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The HealthCare segment at Bayer (BAYRY - Analyst Report) received positive nods from the European Committee for Medicinal Products for Human Use (CHMP) for two of its newly launched products for additional indications.

The first one was for Bayer’s blockbuster eye drug, Eylea (aflibercept solution). Bayer is looking to get Eylea approved in the EU for the treatment of visual impairment due to diabetic macular edema (DME). A final opinion from the European Commission on the approval of the drug in the DME indication is expected in the coming months. Eylea is also under review in the U.S. for the DME indication with a final decision expected by Aug 18, 2014.

Bayer has a collaboration agreement with Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) for the global development of Eylea. 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.

Eylea is already approved for the neovascular (wet) age-related macular degeneration (AMD) indication and for the treatment of visual impairment due to macular edema secondary to central retinal vein occlusion in several countries. Eylea contributed €157 million in the first quarter of 2014. Bayer and Regeneron are looking to get Eylea approved in other indications as well.

The CHMP was also positive on the approval of Bayer’s Stivarga for the treatment of adults suffering from unresectable or metastatic gastrointestinal stromal tumors (GIST) who progressed on or cannot tolerate prior treatment with Gleevec (imatinib) and Sutent (sunitinib). A final decision on the approval of the drug in the GIST indication in the EU is expected in the third quarter of this year.

Stivarga is already approved in several countries including the U.S. and EU for the treatment of metastatic colorectal cancer (mCRC). The drug is also approved for the GIST indication in some countries including the U.S. Bayer recorded Stivarga sales of €54 million in the first quarter of 2014. Stivarga is co-promoted by Bayer and Amgen Inc. (AMGN - Analyst Report) in the U.S. Amgen receives royalty payments from Bayer on all global net sales of Stivarga.

Our Take

We are encouraged by Bayer’s progress with its newly launched products. Eylea and Stivarga along with drugs like Xarelto (anticoagulant), Xofigo (oncology) and Adempas (pulmonary hypertension) posted sales of €598 million in the first quarter and are expected to contribute around €2.8 billion in 2014. Additional label expansions of these drugs will drive growth further. We expect investor focus to remain on these drugs.

Bayer presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Allergan Inc. (AGN - Analyst Report). Allergan carries a Zacks Rank #2 (Buy).
 

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