Regeneron, SNY Report Mixed Results From Late-Stage COPD Studies

Regeneron (REGN) and Sanofi (SNY) reported mixed results from phase III trials of itepekimab for COPD treatment; AERIFY-1 met its primary endpoint, demonstrating a 27% reduction in moderate/severe exacerbations compared to placebo, while AERIFY-2 did not. The companies are reviewing the data and plan to discuss next steps with regulators, as Regeneron seeks to broaden its portfolio amid declining Eylea sales and looks to its oncology pipeline, including linvoseltamab, which has a target FDA action date of July 2025.

Analysis

Regeneron (REGN) and Sanofi (SNY) reported mixed phase III results for their chronic obstructive pulmonary disease (COPD) candidate, itepekimab: the AERIFY-1 study met its primary endpoint by significantly reducing moderate or severe acute exacerbations by 27% compared to placebo at week 52, a clinically meaningful benefit, while the AERIFY-2 study did not meet the same primary endpoint. This outcome introduces uncertainty for the program, as both companies review data and plan discussions with regulatory authorities. This development occurs against a backdrop of REGN shares underperforming, having lost 14.8% year-to-date compared to the industry’s 2.8% decline, partly due to a dismal first-quarter performance where a plunge in Eylea sales adversely impacted the top line. Eylea continues to face significant competitive pressure from Roche’s (RHHBY) Vabysmo, which has shown outstanding market uptake, and Regeneron anticipates a prolonged period before Eylea HD can substantially contribute to revenue. Conversely, Dupixent, co-developed with Sanofi, remains a primary growth driver for REGN, with sales maintaining momentum due to strong prescription trends and a recent label expansion into COPD. Regeneron aims to broaden its portfolio with the potential success of itepekimab and is advancing its oncology pipeline, evidenced by linvoseltamab (Lynozyfic) receiving conditional EU marketing approval for multiple myeloma and an FDA target action date of July 10, 2025. REGN currently holds a Zacks Rank #3 (Hold).

Key Decisions for Investors

• Investors should closely monitor communications from Regeneron and Sanofi regarding their upcoming discussions with regulatory authorities about the future development pathway for itepekimab, given the mixed late-stage trial results and its strategic importance for diversifying beyond Eylea.
• The sustained competitive pressure on Eylea sales from Roche's Vabysmo and the noted underperformance of REGN stock warrant careful risk assessment; however, the strong performance of Dupixent and progress in the oncology pipeline, particularly linvoseltamab’s FDA target action date, represent key potential offsetting factors.
• Considering the current challenges, including the uncertainty surrounding itepekimab and the competitive environment for Eylea, alongside Regeneron's Zacks Rank #3 (Hold), a cautious or neutral stance may be advisable until further clarity on these pivotal product developments and their impact on future revenue streams emerges.