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Regeneron Blows Away Sales Forecast for New Eye Drug


The fourth-quarter sales of Eylea were at least eight times greater than Wall Street estimates. Early indication eases fears of a Dendreon-like flop.

Regeneron Pharmaceuticals (REGN) needed to give investors an early signal that its new eye drug can keep pace in a competitive market. So the company blew away Wall Street's fourth-quarter sales estimates.

Shares of Regeneron jumped 13% to $73.82 Tuesday morning after the company said its drug Eylea recorded as much as $25 million in sales in its first six weeks on the market. Analysts expected a little more than $3 million in sales.

Regeneron CEO Leonard Schleifer told a group of investors late Monday that he expects this year's sales of the drug to be $140 million to $160 million -- again far exceeding analyst estimates of a little more than $100 million in first-year revenue.

"Given just six weeks of ramp following the late-November launch, we find this number all the more impressive," Robert W. Baird analyst Christopher Raymond says. He raised his recommendation on the stock to a buy from a hold and set a 12-month price target of $81 a share.

Regeneron was approved in November to treat age-related macular degeneration, or AMD, the leading cause of blindness in the elderly. (See What's Next for Regeneron?) Roche's Genentech drug Lucentis treats the same disease and had a huge head start over Eylea as it was approved almost six years ago in the US. Regeneron has said it can compete with Lucentis because it requires fewer injected doses and costs less than the Roche product. Some investors have been skeptical. (See Regeneron Shares Drop as Study Shows Little Advantage Over Rival Eye Drug.)

However, Raymond, other analysts and some investors have been concerned about another competitive threat: the unapproved use of the older cancer drug Avastin to treat the same condition. One study found that $50 worth of Avastin (also made by Roche) worked as well as an almost $2,000 dose of Lucentis. Roche can't promote the use of Avastin for AMD, but doctors are free to prescribe the drug for the disease.

Raymond estimates that Avastin represents almost 70% of the market for treating AMD, a number he has said appears to be growing. Eylea's early success may show at least some doctors are more comfortable using an approved, albeit costly drug or it can be attributed to demand among patients who aren't easily treated with either Avastin or Lucentis.

"We could probably all agree that, so far, so good, but we have a long ways to go," Schleifer told analysts. "We can't rest yet."

The CEO says AMD is a $1.5 billion market in the US with upside potential as the disease strikes the elderly, a growing demographic. The company is partnered with Germany's Bayer to sell outside the US.

While the early sales success is good news for Regeneron, it's also a positive sign for biotech investors who have been conditioned to fear the launch of any new drug following disappointing results last year for Dendreon's (DNDN) prostate cancer vaccine Provenge and Human Genome Sciences' (HGSI) lupus drug Benlysta. Investors had very high expectations for robust revenue from both treatments.

Twitter: @brettchase

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