Regeneron Pharmaceuticals Inc. (REGN) and partner Bayer (BAYRY) recently announced the commencement of a late-stage study (SIGHT:n~300) in China to evaluate their injectable eye drug Eylea (aflibercept) for treating patients suffering from neovascular form of age-related macular degeneration (wet AMD).
The randomized, double-masked study is designed to evaluate the safety and effectiveness of Eylea, also known as VEGF (vascular endothelial growth factor) trap-eye, versus the standard therapy for wet AMD in China.
Wet AMD is the primary cause of blindness in patients aged over 65 years in the US and EU. The disease is quite prevalent in China as well. Approximately 540,000 patients newly diagnosed with wet AMD in 2010 were above the age of 50.
Per the agreement, Bayer is responsible for marketing Eylea in ex-US markets on approval. The profit earned from the sales of the candidate in those markets will be shared equally by the companies. However, Regeneron owns the entire US rights pertaining to the eye-drug.
We remind investors that Eylea was cleared by the US Food and Drug Administration (FDA) earlier in the month for wet AMD. The approval of Eylea was based on positive results from the VIEW program (VEGF (vascular endothelial growth factor) trap-eye: Investigation of Efficacy and Safety in Wet AMD) which consisted of two studies, VIEW 1 and VIEW 2. The studies evaluated the efficacy of VEGF trap-eye versus Roche/Novartis‘ (RHHBY/NVS) Lucentis (ranibizumab), an anti-angiogenic agent approved for treating wet AMD. Regeneron’s eye treatment was found to be non-inferior to Lucentis.
We believe that if Eylea is successfully developed and subsequently commercialized for wet AMD in additional markets such as China then the top lines of both companies will be boosted.
Apart from wet AMD, Regeneron and Bayer are studying VEGF trap for other eye-disorders.
Our Recommendation
Currently, we have a Neutral stance on Regeneron in the long run. However we have an Underperform recommendation on Bayer since we believe that the stock is overvalued at current levels. Both companies carry Zacks #3 Rank (Hold rating) in the short run.
