StockWatch: COPD Data, Analysts, Treg Cell Therapy Deal Lift Regeneron

The largest biopharmas hardly budge much in terms of stock prices from week to week, so it’s reason to take notice when shares of Regeneron Pharmaceuticals (REGN) jump by double digits over a few days.

Regeneron finished trading Tuesday at $826.97, up 10% from $751.30 on March 23, the day the company’s shares enjoyed a spurt of buying from investors after it joined collaboration partner Sanofi to report positive Phase III data for a potential additional indication for Dupixent^® (dupilumab) in chronic obstructive pulmonary disease (COPD).

The stock yo-yoed a little after Tuesday, dipping 2% to $811.50 on Thursday before bouncing back today, inching up 0.5% in midday trading, to $815.14 as of 2:00 p.m. ET.

Data from the Phase III BOREAS trial (NCT03930732) showed that Dupixent met the study’s primary endpoint by achieving clinically meaningful and statistically significant (30%) reduction in exacerbations of COPD compared to placebo over 52 weeks in adults currently on maximal standard-of-care inhaled therapy with uncontrolled disease and evidence of type 2 inflammation. According to Regeneron and Sanofi, Dupixent is also the first and only biologic to show fast and significant improvement in lung function—160 mL in forced expiratory volume in the first second (FEV₁) compared with placebo (77 mL in FEV₁).

BOREAS is one of two Phase III trials the companies are conducting in COPD. Should Dupixent be approved in COPD, it would join the interleukin-4 receptor alpha antagonist’s existing indications in forms of atopic dermatitis, asthma, chronic rhinosinusitis with nasal polyposis, the chronic immune system disease eosinophilic esophagitis, and the chronic skin disorder prurigo nodularis.

The stock spurt continued earlier this week, led in part by several upgrades by analysts to their ratings of Regeneron stock. The largest was the 37% increase in the stock’s 12-month price target from Jefferies, where equity analyst Akash Tewari went from $675 to $925, and upgraded the firm’s rating from “Hold” to “Buy.”

“We think COPD could be a ~$4 Bn [billion] opportunity for Dupi[xent]—upping our total Dupi WW [worldwide] peak sales estimate to ~$19.2 Bn,” Tewari wrote in a March 24 research note.

Regeneron and Sanofi are also working to treat COPD through another drug candidate—itepekimab, a fully human monoclonal antibody that binds to and inhibits interleukin-33 (IL-33), and is also in Phase III trials. While data from itepekimab’s pivotal program is expected in 2025, Tewari is apparently sold on itepekimab, increasing Jefferies’ peak sales estimate for the drug to about ~$2 billion based on studies showing improved lung function in former smokers.

“New investment Thesis”

Also upgrading Regeneron shares was SVB Securities. David Risinger, CFA, a Senior Managing Director and Senior Research Analyst covering Diversified Biopharmaceuticals, raised the firm’s 12-month price target on Regeneron shares 17%, from $834 to $976. Risinger also upgraded his firm’s rating on the shares, from “Market Perform” to “Outperform.”

[SVB Securities was not among entities included in the recent Chapter 11 filing of its parent company SVB Financial Group, and SVB Securities operations have continued uninterrupted.]

In a Monday research note, Risinger noted that Regeneron stock had risen 14% year-to-date while a leading electronic transfer fund for biotech stocks, the NYSE Arca Biotechnology Index (BTK) dipped 2% during that period.

“We believe that shares can continue to outperform over the next year,” Risinger predicted. “Our new investment thesis is that we see the potential for upward pressure on both earnings and the stock multiple.”

Joining SVB Securities and Jefferies in upgrading Regeneron stock since March 24 were:

• J.P. Morgan: Chris Schott, senior pharmaceuticals analyst, today raised his firm’s price target 5.5%, from $900 to $950, but maintained the “Overweight” rating.
• B of A Securities: Elizabeth Lane Suzuki, a senior analyst, on Wednesday raised her firm’s price target 7%, from $605 to $650, but maintained the “Underperform” rating.
• Erste Group: Hans Engel, global equity research expert, on Tuesday reinstated his firm’s “Buy” rating.
• BMO Capital Markets: Evan David Seigerman, a managing director and senior research analyst covering biotechnology (large and small-to-mid-cap) and U.S. major pharmaceutical companies, on March 24 raised his firm’s price target 1.5%, from $1,025 to $1,040, but maintained the “Outperform” rating.
• Baird: Brian P. Skorney, CFA, senior research analyst, on March 24 raised his firm’s price target 6%, from $756 to $800, but maintained the “Neutral” rating.
• Wells Fargo: Mohit Bansal, managing director-biopharma equity research, on March 24 raised his firm’s price target 6%, from $860 to $915, but maintained the “Overweight: rating.
• Barclays: Carter Gould, senior analyst, U.S. biopharma equity research, on March 24 raised his firm’s price target 12%, from $815 to $915, but maintained the “Overweight” rating.
• Raymond James: Dane Leone, managing director, biotechnology, on March 24 upgraded his firm’s rating from “Underperform” to “Market Perform.”

Partnering on cell therapies

Another event drawing investors to Regeneron this week was the company’s announcement of a regulatory T cell (T_reg) therapy collaboration with privately-held Sonoma Biotherapeutics. The deal expands Regeneron’s developmental horizons into cell therapies as well as therapies for inflammatory bowel diseases, while maintaining Sonoma’s focus no inflammatory as well as autoimmune disease treatments.

The companies agreed to discover, develop, and commercialize T_reg cell therapies using Regeneron’s VelociSuite^® platform technologies, in return for Regeneron paying South San Francisco, CA-based up to $120 million in upfront and milestone payments. Regeneron and Sonoma agreed to research and develop T_reg cell therapies for ulcerative colitis, Crohn’s disease and two other undisclosed indications, with a Regeneron option for a fifth indication.

Regeneron agreed to pay Sonoma $75 million upfront—$45 million cash and a $30 million equity investment in Sonoma—as well as an up to $45 million development milestone payment.

The companies agreed to equally co-fund R&D for all potential products and share equally any future commercial expenses and profits. Regeneron has the option to lead late-stage development and commercialization on all products globally, with Sonoma retaining rights to co-promote all such products in the U.S. Sonoma will also retain full ownership of its lead cell therapy candidate, SBT-77-7101, and other programs in development.

“Regeneron’s investigational pipeline includes a diverse range of cutting-edge scientific approaches, and we are pleased to expand this toolkit further through a partnership with Sonoma to explore the potential of engineered T_reg cell therapies with enhanced functionality and the ability to target specific tissues,” said George D. Yancopoulos, MD, PhD, Co-founder, president and chief scientific officer of Regeneron.

Leaders and laggards

• Biomea Fusion (BMEA) shares nearly doubled, surging 99% on Tuesday, from $15.43 to $30.71 after the company announced initial positive topline data for the first two cohorts of patients enrolled in the Phase II portion of its ongoing Phase I/II COVALENT-111 trial (NCT05731544), assessing BMF-219 in type 2 diabetes, the company’s lead clinical program. In Cohort 3, 89% of patients achieved a reduction in A1c, 78% of patients achieved at least a 0.5% reduction in A1c, and 56% achieved at least a 1% reduction in A1c, all after 4 weeks of once-daily 100 mg dosing with the investigational oral covalent menin inhibitor.
• Bluebird Bio (BLUE) shares sank 24.5% on Wednesday, from $4.32 to $3.26, after the company acknowledged that it would likely miss its goal of submitting a BLA for its sickle cell disease gene therapy lovotibeglogene autotemcel (lovo-cel) during the first quarter. CEO Andrew Obenshain told investors during the quarterly conference call that Bluebird was awaiting an FDA response to additional information on chemistry, manufacturing and controls (CMC) submitted by the company at the agency’s request. “We anticipate a response from the Agency within a matter of weeks,” Bluebird stated. The company ended Q4 with net income of $32.232 million, up from a $155.052 million net loss a year earlier.
• Codiak BioSciences (CDAK) shares plunged 57% between March 24 and Thursday, from 44 cents to 19 cents, after the company voluntarily filed Monday for Chapter 11 protection from creditors in U.S. Bankruptcy Court for the District of Delaware. The exosome-based drug developer said it will sell assets, with the aim of maximizing company value. Codiak added that much of its executive management team will depart in April—including President and CEO Douglas E. Williams, PhD, who will remain on the board. Last August, Codiak eliminated 37% of its workforce, about 30 employees, in a restructuring that left it with 53 full-time staffers.
• Gamida Cell (GMDA) shares tumbled 50% on Monday, from $1.35 to 68 cents, on Monday after it announced a restructuring intended to extend its cash runway through the third quarter. Gamida Cell said it will eliminate 17% of its workforce; shut down its Jerusalem offices and consolidate Israel operations in Kiryat Gat; and end development of its engineered natural killer (NK) cell therapy preclinical pipeline—including GDA-301, GDA-501 and GDA-601—while maintaining the IP to those candidates.The company also plans to shift most of its resources to launching its blood cancer stem cell therapy candidate omidubicel upon approval.
• Scynexis (SCYX) shares rocketed 76% on Thursday, from $1.67 to $2.94, after the company joined GlaxoSmithKline (GSK) to announce an up-to-$593 million ($90 million upfront) exclusive agreement allowing GSK to commercialize and further develop Scynexis’ FDA-approved Brexafemme (ibrexafungerp tablets) for vulvovaginal candidiasis (VVC) and reduction in the incidence of recurrent VVC (RVVC). The agreement lets GSK continue developing the drug to treat invasive candidiasis, the subject of Phase III trials. GSK also received an exclusive license to develop ibrexafungerp and commercialise Brexafemme worldwide except Greater China and other countries where rights have already been outlicensed. Brexafemme is approved to treat adult and post-menarchal pediatric females with VVC.
• Unity Biotechnology (UBX) shares nosedived 53% on Monday, from $4.15 to $1.95 after the company released results from Part A of the Phase II ENVISION trial (NCT04857996) evaluating lead candidate UBX1325 in age-related macular degeneration (AMD) did not meet the study’s non-inferiority threshold compared to aflibercept through 24 weeks. Patients treated with UBX1325 had a mean change from baseline in mean Best Corrected Visual Acuity (BCVA) of -0.8 Early Treatment Diabetic Retinopathy Study (ETDRS) letters, compared to +3.1 ETDRS letters in the aflibercept control arm. UBX1325 patients showed a mean change from baseline in central subfield thickness (CST) of +87.3 µm at 24 weeks compared to +30.5 µm among aflibercept patients.