Shares of Regeneron Pharmaceuticals (REGN) jumped 7.41% to close the trading session on Jul 1 at $303.39 per share following Sanofi’s (SNY) decision to increase its stake in the former. Sanofi will hold approximately 22.5% of Regeneron’s shares outstanding going forward as opposed to 20.5% earlier.
Sanofi is looking to buy the additional interest in the market or privately, or by way of derivatives subject to regulatory framework at an agreed-upon price. Sanofi and Regeneron have a long standing agreement which stipulates that Sanofi will not acquire more than 30% of Regeneron's class A stock and common stock. Sanofi ruled out an outright acquisition of Regeneron.
Sanofi’s decision to boost its stake in Regeneron comes close on the heels of the latter’s highly successful eye drug Eylea receiving a favorable opinion from the European Committee for Medicinal Products for Human Use for an additional eye disorder (diabetic macular edema).
Eylea is marketed for the neovascular form of age-related macular degeneration and macular edema following central retinal vein occlusion indications with approvals for additional indications widely expected by year end. Regeneron has an agreement on Eylea with the HealthCare unit of Bayer (BAYRY).
Regeneron and Sanofi – No Strangers
Regeneron has an antibody development collaboration with the French company. While releasing its first quarter results, in May 2014, Regeneron stated that it is developing eight fully human monoclonal antibodies with Sanofi.
The promising candidates being developed under the collaboration include alirocumab, a proprotein convertase subtilisin/kexin type 9 (PCSK9) antibody, to lower low-density lipoprotein-cholesterol levels (phase III), sarilumab – an antibody targeting the interleukin-6 receptor (IL-6R) for rheumatoid arthritis (phase III) and dupilumab – an IL4R antibody being developed for asthma, atopic dermatitis and nasal polyposis (phase II). Furthermore, the companies have an agreement on oncology drug, Zaltrap.
Regeneron carries a Zacks Rank #1 (Strong Buy). A healthcare stock carrying the same rank as Regeneron is Biogen Idec (BIIB).
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