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Encouraging news flowed in at Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) from Europe when the European Commission approved eye-drug Eylea for treating patients suffering from visual impairment due to macular edema following central retinal vein occlusion (CRVO).

Regeneron has co-developed Eylea with the HealthCare unit of Bayer (BAYRY - Analyst Report). Regeneron is solely responsible for U.S. sales of the eye drug. Regeneron and Bayer equally share the profits from ex-U.S markets. Eylea sales, except for Japan where Regeneron receives a royalty on net sales.

Eylea is already available in the U.S. for the above indication. In Sept 2012, the U.S. Food and Drug Administration (FDA) approved Eylea for the CRVO indication. Eylea was first approved in the U.S. in late 2011 for treating patients suffering from the neovascular form of age-related macular degeneration (wet AMD). Sales of the drug have been on the rise since then.

Sales of Eylea in the U.S. climbed 70% in the second quarter of 2013 to $330 million. Sales in ex-U.S. markets were $96 million, as reported by partner Bayer. Management is not overly perturbed by the modest 5.1% sequential growth in Eylea sales in the second quarter and expects sales to rebound in the coming quarters.

Based on its bullish expectations, the company raised its forecast for 2013 Eylea sales. Regeneron now expects 2013 sales of Eylea in the range of $1.3-$1.35 billion (old guidance: $1.25–$1.325 billion).  We expect Regeneron to achieve the guidance on Eylea. We note that Eylea is also approved for wet AMD in the EU, Australia, Japan and several other territories.

Regeneron and Bayer are also evaluating Eylea for other indications such as diabetic macular edema (positive phase III data presented: approval expected to be sought by year end) and myopic choroidal neovascularization (phase III). Approval for new indications would boost the drug’s sales potential further.

Regeneron, a biopharmaceutical company, currently carries a Zacks Rank #3 (Hold). However, biopharma stocks that warrant a look are Gilead Sciences Inc. (GILD - Analyst Report) and Actelion Ltd. (ALIOF). Both stocks carry a Zacks Rank #1 (Strong Buy).

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