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By Vinay Singh

Regeneron Pharmaceuticals (NASDAQ:REGN) won approval for its macular degeneration drug Eylea, putting the drug into competition with Genentech’s Lucentis and Avastin.

The U.S. Food and Drug Administration approved the drug to treat wet age-related macular degeneration (wet AMD), a leading cause of blindness in people aged 60 and older. In an attempt to challenge Lucentis’ 40 percent market share, Regeneron has priced Eylea at $1,850 per dose, or about 5 percent less than Lucentis current price. Off-label use of Avastin accounts for 60 percent of the pre-Eylea market.

Regeneron is also betting on convenience. Eylea can be injected once every eight weeks, half as often as Lucentis. Citigroup analyst Yaron Werber believes that the need for fewer doctor visits may help Eylea capture as much as 16 percent of the U.S. market.

Competition to Lucentis isn’t new. Genentech has sold the drug for about $1,950 an injection. But doctors often use Avastin off-label at a cost of $50 per injection to treat the same eye disease.

Genentech has fought to protect Lucentis’ market share from cannibalization by Avastin. It rebuked a National Institutes of Health head-to-head study that found Avastin and Lucentis equally effective in treating wet AMD with a study of its own that found patients using Avastin had an 11 percent higher risk or dying. Genentech’s data won it some relief as it prompted the U.S. Department of Veterans Affairs to suspend use of Avastin for wet AMD. Now, though, Genentech must contend with Eylea’s approval.

Many analysts believe Eylea’s lower price point will immediately pay dividends for Regeneron. “We believe [the pricing of Eylea] will aid in the reimbursement adoption by insurers and perhaps be preferentially reimbursed to Lucentis,” writes Leerink Swann Analyst Joshua Schimmer, adding that he estimates the cost savings to be roughly $4,000 a year. Other analysts, however, argue that the convenience and reimbursement advantages might be short lived because Genentech will surely respond aggressively to the new competition.

Even though Eylea’s price does not compete with the $50 per injection for Avastin, it will be helped by the Genentech study, which found several clusters of serious eye infections caused by the repackaging of Avastin into smaller doses.

Wet AMD is a breakdown of the eye’s macula, the part of the eye that allows people to see fine detail and to perform tasks such as reading. In the wet form of the disease, there is an abnormal growth of blood vessels that causes fluid to leak into the macula, impairing vision.

Regeneron estimates that about 1.5 million people worldwide have wet AMD with 200,000 new cases diagnosed each year. They estimate that Eylea can generate sales equivalent to Lucentis, which drew revenue of $1.4 billion last year.

Source: Regeneron Challenges Genentech's Lucentis