Drug developer Intercept Pharmaceuticals Inc's shares surged as much as 65 percent after the bell on Monday after the company said its drug to treat liver disease caused by fat buildup was effective in mid-stage trials.
The drug, obeticholic acid, was tested in patients with non-alcoholic steatohepatitis (NASH), a form of liver inflammation, for which there is no approved treatment.
The company said on Monday liver scarring did not worsen in 46 percent of NASH patients who were given the drug, compared with 21 percent in the placebo group.
Intercept said on Jan. 9 it had stopped the trial after the drug showed statistically significant improvement in patients.
The company's shares quadrupled on that day but lost some of those gains in the past few months as investors raised questions about the drug's side-effects and awaited full clinical results of the trial.
"The fear that investors had regarding the safety of the drug have now been put to rest with this update," Oppenheimer analyst Akiva Felt told Reuters.
"The statistically significant results of the trial are also a positive new development."
The company said it plans to start late-stage trials for the drug in the first half of 2015.
The drug is also being tested as a treatment for primary biliary cirrhosis, an autoimmune disease in which bile ducts in the liver are destroyed.
Intercept also posted a profit in the second quarter ended June 30 compared with a loss a year earlier, helped by a one-time gain related to revaluation of warrants.
Intercept's shares were up 53 percent at $358.07 after the bell.
(Reporting By Amrutha Penumudi)