COVID-19 treatment yields disappointing data in trial and shows it’s not easy to develop drugs

Jaimy Lee

A disappointing set of data from Regeneron Pharmaceuticals Inc. and Sanofi’s mid-stage clinical trial testing rheumatoid arthritis drug Kevzara as a COVID-19 treatment underscores the traditional ups and downs of drug development that have now been heightened by the global pandemic.

Shares of Regeneron
were down 1% in trading on Tuesday; Sanofi’s stock dropped 1.7%.

Kevzara was first proposed as a potential treatment after researchers in China published data from a single-arm trial with 21 patients that found Roche Holding AG’s
Actemra, also a IL-6 inhibitor, reduced fevers and the need for supplemental oxygen in COVID-19 patients.

“Emerging evidence with Kevzara and other repurposed drugs in the COVID-19 crisis highlight the challenges of making decisions about existing medicines for new viral threats using small, uncontrolled studies,” Regeneron co-founder George Yancopoulos said in a statement. “We await results of the ongoing Phase 3 trial to learn more about COVID-19, and better understand whether some patients may benefit from Kevzara treatment.”

There are no proven treatments or vaccines for the novel coronavirus at this time. More than three million people have tested positive for the virus, and at least 212,000 have died, according to aggregated data from Johns Hopkins University.

Regeneron and Sanofi, which jointly developed Kevzara as part of a longstanding collaboration, announced in March that they had initiated trials testing the drug in COVID-19 patients. (The Food and Drug Administration initially approved Kevzara for rheumatoid arthritis patients in 2017, and the drug generated about $206 million in sales in 2019, according to Regeneron’s financial filings.)

On Monday, they said that going forward they would limit the Phase 3 trial to only include patients defined as critical, which includes those requiring mechanical ventilation, high-flow oxygenation, or being cared for in an intensive care unit, given that sicker patients seemed to show some improvement while taking the drug. The next phase of the study will also only include a higher dose of the drug (400 milligrams) and the placebo, and not the lower dose of 200 milligrams used in the mid-stage trial.

Analysts called the data disappointing but also noted the limitations of the commercial opportunity that would arise if the drug is successful in trials. The data isn’t “relevant for REGN valuation since [it is a] small commercial opportunity,” Evercore ISI’s Josh Schimmer wrote Monday.

“Although this might come as a relative disappointment to some — especially given the heightened sensitivities around COVID-19 — we believe REGN may have a better shot treating this pandemic with its antibody cocktail,” J.P. Morgan analysts wrote Monday night. “All in, today’s updates are not thesis changing.”

The news follows a turbulent two weeks for Gilead Sciences Inc.’s
stock, which has both soared and tumbled on media outlets reporting on leaked data from its closely watched clinical studies testing remdesivir in COVID-19 patients. The first round of data from a Gilead-sponsored clinical trial is expected this week. SunTrust Robinson Humphrey’s Robyn Karnauskas expects that data during the drugmaker’s earnings on Thursday.

Year-to-date, Regeneron’s stock is up 42.2%, Sanofi’s stock is down 0.9%, and shares of Gilead have gained 22.0%, while the Health Care Select Sector SPDR Fund
has declined 0.2%.

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