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Regeneron Shares Jump on Strong Sales of Eye Drug


The biotech company exceeds Wall Street estimates for a new drug that treats a blinding disease in the elderly.

MINYANVILLE ORIGINAL Under-promising and over-delivering is not a common practice in biotech. And yet here is Regeneron Pharmaceuticals (REGN) for the second straight quarter, shattering expectations for its new eye drug.

Regeneron reported $124 million in sales in the first quarter for Eylea, an injected drug that treats age-related macular degeneration, which is a leading cause of blindness in the elderly. The figure was higher than any analyst prediction; in fact, it was more than double one set of consensus estimates. The company expects Eylea sales will be as much as $550 million this year.

Shares of Regeneron rose more than 9% to $138.65 in midday trading after earlier jumping by double digits. The stock is up more than 150% this year.

A nagging concern about Regeneron's drug was how it would compete with the so-called off-label use of an unapproved, cheaper medicine. A number of doctors use small doses of the cancer treatment Avastin because it works and it's a fraction of the cost of Eylea or Roche's rival drug Lucentis. (A US study last year found that $50 worth of Avastin worked as well as almost $2,000 worth of Lucentis.)

Regeneron CEO Leonard Schleifer said on a conference call today that about a quarter of Eylea's sales last quarter came from patients who were switched from Avastin.

Regeneron, Roche, and Novartis (NVS), which co-developed Lucentis and sells it outside the US, are trying to convince doctors to stop using Avastin. Earlier this week, Novartis said it is asking a UK court to block the use of the cancer drug in government-run hospitals. Avastin is sold by Roche, headquartered in Switzerland.

In the US, Regeneron charges $1,850 per dose, while Lucentis costs $1,950 per injection. Regeneron previously said its drug works just as well as Lucentis and may require fewer injections over a two-year period. (See Regeneron Shares Drop as Study Shows Little Advantage Over Rival Eye Drug.)

The lower frequency of shots may be an important advantage in winning over more doctors, Leerink Swann analyst Joshua Schimmer says in a recent note.

The worldwide market for Lucentis is already about $4 billion each year and growing, Schimmer says. (Roche said that about $1.7 billion of that figure was US sales.) Just shaving some market share from its main rival would be meaningful for Elyea's growth, the analyst says.

"There is a substantial commercial opportunity ahead just by making a modest dent in the market," Schimmer says.

It appears Regeneron is making a dent. Roche recently reported about $423 million in first-quarter Lucentis sales, which was down slightly from a year earlier.

Regeneron's overall revenue for the first quarter was almost $232 million. The company also generates revenue from collaborations with Sanofi (SNY) and Bayer. Regeneron said it had net income of $11.7 million, or $.11 per share, compared with a loss of $43 million in the year-earlier period.

Twitter: @brettchase

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