2 Biotech Companies That Could Profit if Their Skin Treatments Are Successful

April 1 gave the stock market a strong start to the new quarter as investors reacted positively to positive news from the U.S. labor market. One of the winners of Friday's market was Regeneron Pharmaceuticals (REGN) , which jumped nearly 13% on its own good news from two late-stage trials.

Regeneron reported promising results from its phase 3 clinical trial for the drug dupilumab, which treats patients with atopic dermatitis, a severe, chronic eczema that may be inherited. 

Tarrytown, N.Y.-based Regeneron is a biopharmaceutical company that manufactures and markets products for treating serious medical conditions. Its pipeline, which includes products through all stages of human clinical trials, addresses cardiovascular disease, arthritis, cancer and other serious ailments. 

Atopic dermatitis results from contact with certain substances and leads to dry scaly patches of skin. The autoimmune disease, so-called because the body's defenses trigger the ongoing itching that worsens the rash, may lead to more serious bacterial infections. Treatment now focuses on rehydrating the skin with moisturizers or emollients, including petroleum jelly, although antihistamines and steroids may also be involved, and patients may need antibiotics to treat infections. 

Among other drugs that are used in the treatment of autoimmune diseases, including psoriasis and eczema, AbbVie's Humira, can cost patients up to $60,000 a year.  

Regeneron estimates that 1.6 million patients in the U.S. might benefit from dupilumab therapy. Assuming that the drug only reaches 10% of that market, Regeneron could generate several billion dollars. The company is expected to file for approval later this year and investors hope that the FDA will offer a quick approval. 

"Eczema has been underestimated as a serious medical condition," said Dr. Daniel Teper, the CEO of Immune Pharmaceuticals. "The new biological drug for severe candidates and new topical drugs for moderate patients have the potential to change the lives of millions of people," he said, in reference to the Regeneron trials.

Another mid-cap company working on atopic dermatitis is Palo Alto, Calif.-based Anacor Pharmaceuticals  (ANAC) . Anacor attempts to preserve the skin after irritation has already started.

Anacor developed Crisaborole Topical Ointment 2%, a boron-containing molecule that is believed to inhibit the pro-inflammatory proteins that cause the symptoms of atopic dermatitis. During two Phase 3 studies in July of 2015, patients with mild to moderate atopic dermatitis saw significant improvement when treated with crisaborole. Anacor announced it will hire 300 sales reps in the U.S. Analysts are suggesting that sales may reach $2 billion for a drug priced cheaper than Regeneron's.

This article is commentary by an independent contributor. At the time of publication, the author holds shares in Immune Pharmaceuticals.

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