Idiopathic pulmonary fibrosis (IPF) scars lung tissue, causing breathing to become progressively harder.
It kills more than 5,000 people each year in the UK alone, according to the British Lung Foundation.
Researchers hope a new drug, inspired by an antibody in the blood of sharks, can begin human trials next year.
The drug, AD-114, was developed by researchers at Melbourne’s La Trobe University and biotechnology company AdAlta.
Initial testing successfully targeted fibrosis-causing cells by creating a human protein that imitated the shark’s antibody, according to Dr Mick Foley, from the La Trobe Institute for Molecular Science.
“Fibrosis is the end result of a lot of different insults and injuries,” he told the BBC.
“This molecule can kill the cells that cause fibrosis.”
IPF symptoms include shortness of breath, especially during exercise, which gradually gets worse, and a persistent dry cough.
There is currently no cure so treatment focuses on trying to relieve symptoms and slow its progression.
The US Food and Drug Administration this month designated AD-114 an “orphan drug” – a move which gives tax breaks to companies attempting to find treatments for diseases.
Dr Foley, who is also AdAlta’s chief scientific officer, said the company had raised A$10 million (£6m; $7.5m) since being listed on the Australian Stock Exchange in August.
It intends to use the money to take the drug to human trials in 2018.
AD-114 does not involve injecting shark blood, which the human body would reject, Dr Foley said.
Other potential uses
In laboratory tests, the drug also showed potential to treat other forms of fibrosis.
This included, for example, people suffering from liver disease and age-related eyesight degeneration, Dr Foley said.
He added no sharks had been harmed in the process. A single blood sample was extracted from a wobbegong shark at Melbourne Aquarium.
“It would be very nice to say one day that ‘this person is alive because of what the sharks told us,” Dr Foley said.