Prometheus Biosciences reported promising results for one of its drugs in two inflammatory disease studies on Wednesday, and RXDX stock catapulted by triple digits.
The company studied its drug, currently dubbed PRA023, in patients with ulcerative colitis and Crohn's disease, two forms of inflammatory bowel disease. More than a quarter of ulcerative colitis patients and almost half the Crohn's disease group entered remission 12 weeks after treatment.
The results exceeded Prometheus' expectations, RBC Capital Markets analyst Gregory Renza said in a note to clients. Now, Prometheus is planning to run final-phase studies in 2023.
"Net-net, the results exceed our expectations," he said. They provide "key proof-of-concept in (inflammatory) bowel disease, early validation on the biomarker strategy and positive read-through to the (second ulcerative colitis data set) now set for the second quarter of 2023."
On the stock market today, RXDX stock skyrocketed 165.7% to 95.80. Shares hit a record high at the open.
RXDX Stock: Targeting A Ligand
Prometheus' drug is an antibody that binds to TL1A, a ligand associated with inflammation. The firm theorized blocking that ligand — a molecule that binds to a receptor — would ease symptoms in patients whose bodies make too much of it.
After 12 weeks, 26.5% of patients with ulcerative colitis achieved remission compared with 1.5% of the placebo group. That "comfortably overshoots" Prometheus' expectations for a 10%-15% improvement, RBC's Renza said. The company credits the placebo response to the severity of the patient group.
In the Crohn's disease test, 49.1% of patients entered remission and 26% had an endoscopic response. The latter means doctors found no inflammation in patients' intestines after treatment.
Bullishly for RXDX stock, PRA023 also showed statistical significance on all secondary goals of the studies, Renza said.
SVB Securities analyst Thomas Smith noted the drug showed a "remarkably clean safety/tolerability profile across both studies." There were no treatment-related serious side effects. He rates RXDX stock with an outperform.
Bucking Recent Negative Pressure
It's important to note, RXDX stock had trended down heading into the data readout. That followed news that Pfizer and Roivant Sciences would create a company to sell their TL1A-targeting antibody. Their drug is currently in midstage development for ulcerative colitis.
"We believe the positive reception (Wednesday) could be further accentuated by the negative pressure seen over the last week from the Pfizer/Roivant competitor development," RBC's Renza said.
He kept his outperform rating on shares.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
