Regeneron/Bayer's Eylea Gets Japanese Approval for DME

Regeneron Pharmaceuticals, Inc.’s (REGN) shares were up 3.4% on news that Bayer’s (BAYRY) Japanese subsidiary, Bayer Yakuhin, Ltd. gained approval for Eylea for yet another indication in Japan. Eylea was approved by the Japanese Ministry of Health, Labour and Welfare (:MHLW) for the treatment of diabetic macular edema (:DME).

We note that Eylea is already approved in Japan for the treatment of patients with neovascular age-related macular degeneration (wet AMD), macular edema secondary to central retinal vein occlusion (:CRVO), and myopic choroidal neovascularization (myopic CNV). Meanwhile, both companies are currently looking to get Eylea approved for the treatment of macular edema secondary to branch retinal vein occlusion (BRVO) in Japan.

Eylea is approved in the U.S. for the treatment of wet AMD, DME and macular edema following retinal vein occlusion (:RVO).

We note that Eylea is the key growth driver at Regeneron. Regeneron has a collaboration agreement with Bayer for the global development of Eylea. Eylea’s revenues, as reported by Bayer, were $741.9 million in the first nine months of 2014 as compared to $288.3 million in the first nine months of 2013.

However, Regeneron tightened its U.S. Eylea sales guidance for 2014 to $1.7 billion to $1.74 billion (previous guidance: $1.7 billion to $1.8 billion).

We are encouraged by the label expansion of Eylea as it will boost sales further. We expect investor focus to remain on updates regarding Eylea.

Regeneron currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector include AMAG Pharmaceuticals, Inc. (AMAG) and Biogen Idec Inc. (BIIB). Both hold a Zacks Rank #1 (Strong Buy).

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