Is Another Blockbuster Drug on the Way for Regeneron Pharmaceuticals, Inc.?

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Regeneron Pharmaceuticals, Inc. (REGN 0.53%) is best known for Eylea. The drug, which is used to treat three eye diseases, generated $3.1 billion in 2015 for Regeneron and nearly $950 million for the biotech's partner, Bayer.  

Many observers expected that Regeneron's partnership with Sanofi (SNY 0.66%) to develop and market PCSK9 inhibitor Praluent could lead to the next blockbuster alongside Eylea. However, sales for the cholesterol drug have been disappointing so far.

Another drug in the pipeline for Regeneron and Sanofi could be better positioned to meet expectations and top that magical billion-dollar sales mark. Here's why Dupixent could be Regeneron's next blockbuster.  

Three for three

In April, Regeneron and Sanofi announced positive results from two late-stage clinical studies of Dupixent in treating atopic dermatitis. A total of 1,379 patients were enrolled in the two studies. Between 36% and 38% of patients treated with Dupixent achieved clearing or near-clearing of skin lesions. Patients taking the drug also achieved significantly higher Eczema Area and Severity Index (EASI) scores, signifying dramatic improvement in skin conditions.

The two partners announced great results from a third phase 3 study in June. This study compared treatment of patients with topical corticosteroids alone versus topical corticosteroids in combination with Dupixent. The results showed clear superiority of administering Dupixent with topical corticosteroids.

In the first two studies, the rate of serious adverse events and severe infections were actually higher in the patients who didn't take Dupixent. Patients taking Dupixent in all three studies did experience higher rates of injection site reactions and conjunctivitis. However, there weren't any big safety concerns with Dupixent.

High expectations 

These positive findings led Regeneron and Sanofi to move quickly to file for regulatory approval in the U.S. for Dupixent. On September 26, the companies announced that the FDA had accepted the Biologics License Application (BLA) for priority review of Dupixent. A decision is expected by March 29, 2017.

With impressive efficacy results and no serious safety concerns, Dupixent should have a good shot at winning FDA approval. What about the prospects for commercial success? That looks good, too. In the U.S. alone, there are an estimated 1.6 million patients with uncontrolled moderate-to-severe atopic dermatitis. More effective treatment options are definitely needed.  

Investment bank Jefferies estimates that Dupixent could hit peak annual sales of up to $3 billion. That target doesn't seem far-fetched with potential commercialization in other countries outside of the U.S.  

Potential hurdles

It's not a foregone conclusion that Dupixent will achieve blockbuster status for Regeneron. While I think the drug should win regulatory approval, there's always a chance that it won't. A phase 3 study is also in progress for Dupixent in treating asthma, but results won't be available for that study until next year. A failure in the additional indication would decrease potential revenue for the drug.

Another potential issue is competition. Anacor Pharmaceuticals, now owned by Pfizer, has its own atopic dermatitis drug awaiting FDA approval. Crisaborole, an anti-inflammatory PDE-4 inhibitor, also achieved positive results in late-stage testing. A decision by the FDA on approval of the drug is expected by Jan. 7, 2017.

Regeneron and Sanofi probably don't have too much to worry about with crisaborole, though. Anacor's drug targets mild-to-moderate atopic dermatitis instead of the moderate-to-severe cases of the disease targeted by Dupixent. There could be some overlap in the patient populations, but Dupixent's prospects for dominating in the more severe cases seem pretty good. Potential hurdles exist, but I think Regeneron isn't too far away from having another blockbuster drug to its credit.