Nurix plunges 38% after Sanofi scraps drug licensed from the biotech

Shares of small-cap biotech Nurix Therapeutics plunged nearly 40% on Wednesday, marking their worst day ever. The company announced that pharmaceutical giant Sanofi had scrapped further testing of a drug licensed from Nurix just months after trials began. Wells Fargo cut its target price for the biotech by 20% following the news.

Nurix shares fell 38% on the Nasdaq on Wednesday to $15.95 apiece. It was the stock’s biggest one-day decline on record, Stocktwits reports. The selloff followed the announcement that Sanofi had halted clinical trials of SAR448272, an experimental treatment for immune diseases. The French company licensed the drug – designed to eliminate STAT6, a protein involved in many inflammatory conditions – from Nurix.

The companies have worked together since 2019. Sanofi has since paid the biotech around $139 million under their collaboration to develop technologies that target and degrade proteins involved in certain diseases, according to a Nurix statement. SAR448272 was one of the drugs developed through that collaboration.

In August, Sanofi began phase I clinical trials of the drug, triggering a $10 million milestone payment to Nurix. Nurix’s press release did not give a reason for terminating the program.

BioPharma Dive writes that Sanofi told Leerink Partners analysts that emerging findings from nonclinical studies did not warrant continued development of the drug for eczema.

The move is disappointing, RBC Capital Markets analyst Brian Abrahams wrote, as quoted by BioPharma Dive. “We thought initial preclinical properties looked reasonably similar to [Kymera’s drug].” Like Nurix, Kymera develops targeted protein degradation technologies. Its competing drug is undergoing early-stage trials.

Wells Fargo also called the decision to discontinue development a negative surprise, noting that it had attributed about $400 million in value to the terminated program, Stocktwits reports. With SAR448272 discontinued, Nurix has fewer internal pipeline catalysts to drive the stock. The bank cut its target price by 20% to $20 per share while maintaining its “hold” recommendation. The new TP implies more than 25% upside from the last closing price.

Needham analyst Gil Blum maintained his “buy” recommendation at a target price of $34 per share, more than double the last close, Investor’s Business Daily reports. The Sanofi collaboration was still at such an early stage that Blum had not yet assigned it any value in his model.

Beyond its collaboration with Sanofi, Nurix has a program with pharmaceutical giant Roche to develop a treatment for chronic lymphocytic leukemia that is now in late-stage testing. That drug is Nurix’s “core value driver,” and the SAR448272 setback does not affect it, Jefferies analyst Roger Song wrote.

Sanofi told Leerink Partners that it still considers STAT6 “an important pathway in immunology” but that this “particular molecule will not be able to move forward.” The program’s termination eliminates $453 million in potential development, regulatory, and commercial milestone payments for Nurix. Other programs under the Sanofi agreement could still bring the biotech up to $465 million in milestone payments on top of the $139 million it has already received, IBD reports.

Nurix shares have 13 “buy” calls versus just one “hold” recommendation. The average target price is $33.50 per share, 110% above the Wednesday close.