Regeneron needs revved-up newcomers to backstop vulnerable Eylea—and so far, they're falling short

Regeneron generated $1.5 billion in the first quarter, a 15% increase over the same period last year. (Regeneron)

Regeneron's 15% growth in the first quarter came from its aging eye injection Eylea, while its newer drugs came short of expectations. That's not good—particularly with two potential new rivals threatening that blockbuster lead medication.

Regeneron's top drug Eylea generated $984 million (PDF) in the U.S. during the period, beating consensus estimates of $961 million, according to SunTrust analyst Yatin Suneja.

Together with its share of Bayer's profits on $624 million in Eylea sales in international markets, plus other revenues, Regeneron generated $1.5 billion for the quarter, a 15% increase over the same period last year.

But newer drugs under a partnership with Sanofi—Dupixent, Praluent and Kevzara—all missed expectations, Suneja said. Atopic dermatitis drug Dupixent generated $131 million, while PCSK9 cholesterol drug Praluent chipped in $60 million and rheumatoid arthitis medication Kevzara brought $12 million. 

Those first-quarter trends are likely to be a long-term problem, even if the company hits its top-line estimates in the short term. Regeneron is likely to face trouble with growth down the road, particularly with Eylea threatened by potential competition from a Novartis pipeline drug RTH258, Suneja said. Plus, as the analyst pointed out, a biosimilar to Roche's Lucentis from Formycon could not only siphon away sales, but hurt Eylea's pricing power.  

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Regeneron knows all of that, and it has brought a series of new drugs to market to keep growth coming. But those three medications have yet to gain real traction. Praluent was approved in 2015 with big expectations, but payer barriers to uptake have hobbled sales.

This week, the drugmaker announced an exclusive deal with top pharmacy benefit manager Express Scripts to simplify access at a lower price. But Bernstein analyst Ronny Gal said it's a "capitulation" because Regeneron is admitting the drug class won't become a major commercial success.

Now, Dupixent is carrying its own blockbuster expectations, but its sales fell quarter over quarter. During a conference call last week, Olivier Brandicourt, CEO of Regeneron partner Sanofi, said there's no problem with “the underlying dynamics of the launch.” Instead, he said, the sales decline stemmed from an inventory reduction for wholesalers and higher patient assistance program costs in the first quarter.

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“We really are at the beginning of the journey for this high-potential, groundbreaking therapy," Brandicourt said. 

Analysts have predicted $3 billion in peak sales for Dupixent as it is expected to pick up new indications in asthma, severe nasal allergies and more.

Meanwhile, in an R&D hit for Regeneron in the first quarter, the company said it halted high-dose arms in a phase 3 test of osteoarthritis drug fasinumab after an independent data monitoring committee highlighted risk-benefit concerns.