Regeneron shares slide on mixed trial data on smoker's lung drug

Regeneron shares fell nearly 13% after its experimental COPD drug, itepekimab, failed to meet its primary endpoint in one late-stage trial, despite succeeding in another. While one study showed a 27% reduction in COPD exacerbations compared to placebo, a second study did not meet its goal, potentially limiting the drug's market opportunity versus existing treatments like Regeneron/Sanofi's Dupixent and GSK's Nucala. Sanofi and Regeneron are assessing the data and will discuss next steps with regulatory authorities.

Analysis

Regeneron's (REGN.O) shares declined sharply by nearly 13% in premarket trading following the announcement of mixed results from late-stage trials for its experimental COPD drug, itepekimab. While one study of 1,127 patients successfully demonstrated a 27% reduction in exacerbations compared to placebo over 52 weeks, a second study, which notably enrolled fewer former smokers, failed to meet its primary endpoint. This outcome casts considerable doubt on the drug's prospects, which was being co-developed with Sanofi (SASY.PA) and aimed at a broader patient population than their existing blockbuster Dupixent for the condition affecting nearly 16 million U.S. adults. Barclays analyst Emily Field suggests Dupixent will likely retain its first-choice status among physicians, with GSK's (GSK.L) Nucala also a key competitor. This development exacerbates Regeneron's stock performance, already down 15% year-to-date before this news, with shares trading at $530 premarket. The company's P/E ratio stood at 16.15, higher than peers like Gilead (13.62) and Bristol Myers Squibb (7.29). Regeneron and Sanofi are now evaluating the full dataset and intend to discuss the path forward with regulatory authorities, leaving the future of itepekimab uncertain.

Key Decisions for Investors

• Investors should closely monitor communications from Regeneron and Sanofi regarding their discussions with regulatory authorities and the subsequent development plan for itepekimab, as this will be critical in determining the drug's ultimate market potential.
• It is prudent to re-evaluate Regeneron's near-term revenue growth and pipeline valuation, considering the significant setback for itepekimab, which was anticipated to be a major growth driver, and the increased competitive pressure on existing treatments like Dupixent.
• Given the substantial premarket share price drop, consider whether Regeneron's revised valuation accurately reflects the heightened risk profile following this trial data, balanced against the strength of its approved products and remaining pipeline assets.