Image Source: Regeneron Pharmaceuticals  

What: Investors in biotech giant Regeneron Pharmaceuticals (NASDAQ:REGN) are having a good day. Shares are up more than 13% as of 2:30 p.m. EST after the company released top-line clinical results from two Phase 3 trials.

So what: Regeneron and its collaboration partner Sanofi (NASDAQ:SNY) reported results from two Phase 3 trials using their experimental compound dupilumab. The trials were studying dupilumab's ability to treat patients with moderate-to-severe atopic dermatitis, which is a serious form of eczema classified by itchy and inflamed skin. 

The two studies -- called LIBERTY AD SOLO 1 and SOLO 2 -- showed that dupilumab performed much better at helping patients control the symptoms of their atopic dermatitis when compared to those who took a placebo. Roughly 37% of patients who used dupilumab were able to clear up their skin lesions compared to roughly 10% of patients who used placebo. In addition, when measured on the Eczema Area and Severity Index, patients who took dulipumab showed about a 72% or 67% improvement in their reading from baseline compared to a 38% or 31% change in the placebo group.

Importantly, the number of adverse events for both groups was similar, which indicated that dupilumab was well tolerated by patients.

Now what: The two companies plan to submit dupilumab for regulatory review in the third quarter of this year. Because the drug has already been given a breakthrough-therapy designation by the FDA, the chances of an approval look favorable.

There are roughly 1.6 million Americans who have moderate to severe atopic dermatitis, and because there are currently not any approved systemic therapies on the market to treat the disease, analysts are feeling bullish about dupilumab's potential. Peak sales estimates are currently running around $2.5 billions per year, but that could prove to be a conservative guess, especially if dupilumab is shown to be successful at treating other inflammatory diseases, as well.

Even though both Sanofi and Regeneron currently boast sales measured in the billions, adding another drug that holds multibillion sales potential to the mix could be a needle mover for both companies. With the good clinical news, I think the market was right to bid up shares today.

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