Regeneron scored a big win in the first quarter when the FDA approved Dupixent, the IL-4 and IL-13 inhibitor it developed with Sanofi to treat atopic dermatitis. But a successful launch of the new drug is far from guaranteed, with payer pushback and a patent suit already threatening to interfere.
So for now, investors remain focused on Regeneron’s flagship blockbuster, the anti-VEGF drug Eylea to treat age-related macular degeneration (AMD) and other conditions that trigger vision loss. Judging from the first-quarter earnings report, they may have reason to be concerned.
Eylea sales increased 9% in the U.S. to $854 million during the quarter, helping drive total revenues up 10% to $1.3 billion. But Eylea still came in below analysts’ estimates, and even though the company’s net income jumped 37% to $248.9 million, non-GAAP per-share earnings of $2.92 fell short of the average analyst estimate.
Understandably, Regeneron execs zeroed in on the Eylea worries during the company's earnings call with analysts, pointing to long-term data on its drug—and the lack of comparable data for its head-to-head rival in the anti-VEGF class, Roche's Lucentis, and a potential competitor from Novartis.
CSO George Yancopoulos revealed results from a long-term study of Eylea in AMD, referencing a previous study showing that many patients using Roche's Lucentis and Avastin didn't maintain vision gains and were legally blind by year 5. Regeneron’s long-term data, he said, showed vision gains were “largely maintained over 4 years,” marking the “first evidence” that anti-VEGF therapies do help AMD patients retain their sight.
One analyst asked during the call how Regeneron is looking at Novartis' potential anti-VEGF rival, RTH258, a treatment designed to be dosed quarterly. Yancopoulos said only the long-term data would demonstrate whether the new med can achieve and maintain visual gains.
“Right now we have the only such study that shows that,” he said. He added that he thinks the anti-VEGF field is “going in the wrong direction, focusing on convenience as opposed to focusing on vision.”
Regeneron has also been working hard to expand Eylea’s market, but with mixed results. Last fall, an Eylea combination trial with rinucumab failed, as solo Eylea therapy actually outperformed the two-drug cocktail. Several additional studies are underway, including two phase 2 combo trials with nesvacumab, but the failure raised concerns about Regeneron’s ability to continue growing the drug’s market.
To reduce their reliance on Eylea’s growth, Regeneron’s executives are counting on new entries like Dupixent, a drug that analysts have predicted could hit $4 billion in sales by 2022. The company is submitting the drug for approvals outside of the U.S., initiating studies in pediatric patients and for food allergy treatment, and seeking an additional FDA approval for treating asthma in adults.
The launch is underway in the U.S., though payer response to the drug’s $37,000 price tag remains to be seen. And the company is now under full attack from Amgen, which recently sued, claiming Regeneron used an Amgen antibody in developing Dupixent.
Amgen has already scored a big court victory over Regeneron and Sanofi in the PCSK9 anti-cholesterol market. An injunction that would have forced the Regeneron/Sanofi drug Praluent off the market was stayed pending appeal. But the Amgen win did affect Praluent’s pickup, Regeneron said during the earnings call. The company lowered and narrowed its estimate for full-year reimbursement revenues from its Sanofi collaboration. It is now expecting that number to come in between $385 million and $425 million, vs. the $400 million to $450 million it previously predicted.
There is one more potential short-term catalyst Regeneron investors will be watching closely: The expected May 22 FDA decision on Kevzara, the rheumatoid arthritis treatment it is also developing with Sanofi. Even that hasn’t been easy. The FDA was supposed to hand down its decision on the drug last October, but instead slapped the companies with a delay related to Sanofi manufacturing concerns. Regeneron said the drug is ready for market if the approval comes later this month as expected.