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The JPMorgan Healthcare Conference currently under way in San Francisco is arguably the most important event of the entire year for the health care sector. This is one of the rarest opportunities for biotechnology, pharmaceutical, and medical device companies to open up about where they've been and where they're headed, so it pays to take notice.
The one company I had my eyes keenly focused on yesterday was Regeneron Pharmaceuticals (NASDAQ: REGN ) , whose founder and CEO, Len Schleifer, was nothing short of entertaining and open about Regeneron's past, present, and future in his presentation.
Eylea, Eylea, and more Eylea
As you might expect, Regeneron's primary focus was on Eylea, its wet age-related macular degeneration drug that has totaled more than $1 billion in sales during its first four quarters of sales. Within the U.S., Regeneron's Eylea revenue totaled $838 million in 2012 and is expected to rise by approximately 50% to $1.2 billion to $1.3 billion in 2013. More importantly, Schleifer noted that the wet-AMD opportunity outside the U.S. -- including the European Union and Japan -- is about the same size as within the U.S. market, meaning Regeneron's sales could quickly double if licensing partner Bayer (NASDAQOTH: BAYRY ) is able to capitalize on a launch overseas.
An interesting tidbit divulged during the presentation was that branded wet-AMD sales have actually increased 47%. You might have thought that Novartis' (NYSE: NVS ) and Roche's (NASDAQOTH: RHHBY ) Lucentis sales would be suffering from the emergence of Eylea and its slightly lower price point, but that hasn't been the case -- the market has simply expanded. Schleifer placed this expansion on three factors: an increase in an aging population, an increased indication for Lucentis -- which is also approved for diabetic macular edema -- and market share losses for off-label Avastin use.
By the way, we are developing other drugs aside from Eylea...
Following the presentation on Eylea, Schleifer's presentation turned into an episode of the Love Boat, with the remaining time spent almost entirely on its collaborative efforts with Sanofi (NYSE: SNY ) .
Schleifer spent a short amount of time talking about its colorectal cancer drug, Zaltrap, which was recently approved in the U.S. The most interesting aspect of this discussion, however, was the possibility that Regeneron may try to combine Zaltrap with other in-house compounds.
This was also one of the few glimpses investors have received into Regeneron's pipeline over the past year with Schleifer highlighting three developing compounds: an anti-PCSK9 antibody for elevated cholesterol, an anti-IL-6 receptor antibody for rheumatoid arthritis, and an IL-4 receptor for asthma and atopic dermatitis.
First up is the anti-PCKS9 antibody, known as REGN727, which Schleifer described, "Allows more LDL receptors to be expressed on the surface of the liver cell and suck LDL out of the bloodstream." The study, currently in phase 3 trials, has produced data that has demonstrated up to a 70% reduction in LDL cholesterol (the bad type of cholesterol that gives us heart disease), which is on top of statin use in some cases. Penetrating this market will be difficult, however, with Pfizer's (NYSE: PFE ) Lipitor now off patent and a surge of cheap generic competitors piling in.
Regeneron's anti-IL-6 receptor antibody, known as Sarilumab, is also in late-stage trials, but Schleifer's conviction appears a little shakier here. His basis for success relates to Roche's Actemra being more successful in head-to-head studies when compared against Humira, manufactured by recent Abbott Labs spinoff, AbbVie (NYSE: ABBV ) . Schleifer notes that blocking the IL-6 receptor appears more successful than Humira's anti-TNF approach.
Finally, its anti-IL-4 receptor, currently in phase 2 trials and known as REGN668, could show promise in reducing inflammation associated with the skin. Regeneron expects to present positive proof-of-concept data on both indications in upcoming health-care conferences.
The future of Regeneron
It may have been a closing remark, but Len Schleifer made it clear that Regeneron's partnership with Sanofi in the antibody market will shape the future of his company.
Having ended the quarter with $1.2 billion in cash on hand and having the majority of its preclinical studies funded by upfront payments from Sanofi that result in a 50%-50% sales split in the U.S. and a 35%-45% share of sales outside of the U.S., Regeneron is sitting in the driver's seat. Over the near term, I believe the launch of Eylea in Europe will be its most important factor to watch as well as developing data from its REGN727. Foolish biotech guru Brian Orelli has pretty much dismissed the importance of Zaltrap -- and I tend to agree with him -- although I'd also keep a close eye on what, if anything, the company has planned with regard to future drug combinations using Zaltrap.
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