Regeneron plots DTC advertising and discount push to put Eylea back on track

Industry watchers already knew that Regeneron’s key new launches were hitting their marks, thanks to quarterly numbers Sanofi unveiled earlier this week. What they didn’t know was that top seller Eylea would fall short of expectations. But never fear, executives said: We're all over it.

The eye drug collected $992 million for the quarter, checking in $8 million below Wall Street estimates—and posting just 8% growth year over year, ending a streak of double-digit growth quarters, Bernstein analyst Ronny Gal pointed out in a note to clients.

And as SunTrust analyst Yatin Suneja highlighted in his own note, with competition advancing through the pipelines at Novartis, Roche, and drugmakers working on biosimilar copies of Roche’s Lucentis, growth could get even harder to come by.

Regeneron is fighting back, though; it's plowing more money into direct-to-consumer advertising on the brand and expanding its discount program for doctors, executives said during a Thursday call with analysts. By year's end, it'll launch a new ad campaign focusing on patients with diabetic macular edema.

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There's good reason for that choice. According to Regeneron management, "only 25% of the Eylea business today comes from DME, less than 20% of all DME patients receive anti-VEGF therapy, and many remain undiagnosed," Leerink Partners analyst Geoffrey Porges wrote to clients. 

And for now, "the overall branded U.S. retinal disease market (Eylea+Lucentis) continues to expand, with ~3%/12% QoQ/YoY growth in 2Q,” Suneja wrote, though he noted that “the pace is likely to slow going forward.”

Luckily for Regeneron, though, investor expectations “are relatively low for the product,” Suneja said, and “focus remains on newly launched products.”

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Those therapies—atopic dermatitis treatment Dupixent, PCSK9 contender Praluent and rheumatoid arthritis drug Kevzara, all shared with Sanofi—each outperformed expectations, raking in $209 million, $74 million and $24 million, respectively, the French drugmaker said earlier this week. Together, they helped Regeneron’s overall revenue haul come in 3% above consensus at $1.6 billion for the quarter.

The New York biotech also surpassed profit expectations, rolling out adjusted EPS of $5.45 to crush a $4.70 forecast. But the launches couldn’t take credit for that showing; the company beat “on non-product revenue and cost control,” Gal said.