Regeneron Surges on VA Order to Drop Avastin for Eyes

(Corrects story published yesterday to add word Pharmaceuticals to name in first paragraph.)

Regeneron Pharmaceuticals Inc. (REGN) shares surged to a 20-year high on a Department of Veterans Affairs decision to stop using Roche AG’s cancer drug Avastin to treat an eye disease as it investigates reports of serious infections and blindness.

Regeneron, the developer of a rival drug for the condition, rose $5.93, or 9.2 percent, to $70.28 at 4 p.m. in Nasdaq Stock Market trading, after reaching $79.90, the highest since April 3, 1991. Roche rose less than 1 percent to close at 138.9 Swiss francs before the VA decision was reported.

Regeneron, based in Tarrytown, New York, is developing Eylea, a more convenient injectible drug for wet age-related macular degeneration, an eye disorder that affects more than 1 million Americans. The Food and Drug Administration in August extended its target date to complete its review of the medicine by three months to Nov. 18.

“It’s a positive for Eylea,” said Yaron Werber, an analyst with Citigroup Global Markets Inc. in New York, by phone. “The question is whether the VA is comfortable from this point onwards using an off-label product that needs to be compounded by the pharmacy.”

Avastin has to be repackaged in a process known as compounding so it can be injected to treat the eye disease. Pharmacies may face strict new regulations surrounding the process, Werber said.

“The bar is going to be raised on where doctors are getting compounded Avastin from,” he said.

Off-Label Prescribing

Avastin is only approved in the U.S. to treat certain cancers. Once a drug is cleared, though, it can be prescribed off label by doctors for any ailment. Lawmakers have been pressuring U.S. health programs such as Medicare to expand Avastin’s use for the potential savings. Avastin costs about $50 a dose compared with $2,000 for Lucentis.

The medicine, with $6.4 billion in 2010 sales, works in both cancer and the eye disease by preventing blood-vessel growth. Roche makes very little off of Avastin for the eye disease, between $30 million to $40 million last year, Werber said. The VA decision, announced in an e-mail to Bloomberg News, comes after the FDA rejected the drug’s use in breast cancer because of the risk of deadly bleeding.

The VA decision may chill future calls to expand Avastin’s uses, said Scott Gottlieb, a former deputy commissioner for medical and scientific affairs at the FDA.

Expanded Uses

“I don’t think doctors are getting their cues from the VA, but I think you’ll see implications on the policy side,” Gottlieb, who consults for Genentech, the unit of Basel, Switzerland-based Roche that developed the drug. “You’ll see proponents less likely to stand up for it.”

Democratic Senator Herb Kohl of Wisconsin and Sherrod Brown of Ohio have pushed the Medicare program to declare Avastin necessary to fight wet age-related macular degeneration.

Medicare can’t take cost into account in making such determinations and doesn’t have to issue the recommendations.

The VA is investigating eye infections and in the meantime is no longer using Avastin, the department said in an e-mailed statement.

“Once the investigation is complete, VA will reassess how Avastin and similar therapies may be made available for ophthalmologic use and will issue further guidance,” the statement said.

The FDA last month linked at least a dozen serious eye infections in the Miami area to repackaged Avastin. Some of the cases resulted in blindness.

Roche is aware of reports of patients in Miami, Nashville and Los Angeles who have developed severe eye infections, some resulting in permanent vision loss, after receiving Avastin, Terence Hurley, a spokesman for the company, said. In Miami, the syringes were contaminated with bacteria and the FDA found no evidence of contamination in vials of Avastin, Hurley said.

The FDA also is investigating the serious eye infections, Shelly Burgess, an agency spokeswoman, said.

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.

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