REGN Strengthens Obesity Pipeline: Will the Move Revive the Stock?
The company recently entered into an in-licensing agreement for an obesity drug with Hansoh Pharmaceuticals Group Company Limited, in a bid to expand its clinical-stage obesity portfolio.
The licensing agreement with Hansoh Pharma provides Regeneron with HS-20094, a GLP-1/GIP receptor agonist.
Regeneron will acquire exclusive clinical development and commercial rights for HS-20094, a dual GLP-1/GIP receptor agonist, outside the Chinese Mainland, Hong Kong and Macau.
Per the terms of the agreement, Regeneron will make an upfront payment of $80 million to Hansoh, with potential additional payments of up to $1.93 billion for achievement of development, regulatory and sales milestones. Any royalties on global net sales in the future (outside the designated territories) would be in the low double digits.
HS-20094 has been evaluated in over 1,000 patients and administered as a weekly subcutaneous injection. The candidate has demonstrated promising efficacy and safety clinical data, suggesting a potentially similar profile to the only FDA-approved GLP-1/GIP receptor agonist.
The candidate is currently being evaluated in a phase III study in obesity in China, and a phase IIb study in diabetes is ongoing.
The in-licensing agreement for an obesity candidate will expand REGN's obesity pipeline, which includes trevogrumab.
Regeneron recently announced positive interim results from the ongoing phase II COURAGE study investigating novel combinations of semaglutide (GLP-1 receptor agonist) and trevogrumab (anti-GDF8/anti-myostatin) with or without garetosmab (anti-activin A) for the treatment of obesity.
COURAGE was designed to investigate the quality of weight loss in patients with obesity. Results showed that approximately 35% of semaglutide-induced weight loss was due to loss of lean mass, and further demonstrated that combining semaglutide with trevogrumab with or without garetosmab helped preserve lean mass while increasing loss of fat mass.
Garetosmab is being evaluated for the treatment of fibrodysplasia ossificans progressive.
The successful development of any obesity treatment will be a great boost for the company.
We note that REGN has had a rough time so far this year. The stock got hammered last week after REGN and partner Sanofi SNY reported results from two late-stage studies, AERIFY-1 and AERIFY-2, on itepekimab for the treatment of chronic obstructive pulmonary disease (COPD).
While the AERIFY-1 study met the primary endpoint, AERIFY-2 did not meet the same.
REGN and SNY are currently reviewing the data and plan to discuss the next steps with regulatory authorities.
Year to date, REGN's shares have lost 31.7% compared with the industry's 3.2% decline.
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Regeneron's performance in the first quarter was dismal. The plunge in Eylea sales adversely impacted the top line.
Eylea sales have been under pressure for some time now due to competition from Roche's Vabysmo.
Regeneron Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Regeneron Pharmaceuticals, Inc. Quote
Regeneron has a tough road ahead, as it will take a long time for Eylea HD to contribute significantly to the top line.
Apart from Eylea, profits from the sales of asthma drug Dupixent are a primary growth driver for REGN. Regeneron has a collaboration agreement with Sanofi for Dupixent.
While the obesity market is lucrative, REGN is a pretty late entrant here. The market is dominated by bigwigs like Novo Nordisk NVO and Eli Lilly LLY.
The stupendous success of Novo Nordisk's obesity drug, Wegovy (semaglutide) and Eli Lilly's Zepbound has prompted many companies to join the bandwagon.
Buoyed by this success, both Lilly and NVO have taken significant strides in developing their obesity portfolios further. Given the significant market potential of obesity, other players are also striving to grab a chunk of this pie.
Regeneron currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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