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Sales of Regeneron's Eylea eye drug slow, shares drop

By Esha Dey and Bill Berkrot

(Reuters) - The explosive growth in the sales of Regeneron Pharmaceuticals Inc's Eylea eye drug slowed in the second quarter as existing patients moved to less-frequent dosing.

Shares of Regeneron fell 6.1 percent on Tuesday even though the company said it plans to file for wider use of the injectable drug later this year, following positive new trial data.

Analysts, who were already expecting positive data from the trials targeted at diabetic macular edema (DME), focused on Eylea's slowing sales growth. Regeneron's second-quarter profit came in below Wall Street expectations.

"Positive results for Eylea in DME were widely expected by the Street, though the filing is now coming earlier. Overall, 2Q looks mixed to us," J.P. Morgan analyst Geoff Meacham wrote in a note.

Eylea was approved in November 2011 to treat wet age-related macular degeneration - the leading cause of blindness in the elderly - and has become one of the fastest-growing medicines in the history of biotechnology.

U.S. sales of the drug rose 70 percent in the second quarter to $330 million, slowing from growth of 153 percent in the first quarter, the company reported on Tuesday.

"As the dosing interval increases, the number of doses per quarter do decline, so we're dependent on getting new patients into the marketplace," Chief Executive Leonard Schleifer said on a conference call with analysts.

Eylea is given by injection into the eye every four weeks for the first three months, but is subsequently only administered every two months.

The company, betting on growing demand for the drug, raised its 2013 sales estimate for Eylea to between $1.30 billion and $1.35 billion from its earlier estimate of $1.25 billion to $1.33 billion.

Eylea has been steadily grabbing market share from Roche Holding's similar drug Lucentis, leading Regeneron to repeatedly increase Eylea sales forecasts since its approval.

Piper Jaffray analyst Edward Tenthoff on Tuesday predicted U.S. Eylea sales will hit $1.89 billion in 2014, accompanied by growing sales of the product in Europe, where sales are split with Bayer AG.

Tenthoff called Tuesday's selloff a buying opportunity and said he expects Regeneron shares to climb to $336 within 12 months, up from his earlier price target of $274 on the stock.

He said the company's array of experimental medicines, most of which are being developed in partnership with French drugmaker Sanofi SA, will continue to capture investor interest.

"Eylea is a great drug, but Regeneron has 11 other antibodies" in testing, he said, including drugs in late-stage trials to treat rheumatoid arthritis and high levels of "bad" LDL cholesterol.

EYLEA FOR DIABETICS

Two new late-stage trials showed Eylea significantly improved vision in patients with DME compared to laser surgery.

With the new data, Regeneron said it planned to apply for U.S. approval for Eylea to treat DME in 2013 - a year ahead of its previously projected timeline.

DME is a major cause of blindness in younger and middle-aged adults, with potentially more than 6 million treatable patients worldwide and represents a huge potential market for Eylea.

Patients in the 2-year-long DME studies, called Vivid-DME and Vista-DME, received either monthly injections of Eylea, or injections every other month following a course of five monthly injections.

Eylea treatment was compared with laser photocoagulation, a type of laser surgery in which leaky blood vessels in the eye are cauterized to stop the leakage that leads to vision loss.

In the Vista-DME trial, those who received monthly Eylea on average were able to see 12.5 more letters on an eye chart test after one year compared to before receiving treatment.

Those in the every-other-month group saw vision improve by 10.7 letters. That compared with a mean change of just 0.2 letters for the laser group.

In the Vivid-DME trial, the vision improvement was 10.5 letters for the Eylea monthly and 10.7 letters for less-frequent dosing groups, versus 1.2 letters for those who received laser treatment.

All the results for Eylea were deemed by researchers to be highly statistically significant.

Eylea was generally well tolerated in the studies with the incidence of serious adverse side effects similar across all three treatment groups, the company said.

Bayer also will apply this year for European approval to treat DME.

Regeneron said on Tuesday that second quarter net income rose to $87.4 million, or 79 cents a share, from $76.7 million, or 70 cents a share, in the year ago period. Excluding items, the company reported earnings per share of $1.73.

Revenue rose to $457.6 million from $304.4 million.

Shares of Regeneron closed down 6.1 percent to $254.50 on the Nasdaq.

(Reporting by Bill Berkrot and Ransdell Pierson in New York and Esha Dey in Bangalore; Editing by Carol Bishopric and Sreejiraj Eluvangal)

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