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Regeneron's eye drug revenues uncertain after combo therapy failure

The days of dominance for Regeneron Pharmaceuticals Inc.'s blindness medicine Eylea may be numbered as its latest attempt to protect market share through a combination therapy failed to produce results.

Eylea has long been a key revenue driver for Regeneron and its partner Bayer AG, first for a form of blindness known as wet age-related macular degeneration, or AMD, and increasingly to treat diabetic macular edema, or vision loss associated with diabetes.

Yet a pair of phase 2 trials combining the medicine with experimental drug nesvacumab failed to show any significant benefit over Eylea alone for either form of blindness. This failure follows a quarter in which Eylea's better-than-expected sales buffered the company against stagnant revenues for several other products that have been slow to find market footing.

Meanwhile, at least one patient pool could be drying up; a new study suggests that rates of AMD have markedly declined in recent generations.

Sales in diabetic macular edema could counterbalance some of this potential decline as the diabetes-related blindness makes up a growing chunk of the business; it accounted for 25% of third-quarter sales and is an important driver for future growth, CEO Len Schleifer said on the latest earnings calls.

The new drug combination could have fended off incoming pressure from Novartis' brolucizumab, a wet AMD drug expected next year, and potential biosimilars after Eylea loses its patent exclusivity in 2020.

This recent failure highlights longer-term growth concerns for Regeneron's eye care franchise, Barclays analyst Geoff Meacham said in a note, adding that while a potential dosing change — bumping Eylea to a 12-week injection cycle — may help it competitively, it is unlikely that this will be enough to reset sales growth.

Meacham expects about $4 billion in sales through the 2020s but said growth rates will slow; he reiterated his "underweight" rating on the company.

Regeneron expects to report phase 3 results for Eylea in diabetic retinopathy, another diabetes-related vision disorder, in the first half of 2018. In a statement on the combo therapy results, Regeneron President and Chief Scientific Officer George Yancopoulos said the company will continue to invest in ophthalmology.