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Regeneron Settles Dispute - Analyst Blog

Recently, Regeneron Pharmaceuticals, Inc. ( REGN">REGN ) reached a non-exclusive license and partial settlement agreement withGenentech , Inc. {a wholly owned subsidiary of Roche ( RHHBY">RHHBY )} regarding the sales of the former's injectable eye drugEylea (aflibercept orVEGF trap) in the US.

Following the agreement,Regeneron was granted a non-exclusive license to certain patents pertaining toVEGF receptor proteins (theDavis-Smyth patents) in addition to other technology patents.

Per the clauses of the deal,Regeneron has to make payments to Roche until May 7, 2016 (the date of expiry of theDavis-Smyth patents) based on US sales ofEylea .Regeneron will have to shell out $60 million as soon as the cumulative US sales of the eye-drug touch $400 million. Between $400 million - $3 billion the royalty rate is 4.75%. If sales cross the $3 billion mark, the royalty rate becomes 5.5%.

Following the development, the dispute in the US regardingEylea (only foropthalmic use) has been resolved. The agreement does not cover any other uses or non-US patents. Dispute between the two companies regarding matters not encompassed by the deal remain unresolved.Regeneron further stated that the fact that it has reached an agreement does not mean that the company has infringed theDavis-Smyth patents.

We remind investors that the US Food and Drug Administration ("FDA") clearedEylea in November 2011 for treating patients suffering from theneovascular form of age-related macular degeneration (wet AMD). The approval was based on positive 52-week results from two studies, VIEW 1 and VIEW 2 which evaluated the studies evaluated the efficacy ofEylea versus Roche/ Novartis ' ( NVS">NVS )Lucentis (ranibizumab ), ananti-angiogenic agent approved for treating wet AMD.

Apart from wet AMD,Eylea is also being studied for other eye-disorders such as central retinal vein occlusion, diabetic macular edema and myopicchoroidal neovascularization .

Our Recommendation

Currently, we have a Neutral stance onRegeneron in the long run. The company carries aZacks #3 Rank (Hold rating) in the short run.

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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 Nasdaq, Inc.


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

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