The U.S. Food and Drug Administration (FDA) has rejected Regeneron Pharmaceuticals’ (NASDAQ:REGN) application for a higher-dose version of its blockbuster eye disease drug Eylea, used for the treatment of a disease that is known to be the primary cause of blindness in the elderly. Shares of the biotechnology company fell nearly 9% on Tuesday.
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Setback for Regeneron
Regeneron was seeking approval for an 8-milligram dose of the Eylea (aflibercept) injection for patients with wet age-related macular degeneration (the leading cause of blindness among elders) and two other eye diseases that are common in people with diabetes, namely diabetic macular edema and diabetic retinopathy.
The company said that the FDA issued a Complete Response Letter (CRL), rejecting its application due to “an ongoing review of inspection findings at a third-party filler.” The company further clarified that the FDA did not ask for additional clinical data or trials. Also, the regulatory body did not identify any issues pertaining to the clinical efficacy or safety of the drug, trial design, labeling, or drug substance manufacturing.
Regeneron, which develops Eylea in collaboration with Bayer AG (BAYRY), intends to work closely with the FDA and the third-party filler to ensure that the treatment is made available to patients as soon as possible. The aflibercept injection at a dose of 2 mg is already marketed in the U.S. Regeneron has the exclusive rights to Eylea in the U.S., while Bayer has licensed the exclusive marketing rights to the drug outside the U.S.
The setback for Regeneron comes at a time when the Eylea franchise is already facing competition from Roche’s (RHHBY) Vabysmo. In the first quarter of 2023, the U.S. sales of Eylea fell 5.5% to $1.43 billion.
Analysts’ Reactions
Morgan Stanley analyst Terence Flynn maintained a Buy rating on REGN stock and a price target of $927 following the “surprising” CRL for high-dose Eylea. The analyst expects the stock to be under pressure due to the delay in the potential launch of high-dose Eylea, which will give Roche time to ramp Vabysmo.
Meanwhile, some analysts expect the drug to eventually win the FDA’s approval. Truist analyst Robyn Karnauskas thinks the compliance issue would mean a delay in the approval of the drug by about six months. The analyst has a Buy rating and a Street-high price target of $1,050 on Regeneron.
Is Regeneron a Good Stock to Buy?
Of the 11 Top Wall Street Analysts covering Regeneron, nine have a Buy rating, one has a Hold recommendation, while one analyst has a Sell review. The average price target of top analysts stands at $896.03, implying 25.1% upside.
It is interesting to note that the top analysts have an impressive track record of generating attractive returns from their recommendations. Moreover, each analyst has a remarkable success rate.
