By Esha Dey and Ransdell Pierson
May 1 Allergan Inc said approval of its
Darpin eye drug could be delayed up to two years, providing a
new boost to Regeneron Pharmaceuticals Inc whose
successful treatment, Eylea, stands to gain from a lack of new
Shares of Allergan, which makes wrinkle treatment Botox,
fell 13.1 percent after the company said mid-stage trial results
of Darpin did not warrant an immediate move into far larger
late-stage trials. Regeneron shares closed up 10.3 percent.
If eventually approved, Darpin would also compete with Roche
Holding AG's, Lucentis, to treat age-related macular
degeneration - the most common form of blindness in the elderly.
Adnan Butt, an analyst with RBC Capital Markets, said
Darpin's delay was "great news" for Regeneron. He noted that
Wall Street had feared the Allergan drug might have a superior
clinical profile to Eylea.
"This gives Eylea even more time to become entrenched as the
drug to beat," Butt said.
He estimates that each year of Darpin delay will translate
into an upside of about $15 to $20 for Regeneron shares, now
trading at about $240.
Eylea, which was approved in November 2011, had sales last
year of $838 million. Regeneron expects 2013 Eylea sales of $1.2
billion to $1.3 billion. Company officials would not comment on
the setback for Allergan's drug.
Regeneron is expected to report first quarter results on
Friday and could update its sales projections.
Allergan Chief Executive David Pyott said on a conference
call that a mid-stage trial of Darpin showed some product
differentiation over Lucentis, but did not support directly
moving to late-stage development.
The company now plans to perform additional mid-stage trials
to assess Darpin, which will delay its potential approval by one
to two years.
"There was a rush to ascribe a lot of value to Darpin and
our view is that this is still very much an unproven asset with
limited data," Piper Jaffray analyst David Amsellem said.
"The earliest it could get to market now is likely 2019,"
Amsellem said. "If you couple that with the setback of the hair
loss product, the late-stage pipeline for Allergan right now is
really quite thin."
A mid-stage trial of Allergan's hair loss treatment
Bimatoprost Scalp also failed to provide sufficient efficacy to
proceed to a late-stage study, further weighing on company
ROOM TO GROW
Regeneron in the past two years has vaulted seemingly out of
nowhere to become one of the world's biggest biotechnology
companies, thanks largely to Eylea.
The company has repeatedly raised its sales forecasts for
the drug, which is injected into the eye, as it steadily steals
market share from Lucentis.
Some specialty pharmacies also use Roche's Avastin cancer
drug, which works the same way as Lucentis, but is far less
expensive, when divided into smaller portions for treating
Roche has said that dividing Avastin through a procedure not
closely monitored by health regulators, called compounding,
could compromise its sterility.
Regeneron Chief Executive Leonard Schleifer said in a recent
interview that sales of Eylea could jump sharply if potential
rivals stumble, or if U.S. regulators clamp down on the
compounding of Avastin for eye use.
Moreover, he said some analysts believe Eylea sales could
swell if it is approved for a new indication called diabetic
macular edema now in late-stage trials. Lucentis is already
approved for the condition.
"So Eylea is a growth story unto itself, with lots of room
to still grow," Schleifer said.
Allergan on Wednesday also posted a higher-than-expected
quarterly profit, helped by strong sales of Botox.
Net income for the first quarter fell to $12.5 million, or 4
cents per share, due to a loss of $259 million from discontinued
operations. Profit was $229.8 million, or 74 cents per share, a
Excluding special items, Allergan earned 98 cents per share.
Analysts were expecting 96 cents, according to Thomson Reuters
Global company sales rose 8 percent to $1.46 billion, above
Wall Street's average estimate of $1.44 billion.
Sales of Botox, which is also approved for treating migraine
headaches, overactive bladder and underarm sweating, rose 15
percent to $457.9 million.
Allergan said it now expects 2013 adjusted earnings of $4.70
to $4.76 per share, compared with its prior outlook of $4.75 to
$4.83 a share.
The company forecast a second-quarter profit of $1.18 to
$1.20 per share, below analysts' average estimate of $1.22 a
share. The new forecasts reflect the impact of its MAP
Pharmaceuticals acquisition earlier this year.
Allergan shares fell $14.88 to $98.67 on the New York Stock
Exchange, while Regeneron shares rose $25.15 to $237.29.