KaloBios Pharmaceuticals Inc, which recently appointed controversial head of Turing Pharmaceuticals Martin Shkreli as CEO, said it was acquiring worldwide rights to a compound being developed for the treatment of Chagas disease.
The company's shares rose 42 percent to $41.78 in extended trading.
KaloBios will be purchasing the rights to the drug, Benznidazole, from privately held Savant Neglected Diseases LLC for an upfront payment of $2 million, regulatory milestones and a royalty based on product sales.
Chagas disease, which affects more than 300,000 people in the United States, spreads through the droppings of a small beetle known as the Kissing Bug and primarily attacks the heart, ultimately causing heart failure and death.
In the United States, Chagas disease is considered one of the neglected parasitic infections, a group of five parasitic diseases that have been targeted by Centers for Disease Control and Prevention (CDC) public health action.
Neglected parasitic infections are eligible to receive a priority review voucher, an expedited review granted by the U.S. Food and Drug Administration.
There are currently no approved treatments for Chagas disease in the United States or Europe. However, Benznidazole is approved in Latin America as the standard of care for Chagas Disease.
On a conference call, Shkreli said no clinical trials will be required for the marketing application of Benznidazole and that pharmacokinetics and toxicology study results will enable the company to file for approval in 2016.
Shkreli was widely criticized and called a symbol of price gouging in September after Turing Pharmaceuticals drastically raised the price of Daraprim, a drug for treating a dangerous parasitic infection. He later said he would lower the price.
In November, Shkreli led a group of investors to buy 70 percent of Kalobios' outstanding shares.
(Reporting by Amrutha Penumudi in Bengaluru; Editing by Maju Samuel and David Gregorio)