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Are Novartis and Regeneron seeing the same thing?

Novartis says its new eye drug is off to a strong start. Regeneron says its market-leading competitor remains a favorite among doctors, and has sales figures to showcase that. Can both companies be right?

Yes, but maybe not for long.

The Novartis drug, Beovu, launched in October. By the end of the year, it had earned $35 million, putting its first weeks of sales on par with several other medicines that went on to become blockbusters. “We’ve got 84% of retina specialists that have Beovu in their fridge,” said Marie-France Tschudin, president of Novartis Pharmaceuticals, on an earnings call last week.

Regeneron’s Eylea, meanwhile, fetched $1.2 billion over the last three months of 2019, reflecting a 13% increase year over year that beat Wall Street expectations.

Sell-side analysts covering Regeneron were cautiously optimistic after seeing the numbers. Evercore ISI’s Joshua Schimmer wrote that the company’s outlook appears strong for the next few months, in part because Eylea sales were stable even as retina specialists started getting comfortable with Beovu. SVB Leerink’s Geoffrey Porges noted how Eylea sales saw “very limited impact from the Beovu launch despite Novartis management’s positive commentary about physician feedback.”

Investors also seemed confident. After dipping by about 13% from mid- to late-January, Regeneron’s share price rallied back 15% between Jan. 29 and Feb. 6, when the biotech and Novartis respectively reported fourth quarter earnings.

Regeneron, however, isn’t in the clear yet.

While Beovu didn’t significantly impact Eylea sales last quarter, that could change in the coming months. Novartis is one of the world’s largest drug companies and has experience marketing eye products, factors which could drive Beovu uptake. Additionally, Evercore ISI expects skeptical investors to argue that specialist doctors are eager to use this new addition, which has “the perception that it dries retina better than Eylea.”

Roche also presents a threat to Regeneron. The Swiss pharma giant has moved a bispecific antibody that binds to the same protein as Eylea into late-stage testing for the two main diseases Eylea treats.

What’s more, Samsung Bioepis and partner Biogen are working on a biosimilar version of Roche’s Lucentis. Though the companies are years off from potentially launching their copycat, the likely lower price of a Lucentis biosimilar could eventually erode sales for branded eye drugs on the market.

“We see wide error bars for Eylea’s outlook,” Schimmer wrote in a note to investors. “Were it not for threats to this franchise, [Regeneron] would be an easy name to own for the coming years.”

Regeneron executives acknowledged on an earnings call Thursday that it will take time for markets to adjust.

“It’s very early days for the newest competitor in the marketplace. But what I will affirm is that Eylea has a profile that is incredibly well received and is referred to as the standard of care by our retinal specialists and injectors,” Marion McCourt, Regeneron’s head of commercial, said on the call.

Analysts say they’ll be watching sales and prescription figures closely over the next few quarters to better understand how much a challenge Beovu is for Eylea. As the market crowds, though, it’s unclear how much longer both Regeneron and Novartis will get to tout the success of their drugs.