the promise of an effective drug for nonalcoholic steatohepatitis (NASH) sent La Jolla Pharmaceutical's ($LJPC) shares up as much as 20% on Tuesday despite very early data.

In a preclinical study, La Jolla's LJPC-1010 significantly reduced disease scores in mouse models, the company said, notching a meaningful response in all three measures used to chart fatty liver disease. The treatment also helped decrease yellowing of the liver, liver weight and fibrosis, lighting the way for a Phase I/II trial next year, La Jolla said.

Preclinical promise is of course no guarantee of success in humans, let alone FDA approval, but the potential market for NASH drugs has made the field a big target for biotechs and investors.

In January, Intercept Pharmaceuticals ($ICPT) watched its shares jump more than 250% after a Phase IIb trial of its NASH-treating drug ended early thanks to stellar efficacy. Soon after, every biotech with a NASH program in any stage of development put its efforts front and center, including a handful of IPO hopefuls and the promising Lumena Pharmaceuticals, which Shire ($SHPG) signed up to buy for $260 million.

Tuesday's surge in La Jolla's shares illustrates that the belief in the blockbuster potential of NASH treatments has hardly waned, and the biotech is betting its in-house drug can come through in further study.

LJPC-1010 is a more potent formulation of GCS-100, La Jolla's lead candidate. The treatment is designed to bind to the protein galectin-3, which is implicated in tissue fibrosis, and block its effects. GS-100 is in Phase II development for chronic kidney disease.

- read the release

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