Regeneron Q3 Sales Mixed; Eylea Franchise Faces Ongoing Pressure

In its third-quarter earnings report, Regeneron highlighted significant year-over-year growth and global revenues surpassing expectations. Despite these achievements, the company's shares fell by around 10% due to underwhelming performance from its Eylea (aflibercept) franchise. Specifically, the high-dose Eylea formulation, approved in August 2023, did not meet analysts’ expectations, generating $392 million compared to the anticipated $414 million. The original Eylea formulation also saw a decline, with sales dropping to $1.15 billion from $1.5 billion in the same quarter of the previous year.

Jefferies analyst Akash Tewari identified several factors that might be limiting the uptake of high-dose Eylea. These include the less frequent dosing intervals of every eight or sixteen weeks, which some physicians might be hesitant to adopt for their patients. Tewari suggested that approval for the high-dose injection to treat retinal vein occlusion could potentially boost sales. Moreover, he noted that the most significant catalyst for increasing the uptake of high-dose Eylea would be the introduction of a pre-filled syringe product, which Regeneron plans to launch in mid-2025.

Investor concerns are further heightened by the upcoming entry of Amgen’s Eylea biosimilar, Pavblu, which received approval in August 2024. In the following month, Regeneron’s attempt to block Pavblu’s market entry in the U.S. was unsuccessful. Judge Thomas Kleeh of West Virginia denied Regeneron’s motion for a preliminary injunction against Amgen. Following this court decision, Amgen announced its plans for an at-risk launch of Pavblu.

Despite these setbacks, Regeneron’s CEO Leonard Schleifer emphasized the company’s solid performance during an analyst call, mentioning that Regeneron generated $3.72 billion in Q3, reflecting an 11% rise from the same period in 2023. Other Regeneron products also performed well in the quarter. BMO Capital Markets analyst Evan Seigerman described Dupixent, developed in partnership with Sanofi, as a positive highlight for Regeneron, with end user sales surpassing analyst expectations by 7%. The recent approval of Dupixent for chronic obstructive pulmonary disease is likely to further increase the biologic’s sales.

Seigerman expressed optimism about the potential for high-dose Eylea to mitigate the decline in sales of the original aflibercept formulation. He also noted that Regeneron’s pipeline is set to deliver several significant results in the coming months, which could enhance the company’s financial performance.

Truist Securities analyst Srikripa Devarakonda also expressed confidence in Regeneron’s pipeline. Devarakonda highlighted the company’s broad pipeline across various fields, including oncology, internal/genetic medicines, immunology and inflammation (I&I), and ophthalmology, suggesting that these areas remain underappreciated by the market.