What happened

Prometheus Biosciences (RXDX) saw its shares rise this week as much as 168.7% by early Thursday, according to data from S&P Global Intelligence. The clinical-stage biotech focuses on inflammatory bowel disease (IBD) treatments and immune-related diseases.

The stock, after slumping last week, closed last Friday at $40 a share. It opened this week at $39.79, then rose to a 52-week high of $111.99 on Wednesday. 

So what

Prometheus' big rise this week was driven by the good news in its announcement Wednesday regarding its lead therapy, PRA023. The therapy did well in two separate phase 2 trials. It demonstrated a 49.1% clinical remission rate in its Apollo trial to treat Crohn's disease (CD), lowering inflammation and fibrosis connected with the malady.

In the therapy's Artemis trial to treat ulcerative colitis (UC), PRA023 met its primary end point, with 26.5% of patients showing clinical remission compared to just 1.5% of those on placebo. The drug also showed good safety levels and tolerance with few side effects in both trials.

The company said it now plans to enroll the therapy into phase 3 studies for UC and CD next year.

"The performance of PRA023 in both UC and Crohn's patients has surpassed our expectations," said Mark McKenna, chairman and CEO of Prometheus Biosciences, in a press release. "We believe PRA023 and our precision medicine approach has the potential to change the paradigm of IBD treatment, and we look forward to discussions with regulatory agencies as we prepare to advance into Phase 3 studies in ulcerative colitis and Crohn's disease."

Now what

The news was so good that when Prometheus announced on Wednesday it was selling $250 million shares of stock to raise money, normally a dilutive move that would lower the stock's price, the market didn't blink. The biotech company said it plans to use the proceeds from the stock sale to fund the promotion of PRA023, and another potential IBD therapy, PRA052, as well as other research and development programs.

The move makes sense because the company is taking advantage of the big jump in price. In the third quarter, it said it had only $260.2 million in cash and cash equivalents, enough to fund operations into 2024, and now that time line is extended.