What happened
Shares of Jaguar Health (JAGX -6.62%) soared 49.3% on Friday, extending the pharmaceutical company's staggering gains since mid-November.
So what
Jaguar Health's stock price is up a stunning 2,062% since its lows on Nov. 16. Investors have bid up the healthcare stock after management announced its plan to develop and commercialize crofelemer, a new drug aimed at helping people with inflammatory diarrhea, including those who have recovered from COVID-19 but are still experiencing symptoms.
Jaguar Health said the plan could involve a potential merger of its operating subsidiary with Swiss Growth Forum, a sponsor of a special purpose acquisition company (SPAC). Preliminary terms of the deal include Jaguar Health receiving upfront cash payments of as much as $10 million and at least $20 million in clinical development funding, as well as an equity stake in the new company of 30% to 49.9%.
Investors have received massive returns from Jaguar Health since November. Image source: Getty Images.
Jaguar Health's stock price gains accelerated in recent days, following the company's announcement on Jan. 6 that it began a 28-day preclinical toxicology and safety study in dogs for lechlemer, a plant-based drug candidate for the relief of diarrhea from cholera. The National Institute of Allergy and Infectious Diseases (NIAID) is supporting the development of lechlemer and helping to conduct the study.
Now what
As many as 5 million cholera cases and over 100,000 cholera-related deaths occur worldwide each year, according to the Centers for Disease Control and Prevention (CDC). Thus, if lechlemer proves safe and effective, the drug could have a large market opportunity.
COVID-19, of course, is a much more widespread disease as it stands today. Over 88 million COVID-19 cases have been reported to date, according to data compiled by Johns Hopkins University. Jaguar Health's CEO Lisa Conte estimates that with the coronavirus continuing to spread rapidly, up to 15% of the global population could experience long-term COVID-19 symptoms. Thus, Jaguar Health would likely have another large profit opportunity with crofelemer, if it's shown to be effective and safe in clinical trials.