Protalix Biotherapeutics Inc (NYSEAMERICAN:PLX) has had a pretty strong start to the week this week and a strong new year on the back of some fresh news related to one of its lead development assets in the biotechnology sector. The company is trading up around 6% on its open on Tuesday morning (bear in mind that markets were closed on Monday) and looks set to continue to appreciate as we head into the latter half of this week given that early morning activity (premarket) has added a couple of percentage points onto the above-mentioned weekly gains on Wednesday.

So what’s driving the action?

Protalix is trying to develop a drug called OPRX-106 as a target asset for ulcerative colitis (UC). This is a circa six billion-dollar global market (or, at least, that is, it is expected to be within the next couple of years) and right now, standard of care treatments are pretty wide-ranging, but the gold standard is a family of drugs called anti-TNF treatments.

These sorts of drugs seek to inhibit the processes that promote the excessive inflammation that is at the root of these sorts of conditions.

The problem is, however, the drugs that currently serve as standard of care are administered through an injectable. That’s a problem for a couple of reasons. First, it requires a physician to be present (and, generally, to perform the administration. Second, it’s not that great as far as getting drugs to certain parts of the body is concerned – especially with GI tract conditions (as is the case with UC).

So Protalix is trying to take the concept that underpins anti-TNF treatments and transform the drug into an oral administration asset (because this is going to help the active compound reach the GI target quicker and with less resistance).

And as per the latest data, the company seems to have been able to achieve that.

57% of 14 patients had a clinical response after eight weeks. 36% of these went into complete remission. Against certain symptoms and biomarkers, the drug also performed strongly. 79% resulted in a significant improvement in rectal bleeding and 86% showed a reduction in what’s called calprotectin, which is a major biomarker for the severity of UC.

Next, then, it’s about getting this asset into phase III trials and proving that it can work to the same degree at a larger scale.

As mentioned, however, even though this is just a mid-stage trial, there’s plenty of positive sentiment surrounding the development and the company is trading up heading into the session today. We expect continued appreciation as we move into the end of this week and beyond.

Another noteworthy development in the biotech space this week relates to a company called Menlo, which is currently preparing to conduct an IPO that’s rooted in an old Merck & Co., Inc. (NYSE:MRK) drug. The asset is called serlopitant and it’s what’s called an NK-1 receptor antagonist. It’s a once-daily oral treatment and it is being tested as a potential target for pruritus (which is basically just another word for the itch) associated with atopic dermatitis, psoriasis and prurigo nodularis.

So, the drug is about to enter phase III trials and Menlo is looking to take advantage of what is currently a pretty strong IPO environment to raise capital to conduct its trial and, with any luck, to push forward into the commercialization stages of the assets advance in the US.

Exactly how the ICO will play out remains to be seen, but the company wants to raise just shy of $100 million. There’s some data slated for release from a phase II investigating the drug in pruritus associated with atopic dermatitis, which could be a major near-term catalyst if the IPO goes ahead and runs smoothly through to closing.

Here’s what the company said in its SEC-1, with regards to its expectations for the asset:

“We believe that serlopitant may be effective as an oral therapy adjunct to standard of care topical or systemic treatments for pruritic dermatologic conditions, and may also be effective as a monotherapy for patients for whom management of the pruritus or refractory chronic cough symptoms is the primary patient need.”

We believe this is one to watch near term and we’ll be keeping an eye on the company heading into the IPO.