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Regeneron Pharmaceuticals’ Research Pipeline and Analyst Recommendations

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Updated

Analyst recommendations after 4Q15 results

Regeneron Pharmaceuticals (REGN) released its 4Q15 and fiscal 2015 earnings on February 9, 2016, and these came as a surprise as revenue and earnings were both negative. Since then, analysts have revised their targets for the company.

As the table shows, the consensus revised 12-month target price for Regeneron is now $523.8. This translates to a ~42.6% return compared to Regeneron’s closing price of $367.2 on February 9, 2016.

According to the Bloomberg consensus of 25 brokerage firms recorded on February 9, 2016, 56.0% brokerage firms have rated Regeneron as a “buy,” while 40% broker firms rated the company as a “hold.” Around 4% brokerage firms believe that the stock should be sold.

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Update on Regeneron’s pipeline

Perhaps these recommendations have to do with Regeneron Pharmaceuticals’ (REGN) robust pipeline of 13 drugs. Along with Eylea and Praluent, the company’s late-stage pipeline includes Sarilumab, Dupilumab, Fasinumab, and REGN2222.

In 2015, Regeneron received approval for Praluent. In 2016, Regeneron expects approval for Sarilumab for the treatment of rheumatoid arthritis, followed by another approval for Dupilumab, which treats atopic dermatitis and asthma, in 2017. Both of these drugs are being developed in association with Sanofi (SNY), while Regeneron’s major drugs, Eylea and Praluent, compete with Amgen’s (AMGN) Repatha and Roche’s (RHHBY) Lucentis and Avastin.

Sarilumab approval in 2016

Sarilumab is an antibody that targets IL-6R for rheumatoid arthritis. Sanofi and Regeneron would co-promote the drug, whose Prescription Drug User Fee Act action date is October 30, 2016.

With a compound annual growth rate of 15% over five years from 2015, the IL-6 inhibitor market should grow to amount to $25.9 billion by 2020. But the pipeline success or failure for late stage development candidate may cause turmoil for a company.

To avoid the risk of investing directly in a company’s stock, however, investors can look for options in ETFs, which have diverse holdings for many companies across various sectors. One such option is the Vanguard Growth ETF (VUG), which holds ~0.36% in Regeneron.

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