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Regeneron Shares Drop as Study Shows Little Advantage Over Rival Eye Drug


The biotech is battling drug giant Roche as it launches a new treatment to prevent blindness.

Regeneron Phamaceuticals (REGN) is gunning for Swiss drug maker Roche as it launches its new treatment for a blinding disease. But does it have enough bullets?

The biotech, which won US approval for its drug Eylea last month, already priced its treatment at a discount to Roche's Lucentis. Now the company has more data to show the longer-term success of its drug. Both medicines treat age-related macular degeneration, the leading cause of blindness in the elderly.

The problem is the data -- released today -- doesn't provide the firepower Regeneron needs. It definitely helps but it doesn't appear to be enough to take down Roche. With the new data for Eylea released Monday, Regeneron can show that its drug works just as well as Lucentis over two years and may require fewer injections. The company views the additional data as an incremental positive for the launch. Lucentis showed a slight efficacy advantage that wasn't statistically significant.

Both drugs are approved for monthly use but the actual number of injections varies, and many patients don't require doses every month. For instance, Regeneron says in the first year, its drug can be dosed every two months (after the first three months of use). Fewer doses of either drug are needed in the second year. According to Regeneron's latest data, patients needed an average of 4.2 doses in the second year vs. 4.7 for Lucentis.

Even though Regeneron is priced lower than Lucentis, both drugs carry hefty price tags: $1,850 a dose of Eylea vs. $1,950 a dose for Lucentis. The treatments are far more expensive than the so-called off-label use of cancer drug Avastin. (See What's Next for Regeneron?)

"We increasingly think Eylea's key differentiator is price -- a tenuous advantage in our view," Robert W. Baird analyst Christopher Raymond says. He has a hold rating on Regeneron's stock.

Regeneron shares dropped more than 5% to $55.10 in midday trading Monday. The stock is still up almost 70% on the year.

There is, of course, a bull perspective for Regeneron's success with Eylea.

Leerink Swann analyst Joshua Schimmer says he thinks Regeneron can snag patients who are requiring the greatest number of injections. He recommends buying the stock and set a price target of the low $70s range for the shares.

This is another drug launch that will be closely watched over the coming months. Expect analysts to conduct their own surveys of docs and any hint of a slow launch will sink the shares. So far, Roche hasn't indicated it would reduce its price but it may not have to make such an announcement as discounting already is done on a case-by-case basis. Any indication from Roche that it is cutting price would also hurt Regeneron's shares.

Twitter: @brettchase

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