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Shares of Regeneron Pharmaceuticals [NASDAQ:REGN] surged 9.32% to a record high of $605.93 per share on August 4 after the company announced a blowout earnings report and raised the sales forecast of its blockbuster eye drug, Eylea. In the second-quarter ended June 2015, Regeneron reported total revenues of $998.6 million, up 50% year-over-year and non-GAAP (adjusted) EPS of $2.89, up 17% year-over-year.
Wall Street was expecting earnings of $2.77 per share on revenues of $887.81 million. The company said that it now expects U.S. Eylea sales to rise 40% to 50% this year, up from its previous guidance of 30% to 35%.
Regeneron reported sales of Eylea in the United States of $655 million, up 58% year-on-year. Net sales of Eylea outside of the United States were $338 million, up 36.8% from $247 million in the second-quarter of 2014. Regeneron and Bayer HealthCare [OTCMKTS:BAYRY] commercialize Eylea outside the United States, except for Japan, where Regeneron receives a royalty on net sales. In the second-quarter 2015, Regeneron recognized $107 million from its share of net profits from Eylea sales outside the United States, up 60% from $67 million in the second-quarter of 2014.
Eylea (aflibercept) is a VEGF inhibitor indicated for the treatment of patients with neovascular (wet) age-related macular degeneration (AMD), macular edema following retinal vein occlusion, diabetic macular edema (DME), and diabetic retinopathy. The drug was first approved in June 2011 by the U.S. Food and Drug Administration (FDA) for the treatment of wet AMD, a leading cause of blindness in the elderly.
During Regeneron's earnings call, the company told analysts that the bulk of Eylea’s growth is coming from DME, both in terms of the growing the DME market overall for the anti-VEGF class, as well as taking market share from both Roche’s [OTCMKTS:RHHBY] Lucentis (ranibizumab) and Avastin (bevacizumab).
About 30% of Regeneron’s total revenues is generated from its collaboration partners including Bayer HealthCare and Sanofi [NYSE:SNY]. Bayer HealthCare collaboration revenue was $134.2 million in the second-quarter 2015, up 37.9% year-over-year from $97.3 million. Sanofi collaboration revenue in the second-quarter 2015 was $195.1 million, up 36.8% year-over-year from $142.6 million. As of June 2014, Sanofi holds approximately 22.5% of Regeneron’s shares outstanding.
In July, the FDA approved of Praluent (alirocumab), a monoclonal antibody targeting proprotein convertase subtilisin/kexin type 9 (PCSK9), for the treatment of adults with heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease (ASCVD), who require additional lowering of low density lipoprotein (LDL) cholesterol.
Praluent will be competing with Repatha (evolocumab), another PCSK9 inhibitor drug developed by Amgen [NASDAQ:AMGN]. Praluen, Repatha and other PCSK9 inhibitor drugs act by identifying and knocking out PCSK9 enzymes in the liver, and hence lowers the amount of LDL cholesterol in the blood.
Regeneron said that Praluent sales may rise only gradually, as there may be a possible delay in decisions by insurance companies on the drug's coverage as well as Medicare and Medicaid reimbursement. Regeneron will provide an update on Praluent at the end of the third-quarter. Leerink Partners analysts expect the drug to hit peak annual sales of more than $5 billion.
Another key antibody pipeline with Sanofi is Sarilumab, an antibody targeting IL-6R for rheumatoid arthritis, which is currently being studied in the global Phase 3 SARIL-RA program. The companies plan to present new Phase 3 data in 2015 and submit a BLA in the United States by the end of 2015.
In May, Sanofi and Regeneron reported positive results from an interim analysis of a pivotal Phase 2b study of dupilumab, an antibody co-developed by Regeneron and Sanofi, designed for the treatment of adult patients with moderate-to-severe asthma, who are uncontrolled despite treatment with inhaled corticosteroids and long-acting beta agonists (ICS/LABA).
Leerink Swann analyst Joseph Schwartz said a win here would be big for Regeneron and huge for Sanofi as the projected peak annual sales for dupilumab is $2.8 billion for two indications — asthma and atopic dermatitis.
According to FierceBiotech, the analyst believes that the drug could also hit the mark for chronic obstructive pulmonary disease (COPD), a group of lung diseases including emphysema and chronic bronchitis, that block airflow and make breathing difficult. Nearly 27 million people in the U.S. are affected by COPD.
Additional antibody pipelines with Sanofi include Fasinumab (REGN475), a fully human monoclonal antibody against nerve growth factor for the treatment of pain, REGN2222, REGN2176-3, REGN2810, REGN1500, and REGN1033.
The 12-month target price for REGN on Yahoo Finance is $615.14 per share. Regeneron will report its third-quarter 2015 earnings on November 2-6. Analysts are expecting earnings of $3.09 per share, up 22.6%, on revenues of $1.05 billion, up 44.40%.
Disclosure: Long position REGN. No positions in any other companies mentioned. |
