Teva stock catapulted Tuesday, hitting a six-year high, after its inflammatory bowel disease treatment showed "best-in-class potential" in a Phase 2 study.
Teva Pharmaceutical tested its drug, dubbed duvakitug, in patients with ulcerative colitis and Crohn's disease, the two most common forms of inflammatory bowel disease. In the former group, 36.2% of patients who received a low dose of the drug and 47.8% of the high-dose group reached clinical remission vs. just 20.5% of the placebo group.
In the Crohn's disease group, 26.1% and 47.8% of the low-dose and high-dose recipients, respectively, showed endoscopic responses vs. just 13% of the placebo group. An endoscopic response means signs of the disease disappeared under an endoscopy.
Sanofi's head of research and development, Houman Ashrafian, called the results "unprecedented." Sanofi is partnered with Teva on duvakitug.
"Duvakitug could represent the next frontier in treating ulcerative colitis and Crohn's disease," he said in a written statement. "If the magnitude of effect persists in the Phase 3 program, we believe we will have a differentiated medicine for (inflammatory bowel disease) patients who are in urgent need of new options."
Teva stock soared 26.4% to 20.88 after briefly hitting its highest point since December 2018. Sanofi stock jumped 6.7%, closing at 48.94.
TL1A Space Gets Refreshed Attention
Teva and Sanofi's drug blocks TL1A, a protein that shows up in patients with immunologic diseases. The companies are starting with duvakitug in ulcerative colitis and Crohn's disease, but experts say it could reach beyond stomach diseases, eventually treating conditions like arthritis and skin or lung diseases.
In a 2023 interview with Investor's Business Daily, Teva Chief Executive Richard Francis called duvakitug a "multibillion-dollar blockbuster."
But Teva and Sanofi are far from alone in their efforts. Also last year, Merck spent $10.8 billion to acquire Prometheus Biosciences for its experimental TL1A drug. Roche paid $7.1 billion to take on Roivant Sciences' and Pfizer's joint project, Televant, for its efforts in developing a TL1A drug.
In testing, duvakitug proved to be well tolerated with no new safety issues.
Beating Merck, Roche
Evercore ISI analyst Umer Raffat noted the placebo-adjusted responses to Teva's drug were better than the same for Merck's and Roche's. Merck's drug topped the placebo by 25%, while Roche's beat the nondrug by 18% to 23%, depending on the dosage. Teva's was 16% to 27% better than the placebo.
Going into the readout, investors had two questions, Raffat said in a client note. Can the Teva drug be a real contender in the "hyper-competitive space?" And will the high placebo responses from the European Union dampen the placebo-adjusted effectiveness?
"As we turned over the cards, Teva/Sanofi's TL1A program came out with flying colors," he said. "Not only did we confirm that it's a real TL1A, but also: in spite of one of the highest placebo responses ever seen in (inflammatory bowel disease), the active arm was extremely strong — to the point where placebo-adjusted efficacy was best-in-class."
Raffat has an outperform rating on Teva stock. He doesn't list a rating for Sanofi stock.
But the TL1A class is still relatively new to the inflammatory bowel disease space. Piper Sandler analyst Christopher Raymond, in a Tuesday report, said he expects AbbVie's Skyrizi and Rinvoq to continue gaining steam as treatments for ulcerative colitis and Crohn's disease. Neither one is a TL1A drug.
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