Eylea Could Help Regeneron Focus on the Eye Therapy Segment
Coming Soon! Regeneron's Earnings for 4Q15 and Fiscal 2015
Business model
Regeneron (REGN) generates revenue from three sources—product sales revenue, collaboration arrangements revenue, and licensing proprietary technology. Since 2012, the contribution from product sales has been stable. It accounted for ~62%–65% of the total revenue.
The above chart shows the three commercialized drugs in Regeneron’s portfolio—Eylea, Praluent, and Arcalyst.
Eylea is a major revenue contributor
Eylea was approved in 2011 for the indication of neovascular age-related macular degeneration or wet AMD. However, following label expansion, it received approval for various eye ailments like macular edema following central retinal vein occlusion, DME (diabetic macular edema), macular edema following retinal vein occlusion, and diabetic retinopathy in patients with DME. A severe form of wet AMD causes blindness in elderly people.
According to the American Society of Retina Specialists, there are ~15 million patients suffering from AMD. Bayer HealthCare estimates that ~10% of these patients suffer from wet AMD.
For more information on Eylea, read Eylea: Regeneron’s Blockbuster Therapy Focuses on Eye Segment.
The above graph shows Wall Street analysts’ revenue projections for Eylea. According to analysts, the drug would record $745 million and $770 million in revenue for Regeneron for 4Q15 and 1Q16, respectively.
Pricing and competition scenario for Eylea
A decade ago, the scenario for AMD treatments was different. Treatment wasn’t available. However, with the introduction of injectable anti-vascular endothelial growth factor drugs, there was a revolution. The most commonly used drugs to treat AMD are Eylea, Roche’s (RHHBY) Lucentis, and Avastin.
The above graph shows the annual product sales from Eylea for 2015 and 2016. According to analysts’ estimates, the drug might generate $2.68 billion and $3.17 billion for Regeneron for 2015 and 2016.
According to the American Academy of Ophthalmology, Avastin is an off-label drug. It costs ~$50 per average treatment for AMD. In contrast, Eylea and Lucentis cost ~$1,800 and $2.000, respectively. Other major competitor drugs for Eylea are Novartis’s (NVS) Visudyne and Pfizer’s (PFE) Macugen.
It can be risky to invest directly in a biotech company. Any news release for the success or failure of its drug results in volatility in the stock price. To remain on the safer side, investors can choose the iShares Nasdaq Biotechnology ETF (IBB). IBB has 6.8% of its total holdings in Regeneron stock.
Browse this series on Market Realist:
