Pipeline Progress at Bayer/Regeneron

Regeneron Pharmaceuticals ( REGN - Analyst Report ) and partner, Bayer’s ( BAYRY - Analyst Report ) HealthCare unit recently commenced a new phase III study (VIVID EAST-DME) to evaluate the efficacy and safety of their eye drug Eylea for treating patients suffering from diabetic macular edema (DME). The companies have initiated the study in Russia, China and other Asian countries.

The primary endpoint of the phase III study, which has three treatment arms, is the mean change in visual acuity from baseline to week 52. This will be measured by the early treatment diabetic retinopathy study eye chart. Bayer/Regeneron intend to evaluate the patients in the study for a maximum period of one year.

We note that while Bayer is conducting the first phase III study (VIVID-DME) of Eylea in the DME indication in Europe and Japan, Regeneron is evaluating the drug in the same indication in another phase III study (VISTA-DME) in the US. Enrollment has been completed in both the studies.

As per the agreement between the companies on Eylea, Bayer is responsible for marketing the drug in ex-US markets on approval. The profit earned from the sales of the drug in those markets will be shared equally by the companies. In Japan, Regeneron is eligible to receive royalties on net sales of the drug. However, Regeneron owns the entire US rights pertaining to the eye drug.

Eylea is also being studied for other indications, such as macular edema following branch retinal vein occlusion and myopic choroidal neovascularization.

We note that Eylea is already available in the US since Nov 2011 for treating patients suffering from the neovascular form of age-related macular degeneration. The drug was cleared in the EU for the same indication late last year. In Sep 2012, the label of the drug was successfully expanded in the US to treat patients suffering from macular edema following central retinal vein occlusion (CRVO).

Regeneron, a biopharmaceutical company, also carries a Zacks Rank #3. Biopharma stocks, which are currently well placed include, Array Biopharma ( ARRY - Snapshot Report ) and Medivation, Inc. ( MDVN - Analyst Report ) . Both stocks carry a Zacks Rank #2. Bayer also carries a Zacks Rank #2.