Regeneron Drug Gets Thumbs Up

On July 24, New York-based biopharmaceutical company Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) announced that its once-weekly injection Arcalyst (Rilonacept) received a positive response from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMEA). The drug is used for treating Cryopyrin-Associated Periodic Syndromes (CAPS), a group of rare, inherited, auto-inflammatory conditions characterized by life-long, recurrent symptoms of rash, fever/chills, joint pain, eye redness/pain, and fatigue.

CHMP has recommended that rilonacept, an interleukin-1 blocker, be granted marketing authorization under exceptional circumstances. Such authorizations are granted to products on which comprehensive data cannot be provided by the company, which may happen due to the the rarity of the condition. The agency also asked Regeneron to  provide new information, if available, pertaining to the drug every year for review.

The company submitted a Marketing Authorization Application (MAA) with the EMEA for Arcalyst for the treatment of CAPS in the European Union in Jul 2008. We expect the agency to approve the drug for marketing in Europe in the fourth quarter of 2009. EU approval of Arcalyst could double its sales potential. Arcalyst has received Orphan Drug designation in the EU for the treatment of CAPS.

As a reminder, Arcalyst (Rilonacept) for CAPS was approved by the US Food and Drug Administration (FDA) in Feb 2008 for CAPS including Familial Cold Auto-inflammatory Syndrome (FCAS) and Muckle-Wells Syndrome (MWS) in adults and children aged twelve years and above. The drug is available in US markets since Mar 2008. Although CAPS is a small market, Regeneron will gain marketing experience from this indication.

In June 2009, the FDA approved Novartis’ (NVS) canakinumab, a fully human anti-interleukin-IL1β antibody, for CAPS in the US. This will have some negative impact on Arcalyst sales. Regeneron is entitled to receive royalties on worldwide sales of canakinumab on CAPS and other inflammatory diseases.

In addition to Arcalyst, which is Regeneron’s sole marketed product, the company boasts of six clinical development programs, including three late-stage clinical programs, targeting various oncology or eye-disorder indications.

We believe the current price provides an attractive entry-point to long-term investors.