Bristol Myers Squibb (BMY) reported positive ulcerative colitis treatment data. The report sent shares of Arena Pharmaceuticals (ARNA) higher.
The study tested Bristol Myers’ Zeposia in patients with moderate to severe ulcerative colitis. At weeks 10 and 52, the experimental ulcerative colitis treatment induced clinical remission and maintained remission, respectively.
Zeposia belongs to a class of oral drugs known as sphingosine-1-phosphate receptor modules, or S1P. This is the first time an S1P drug has shown strong effectiveness in ulcerative colitis treatment, suggesting these drugs could beat out another class called janus kinase inhibitors, or JAKs.
Arena is also testing out an S1P drug, etrasimod.
Etrasimod is a next-generation, once-daily, oral, highly selective sphingosine 1-phosphate (S1P) receptor modulator discovered by Arena, and designed for optimized pharmacology and engagement of S1P receptor 1, 4 and 5 which may lead to an improved efficacy and safety profile.
Etrasimod provides systemic and local effects on specific immune cell types and has the potential to treat multiple immune-mediated inflammatory diseases including ulcerative colitis, Crohn’s disease, and atopic dermatitis.
Etrasimod is an investigational compound that is not approved for any use in any country.
Canter Comments
Cantor Fitzgerald analyst Alethia Young raised the firm’s price target on Arena Pharmaceuticals (ARNA) to $88 from $68 and reiterates an Overweight rating on the shares.
Bristol Meyers’ (BMY) positive topline data this morning from the pivotal study of its sphingosine-1-phosphate ozanimod in ulcerative colitis is a “positive readthrough” to Arena’s etrasimod ulcerative colitis program, Young tells investors in a research note.
The analyst increased her probability of success to 80% from 75% and is now “very confident” in the Phase 3 success of etrasimod.
#Young also thinks that #S1P1 as a class is shaping up to be a “big commercial opportunity” and increased her peak sales to $3B.
She thinks Arena shares will be up at least 10% today on Bristol’s news given that ozanimod and etrasimod are both S1P1s and this is the first positive Phase 3 readout for the class in ulcerative colitis, says the analyst.
Credit Suisse
Credit Suisse analyst Martin Auster raised the firm’s price target on Arena Pharmaceuticals (ARNA) to $87 from $77 and keeps an Outperform rating on the shares after Bristol-Myers (BMY) announced that S1P modulator ozanimod met its primary endpoint of clinical remission in the Phase 3 “True North” study of adults with moderate to severe ulcerative colitis.
Auster views ozanimod’s topline success as de-risking for the S1P class and sees positive read-through for Arena’s etrasimod, he tells investors. He has increased his view on the odds of success for etrasimod in ulcerative colitis following Bristol’s report, the analyst added.
ARNA is up 16% to $68.04
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