Here’s Our Take On Horizon Pharma PLC (NASDAQ:HZNP)’s Fall Out And Regeneron Pharmaceuticals Inc (NASDAQ:REGN)’s EMA Hit

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Thursday was a big day for two companies, in two very different ways, in the biotech space. News out of the Horizon Pharma PLC (NASDAQ:HZNP) camp initiated a major selloff in the company, while an FDA announcement regarding Regeneron Pharmaceuticals Inc (NASDAQ:REGN) didn’t have an equivalent impact to the upside, but it did set the company up for some considerable strength if things run smoothly going forward.

Here’s our take on both events.

So, starting with Horizon, the company just announced that it will be discontinuing its lead Friedreich’s ataxia study. For those not familiar with this condition, it’s an inherited disease rooted in the nervous system. Basically, it slowly, but continuously, damages the nervous system of the sufferer and – progressively – leads to symptoms such as gait disturbance, scoliosis, heart disease and diabetes. It doesn’t affect the brain, but this doesn’t make it any less severe from a debilitation perspective, and there’s currently no cure. Vitamin treatment is essentially all a patient can do to try and slow the progression of the disease.

Horizon was trying to fill this unmet need with a drug called Actimmune.

The drug is already approved for use in patients with chronic granulomatous disease and severe, malignant osteopetrosis, and Horizon was looking to expand on this batch of indications the FA target. The drug was in a phase III study, and early data looked positive.

In the trial, which compared Actimmune with placebo in 96 patients, across a 26 week dosing period, the drug failed to improve over control across a host of primary and secondary endpoints, and as such, is scrapped in this indication.

It’s a blow for the FA community, of course, and Horizon and its shareholders, but with no discernible clinical benefit on offer, there’s not much else the company could do. Management says it will now pick apart the data drawn from the trial in an attempt to try and salvage any worthwhile information for future trials (assumption, both for it with Actimmune in other indications and for other companies in an FA indication) but that’s all the worth the company is going to get for now.

Moving on, let’s shift gear, and look at Regeneron.

This company submitted a registration application in Europe to the EMA earlier this year (the equivalent of an NDA to the FDA in the US) for a drug called dupilumab. It’s an IL-4/IL-13 inhibitor, and Regeneron developed it in collaboration with French drug maker Sanofi SA (ADR) (NYSE:SNY) as part of a moderate-to-severe atopic dermatitis indication. The data hat underpins the submission is excellent, and it’s widely considered a shoo in for approval. Readers will probably be aware that the drug is also with the FDA as we speak, and is set for PDUFA at the end of March.

The potential of this drug cannot really be understated. This indication is not well served by current alternatives, and the target population suffer from a range of symptoms, including eczema, lesions, depression and severe itching. There’s a multi billion-dollar annual market available when both the US and European markets are taken into consideration, with some estimates suggesting it’s as high as a $5 billion opportunity. The drug is probably going to hit markets under the moniker Dupixent, and will cost somewhere in the region of $30,000 annually for treatment. Of course insurers will bear the brunt of this annual cost, but it’s still going to be a pretty substantial burden on patients. With that said, with symptoms of this condition reportedly as bad as constant poison ivy itching, these patients wont mind bearing the cost for some degree of relief.

Exactly how much of this opportunity the two companies manage to net remains to be seen, but one thing is certain – if the relevant authorities give the drug a thumbs up come decision day, there’s going to be some strong upside momentum in market capitalization for both. As mentioned, the EMA has accepted the drug for review, but it is slightly less clear on its timeframes than the FDA. The drug has priority review in the US, and that’s where the March PDUFA comes in to play, but we’re probably looking at some time late 2017 before the EMA gives its ruling.

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Mark Collins

Having been raised in Cupertino, CA, Mark upped and joined the East Cost biotech scene at the turn of the last decade. He provides research and analysis in the small cap sector, and is an active investor in development stage healthcare. I can be contacted at [email protected]