Leerink Partners adjusted their stance on Regeneron (NASDAQ:REGN) Pharmaceuticals, moving the biotech firm's stock from an Outperform to a Market Perform rating. Accompanying this downgrade is a reduction in the price target, now set at $1,077, decreased from the previous $1,175. This decision comes in the wake of a preliminary injunction ruling unfavorable to Regeneron's Eylea 2 mg biosimilar, a key product in their portfolio.
The analyst from Leerink Partners noted that Regeneron's shares have seen a 24% increase year-to-date, outpacing the Biotechnology Index's 8% rise. This performance was largely fueled by positive developments around Eylea HD and growing optimism for the company's pipeline.
owever, the recent legal setback concerning the Eylea biosimilar has cast doubt on the future earnings potential of this franchise within the United States.
Regeneron's Eylea, specifically the 2 mg dosage, has been a significant contributor to the company's revenue, with an estimated $3.5 billion expected in 2025.
This figure would account for 23% of the total projected revenue of $15.5 billion for that year, and an even larger share of profits. The analyst's initial assumption was that Regeneron would settle with biosimilar competitors to control market entry timing, anticipated in 2026. However, the possibility of an earlier biosimilar launch by competitors, such as Amgen (NASDAQ:AMGN), is now a concern.
Regeneron is currently striving to promote the adoption of Eylea HD, which is an 8 mg formulation of aflibercept, in anticipation of biosimilar competition. Despite the excitement surrounding Regeneron's innovative pipeline, the analyst expressed a cautious outlook on the commercial prospects of several programs, which are yet to be determined.
Regeneron Pharmaceuticals has been in the spotlight due to a series of significant developments. The company reported a 12% increase in total revenues to $3.55 billion, driven by robust product sales. Dupixent global revenues surged by 29% to $3.56 billion, while Eylea HD sales in the U.S. held a 45% market share with $304 million in earnings.
Regeneron's drug Dupixent received expanded approval from the U.S. Food and Drug Administration for adolescent patients with chronic rhinosinusitis with nasal polyps and the European Medicines Agency's Committee for Medicinal Products for Human Use recommended the approval of Dupixent for the treatment of eosinophilic esophagitis in children as young as one year in the European Union.
In the midst of these developments, Regeneron has been engaged in an ongoing legal battle to protect its Eylea product from biosimilar competition. Despite a judge not granting a preliminary injunction against competitor Amgen, analysts from firms such as Baird, Goldman Sachs, RBC Capital, and BMO Capital have maintained neutral to positive ratings on Regeneron's stock.
Regeneron's commitment to its drug development pipeline, including treatments in oncology, inflammation and immunology, and cardiovascular therapies, has been emphasized by analysts.
InvestingPro Insights
In light of Leerink Partners' recent rating adjustment for Regeneron Pharmaceuticals, a peek at the latest InvestingPro data and tips might offer investors additional perspective. Regeneron is recognized as a prominent player in the Biotechnology industry and has demonstrated the ability to maintain operations with a moderate level of debt. Notably, the company's cash flows can sufficiently cover interest payments, which is reassuring for stakeholders concerned about financial stability.
From a financial performance standpoint, Regeneron boasts a market capitalization of $113.49 billion and has shown a solid revenue growth of 6.46% over the last twelve months as of Q2 2024. This growth is consistent with the company's strong return over the last five years. Additionally, the company's gross profit margin stands at an impressive 53.27%, reflecting its ability to translate sales into profits efficiently.
Investors should note that while Regeneron does not pay a dividend, the company's stock generally trades with low price volatility, which might appeal to those seeking less turbulent investments. For those interested in delving deeper, there are several more InvestingPro Tips available, offering a comprehensive analysis of Regeneron's financial health and market performance. Visit https://www.investing.com/pro/REGN for a complete list of tips and further insights.
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