Regeneron Shares Fall as Eylea Disappoints Investors

Regeneron Pharmaceuticals Inc., the drugmaker today celebrating the 25th anniversary of its incorporation, fell the most in five weeks after reporting sales for its eye drug Eylea that disappointed investors.

Regeneron declined 3.2 percent to $176.63 at the close in New York, for its biggest single-day decline since Nov. 30. Sales of Eylea, approved in 2011 for wet age-related macular degeneration, were $838 million for 2012, beating the $817.3 million average of analysts’ estimates compiled by Bloomberg.

Regeneron, based in Tarrytown, New York, sees the drug’s U.S. sales growing by 50 percent in 2013, Chief Executive Officer Len Schleifer said in an interview. While the revenue numbers were “solid,” investors have come to expect Eylea to beat estimates by a wide margin, said Phil Nadeau, a Cowen & Co. analyst in New York, in a note to clients today.

“We therefore suspect that the reported sales and guidance fell short of recent thinking,” he wrote.

Eylea generated $276 million in last year’s fourth quarter, more than the average of six analysts’ estimates of $264.2 million. A 50 percent increase for 2013 would bring the drug’s revenue to $1.26 billion.

“We’re an instant overnight success,” Schleifer joked in an interview at JPMorgan Chase & Co.’s annual health-care conference in San Francisco. Regeneron was incorporated on Jan. 8, 1988, he said, and Eylea is its first major drug.

Peak Sales

The medicine competes with Roche Holding AG’s Lucentis in treating a leading cause of blindness in the elderly. It has topped analysts’ sales projections since it was approved, doubling the company’s share price in the last year. Citigroup Inc. estimated when Eylea was approved that revenue would reach a peak of $1.1 billion in 2021. Regeneron today forecast greater sales for next year.

Wet AMD is caused by abnormal blood vessel formation at the back of the eye, triggering fluid to leak into the macula and creating scarring that obscures vision. It’s treated with injections into the eye. Regeneron’s drug is designed to be able to be administered less frequently than Roche’s Lucentis, which drew 2011 revenue of 1.5 billion Swiss francs ($1.7 billion).

Eylea received approval in September for patients with macular edema following central retinal vein occlusion, an eye disorder that affects an estimated 100,000 people in the U.S. About 200,000 people in North America are diagnosed annually with wet AMD, according to Roche’s Genentech unit.

Asthma Trial

Regeneron also said it plans by the middle of the year to start mid-stage trials in asthma and atopic dermatitis, a chronic skin disorder, of REGN668, a compound that controls a receptor for interleukin-4, or IL-4, which regulates the immune system. Regeneron also has experimental medicines for high cholesterol, rheumatoid arthritis and cancer in its pipeline.

“The machine is still humming,” Schleifer said. The company’s strategy is to “follow the molecules,” he said, letting what looks most promising scientifically to dictate what Regeneron works to develop.

“We’ve learned how to navigate failures,” he said. “That’s part and parcel of what you have to do in this business. You navigate failure by not having only one bet. You need to have lots of shots on goal.”

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