We recently maintained our Neutral recommendation on biopharmaceutical company, Regeneron Pharmaceuticals (REGN). Our target price is $195.00 per share.
Why the Reiteration?
Regeneron reported higher-than-expected earnings in the fourth quarter of 2012, on the back of strong sales of its eye-drug Eylea. The drug has performed well since its US launch in late 2011 for treating patients suffering from neovascular form of age-related macular degeneration (wet AMD). The European approval of the drug for the same indication came in Nov 2012.
Sales of Eylea in the US came in at $838 million in 2012, above the company’s projected range of $790–$815 million. Encouraged by the strong performance, the company forecast Eylea sales to increase 50% in 2013 over 2012 levels.
In Sep 2012, the US Food and Drug Administration (FDA) approved the label expansion of Eylea into the macular edema following central retinal vein occlusion (CRVO) indication.
Zaltrap, co-developed with Sanofi (SNY), is another promising drug in Regeneron’s product portfolio. Zaltrap gained FDA approval in early Aug 2012 for treating previously treated patients suffering from metastatic colorectal cancer. As per Sanofi, sales of Zaltrap were $23 million in the fourth quarter of 2012.
The EU approval of Zaltrap for the same indication in Feb 2013 is another positive for Regeneron. However, we believe that the current price reflects all these positives. Hence, we retain our Neutral recommendation on the stock.
Other Stocks to Consider
The stock carries a Zacks Rank #3 (Hold). Biopharma stocks which appear to be more favorably placed include Athersys Inc. (ATHX) and Celgene Corp (CELG). While Athersys carries a Zacks Rank #1 (Strong Buy), Celgene carries a Zacks Rank #2 (Buy). Both these stocks are worth considering in the biopharma space.
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