After chalking up a billion dollars in losses during its 12-year existence, fledgling biotech Regeneron (Nasdaq:REGN), sees the potential for some nice revenue on the horizon. Just how big of a sales boost the company will enjoy depends on the ability of its newest entry to capture market share.
It appears to be a done deal that Regeneron will gain approval from the Food and Drug Administration in late August for its injectable drug Eylea, used to treat a common cause of blindness. The drug recently whizzed through an FDA advisory panel review, gaining a 10-0 vote recommending approval. That the agency will give the drug the thumbs up sign next month looks about as certain as Yankee shortstop Derek Jeter getting his 3,000th hit this season.
Regeneron has certainly been a darling of investors this year. Perhaps anticipating the good news on Eylea, the stocks was bid up to an all-time high of $60.84 in late April before easing back to $60. Even with the pullback, the stock is up nearly 175% this year.
If approved, Eylea will become Tarrytown, N.Y.-based Regeneron’s second marketed product, joining Arcalyst , which is available in the U.S. for treating Cryopyrin-Associated Periodic Syndromes (CAPS), a spectrum of rare, inherited auto inflammatory syndromes that affects about one of every 1 million people.
The market for Eylea promises to be much bigger. Advanced macular degeneration is a leading cause of blindness in Americans ages 60 and older, according to the National Eye Institute. About 15 percent of patients have the more advanced “wet” form of the disease tied to abnormal blood vessels that grow under the macula, the part of the retina responsible for seeing in fine detail. Blood and fluid leaked from the vessels can result in vision loss. Regeneron estimates about 1.5 million people have the wet form of the disease with 200,000 new cases diagnosed each year.
Perhaps investors have backed off the stock somewhat over concerns that Eylea may be too pricey to make significant market inroads, as Regeneron and its marketing partner Bayer seek to recoup their investment. The leading treatment for macular degeneration is Lucentis, which generated $1.4 billion last year in U.S. sales for Roche and $1.5 billion outside the U.S. for Novartis (NYSE:NVS). But it looks as though many physicians are jumping the Lucentis ship for the Roche cancer drug Avastin. That’s because a recent study showed $50 worth of Avastin worked as well as $2,000 worth of Lucentis.
Avastin isn’t approved to treat the eye disease, and Roche probably wouldn’t want to market the drug for that use since it would cannibalize Lucentis sales. But keep in mind that doctors can prescribe medicines for unapproved uses.
Still, hopes for Regeneron’s Eylea remain high. One analyst thinks that the drug can capture 15% of the U.S. market and has annual sales potential of more than $1 billion. Of course, that could be jeopardized if Avastin gains even greater traction.
Still, Eylea and Arcalyst aren’t the only arrows in Regeneron’s quiver. The company has 10 products in clinical development, including several promising drugs with partner Sanofi (NYSE:SNY). One candidate the companies are optimistic about is Zaltrap, which was shown to be effective as a second-line treatment for colon cancer.
