Sanofi and Regeneron Pharmaceuticals' asthma drug Dupixent succeeded in a final-phase study of patients with "smoker's lung," leading SNY stock and REGN stock to rocket Thursday.
In the Phase 3 study, Dupixent led to a 30% reduction in exacerbations associated with COPD, or chronic obstructive pulmonary disease. Exacerbations are episodes of worsening symptoms in the progressive, and potentially fatal, lung disease. The condition is common in former smokers, said Naimish Patel, head of Sanofi's immunology and inflammation drug development.
The results could carve out a new market for Dupixent, an already highly successful treatment for asthma, eczema and a condition that causes nasal polyps. Last year, Dupixent generated nearly $8.7 billion in sales. This year, it's expected to top $13 billion, according to FactSet.
On today's stock market, REGN stock surged 6.8% to close at 802.16. SNY stock rose 6% and closed the regular session at 51.73.
REGN Stock, SNY Stock: Treating Inflammation
Part of the challenge with COPD is that it's a heterogenous condition, meaning its cause differs from patient to patient, Patel told Investor's Business Daily.
In this study, Sanofi and Regeneron focused on patients with type 2 inflammation. These patients tend to have high levels of eosinophils, white blood cells associated with an allergic reaction. This is key because Dupixent blocks the cytokine drivers of type 2 inflammation.
COPD patients with type 2 inflammation also tend to have worsen symptoms and exacerbations. Their condition can also progress more rapidly, Patel said.
"What we did with our program was we optimized the patient selection by limiting to patients with 300 eosinophils or greater and we also optimized patients to have those already on maximal inhaled therapies," he said.
The strategy appeared successful in the Phase 3 study. In addition to reducing exacerbations by 30%, Dupixent also led to improvements in lung function, quality of life and respiratory symptoms. This pushed REGN stock above a buy point at 800.58 out of a flat base, according to MarketSmith.com. SNY stock is nearing an entry at 50.03 out of a cup-with-handle base.
The safety also lined up with what doctors expect from Dupixent. The most common side effects were headache, diarrhea and back pain.
Companies Hit A 'Home Run'
Piper Sandler analyst Christopher Raymond called the study a "home run." He notes the companies are waiting on a second Phase 3 study in the first half of 2024 before filing for approval.
But "management indicated they feel these data may be positive enough to take to (Food and Drug Administration) now — to at least have the conversation regarding accelerated approval," he said in a note to clients.
Raymond added $1.5 billion to his 2026 revenue estimate for Regeneron. But an early request for FDA approval would pull that forecast forward by a year. He kept his overweight rating on REGN stock, but raised his price target to 850 from 800.
Sanofi's Patel notes COPD is the third leading cause of death worldwide. He estimates there are about 300,000 patients in the U.S. with type 2 inflammation. Sanofi and Regeneron are also working on a treatment with former smokers with another type of inflammation.
There are very few options for COPD patients, he said.
"It's a very severe disease with really no therapy past the inhaler medications that have been on the market for years and years," he said. "We're trying to break ground in an area of high unmet need."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
