Physician's Financial News

By Matthew Mahady
Published: Friday, May 28, 2010

Regeneron Poised for Growth

After a challenging year in which Regeneron has seen its per-share stock price tumble from a high in January of this year to a low of less than $14 per share less than six months later (June of 2008), industry analysts are becoming increasingly bullish on the future of the Tarrytown, New York–based biotechnology company.

The company—which emphasizes in-house drug development and employs more than 700 people (In addition to the Company’s corporate headquarters, Regeneron has a large-scale biologics manufacturing facility in Rensselaer, New York, where it produces commercial and investigational products for its clinical trials)— saw its stock market fortunes take a hit in May 2008 when a promising cancer drug candidate, aflibercept, yielded disappointing phase III data in an ovarian cancer population that failed to live up to investor expectations. The downturn was likely exacerbated by the broader market decline, which has been taking place of late.

Now that the dust has settled from the phase III trial disappointment, however, many are taking a fresh look at the company and wondering if the second quarter 2008 sell-off of Regeneron was not an overreaction. The potential strength of product candidates currently in development is significant and seems to be fueling a general reassessment of the company that is increasingly optimistic. Also, the company has some fiscal room to breathe and maneuver as it moves its drug through the development pipeline. According to a company spokesperson, Regeneron’s cash position is relatively strong and will be enough to last until the company attains profitability. The company is expected to post a profit in 2010. Currently, the stock has posted a mini-rally and has been hovering between $17 and $18 per share.

Still Moving Forward With Aflibercept

Aflibercept, despite its recent phase III ovarian cancer setback, continues to be studied in other cancers (i.e., brain cancer) and a future ovarian cancer indication, although delayed, may be attained eventually. Indeed, in a recent phase II trial evaluating the agent in relapsed and difficult-totreat brain tumors, response rates of 50% and 30% were achieved in patients with anaplastic glioma and glioblastoma, respectively. As Leonard Schleifer, MD, PhD chief executive officer, Regeneron, recently commented, “We’re moving ahead progressively (with aflibercept), and the big picture is still a significant competitor to Genentech’s Avastin.”

In addition to presenting a variety of promising data at the recent American Society of Clinical Oncology annual meeting (most notably two studies evaluating a potential metastatic colorectal cancer product and one study on a potential glioblastoma candidate), the company has further fueled investor optimism with the announcement of major partnerships with Sanofi-Aventis and Bayer Healthcare. The deal with Sanofi is to jointly develop and commercialize fully-human therapeutic antibodies utilizing Regeneron’s proprietary VelociSuite technology and the agreement with Bayer is designed to facilitate the global development of eye disease therapies based on Regeneron’s proprietary Trap technology. The Trap technology is expected to yield products in oncology and a number of other sectors. Also, such proprietary technologies and platforms make the company an attractive partner for potentially lucrative intercompany collaborations. The company has also developed a VelcoImmune technology that analysts expect will attract additional partners over the next few years.

According to the company website, “the company’s ability to develop product candidates is enhanced by the application of several proprietary technologies that Regeneron has incorpo- rated into a comprehensive drug discovery and development process. This process is designed to thoroughly understand the biology of specific diseases, discover potential therapeutic candidates, and evaluate these candidates in clinical trials.” In other positive news for the company, the FDA recently approved the company’s Arcalyst (rilonacept) for CIAS1-associated periodic syndrome, a rare genetic disorder.

Research and Development

The general consensus of industry watchers is that Regeneron’s future success or failure will be based on the performance of its research pipeline. Currently, Regeneron has therapeutic candidates in clinical trials for the potential treatment of cancer (Figure), eye diseases, and inflammatory diseases. Regeneron has four clinical development programs: (1) aflibercept in cancer, in collaboration with Sanofi-Aventis, and (2) the VEGF Trap-Eye, in collaboration with Bayer HealthCare, (3) rilonacept (IL-1 Trap), where the company is currently evaluating the potential role of rilonacept in other conditions in which Interleukin-1 (IL-1) may play a role, and REGN88, an antibody to the Interleukin-6 receptor (IL-6R).

Regeneron also has a number of solid pre-clinical drug candidates for a variety of disorders. The collaboration with Sanofi alone plans to introduce two to three new antibody candidates into clinical development each year going forward. Much of the preclinical company research into oncology has yet to yield dividends in terms of named agents.

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