The end of the week is here and it’s been a strong one in the biotechnology space. There’s been plenty to go at, at both ends of the markets, with a variety of inputs both weak and strong driving volatility.

Here’s a look at two of the biggest movers on Thursday with an analysis of what caused the action in each and where we expect things to go next.

The two companies we are focusing on for the session today are Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) and Aeterna Zentaris Inc. (NASDAQ:AEZS).

First up, Ironwood.

This one is rooted in a data release from the company’s phase IIb trial of its lead development asset, a drug called IW-3718. The company is trying to get it approved as a potential therapy for patients with a condition called uncontrolled gastro-esophageal reflux disease (GERD). For those not familiar with the condition, GERD occurs when stomach acid or, occasionally, stomach content, flows back into the esophagus. The backwash (reflux) irritates the lining of the esophagus and causes GERD.

The idea behind treatment with IW-3718 is that it’s a sequestrant, meaning the drug binds with bile that refluxes in the stomach to stop it bringing about reabsorption and – in doing so – provide relief from the symptoms of the condition. It’s designed for use in combination with what’s called a proton pump inhibitor (PPI) which is one of the standard of care therapies in this space as things stand.

As per the data, then, patients treated with IW-3718 plus a PPI showed a mean decrease of 58% from baseline in heartburn severity compared to 46% in patients treated with a PPI alone (p = 0.04).

So we got some statistically significant data and a primary endpoint hit. In response to the news, however, markets are selling off on the company. Why? Because the difference between the active and the control arm (so, PPI and PPI with IW-3718) was only 12% and markets were expecting to see a slightly larger difference between the two numbers.

As such, Ironwood is currently trading at an around 8% discount to its pre-announcement market capitalization. Going forward, we expect this to gap to close out as markets rebalance sentiment ahead of a phase III trial initiation in this indication. Safety was relatively clean, so the improvement is sort of a no brainer if and when the company picks up a green light for commercialization on this asset.

So, moving on, let’s look at Aeterna Zentaris.

This one’s actually a continuation of a move that we saw earlier on in the week but it remains pertinent, hence the company’s inclusion on this list. Aeterna is developing a drug called Macrilen as a therapy for patients with growth hormone deficiency in adults (AGHD). The drug has been repeatedly turned down by the FDA and actually failed its pivotal trial (the one on which the company’s application for registration rests) and, when taken against a backdrop of the phase III failure of another drug late last year, markets had pretty much written the company off.

Mid week, however, Aeterna announced that the FDA had accepted its response to a Complete Response Letter (CRL) that the latter issued in response to the initial application, and has subsequently set a PDUFA data for the drug of December 30, 2017.

The company has rocketed on the back of the news, currently up somewhere in the region of 40% on its Wednesday close. So why the big response? Well, as mentioned, markets had pretty much written this one off as an asset sale and – based on the seeming double failure of its two lead drugs – there’s not much in terms of assets to sell. With the latest news, however, Aeterna has gone from cash value to a company with a late stage asset in an unmet need and a PDUFA date that could see it have a drug on shelves before the end of the year. That’s an incredible turnaround and one that – unsurprisingly – markets are responding positively to.

Chances are we will see this one continue to appreciate as it heads into decision day.