Regeneron Rises on Upbeat Eylea Q4 Outlook - Analyst Blog


Shares of Regeneron Pharmaceuticals, Inc. ( REGN ) climbed 11.78% to $300.32 per share on Jan 14 following the rosy fourth quarter 2013 outlook provided by the company on its eye drug Eylea.

As per the preliminary (unaudited) results released by the biopharmaceutical company, U.S. Eylea sales in the fourth quarter of 2013 are expected to touch $400 million, up 10.2% sequentially and 45% year over year. For full year 2013, U.S. Eylea sales are expected to climb to $1.4 billion from $838 million recorded in 2012. The 2013 U.S. Eylea sales are above the company's projected range of $1.35-$1.375 billion. We note that sales of the drug have been on the rise ever since its U.S. launch in late 2011 for treating patients suffering from neovascular form of age-related macular degeneration (wet AMD).

Eylea is also available for the macular edema following central retinal vein occlusion (CRVO) indication. Eylea is also being developed for other eye disorders such as macular edema after branch retinal vein occlusion and myopic choroidal neovascularization.

We note that Regeneron has co-developed Eylea with the HealthCare unit of  Bayer ( BAYRY ). Regeneron is solely responsible for the U.S. sales of the eye drug. The company is entitled to the entire profits arising from the U.S. sales of Eylea. Regeneron and Bayer equally share the profits and losses from ex-US Eylea sales, except for Japan where Regeneron receives a royalty on net sales.

In another development related to Eylea, Regeneron announced that it will co-develop a platelet derived growth factor receptor beta (PDGFR-beta) antibody in combination with Eylea (an intravitreal injection) for wet AMD with Bayer. Pre clinical studies on the combination have yielded encouraging results. The combination is expected to be evaluated in human studies shortly.

As per the agreement related to the above candidate, Regeneron will receive an upfront payment of $25.5 million from Bayer besides milestone and option payments of up to $40 million. The two companies will share the world wide development costs related to the program.  Bayer will be entirely responsible for commercializing the treatment (on approval) in ex-U.S. markets with profits being shared equally. Regeneron will be responsible for the same in the U.S. Moreover, Regeneron will be eligible for the entire profits from the U.S. sales. Moreover, Bayer will be responsible for certain third party royalties and share of milestones. Regeneron also intends to submit an investigational new drug application on ANG2 combined with Eylea during the course of the current year.

Apart from the label expansion efforts on Eylea, Regeneron boasts of an interesting pipeline including programs with Sanofi ( SNY ) which offer significant potential. The promising candidates being developed under the antibody collaboration with Sanofi include alirocumab, a proprotein convertase subtilisin/kexin type 9 (PCSK9) antibody, to lower lowdensity lipoprotein-cholesterol cholesterol levels (phase III), sarilumab an antibody targeting the interleukin-6 receptor (IL-6R) for rheumatoid arthritis (phase III) and dupilumab an IL4R antibody being developed for asthma, atopic dermatitis and nasal polyposis (phase II).

Regeneron initially entered into a partnership with Sanofi in 2007. The agreement has been recently amended. Sanofi, which currently has approximately 16% stake in Regeneron, will have the right to nominate an independent director to Regeneron's board on reaching 20% stake as per the amended agreement. Sanofi retains the right to acquire up to 30% of Regeneron's outstanding common stock and Class A stock.

Regeneron also announced the launch of a new human genetics initiative. The biopharmaceutical company has announced five year collaboration with the Geisinger health system, one of the largest integrated health systems in the U.S. for the purpose.

Regeneron carries a Zacks Rank #3 (Hold). Actelion Ltd. ( ALIOF ) is an example of a better-ranked stock in the biopharma space. Actelion carries a Zacks Rank #1 (Strong Buy).


BAYER A G -ADR (BAYRY): Free Stock Analysis Report

REGENERON PHARM (REGN): Free Stock Analysis Report

SANOFI-AVENTIS (SNY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ALIOF , BAYRY , REGN , SNY

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