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The HealthCare segment at Bayer (BAYRY - Analyst Report) recently received encouraging news from the European Committee for Medicinal Products for Human Use (CHMP), when it gave a positive opinion on the EU approval of eye drug, VEGF Trap-Eye.

Bayer is looking to get VEGF Trap-Eye approved in the EU for the treatment of visual impairment due to macular edema secondary to central retinal vein occlusion (CRVO). A final verdict from the European Commission on the approval of VEGF Trap-Eye in this indication is expected later this year.

We note that though the European Commission is not bound to follow the CHMP’s decision, it generally does so.

Bayer has a collaboration agreement with Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) for the global development of Eylea (U.S. trade name of VEGF Trap-Eye). Per the terms of the agreement, Regeneron owns the entire U.S. rights pertaining to the eye drug. Bayer is however responsible for marketing Eylea in ex-U.S. markets on approval. The profit earned from the sales of Eylea in those markets will be shared equally by the companies. However, in Japan, Regeneron will receive royalties on Eylea’s net sales.

VEGF Trap-Eye is already approved in the U.S. for the CRVO indication since Sep 2012 under the trade name of Eylea. Eylea is also approved in the U.S. for the treatment of neovascular (wet) age-related macular degeneration (AMD).

We also note that EYLEA is approved in Europe, Japan, Australia, and several other countries for the wet AMD indication.

Bayer is looking to expand VEGF Trap-Eye’s indication further in the myopic choroidal neovascularization (mCNV) indication. In Jun 2013, the company reported positive top-line results from the phase III MYRROR study on VEGF Trap-Eye in patients suffering from mCNV. Bayer intends to submit its first regulatory approval application in Asia for VEGF Trap-Eye in this indication later in the year.

Eylea sales came in at €49 million in the first quarter of 2013 as per Bayer.

Bayer, a large cap pharma stock, presently carries a Zacks Rank #3 (Hold). However, another large cap pharma stock, Johnson & Johnson (JNJ - Analyst Report), currently looks better positioned with a Zacks Rank #2 (Buy).

Other companies in the pharma space that are worth considering include Jazz Pharmaceuticals Public Limited Company (JAZZ - Analyst Report), which carries a Zacks Rank #1 (Strong Buy).

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