Regeneron's Results Clearing Up

Filling the void between earnings announcements and the start of medical-conference season in a couple of months, Regeneron Pharmaceuticals (Nasdaq: REGN) and partner Bayer released intriguing new phase 2 study results for their macular degeneration treatment VEGF Trap-Eye earlier in the week.

Wet age-related macular degeneration is a disorder where part of the retina gets damaged over time, potentially leading to blindness. As companies like OSI Pharmaceuticals (Nasdaq: OSIP), QLT (Nasdaq: QLTI), and Genentech (NYSE: DNA) have shown in the past few years, even treating a small portion of patients with this condition can generate several hundred millions of dollars in annual sales for drugmakers.

The interim data that Regeneron released Tuesday showed how patients fared after 52 weeks of treatment with VEGF Trap-Eye. The drug's also in phase 3 testing against Genentech's leading macular degeneration treatment Lucentis.

For two of the patient groups on different doses of Trap-Eye, after 52 weeks of treatment, patients' vision improved by respective means of 9.0 and 5.4 letters on an eyesight chart. In its two much larger phase 3 studies, Lucentis patients experienced an 11.3 and 7.2 increase in visible letters after 52 weeks. At first glance, that makes VEGF Trap-Eye look at least somewhat comparable to Lucentis; more data will be revealed in September at a medical conference.

Regeneron is currently trading at an enterprise value of slightly more than $1 billion -- the market's estimated worth of its pipeline, its already FDA-approved drug Arcalyst, and other non-cash assets like Trap-Eye. The drug's potential for success against Lucentis and the other macular degeneration treatments on the market is a key component of Regeneron's current valuation. The company will need continued proof of Trap-Eye's comparable efficacy and safety to Lucentis in its ongoing studies to justify its market cap.