Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Dermira Stock Is Rocketing Higher Today

By Cory Renauer - Updated Oct 18, 2019 at 1:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company gave investors a closer look at its eczema candidate and they liked what they saw.

What happened

Shares of Dermira (DERM), a biopharmaceutical company developing an in-licensed eczema candidate, took off like a rocket after the company announced follow-up results from a mid-stage clinical trial. Investors thrilled with lebrikizumab's performance have driven the biotech stock 25% higher as of 1:16 p.m. EDT on Friday. 

So what 

Dermira's first drug to earn approval, an underarm sweat preventer called Qbrexza, isn't doing so well in the commercial stage. When the company licensed lebrikizumab from Roche (RHHBY 2.34%) in 2017 and began developing it to treat eczema, investors didn't pay much attention. After all, why would a big pharma that spends billions each year developing new drugs let this one go?

Man in a suit holding up a lot of money to hide his face.

Image source: Getty Images.

Roche stands to earn a great deal, but the pharma giant must be kicking itself after seeing just how well lebrikizumab, an inhibitor of interleukin-13 (IL-13) performed in a mid-stage trial. An impressive 44% of patients treated with the highest dosage of lebrikizumab exhibited 90% skin clearance compared to 11.4% of the placebo group. 

Lebrikizumab's similar to Dupixent, a popular new eczema treatment from partners Regeneron (REGN 0.77%) and Sanofi (SNY 2.19%). The main difference is that lebrikizumab has a stronger affinity for IL-13 than Dupixent, which appears to make a big difference when it comes to alleviating eczema's debilitating symptoms.

Now what

While eczema clearance rates for lebrikizumab have been arguably competitive to Dupixent, today's look at chronic itching caused by the disease and opportunistic infections caused by dialing back the immune system could give Dermira an edge in the commercial setting. Patients in the placebo group reported a 6.8% worsening of pruritus scores while the group treated with the highest dosage of lebrikizumab reported a 61.8% improvement.

Just 2.7% of the group treated with the highest dose of lebrikizumab reported conjunctivitis, which was lower than the mid-sized dosage. During trials that led to Dupixent's approval, 10% of those treated developed an eye infection or conjunctivitis compared to just 2% of the placebo group.

At recent prices, Dermira's still a relatively tiny company with a $385 million market cap. If lebrikizumab continues to impress, that could grow ten-fold or more in another couple years.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dermira, Inc. Stock Quote
Dermira, Inc.
Sanofi Stock Quote
$44.37 (2.19%) $0.95
Roche Holding AG Stock Quote
Roche Holding AG
$42.00 (2.34%) $0.96
Regeneron Pharmaceuticals, Inc. Stock Quote
Regeneron Pharmaceuticals, Inc.
$628.71 (0.77%) $4.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.