Elanco Animal Health Incorporated has received a significant boost with the FDA’s approval of their new drug, Zenrelia. This once-daily oral JAK inhibitor is specifically designed to manage pruritus (itching) associated with allergic dermatitis and atopic dermatitis in dogs aged 12 months and older. This is a welcome development for the estimated 17 million dogs suffering from allergic skin conditions, including atopic dermatitis, food allergies, or flea sensitivity.
Elanco’s confidence in Zenrelia is rooted in a head-to-head noninferiority study conducted against Apoquel, the market incumbent JAK inhibitor. This study, involving 338 dogs diagnosed with atopic dermatitis, demonstrated that a single daily dose of Zenrelia is at least as effective as Apoquel at the primary endpoint on Day 28. Furthermore, Zenrelia consistently provided greater relief from itch and skin lesions over time, with once-daily dosing from the start. In contrast, dogs treated with Apoquel experienced rebound itch after their dosage was reduced to once daily following Day 14. The results are impressive, with 77% of Zenrelia-treated dogs achieving clinical remission of itch compared to only 53% of those treated with Apoquel.
However, a crucial warning on Zenrelia’s label advises discontinuation 28 days to 3 months before any vaccination. This raises concerns about veterinarian adoption, especially given that some dogs receive vaccinations annually. William Blair, a prominent financial firm, highlights these concerns, noting that the extra precautions might discourage widespread use of Zenrelia.
Additionally, a deeper dive into the clinical data revealed a higher placebo effect in Zenrelia’s FDA study compared to Apoquel’s. This suggests that Apoquel might have a more robust impact on atopic dermatitis than Zenrelia, raising doubts about Zenrelia’s true efficacy. Furthermore, William Blair pointed out that adverse events like diarrhea and vomiting occurred at twice the rate in Zenrelia’s FDA study compared to Apoquel’s.
Despite these uncertainties, investor expectations for Zenrelia’s performance over the next two years remain high. However, William Blair prefers to adopt a wait-and-see approach, urging caution until concrete evidence of Zenrelia’s sustainable impact on Elanco’s P&L statement becomes available. Consequently, they have maintained their Market Perform rating on Elanco’s stock.
On Friday, ELAN stock experienced a decline of 4.18%, closing at $14.44. The market seems to be reacting to the concerns raised about Zenrelia’s efficacy and the potential impact of the vaccination warning on its adoption.
