Regeneron raises 2012 Eylea sales forecast, shares jump

Mon Feb 13, 2012 12:00pm EST

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(Reuters) - Regeneron Pharmaceuticals Inc (REGN.O) significantly raised its 2012 sales forecast for its key eye drug Eylea, suggesting fast adoption of the recently approved drug, sending its shares to a lifetime high.

The company, which has a market capitalization of about $10 billion, now expects Eylea net sales of $250 million to $300 million in the United States in 2012.

It had earlier forecast net sales of $140 million to $160 million for the drug, which received U.S. regulatory approval in November to treat a common cause of blindness in the elderly.

The raise in sales outlook is a potential signal of strong demand, J.P. Morgan analyst Geoff Meacham said, but added that "questions remain about the specifics of this demand for Eylea."

"The 2012 guidance was initially provided about one month ago at the J.P. Morgan healthcare conference, so it is not clear what has materially changed demand-wise since then."

Fourth-quarter sales for Eylea, which competes with Roche Holding's (ROG.VX) Lucentis, were $24.8 million.

The drug's advantage over Roche's drug is that it can be given once every two months, compared with the typical monthly dosage of Lucentis -- a benefit that, analysts say, gives Eylea an edge.

When launched, Eylea, which is approved to treat wet macular degeneration -- the most serious form of the disease -- was also priced below Lucentis.

Age-related macular degeneration (AMD) is the leading cause of blindness in the elderly, with the wet form being the most serious. About 11 million Americans have signs of AMD.

However, both Eylea and Lucentis face competition from Roche's cancer treatment Avastin. Avastin costs only around $50 per dose and is often used by doctors to treat macular degeneration even though it is not approved for that purpose.

Leerink Swann analyst Joshua Schimmer said the company will see greater investor appreciation in 2012 as patients switching from Lucentis or Avastin do well on Eylea, and these patients are also the ones who require the most frequent injections.

He added that sales estimates for the drug may be revised further, as "conservative assumptions for 2012 may improve as physicians gain comfort with the reimbursement process, which sound to be going smoothly."

Schimmer raised his 2012 U.S. sales estimate for the drug to

$299 million from $195 million.

Separately, the company said in a regulatory filing that it sent a letter to the U.S. health regulator reporting incidents of inflammation following the use of Eylea injection.

Regeneron said excluding a cluster of events occurring at a single practice, the overall rate of the adverse events was about 0.01 percent following the administration of the drug.

Leerink's Schimmer said the rate of adverse events is consistent with other similar therapies for AMD.

Eylea was developed in collaboration with Germany's Bayer AG (BAYGn.DE). Regeneron is also developing a cancer compound known as Zaltrap with French drugmaker Sanofi (SASY.PA).

The company's shares, which have more than doubled in value since Eylea's approval, were up 13 percent at $115.22 in morning trade on the Nasdaq. They touched a life high of $116.48 earlier in the session.

(Reporting by Esha Dey and Kavyanjali Kaushik in Bangalore; Editing by Roshni Menon)

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