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Regeneron's Eylea Gets FDA Nod for Diabetic Macular Edema

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Regeneron Pharmaceuticals, Inc.’s (REGN) eye drug Eylea received FDA approval for a third indication − the treatment of diabetic macular edema (:DME).

Eylea is already approved for the treatment of neovascular age-related macular degeneration (wet AMD) and macular edema following central retinal vein occlusion.

DME (also known as swelling of the macula) is one of the primary causes of vision loss among the working-age group of the U.S. population and commonly affects patients suffering from diabetes. According to the press release issued by Regeneron, out of 29.1 million diabetic adults in the U.S., approximately 1.5 million have been diagnosed with DME, while nearly 1 million cases remain undiagnosed.

Regeneron has an agreement with Bayer (BAYRY) for the development and commercialization of Eylea. While Regeneron holds exclusive rights to sell Eylea within the U.S., Bayer has exclusive commercialization rights to the product in the ex-U.S. markets. Both companies equally share the profits from Eylea sales, excepting Japan, where Regeneron receives royalties on Eylea’s net sales.

We remind investors that Eylea is currently under review in the EU for the DME indication. With the European Committee for Medicinal Products for Human Use (CHMP) recommending the approval of Eylea for the treatment of DME, we expect Eylea to gain EU approval in the second half of 2014.

Although Eylea’s U.S. approval for DME is based on one-year data from two phase III studies (VISTA-DME and VIVID-DME), Regeneron will continue these studies for a total of three years. Eylea is also in another phase III study (VIVID-EAST-DME).

We are encouraged by Eylea’s label expansion which should boost sales further. In 2013, U.S. revenues for Eylea amounted to $1.4 billion (out of global revenues of $1.9 billion), up 68% year over year.

Regeneron carries a Zack Rank #3 (Hold). Some better-ranked stocks in the biotech sector are Actelion Ltd. (ALIOF) and Aegerion Pharmaceuticals, Inc. (AEGR). While Actelion carries a Zacks Rank #1 (Strong Buy), Aegerion holds a Zacks Rank #2 (Buy).

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