Last year, U.S. sales of Regeneron’s drug to treat age-related macular degeneration (AMD) came in at $3.3 billion—68% of the company’s total revenues—so it’s no wonder investors have been expressing some concerns about potential rivals moving through the pipeline. Among those hoping to cut into Eylea’s market is Novartis, which is in phase 3 testing with its AMD candidate, RTH258. And if the latest data from those trials is any indication, Regeneron investors have good reason to worry.
Novartis announced that in two head-to-head trials, RTH258 was as effective as Eylea, but in more than half of patients it could be injected in the eye every three months, versus monthly or every two months for Regeneron’s drug. The rate of side effects was comparable for the two drugs. Some analysts predicted Novartis would gain a competitive edge over Regeneron and the other major player in the field, Roche’s Lucentis.
Convenience is a big deal for patients with AMD, a leading cause of blindness in people over age 60. Eylea and Lucentis, both of which are anti-VEGF treatments that shore up leaky blood vessels, have been shown to slow the progression of the disease. But patients have to endure direct injections into the eye, followed by foggy vision for a day or two that makes it difficult to drive or perform other everyday tasks. So any rival that can be administered infrequently will likely be a threat to Eylea, and to Lucentis, which is dosed monthly.
But the big difference between Roche and Regeneron is diversification—or lack thereof in the case of the latter. Regeneron is so reliant on Eylea that during its first-quarter earnings call in May, its executives were pounded by analysts questioning the company’s ability to maintain the product’s growth. Sales of Eylea rose 9% year-over-year in the U.S. to $854 million during the quarter, but that result underperformed expectations.
CSO George Yancopoulos spent quite a bit of time on the call reviewing results from a long-term trial of Eylea that showed that vision gains were sustained in patients over four years. When asked about the potential of RTH258, which also works by inhibiting VEGF, he replied that without comparable long-term data it would be difficult to determine if Novartis’s rival drug is as effective. He blasted AMD researchers for “going in the wrong direction, focusing on convenience as opposed to focusing on vision.”
Regeneron has been working hard to expand the market for Eylea, testing it in various combinations. It’s collaborating with Bayer on combination trials with nesvacumab, an angiopoietin2 (Ang2) antibody, for example. It also tried the drug in combination with the antibody rinucumab, but that effort failed. In fact, solo therapy with Eylea outperformed the combo.
The competitive threat from Novartis in AMD isn’t imminent—the company aims to file for approval of RTH258 next year—but some analysts are already imagining the potential impact on Regeneron. In a note to investors Tuesday morning, Jefferies analyst Biren Amin predicted that every $100 million of potential Eylea sales lost to of RTH258 would shave 60 cents off Regeneron’s non-GAAP earnings per share. Amin is holding off further judgment until Novartis reveals full data from the trial at an eye conference in November. Still, the fact that more than 50% of patients did well with quarterly dosing of RTH258, he wrote, represents a “compelling result.”