As investors await Regeneron Pharmaceuticals Inc.'s first quarter earnings, due Thursday, the company disclosed an ophthalmology deal with gene therapy specialist Avalanche Biotechnologies Inc. that buys a time-limited right to first negotiations to phase II-stage AVA-101, targeting vascular endothelial growth factor (VEGF) for wet age-related macular degeneration (AMD).

Tarrytown, N.Y.-based Regeneron is forking over an up-front payment of an undisclosed amount and pledging up to $640 million in development and regulatory milestone rewards for Avalanche, of Menlo Park, Calif., in an agreement that covers as many as eight therapeutic targets, with Regeneron keeping worldwide rights to each that is advanced into the clinic. Neither company could be reached for comment.

First quarter results with approved Eylea (aflibercept) for wet AMD will be disclosed later this week, as well as updates on Regeneron's phase III pipeline. Meanwhile, company backers mulled the meaning of the Avalanche deal, centered on the Ocular Biofactory platform, which uses the body's own cells to produce therapeutic protein after one injection. With the adeno-associated virus (AAV) approach, viral genes are removed from AAV and replaced with specific genes encoding a protein that treats AMD.

Piper Jaffray analyst Edward Tenthoff called the Avalanche deal "exciting" for Regeneron, and "a smart strategy to defend and extend the Eylea franchise." Tenthoff forecast that Eylea sales in the U.S. will reach $392 million for the quarter and will exceed Regeneron's guidance of $1.7 billion to $1.8 billion for the year. "We will be focusing on overseas Eylea sales growth by Bayer [AG, of Leverkusen, Germany], which contributes high-margin profit," he added. Eylea, cleared by the FDA in 2011, is a soluble decoy receptor that binds to VEGF-A and placental growth factor.

Robyn Karnauskas with Deutsche Bank wrote in a report that Avalanche's AVA-101 reportedly has been dosed in 40 patients in an Australian study, with data expected in the middle of next year. "We think that safety might be good as we have not seen any issues so far," she speculated. "Focus remains on the long-term benefits of AAV-101 in terms of visual acuity." Another hang-up could be the drug's subretinal delivery route, which "may not be as easy as an intravitreal injection," Karnauskas wrote, adding that her firm is "keeping an eye" on safety issues that may be involved with the route.

Regeneron started the year with news that its relationship with Eylea partner Bayer would deepen by way of a new deal for a combination therapy in AMD. Bayer paid $25.5 million up front as part of the agreement to develop with Regeneron an antibody to platelet-derived growth factor receptor (PDGFR)-beta. The idea is to pair the PDGFR candidate with Eylea for a one-shot therapy with better efficacy. (See BioWorld Today, Jan. 15, 2014.)

At the phase III stage, Regeneron has alirocumab (REGN727), an antibody targeting protein convertase subtilisin/kexin type 9 (PCSK9) for low-density lipoprotein cholesterol reduction, and sarilumab (REGN88), an interleukin-6 receptor antibody for rheumatoid arthritis.

Thousand Oaks, Calif.-based Amgen Inc. and Regeneron recently duked it out, data-wise, at the American College of Cardiology (ACC) meeting, where Amgen offered phase III data with its PCSK9 inhibitor evolocumab against cholesterol and Regeneron countered with late-stage findings of its own. (See BioWorld Today, April 1, 2014.)

The deal by Avalanche with Regeneron could have meaning for another firm in the space, but one perhaps not directly competitive: Applied Genetic Technologies Corp. (AGTC), of Alachua, Fla., which went public in March, raising $50 million. The company's three lead candidates are all preclinical and focused on rare eye diseases caused by mutations in single genes, with the most advanced program applying the company's AAV-based gene therapy vector system to treat X-linked retinoschisis, an inherited retinal disease that can lead to poor visual acuity in young boys and legal blindness in adult men. AGTC plans to submit an investigational new drug application to the FDA for the therapy in late 2014 and to start a phase I/II trial, with initial data expected in mid-2015. (See BioWorld Today, March 28, 2014.)

Roth Capital Partners analyst Joseph Pantginis wrote in a research report that, "though the Regeneron-Avalanche partnership could produce competition for AGTC, we ultimately believe that AGTC's focus on orphan diseases should shield the company from direct competition with Regeneron." And the special interest in Avalanches wet AMD candidate "may signal that Regeneron is looking for larger market opportunities than those AGTC is going after," in Pantginis' view. What's more, AGTC's focus on orphan disease could let the company bring its products to market without a partner.

Regeneron's stock (NASDAQ:REGN) closed Monday at $298.98, up $5.39.