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Regeneron & Sanofi's Atopic Dermatitis Drug Gets FDA Nod

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Regeneron Pharmaceuticals, Inc.  (REGN - Free Report) and its partner Sanofi (SNY - Free Report) announced that the FDA has approved the Dupixent (dupilumab) Injection, for the treatment of adults with moderate-to-severe atopic dermatitis (AD).

Per the companies, this is the first and only biologic medicine approved for the treatment of adults suffering from AD.

Regeneron’s share price shows that the company has underperformed the Zacks classified Medical - Biomedical and Genetics industry year to date. The stock gained 4.2% compared to the industry’s gain of 6.3%.

The approval of Dupixent was based on data from the global LIBERTY AD clinical program, which included three randomized phase III studies. In all these studies, Dupixent, alone, or with topical corticosteroids, met the primary and key secondary endpoints.

We note that Dupixent received the Breakthrough Therapy designation by the FDA in 2014, for the treatment of adults with moderate-to-severe AD, who are not adequately controlled with topical prescription therapy and for whom these treatments are not appropriate. We note that the drug is currently being evaluated in a comprehensive development program for AD that includes studies in children with severe AD (six months to 11 years of age) and adolescents with moderate-to-severe AD (12 to 17 years of age).

In Oct 2016, the FDA also granted Breakthrough Therapy designation for Dupixent for the treatment of moderate-to-severe (12 to less than 18 years of age) and severe (six months to less than 12 years of age) atopic dermatitis in pediatric patients who are not adequately controlled with, or who are intolerant to, topical medication. Also, in Dec 2016, the European Medicines Agency (EMA) accepted for review the Marketing Authorization Application (MAA) for Dupixent for the treatment of adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy.

Regeneron and Sanofi will launch Dupixent in the U.S. at the Wholesale Acquisition Cost (WAC) of $37,000 annually. Actual costs to patients, payers and health systems are anticipated to be lower as the WAC pricing does not reflect discounts, rebates or patient assistance programs. We note that pricing will pay a key role in the uptake of the drug given the current focus on drug pricing by the government.

Sanofi Genzyme – the specialty care global business unit of Sanofi along with Regeneron – will market Dupixent in the U.S. We note that the companies are also developing Dupixent for additional indications, including asthma. If the data from the ongoing phase III study for asthma is positive, Regeneron expects to file for it in the U.S. in fourth-quarter 2017.

Other indications also include nasal polyps where the company is currently enroling patients in two separate phase III studies. Another indication is eosinophilic esophagitis for which the company anticipates to report top-line data from its phase II study in the first half of 2017. Regeneron also plans to initiate a phase II study of dupilumab in food allergies in the second half of this year.

The approval of Dupixent is likely to help Regeneron boost its revenues in the near term.

Zacks Rank & Key Picks

Regeneron currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the health care sector include Heska Corporation and Retrophin, Inc. . Heska and Retrophin flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heska’s earnings estimates moved up from $1.53 to $1.65 for 2017 and from $1.80 to $2.01 for 2018, over the last 30 days. The company posted a positive earnings surprise in all of the last four quarters, with an impressive average beat of 291.54%. Its share price has increased 33.8% year to date.

Retrophin’s loss estimates narrowed from 85 cents to 72 cents for 2017 and from 67 cents to 53 cents for 2018, over the last 30 days. The company posted a positive earnings surprise in three of the four trailing quarters, with a remarkable average beat of 80.55%.  

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