Regeneron Gets CRL

Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) recently suffered a setback in its efforts to expand the label of its drug Arcalyst. The US Food and Drug Administration (FDA) declined to approve Arcalyst for preventing gout flares in patients initiating uric acid-lowering therapy on the basis of the submitted data.

The US regulatory body issued a complete response letter (CRL) to the company after reviewing the supplemental biologics license application (sBLA) for Arcalyst submitted last year. While issuing the CRL, the FDA asked for additional data, apart from additional Chemistry, Manufacturing and Controls (CMC) information related to a proposed new dosage form. Regeneron is currently reviewing the contents of the CRL.

We note that Arcalyst is available in the US since 2008 as an injection for subcutaneous use for the treatment of cryopyrin-associated periodic syndromes (CAPS), a group of rare genetic inflammatory conditions, including familial cold auto-inflammatory syndrome and Muckle-Wells Syndrome. The drug is marketed for treating adults and children 12 years and above.

Regeneron has two more action dates this year. The FDA is expected to decide on whether to approve its pipeline candidate Zaltrap for treating previously treated patients suffering from metastatic colorectal cancer by August 4, 2012.

The other action date corresponds to Regeneron’s efforts to expand the label of its other marketed product – Eylea. Regeneron is looking to get eye-drug Eylea approved for central retinal vein occlusion in the US (action date: September 23). Regeneron would be hoping for positive news from the FDA on those two dates. Moreover, multiple pipeline related news is expected in 2012.

Eylea is marketed for treating patients suffering from the neovascular form of age-related macular degeneration. The drug has performed very well since its US launch in November 2011.

Our Recommendation

The setback regarding Regeneron’s efforts to expand the label of Arcalyst notwithstanding, we have an Outperform recommendation on the company due to the strong performance of Eylea and the robust pipeline. Our long term recommendation is in line with the Zacks #1 Rank (Strong Buy) carried by the stock in the short run.