First Wave BioPharma has acquired Sanofi’s capeserod with plans to repurpose it as a gastrointestinal (GI) disease therapy.

Following the news, First Wave’s stock skyrocketed by over 80% in pre-market trading. The US-based company has a market cap of $3.112m.

The agreement includes a $500,000 upfront payment, with developmental and commercial milestone payments of up to $46m and $235m, respectively.

Additionally, Sanofi would have the right of first refusal on any capeserod sublicensing agreement and would be entitled to a percentage of any licensing payments. Sanofi also reserves the first refusal right to reacquire capeserod during development.

Capeserod is a selective partial agonist of the serotonin type 4 (5-HT4) receptor. In the GI tract, these receptors perform various functions, including gastric emptying, decreasing oesophageal reflux, and promoting intestinal peristalsis.

Sanofi had previously evaluated capeserod in Alzheimer’s disease and urinary incontinence but had since terminated the drug development. However, Fist Wave analysis of the drug had identified its potential application in several GI disorders.

First Wave plans to meet with the US Food and Drug Administration (FDA) to ascertain a developmental and regulatory pathway for capeserod and plans to initiate clinical trials in 2024.

First Wave CEO James Sapirstein said: “Capeserod has been investigated in multiple clinical trials involving over 600 patients and through this research and AI-based analyses evidence emerged suggesting the drug possesses a unique mechanism of action that is applicable to several GI indications underserved by currently available therapeutics.

“We intend to immediately initiate discussions with the FDA focused on a development and regulatory plan that would enable us to begin Phase II clinical trials of capeserod in 2024.”

In June, Sanofi partnered with BioMed X to research an artificial intelligence (AI)-driven drug discovery platform.