Regeneron Pharmaceuticals (REGN) has recently received FDA approval for higher doses of its vision loss drug, Eylea HD. This development, coupled with positive sentiments from Wall Street analysts and the company's competitive positioning, makes REGN a compelling biotech stock to consider for investment. Here’s my complete analysis of the stock today:
FDA Approval of Eylea HD
Regeneron announced that the FDA has approved an 8-milligram injection for Eylea HD, a treatment for wet age-related macular degeneration and other vision-related issues. This is a significant step up from the previously approved 2-milligram dose. The approval came earlier than expected, which is a positive sign for the company's regulatory relations.
Financial Implications
- Eylea accounted for over half of Regeneron's sales in 2022.
- The list price for a single-use vial of the high-dose Eylea is $2,625.
- Analyst Christopher Raymond from Piper Sandler projects Eylea sales to be $6.2 billion in 2023, $6.75 billion in 2024, and $6.85 billion in 2025.
Stock Performance and Analyst Sentiments
- REGN stock was trading at $821.26, marking a 1% increase in premarket trading post the announcement.
- Hartaj Singh from Oppenheimer raised his target for REGN's stock price to $1050, indicating a potential 29% gain from its previous close.
- RBC Capital Markets' Brian Abrahams also adjusted his target price for REGN, increasing it to $830 from $820.
- The stock currently trades at 18.9 times the expected earnings for the upcoming 12 months, a premium compared to its five-year average of 15.3 times.
Competitive Landscape
- Regeneron's Eylea HD is set to compete with Novartis' Vabysmo.
- The high-dose Eylea is priced at $2,625 per vial, while the standard Eylea costs $1,850 per vial. In comparison, Vabysmo is priced at $2,190 a vial.
- Despite the price differences, the annual costs of high-dose Eylea align closely with Vabysmo, making it a competitive offering in the market.
Future Outlook
- The approval of high-dose Eylea is timely as standard Eylea is soon to face competition from lower-priced biosimilars.
- The Centers for Medicare and Medicaid Services is gearing up to negotiate prices for some of the most expensive drugs. While Eylea is expected to be on that list, the introduction of biosimilars might delay its inclusion by two years.
- Brian Abrahams believes that high-dose Eylea could extend Regeneron's market share in treatments for the mentioned eye diseases by an additional two to three years.
Conclusion
Regeneron's recent FDA approval for the higher dose of Eylea HD, combined with its competitive pricing and the potential for extended market share, positions the company favorably in the biotech sector. With positive analyst sentiments and a promising financial outlook, Regeneron stands out as a top biotech stock to consider for investment.
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