Event - Regeneron volatile around FDA decision and data

Regeneron Pharmaceuticals is in for a turbulent fourth quarter. Issuing $400m in senior convertible notes in mid-October has depressed its shares at a time when optimism should have been growing around an FDA decision due by November 18 on macular degeneration treatment Eylea.

Also coming around the time of the agency’s decision will be two-year data from the pivotal View trial against industry standard Lucentis, which will shed more light on the vascular endothelial growth factor inhibitor’s competitive profile. A double win with the regulator and in the clinic has the potential to return the New York group’s shares to the record high territory seen in September.

Product Eylea
Company Regeneron Pharmaceuticals
Market cap $4.97bn
Product NPV $2.67bn
% of market cap 54%
Event type PDUFA date
Indication Wet age-related macular degeneration
Date November 18, 2011

Dosing advantage

Wet age-related macular degeneration (AMD) is a condition caused by abnormal blood vessel growth in the eye; the new blood vessels are fragile and leak fluid, causing inflammation that damages the macula, the tissue in the centre of the retina that is essential to eyesight. Untreated, wet AMD can lead to blindness.

Widely used in cancer treatment, VEGF inhibitors like Eylea suppress the growth of new blood vessels. Indeed, Lucentis is a VEGF-inhibiting antibody very similar to cancer treatment Avastin, which works by suppressing blood vessel growth to tumours, whilst Eylea, known generically as aflibercept and formerly known as VEGF Trap-Eye, is also being developed as a cancer drug called Zaltrap.

Its pivotal View 1 and View 2 trials Eylea proved itself non-inferior to Roche’s Lucentis in vision maintenance after a year of dosing once every other month; Lucentis is dosed monthly, so a reduction in treatment burden would likely be considered an advance by both patients and ophthalmologists (Dosing the jewel in VEGF Trap-Eye’s crown, November 22, 2010).

An FDA adcom gave its unanimous support, and accompanying staff documents were largely supportive of Eylea, suggesting an easy approval (Eylea breezes through adcom and looks ahead to approval, June 20, 2011). However, the PDUFA action date was extended three months by the FDA’s choice to classify responses to questions on chemistry, manufacturing and controls as a major amendment to the biologics license application.

It goes without saying Eylea approval will be a big moment for Regeneron. With consensus sales forecasts of $798m in 2016 in the US, where Regeneron holds full rights, Eylea has a net present value of $2.68bn, equal to more than half the company’s $4.97bn market capitalisation.

Given the largely positive news about Eylea, a complete response letter would be a big surprise that would lead to a big drop in the share price. As such, nervousness may lead to market volatility in the run up to the action date.

Studies continuing

More uncertainty surrounds the two-year data comparing Eylea and Lucentis. In the second year of both the View 1 and 2 trials, dosing changed to as-needed, but not less than once every 12 weeks. Analysts from Bank of America-Merrill Lynch write that a sustained vision advantage in the Eylea patients dosed once every four weeks, a vision deterioration in Lucentis patients or less frequent injections for Eylea patients would all demonstrate qualities of Eylea that give it a commercial edge.

The expectations are that Lucentis patients would be dosed on average six times in the as needed year, similar to what the Comparison of AMD Treatments Trials (Catt) found (Catt is out of bag but Lucentis-Avastin debate far from over, May 4, 2011).

With the Eylea patients dosed at least four times in year two, the Bank of America analysts write that two fewer doses of the Regeneron drug would be viewed as a clinically meaningful difference. One fewer injection, however, would not be considered meaningful, reducing Eylea’s commercial edge and potentially putting pressure on Regeneron to lower its price.

One piece of good competitive news has already been delivered, however. Findings from Roche’s Harbor trial found that a higher Lucentis dose of 2mg administered as needed did not show statistical superiority over the approved 0.5mg dose, causing Roche to drop that strategy as a response to the threat of Eylea.

But before it can compete, Eylea must first get the FDA’s thumbs-up, which is expected. Anything other than a first-pass approval would lead to substantial share price losses.

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