Regeneron Pharmaceuticals Inc (REGN), Sanofi SA (ADR) (SNY): This Pharma Stock Is Ready to Reach New Heights

Investors’ takeaway

Approval of Eylea, and its subsequent availability under NHS for U.K. patients, now allows Bayer to seriously compete with Roche’s Lucentis, marketed in Europe by Novartis, which dominates the wet AMD market. Whereas Regeneron markets Eylea by itself in the U.S., it is an equal partner with Bayer in profit from its sales outside of the U.S. except Japan, for which it gets royalty on sales.

Although both drugs are restricted to the same indication and both are available at a discount through a patient access system, Eylea scores over Lucentis in the matter of frequency of treatment. As such, it can only eat into the market share of Lucentis, which has been a standard treatment for wet AMD since its approval by NICE in 2008.

On Aug. 5, 2013, Bayer announced a deal with Compugen, an early stage biotech company, for development of two antibody-based immunotherapies for cancer. Bayer pays $10 million upfront and has committed to $530 million in milestone payments for commercialization rights for any product that gets approved. Based in Switzerland, Bayer reported annual income of $1.6 billion on revenue of $1.36 billion.

DME is a primary cause of vision loss in diabetics above the age of fifty and the estimated worldwide population of people with treatable DME is approximately 6.2 million. Considering positive late-stage results of Eylea for DME, the edge that Lucentis has over Eylea — approval for DME– may also soon vanish if things proceed as per plan.

Considering these positives and the fact that the stock has come off its all-time high achieved in May, when it was trading at 41.43 P/E, Regeneron is a good buy.

The article This Pharma Stock Is Ready to Reach New Heights originally appeared on Fool.com and is written by Kanak Kanti.

Kanak Kanti De has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Kanak is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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