Innovate Biopharmaceuticals Inc., which saw its stock price rise 54 percent on Friday, is focused on developing novel medicines for autoimmune and inflammatory diseases with unmet needs.

The company’s pipeline includes drugs to treat celiac disease, NASH, Crohn’s disease and ulcerative colitis.

The Raleigh-based company is gearing up for the Phase 3 trial of larazotide acetate or INN-202, which is Innovate’s leading drug candidate for celiac disease.

There are no drugs for celiac disease currently on the market.

“It will be the first drug to enter a Phase 3 trial for celiac disease,” said Kendyle Woodard, a co-founder and director at Innovate.

“Other than a gluten-free diet, to which not all celiac patients respond, there is no current treatment for celiac disease,” Woodard said. “If approved, larazotide has the potential to be a first-in-class drug for this indication. Our main focus now is to begin the Phase 3 trials in order to bring a much-needed therapy to this underserved patient population.”

Patients diagnoses with celiac only have the gluten-free diet to manage their symptoms. There are more than 3 million celiac patients in the U.S. and a similar number in Europe with another 15 million in the rest of the world.

Fast track designation

The Food and Drug Administration has given larazotide fast track designation, so the approval process will be expedited.

Larazotide is the only late-stage drug entering phase 3 with a path forward agreed upon by the FDA.

In clinical studies in more than 800 patients, larazotide demonstrated a favorable safety profile comparable to placebo, due to what Innovate believes is its lack of systemic absorption from the small bowel.

According to founder and President Jay Madan, larazotide is expected to enter Phase 3 clinical trials for celiac disease in mid-2018.

Upon FDA approval, larazotide is expected to go to market in 2020.

Larazotide, an oral peptide formulated into a capsule, has a unique mechanism of action which decreases intestinal permeability and regulates tight junctions by reducing antigen trafficking across intestinal epithelial cells.

As of right now, larazotide is the only known drug in the clinic that reduces intestinal permeability.

Increased intestinal permeability, sometimes referred to as “leaky gut,” has been widely recognized in the literature as a gateway to multiple autoimmune diseases, including celiac disease, irritable bowel syndrome, inflammatory bowel diseases such as Crohn’s and ulcerative colitis, type 1 diabetes mellitus, nonalcoholic steatohepatitis, chronic kidney disease and others.

Intestinal permeability acts as a gateway to other autoimmune diseases that the company also plans to explore.

Innovate is currently researching other indications in the gastrointestinal space, specifically liver disorders such as NASH, according to Madan.

Merging to become public

The company merged with Monster Digital on Jan. 29 and began trading publicly on Feb. 1.

Innovate’s stock closed at $9.48 on Friday, up $3.33, or 54.15 percent from the previous day.

The company’s recent merger was aimed at “leveraging capital to go to market,” said Madan, and “Monster Digital just happened to be available.”

Innovate CEO Christopher Prior stated: “We intend to use the proceeds from the concurrent financing to advance our celiac disease drug candidate into Phase 3 clinical trials with the goal of bringing a much-needed therapy to market for a disease that affects approximately 1 percent of the population.”

In addition, Innovate believes that as a public entity it will be able to engage a wider range of investors, which will allow it to advance its mild-to-moderate ulcerative colitis combination therapy into Phase 2 trials and to expand its pipeline.

“It’s an exciting transition for Innovate as we strive to become a leader in autoimmune and inflammatory drug development for diseases with unmet medical needs,” said Madan. “With the continued support from our existing investors, and now with access to the capital markets, our main focus will be rapidly progressing our clinical assets.

According to Madan, the company will work with a contract research organization to help bring this drug to market.

“Understanding the key market is important when talking CROs. The key is that they understand the celiac base as well as other GI diseases,” said Madan.

Innovate is also currently developing two other clinical stage assets: INN-202, a therapeutic drug for ulcerative colitis and Secretin-MRCP, a non-invasive, ionizing, radiation-free assessment of the pancreaticobiliary system.

All global rights to the products in Innovate’s pipeline are backed by more than 150 patents worldwide that are owned by the company.