The biologics and atopic dermatitis ("AD") space proved the winning space for biotech investors in the last year. Eli Lilly (NYSE:LLY) said it would buy Dermira (NASDAQ:DERM) for $1.1 billion. Dermira stock bottomed in the $5.70 range last Oct. 2019 and traded recently at $19.
Dermira winning a fast track status for its lebrikizumab only affirms Eli’s move into the dermatology space. Already, mega-cap drug stock AbbVie (NYSE:ABBV) has Upadacitinib, a JAK inhibitor that treats AD. Regeneron’s (NASDAQ:REGN) blockbuster, Dupixent, now brings billions in annual revenue. So, Dermira’s IL-13 inhibitor, which has two trials in Phase 3, could come to the market soon.
XBiotech (NASDAQ:XBIT) topped $26.40 after a second stock surge in recent weeks. The company started a modified Dutch auction tender to buy $420 million worth of its stock at $30 - $33. XBIT traded recently in the $24 range. Short float is 13%, so the auction should squeeze bears out once and for all.
Last month, XBiotech signed an agreement to license bermekimab to J&J (NYSE:JNJ). This anti-inflammatory candidate will give $750 million to XBiotech upfront. XBiotech earns $600 million more if it meets various milestones.
The massive cash injection accelerates the company’s work on the anti-IL-1 alpha antibody. It frees the company from spending time and money on commercializing its AD drug. J&J is bigger and has the resources and sales team to bring Bermekimab to market.
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