NEW YORK (TheStreet) -- Shares of Galmed Pharmaceuticals  (GLMD) - Get Report surged 38.58% to $8.98 on Tuesday after the company announced the FDA had given Fast Track Designation to its drug candidate aramchol for the treatment of Non-Alcoholic Steato-Hepatitis, or NASH.

NASH is a chronic disease that affects approximately 12% of the U.S. population and some European nations. Its prevalence could increase as obesity and diabetes rates increase. There are currently no approved drugs for the treatment of NASH, according to Galmed.

Galmed, which focuses on developing once-daily oral treatments for liver diseases and cholesterol gallstones, included the words "FDA approval" in its press release headline, which caused a buying frenzy on higher-than-average volume. But Fast Track Designation simply allows a company more access to the FDA during drug development.

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"Fast track designation is intended to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need," according to the FDA's website. "Designation may be granted on the basis of preclinical data. A sponsor of a drug that receives fast track designation will typically have more frequent interactions with FDA during drug development. In addition, products that have been designated as fast track can obtain rolling review."

Galmed plans to start a Phase IIb clinical trial of aramchol in 240 NASH patients who also deal with obesity and insulin resistance later this year in Israel, Europe and some Latin American nations.

More than 4.8 million shares had changed hands as of 3:40 p.m., which dwarfed the average volume of 23,672. 

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