We are maintaining our Neutral recommendation on Regeneron Pharmaceuticals Inc. (REGN) with a target price of $62.00.
Regeneron, a biopharmaceutical company, focuses on the discovery, development, and commercialization of pharmaceutical products for the treatment of serious medical conditions.
In August 2011, the company presented second quarter 2011 results. Net loss of 69 cents per share was wider than the Zacks Consensus Estimate of a net loss of 41 cents.
The company suffered a loss of 31 cents in the year-ago quarter. The wider loss suffered by Regeneron in the reported quarter was attributable to lower revenues and higher operating expenses.
(Read our full coverage on this earnings report: Loss at Regeneron Widens)
However, we believe that the earnings report is a non-event at Regeneron as investor focus will be on the approval process of eye drug Eylea for treating patients suffering from the neovascular form of age-related macular degeneration (wet AMD). The candidate is under review in the US for the indication with a response from the Food and Drug Administration (FDA) expected by November 18, 2011.
Regeneron has co-developed Eylea with Bayer (BAYRY). A positive response from the US regulatory body in November will be of great significance to Regeneron since the company’s sole marketed product Arcalyst (rilonacept) for the treatment of cryopyrin-associated periodic syndromes, targets a limited market and hence is a small contributor to revenues.
Applications seeking marketing approval of Eylea have been filed by Bayer in the European Union and Japan too. The candidate, which is also being studied for other eye-disorders such as diabetic macular edema, central retinal vein occlusion and choroidal neovascularisation, represents significant commercial potential for the co-developers.
We see limited upside potential for the stock prior to an FDA decision on Eylea and hence retain our Neutral stance on the stock.
BAYER A G -ADR (BAYRY): Free Stock Analysis Report
REGENERON PHARM (REGN): Free Stock Analysis Report
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