What happened

Shares of Dermira (NASDAQ:DERM), a biopharmaceutical company developing an in-licensed eczema candidate, took off like a rocket after the company announced follow-up results from a mid-stage clinical trial. Investors thrilled with lebrikizumab's performance have driven the biotech stock 25% higher as of 1:16 p.m. EDT on Friday. 

So what 

Dermira's first drug to earn approval, an underarm sweat preventer called Qbrexza, isn't doing so well in the commercial stage. When the company licensed lebrikizumab from Roche (OTC:RHHBY) in 2017 and began developing it to treat eczema, investors didn't pay much attention. After all, why would a big pharma that spends billions each year developing new drugs let this one go?

Person in a suit holding up a lot of money to hide his face.

Image source: Getty Images.

Roche stands to earn a great deal, but the pharma giant must be kicking itself after seeing just how well lebrikizumab, an inhibitor of interleukin-13 (IL-13) performed in a mid-stage trial. An impressive 44% of patients treated with the highest dosage of lebrikizumab exhibited 90% skin clearance compared to 11.4% of the placebo group. 

Lebrikizumab's similar to Dupixent, a popular new eczema treatment from partners Regeneron (NASDAQ:REGN) and Sanofi (NASDAQ:SNY). The main difference is that lebrikizumab has a stronger affinity for IL-13 than Dupixent, which appears to make a big difference when it comes to alleviating eczema's debilitating symptoms.

Now what

While eczema clearance rates for lebrikizumab have been arguably competitive to Dupixent, today's look at chronic itching caused by the disease and opportunistic infections caused by dialing back the immune system could give Dermira an edge in the commercial setting. Patients in the placebo group reported a 6.8% worsening of pruritus scores while the group treated with the highest dosage of lebrikizumab reported a 61.8% improvement.

Just 2.7% of the group treated with the highest dose of lebrikizumab reported conjunctivitis, which was lower than the mid-sized dosage. During trials that led to Dupixent's approval, 10% of those treated developed an eye infection or conjunctivitis compared to just 2% of the placebo group.

At recent prices, Dermira's still a relatively tiny company with a $385 million market cap. If lebrikizumab continues to impress, that could grow ten-fold or more in another couple years.