Regeneron, Lilly Get New COVID Drug Deals From Government

Regeneron Pharmaceuticals REGN and Eli Lilly & Company LLY announced new agreements with the U.S. government to supply additional doses of their respective COVID-19 antibody drugs amid greater demand due to the rising infection rates in the country.

Per its new agreement, Regeneron will supply an additional 1.4 million doses of its antibody cocktail for COVID-19, REGEN-COV (casirivimab and imdevimab) to the U.S. Department of Health and Human Services (HHS) and the Department of Defense (DOD).

REGEN-COV has FDA’s Emergency Use Authorization (EUA) to treat certain infected patients to reduce the risk of hospitalization or death from COVID-19 and also for post-exposure prophylaxis in people at high risk of progression to severe COVID-19

The doses will be supplied by Jan 31, 2022, with deliveries set to begin later this month. The majority of the additional doses will be delivered by the fourth quarter. The doses will be supplied at a cost of $2,100 per dose, which adds up to revenues of $2.9 billion. With the latest deal, the total doses purchased by the U.S. government from Regeneron add up to nearly 3 million. Roche RHHBY will manufacture approximately a third of the additional doses for Regeneron.

Regeneron’s shares have gained 35% in the year so far against the industry’s decline of 1.3%.

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Lilly announced a deal to supply 388,000 doses of its COVID-19 antibody medicine, etesevimab to the U.S. government. These doses will be paired with existing doses of bamlanivimab, its another antibody drug, which has already been purchased by the government under an earlier deal.

Please note that bamlanivimab plus etesevimab is approved for emergency use as a cocktail medicine to treat mild-to-moderate COVID-19 in high-risk patients. Neither of the antibody drugs is approved for monotherapy use.

Bamlanivimab’s Emergency Use Authorization (EUA) as a monotherapy treatment for COVID was revoked by the FDA in April at Lilly’s request. Lilly decided to focus only on supplying its antibody cocktail, bamlanivimab and etesevimab together, which was granted emergency approval by the FDA in February.

Lilly subsequently modified the COVID-19 purchase agreement with the U.S. government for bamlanivimab. In February, Lilly had signed an agreement with the U.S. government to supply a minimum of 100,000 doses of the bamlanivimab/etesevimab cocktail. This agreement was modified to enable the supply of etesevimab to complement the doses of bamlanivimab that the U.S. government has already purchased.

Per the latest deal, Lilly expects to ship 200,000 etesevimab doses in the third quarter and the remaining in the fourth quarter. The deal is expected to generate $330 million in revenues for Lilly in the second half of 2021.

Lilly’s shares have risen 38.4% this year so far compared with the industry’s increase of 8.9%.

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The rising infection rates in the United States, mainly due to the spread of the highly contagious Delta variant, have now increased the demand for antibody drugs like Lilly and Regeneron’s cocktail medicines. As vaccination rates in some parts of the country are low, the rising cases have put focus on the antibody cocktail with demand expected to remain high through year-end.

Lilly’s bamlanivimab-etesevimab combination has demonstrated neutralization activity against the Alpha and Delta variants. REGEN-COV has also demonstrated that it reduces the risk of hospitalization or death by 70% in high-risk individuals when given early in the course of the infection.

Another monoclonal antibody granted EUA by the FDA is GlaxoSmithKline GSK and Vir Biotechnology’s sotrovimab for the treatment of mild-to-moderate COVID-19 in adults and pediatric patients.

While Regeneron sports a Zacks Rank #1 (Strong Buy), Lilly currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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