Regeneron falls on concern over rival

Ophthotech says its drug, combined with a Roche treatment showed impressive results treating elderly patients with a blinding disease.

By Minyanville Jun 13, 2012 5:14PM
Image: Senior man driving a car © Jose Luis Pelaez Inc./Blend Images/Getty ImagesShares of Regeneron (REGN) fell more than 12% Wednesday to $111.88 after a small rival company reported impressive results from an experimental drug for a blinding disease.

Closely held Ophthotech's drug Fovista would potentially compete with Regeneron’s fast-growing Eylea to treat age-related macular degeneration, the leading cause of blindness in the elderly.

Announcing midstage study results, venture capital-backed Ophthotech said its drug, combined with Roche's Lucentis, worked better to improve patient vision compared with those people taking Lucentis alone. After 24 weeks, patients receiving the combination therapy on average were able to read 10.6 letters on a vision chart compared with 6.5 letters for those receiving only Lucentis.

Lucentis was approved in the U.S. before Regeneron's Eylea received market clearance last November. But Eylea has far exceeded sales expectations, leading investors to believe that the drug is on its way to becoming a blockbuster product. (See Regeneron blows away sales forecast for new eye drug.) Regeneron touts that its drug requires fewer injected doses and costs less than Lucentis.

Shares of Regeneron more than doubled this year on excitement over Eylea, but the stock dropped more than 8% to $117.20 in late-morning trading Wednesday.

Leading up to Eylea's approval, there were a lot of questions about how Eylea and Lucentis can compete with the so-called off-label use of Avastin. While not approved for the eye disease, a number of doctors inject their patients with a small amount of Avastin because it has been shown to work as well as Lucentis for a fraction of the cost. A U.S. study last year found that $50 worth of Avastin, an older cancer drug made by Roche, worked as well as an almost $2,000 dose of Lucentis.

A combination therapy that is considerably more effective than Lucentis or Eylea, however, may sway more doctors to use the more expensive drugs.

In Ophthotech’s press release, Carmen Puliafito, dean of the Keck School of Medicine at the University of Southern California, said the study results "set the stage for a new era of combination therapy" for patients.

The experimental drug is not particularly close to winning U.S. market clearance, however. The company will have to conduct a final stage of study.

Co-founder and CEO Samir Patel says in a statement that he will move quickly toward those clinical trials.

There is a question of how the company will finance its next step. Roche, Regeneron, or another company can help pay for further study. If Regeneron steps in, Ophthotech would likely test its drug in combination with Eylea, an analyst speculates.

"We would expect Ophthotech to partner the program (or) potentially engage in a company sale prior to start of" new human studies, Jeffries analyst Biren Amin says in a note. "We believe Regeneron has an active business development program, and may possibly engage Ophthotech."

Regeneron declined to comment. Roche didn't immediately respond to a request for comment.

Ophthotech's venture capital investors include SV Life Sciences Advisers, Novo Ventures, HBM Partners, and Clarus Ventures.

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