Mud In Your Eye

Regeneron's Eylea Protection Is Weakening

Another combo failure leaves its best-selling drug exposed to a Novartis threat.


Photographer: Jack Kurtz/Getty Images
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It's not looking good for Eylea, Regeneron Pharmaceuticals Inc.'s best-selling medicine.

Earlier this month, Novartis AG reported strong trial results for a possible competitor to the blockbuster eye drug. And on Monday, Regeneron announced it was giving up trying to combine Eylea with another medicine -- an effort that might have helped defend against Novartis's entry. 

This combo wasn't seen as core to Regeneron's future. But with investors already questioning Eylea's longevity, its failure can't help but feed a negative narrative, particularly after a separate combo effort failed last year.

Back to Earth

Regeneron shares are back below $400 after hits to its main drug franchise

Source: Bloomberg

Eylea accounted for nearly 80 percent of Regeneron's revenue in the third quarter, if you include proceeds from its collaboration with Bayer AG, which largely consists of the profits from Eylea's European sales.

Eylea of the Storm

When you remember that Regeneron's Bayer collaboration revenue also stems from Eylea, it becomes clear how central the drug is to its fortunes

Source: BLoomberg

Even without competition, Eylea's sales growth has slowed dramatically as its market has matured. It's unclear how much Novartis's drug will improve on Eylea, and it won't hit the market until at least 2019. But the data so far certainly look worrisome for Regeneron. 

The bad news heaps more pressure on upcoming data from a final-stage trial of Eylea in treating a broader group of patients with diabetic retinopathy. This may be the only thing standing in the way of a sooner-than-expected sales peak and decline for the drug. 

The stakes are also higher for Dupixent -- a Sanofi-partnered eczema drug and Eylea's presumed successor as Regeneron's best-selling medicine. Dupixent is expected to exceed $4.6 billion in worldwide sales in 2022. But the drug fell somewhat short of lofty expectations in a recent asthma trial and will likely face intense competition from AbbVie Inc. and other drugmakers.

And Sanofi gets a bigger cut of Dupixent sales than Bayer does of Eylea's. Relying on it as a savior is a risky proposition.


Dupixent is absolutely key to Regeneron's future, and will become more so if Eylea's growth stalls out

Source: Bloomberg

If any company can research its way out of this bind, it's Regeneron. The company had two likely billion-dollar drugs approved by the FDA in the space of a few months this year, in Dupixent and arthritis medicine Kevzara. Big pharma companies several times Regeneron's size rarely manage such a feat.

But if Eylea seriously stumbles, then Regeneron will be scrambling to maintain its current level of success rather than building on it. That will invite less-flattering comparisons with big pharma and raise questions about the company's lofty valuation. 


Regeneron's premium over big pharma has already slipped, and may take a further hit

Source: Bloomberg

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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    Max Nisen in New York at

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    Mark Gongloff at

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