Regeneron's Crucial Eylea HD Approval: A Shield Against Potential Biosimilar Competition?

Friday, the FDA approved Regeneron Pharmaceuticals Inc's REGN approved Eylea HD (aflibercept) Injection 8 mg for wet age-related macular degeneration, diabetic macular edema, and diabetic retinopathy (DR). 

Truist Securities remains bullish on Regeneron given HD Eylea approval earlier than expected, Higher WAC price ($2,625) on HD Eylea supporting competition in the less frequent dosing market, and biosimilars competition may arrive on the market later than market expectations, allowing more time to convert from 2mg to 8mg Eylea.

BMO Capital Approval of 8mg aflibercept (Eylea HD) following Veopoz (pozelimab) approval represents a meaningful step forward in securing Regeneron's Eylea franchise. 

Analyst Evan David Seigerman notes that as Eylea contends with rising competition from Roche Holdings AG's RHHBY vabysmo and an ongoing WV court case that will set the stage for potential biosimilar competitors, the approval of Eylea HD gives Regeneron a crucial window to transition new patients to the drug, mitigating potential market losses.

Regeneron remains entangled in a lawsuit with Viatris regarding the potential introduction of their Eylea biosimilar, possibly by May 2024. While the approval of Eylea HD doesn't erase the concerns, it does reduce their significance, given Regeneron's fresh intellectual property and potential exclusive rights associated with the HD variant.

RBC Capital Markets has marginally increased the price target from $820 to $830 with a Sector Perform rating.

The label appears as expected, and the pricing, similar to or slightly below standard Eylea, meets predictions. Launching it before significant competition from Vabysmo is advantageous. 

Despite potential obstacles in converting established Eylea patients and battling biosimilars, RBC forecasts around two-thirds of market retention in the long run. Given recent stock recovery and pipeline setbacks, we view the stock as nearing its true value, though the recent announcement alleviates a significant concern.

Price Action: REGN shares are up 3.19% at $838.38 on the last check Monday.