Jaguar Health (JAGX) Stock Gains Big On Clinical Update

Jaguar Health JAGX Stock News

Jaguar Health Inc (NASDAQ: JAGX) is running for the top in the market this morning with gains of more than 64% early on in the session. The gains come after the company announced a clinical update about work being done by its wholly-owned subsidiary, Napo Pharmaceuticals.

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JAGX Stock Is Climbing On Clinical Update

In a press release issued early Tuesday morning, Jaguar Health announced that Napo Pharmaceuticals will receive preclinical services from the National Institute of Alergy and INfectious Diseases, also known as NIAID. NIAID is part of the National Institutes of Health.

The services are aimed at supporting the development of lechlemer, the company’s treatment under development for cholera.  Also, these services will come to JAGX at absolutely no cost. In fact, NIAID-funded contractors will conduct toxicology testing for 7-day rat and dog studies.

What Is Lechlemer?

Lechlemer is a drug under development by Napo, a subsidiary of JAGX. The drug is being developed under the botanical guidance of the FDA. Ultimately, the drug is a botanical extract that is distinct from Mytesi, yet sustainably derived from the same source, the Croton lechleri tree.

It is expected that Lechlemer will be an effective treatment options for Cholera. This is an acute diarrheal illness that is caused by the bacterium Vibrio cholerae, which infects the intestine.

Market Potential Worth Paying Attention To

While Lechlemer is still in early stages of development, the candidate comes with incredible market potential. According to the World Health Organization, between 1.3 million and 4 million people will be affected by cholera annually. Unfortunately, more than 100,000 patients per year will die from the ailment.

While the condition is generally mild, about 10% of the patient population will experience severe symptoms. This includes profuse diarrhea, vomiting and leg cramps. In this patient population, rapid loss of body fluids often leads to dehydration and shock. In fact, many who do not undergo treatment pass away within hours as a result of the symptoms.

Unfortunately, there are not many treatment options that have been proven effective against cholera. In fact, the standard of care for the condition is rehydration. While antibiotics are sometimes used, their efficacy in reducing the risk of death and period of symptoms has been questioned.

Although Mytesi, an approved treatment of Jaguar Health, is an option, it is also incredibly expensive to produce, therefore the cost to the patient is high and margins are slim. However, Lechlemer is far less expensive to produce, and may be just as effective, if not moreso. If this is the case, JAGX will be able to benefit from larger margins. So, should Lechlemer be approved by the FDA, JAGX and its subsidiary, Napo, could be sitting on a blockbuster treatment option.

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Management Commentary

In a statement, Lisa Conte, President and CEO at JAGX, had the following to offer:

We are grateful for NIAID’s support to conduct these preclinical animal studies of lechlemer. We believe lechlemer, which has the same mechanism of action as crofelemer and is significantly less costly to produce, may support efforts to receive a priority review voucher from the FDA for a cholera indication.

Priority review vouchers are granted by the FDA to drug developers as an incentive to develop treatments for neglected diseases and rare pediatric diseases. Additionally, we believe lechlemer represents a long-term pipeline opportunity as a second-generation anti-secretory agent, on a global basis, for multiple gastrointestinal diseases – especially in resource-constrained countries where cost of goods is a factor, in part, because requirements often exist in such regions for drug prices to decrease annually.

Final Thoughts

All in all, the news today is great for JAGX and its investors. After all, with the National Institutes of Health offering free services to further the development of Lechlemer, the cost of development is going to be lower on the company and its investors.

There’s also a long road to profitability here. The truth is that through Mytesi and its animal health subsidiary, the company is only generating about $1.5 million in net revenues per quarter. While revenue is growing at an impressive rate, losses are pretty large, sitting at more than $8 million in the last quarter.

While the company has recently strengthened the balance sheet through the elimination of more than $6 million in promisorry notes and recently restructured debt, long term operations will likely require further fund injections, which likely means dilution ahead.

So, while there is strong potential for growth as we are seeing compelling growth in Mytesi sales and an opportunity with Lechlemer, there is also a high risk for loss with JAGX as it is operating at a loss with a balance sheet that is far from perfect. Nonetheless, for the right investor, with plenty of patience and an appetite for risk, this could be a strong long-run play.

What Do You Think?

Where do you think JAGX stock is headed moving forward? Join the discussion in the comments below!

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