What Drove Regeneron’s 3Q16 Performance?



Eylea: Regeneron’s major revenue contributor

In fiscal 3Q16, Regeneron Pharmaceuticals (REGN) recorded revenue amounting to $1.2 billion and net product sales amounting to $857 million. Eylea had a giant share of this with net sales of $854 million in the US during the period. Eylea’s ex-US sales recorded by Bayer amounted to $471 million during 3Q16. Regeneron’s share of profit stood at $171 million during the period.

Eylea’s potential growth drivers include the rising aging population, demographics, increased incidence of diabetes, along with market share movement. To understand the pricing and competition scenario for Eylea, the key asset, you can read, Eylea Could Help Regeneron Focus on the Eye Therapy Segment.

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Challenges faced by Eylea

Despite being superior to Roche’s (RHHBY) Lucentis, Eylea is facing a major challenge for continuous growth. Many DME (diabetic macular edema) patients visit ophthalmologists as opposed to retinal specialists. Visiting an ophthalmologist deprives them of getting access to anti-VEGF (vascular endothelial growth factor) therapy, as ophthalmologists prefer laser therapy. Perhaps this is the reason that Regeneron is trying to encourage DME patients to visit retinal specialists. 

The second challenge is in the form of increased rebates for competitor drugs. However, Regeneron seemed prepared to tackle the situation by offering increased discounts. In the eye disease space, REGN’s other competitors include Novartis (NVS) and Pfizer (PFE) with their respective drugs, Visudyne and Macugen.

Ongoing studies for Eylea

REGN is conducting one phase-three study for the indication of diabetes retinopathy. This additional label for Eylea will help it to continue its growth. Also, there are two combination studies for the drug. Positive results from these studies could offer advantages over its competitors if successful. For details on Eylea’s combination studies, please read Will combination therapy make Eylea better?

If you invest in the First Trust NYSE Arca Biotechnology Index Fund (FBT), you can gain exposure to Regeneron. The fund holds 3.6% of its total assets in Regeneron. Let’s have a look at analyst recommendations for REGN in the next part.


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