Jaguar Health Inc (NASDAQ: JAGX) stock corrects post a blockbuster rally

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Jaguar Health Inc (NASDAQ: JAGX) stock surged 35.92% on June 11th, 2019 (Source: Google finance) after the company’s wholly-owned human-health subsidiary, Napo Pharmaceutical Inc, will receive preclinical services from the federal government to support the development of drug candidate lechlemer to treat cholera. The stock opened gap down today, falling over 9.9% (As of 12 Jun, 9:36 am GMT-4; Source: Google finance)

Jaguar Health Inc (NASDAQ: JAGX) stock corrects post a blockbuster rally

Napo Pharmaceutical Inc produces Lechlemer, which is a drug candidate under the botanical guidance of the US Food and Drug Administration. It is a standardized and proprietary botanical extract that is distinct from mytesi, Napo’s FDA-approved drug. Contractors funded by the National Institute of Allergy and Infectious Diseases will conduct toxicology testing for seven-day rat and dog studies. NIAID is part of the National Institutes of Health. 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.

Meanwhile, 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, the rapid loss of body fluids generally leads to dehydration and shock. In fact, many who do not undergo treatment pass away within hours as a result of the symptoms.

Further, there are not many treatment options that have been proven effective against cholera. 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. JAGX will be able to benefit from larger margins. So, if Lechlemer gets the approval by the FDA, JAGX and its subsidiary, Napo, could get a blockbuster treatment option.

The Company had already presented Phase 2 data previously on crofelemer for the treatment of devastating dehydration in cholera patients from the renowned International Centre for Diarrhoeal Disease Research (icddr,b) in Bangladesh. Napo plans to follow the same study design for lechlemer

On the other hand, 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.

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