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Why Regeneron Pharmaceuticals’ Stock Price Fell

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Reasons for the drop in Regeneron’s stock price

The FDA approved Regeneron Pharmaceuticals’ (REGN) Kevzara in May 2017, and the European Medicines Agency approved the marketing authorization application of Kevzara in June 2017. After the launch of Kevzara in the US and European markets, the drug’s 3Q17 sales figures were unsatisfactory.

In 3Q17, Kevzara reported revenues of $3.0 million. Kevzara faces stiff competition in the rheumatoid arthritis market from other available biologic response modifiers such as Orencia, Humira, Enbrel, Rituxan, Simponi, and Cyramza.

Dupixent therapy has not been established for pediatric patients. The approval of Dupixent for pediatric use is expected to unlock the drug’s sales potential. Clinical trials are ongoing to evaluate the safety and efficacy of Dupixent for pediatric patients with atopic dermatitis.

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Analysts’ recommendations

Of the 27 analysts tracking Regeneron Pharmaceuticals (REGN) in March 2018, five recommended a “strong buy” while six analysts recommended a “buy.” Fifteen analysts recommended a “hold” while one analyst recommended a “sell.”

On March 27, 2018, Regeneron Pharmaceuticals had a consensus 12-month target price of $416.91, which represents an ~26.1% return on investment over the next 12 months.

Peers’ ratings

Of the 29 analysts tracking Gilead Sciences (GILD) in March 2018, ~58.0% recommended some form of a “buy.” On March 27, 2018, Gilead Sciences had a consensus 12-month target price of $88.91, which represents an ~18.3% return on investment over the next 12 months.

Of the 27 analysts tracking Vertex Pharmaceuticals (VRTX) in March 2018, ~85.0% of these analysts recommended some form of a “buy.” On March 27, Vertex Pharmaceuticals had a consensus 12-month target price of $192.44, which represents an ~17.0% return on investment over the next 12 months.

Recent developments

In March 2018, Regeneron Pharmaceuticals (REGN) and Alnylam Pharmaceuticals (ALNY) entered into a collaboration agreement to identify RNAi (RNA interference) therapeutics for the treatment of non-alcoholic steatohepatitis (or NASH), a chronic liver disease.

Alnylam and Regeneron’s collaboration is based on Regeneron’s research, which identified that a variant of the HSD17B13 gene is related to decreasing the risk of chronic liver disease.

According to the terms of the collaboration agreement, Regeneron expects to focus on the hepatocyte-expressed, genetically validated HSD17B13 target. Alnylam Pharmaceuticals plans to focus on its RNAi therapeutics platform for the identification of compounds that could direct this target.

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