Why Teva Pharmaceutical and Sanofi are surging

Teva Pharmaceutical (NYSE:TEVA) and Sanofi (NASDAQ:SNY) stocks were rising on Tuesday after the companies announced successful results of a phase 2 study involving the treatment of patients with ulcerative colitis (UC) and Crohn’s disease (CD).

The study investigated duvakitug, a human monoclonal antibody targeting, for the treatment of moderate-to-severe inflammatory bowel disease (IBD). UC and CD are the two main types of IBD. The companies announced that the Phase 2b Relieve UCCD study met its primary endpoints in patients with ulcerative colitis (UC) and Crohn’s disease (CD).    

Specifically, 36.2% of low-dose patients and 47.8% of high-dose patients with UC treated with duvakitug achieved clinical remission compared to 20.45% on placebo.

Also, 26.1% of low-dose patients and 47.8% of high-dose patients with CD treated with duvakitug achieved endoscopic response compared to 13.0% on placebo.

Overall, duvakitug was generally well tolerated in both UC and CD with no safety signal identified.

“The results from the RELIEVE UCCD study have exceeded our expectations, and I am deeply moved by the potential for duvakitug to help treat and meaningfully improve the quality of life of people living with IBD,” Eric Hughes, MD, PhD, head of global R&D and chief medical officer at Teva, said. “These positive results reinforce Teva’s ability to develop and accelerate access to innovative medicines.”

Teva and Sanofi are co-developing the IBD treatment

Teva and Sanofi are co-developing Teva’s duvakitug for the treatment of UC and CD. Each company will equally share the development costs as well as the net profits and losses in major markets.

Teva will lead commercialization of the product in Europe, Israel and specified other countries. Further, Sanofi will lead commercialization in North America, Japan, other parts of Asia, and the rest of the world.

Sanofi will lead the Phase 3 clinical development program, pending regulatory approvals.

“These unprecedented results show that duvakitug could represent the next frontier in treating ulcerative colitis and Crohn’s disease. If the magnitude of effect persists in the Phase 3 program, we believe we will have a differentiated medicine for IBD patients who are in urgent need of new options,” Houman Ashrafian, MD, PhD, executive vice president, head of R&D at Sanofi, said.

Teva stock jumps 26%

Teva stock was the top gainer on the market Tuesday, rising 26% on the news to about $20 per share. The pharma stock has risen 99% year to date, fueled by rapidly rising revenue.

In the latest quarter, Teva generated $4.3 billion in revenue, a 13% year over year increase. It was buoyed by strong results for two of its drugs, Austedo and Ajovy, and its generics.

Specifically, Austedo saw a 28% increase in revenue to $435 million in the quarter, while Ajovy revenue increased 21% to $137 million. Its generics business saw 30% revenue growth in the U.S., 8% in Europe, and 13% in international markets in Q3. The third quarter results enabled Teva to boost its revenue outlook for fiscal 2024.

Further, the progression of the duvakitug IBD study, as well as a pending review of its biosimilar candidate to Prolia by the FDA and the European Medicines Agency (EMA), gives Teva a solid pipeline for increased sales going forward.

Analysts rate Teva stock as a solid buy, with a price target of $23 per share. That would be about an 11% increase. BofA Securities raised Teva’s price target to $25 per share after the study results were released, citing the potential for increased sales.

Sanofi stock was also rising Tuesday, up about 7% to $49 per share. The pharma stock is down about 1% year to date, trading at around $49 per share. Sanofi has a P/E ratio of 24 and a forward P/E of 10, giving it a fairly attractive valuation. The median price target is about $61 per share, giving it 24% potential upside over the next 12 months.