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Regeneron Delivers A 'Blockbuster' Win In Eczema

By Todd Campbell - Apr 1, 2016 at 2:42PM

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Dupilumab successfully cleared moderate to severe eczema in late stage studies.


Following study results showing that its dupilumab can effectively treat eczema, Regeneron Pharmaceuticals (REGN 0.61%) plans to file for FDA approval of this drug in the third quarter. Dupilumab's successful trial continues a string of wins for the company that includes last year's FDA approval of Praluent, a cholesterol lowering drug, and positive late stage results for sarilumab, a rheumatoid arthritis drug. If dupilumab's results eventually lead to a FDA approval, then it could become another top seller for the company, so let's learn more about it.

A bit of background
Dupilumab is a biologic agent that inhibits interleukin-4 and interleukin-13, two small anti-inflammatory proteins secreted by cells that are believed to play a role in eczema.

There are different types of eczema, but dupilumab's study was for its use in the treatment of atopic dermatitis, a moderate to severe form of this itchy rash. According to the National Eczema Association, 17.8 million Americans have atopic dermatitis.

Typically, atopic dermatitis occurs on the inside of elbows, backs of knees, the face, and it can cover most of the body. The condition is inherited and its chronic, usually developing in childhood and persisting throughout a patients' lifetime. Currently, available treatment options, such as topical creams, offer limited and inconsistent results, suggesting a need for new therapies.


Improving care
Regeneron and Sanofi (SNY 2.52%), its partner on this drug, studied the use of dupilumab in two phase 3 trials involving 1,379 patients diagnosed with moderate to severe atopic dermatitis.

Patients in the dupilumab arm of the studies received an initial 600 mg loading dose, followed by either once weekly or bi-weekly dosing of 300 mg for 16 weeks.

In the first study, 37% of dupilumab patients receiving weekly dosing and 38% of patients receiving bi-weekly dosing achieved clearing or near-clearing of their skin, versus 10% in the placebo group. Results from the second study were roughly the same.

Additionally, 52.5% and 51% of patients receiving weekly or bi-weekly dosing, respectively, in the first tiral achieved EASI-75, or a 75% reduction in this disease severity score, versus 15% for the placebo arm of the study. 

Based on those results, it appears the drug could be a new and effective treatment option for doctors and patients, especially since the drug's safety profile was solid.

Potentially profit-friendly
If approved, then Regeneron and Sanofi estimate that the patient population in the U.S. that could benefit from dupilumab therapy is about 1.6 million.

Assuming that the drug penetrates just 10% of that market, it could still be a big needle mover for Regeneron and Sanofi. Currently, other biologics that are used in the treatment of autoimmune diseases command annual prices in the tens of thousands of dollars. Humira, for example, can cost up to $60,000 per year.

If we model for an annual price that's a third of Humira's cost, or $20,000, and multiply that by 10% of 1.6 million patients, or 160,000 patients, then we get an annual sales run rate of $3.2 billion.

Obviously, no one knows if the FDA will approve dupilumab, how many patients will eventually be prescribed it, or how much Regeneron and Sanofi may charge for it, but this calculation does provide a little bit of back-of-napkin context for how meaningful this drug could be to these companies.

Looking forward
Regeneron's Eylea, a widely used drug for the treatment of wet age related macular degeneration hauled in $4.1 billion last year and analysts think that Praluent could become a billion dollar blockbuster drug someday too. If sarilumab wins approval in October and dupilumab wins approval sometime in 2017, then Regeneron could have four blockbuster drugs on the market beginning next year. If so, it could mean significant revenue and profit growth for the company and because of that, this latest win makes this company one that investors shouldn't ignore. 

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