Friday was the worst day for Regeneron Pharmaceuticals Inc.’s stock in over ten years following a startling setback in a late-stage trial of the biotechnology company’s chronic obstructive pulmonary disease medication.
The disappointing study results were made public overnight, shortly after several Wall Street analysts predicted that the stock would rise sharply if the results were favorable.
Rather, the stock (REGN) fell 18.5% in afternoon trading, which was sufficient to keep up with the SPX decliners in the S&P 500 index and set it on course for its first closing below $500 since May 2021.
Additionally, it was on track to see its largest one-day drop since plunging 21% on April 29, 2011.
One Phase 3 trial of itepekimab in adult former smokers with COPD demonstrated a significant 27% reduction in the rapid exacerbation of symptoms after 52 weeks, according to a press release from Regeneron sent at 1 a.m. Eastern time.
However, a second trial only achieved a 2% decrease in exacerbations after 52 weeks, missing that same primary aim.
Wall Street was taken aback by the setback.
Despite Regeneron’s recent struggles due to biosimilar competition, regulatory setbacks, and “general malaise,” analyst Evan Seigerman of BMO Capital stated on Thursday that he thought the stock was “attractively priced,” especially since he saw an 80% chance of either “a positive or a strong positive” trial result, which could push the stock up 10% to 20% on Friday.
Christopher Scott of J.P. Morgan stated that he thought there was a roughly 70% chance that there would be a decrease in exacerbations of more than 25%, which would increase the stock by a mid- to high-single-digit percentage. The study had “a very low probability” of failing, he said.
What will happen to itepekimab next?
France-based Sanofi SA (SNY) (FR:SAN), Regeneron’s development partner, stated that they are “evaluating the data and will talk about next steps with regulatory authorities.”
The shares of Sanofi that are traded in the United States fell 5.6% during Friday afternoon trading.
