Double digit gains across a session or two in small cap biotech aren’t all that rare. Low floats can combine with speculative volume inflow to push a company’s capitalization well into a spike, and indeed, there’s a whole bunch of traders that seek out these opportunities, and these opportunities alone. That said, more often than not, the driver behind the speculative volume inflow is valid, and it can hint at further gains near term, if the catalyst behind the driver proves positive.

Here’s one that illustrates this concept perfectly.

The company is called Protalix Biotherapeutics Inc (NYSEMKT:PLX), and it’s a small cap biotech with a development program targeting inflammatory conditions, including cystic fibrosis (CF) and Fabry. It’s also got an approved therapy called taliglucerase alfa. This one’s a Gaucher disease drug, built on its proprietary ProCellEx platform, which the FDA gave a green light to back in 2012, and which the company has since licensed globally (apart from in Brazil) to Pfizer Inc. (NYSE:PFE).

Anyway, back to the present. The company is up more than 20% on its Thursday open, on a spike in volume. There have been no real fundamental developments over the last couple of days (there was a Gaucher order announcement early week but that’s already been priced in), so why is the company running? Well, it’s currently investigating one of its lead development assets, AIR DNase (PRX-110), under investigation for the treatment of CF.

The trial has been pretty closely followed since some promising early stage data hit press, and Protalix has stated that it will put out interim data from the study during the first week of January.

If the data comes out as a primary hit, there’s plenty more upside on offer from that which we’ve already seen. If it misses, Protalix will likely give back this 20% run, and perhaps a little more, to the markets. So the question is, what are the chances of a hit? Let’s try and figure it out.

PRX-110 is a proprietary plant cell-expressed recombinant form of human deoxyribonuclease I (DNase1). The company designed it to be resistant to actin inhibition. Current CF therapy includes an SOC DNase1. It’s designed to reduce the viscosity of sputum, which is a primary issue with CF, and leads to infections and lung function compromise. Current DNasel1, however, is not resistant to actin, and actin acts to impair the impact it has on the sputum. Basically, it breaks the DNase1 down, reducing its efficacy, and necessitating higher dosing. The version that Protalix has created is resistant to this enzymatic breakdown, so theoretically, it should build on the efficacy of SOC DNase1. If it does, it could quickly eat away at the market for the commercialized version, called Pulmozyme and marketed by Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY)’s Genentech.

That’s a $700 million annual market.

So what are the chances of approval? To date we’ve only got healthy volunteer data derived from the clinic, so while we know it’s safe, we’ve not got too much insight into clinical benefit. With that said, we’ve seen some evidence of benefit for a similar drug in Fabry, and there’s plenty of legacy data supporting the mechanism of action. The science is sound (if actin stops current SOC reaching maximum efficiency, then making the current SOC resistant to actin should make it more effective) and all it really needs to do in this trial is show equivalence. Why? Because these are patients that have already been treated with SOC, and for which the latter is not working particularly well.

Primary is safety on this one, so while that’s got to be a hit, we’re not particularly interested in it. Instead, we’re looking at two secondary measures, area under the curve and change from baseline to end of treatment in FEV1. FEV1 is an industry standard measure of CF severity, so if the company can show that a patient has an improved FEV1 after treatment with 110, then there’s some solid implied clinical benefit.

It’s interim (study completion is set for May next year) so keep that in mind, but t could really impact Protalix’s chances of getting this one through to commercialization if it comes out as indicative of efficacy.