Regeneron (REGN): Taking On A Partner - Baird

September 21, 2016 8:28 AM EDT
Get Alerts REGN Hot Sheet
Price: $347.12 -2.04%

Rating Summary:
    21 Buy, 17 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 18 | Down: 17 | New: 10
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Baird analyst, Brian Skorney, reiterated his Neutral rating on shares of Regeneron Pharma (NASDAQ: REGN) after Regeneron and Teva announced a collaboration deal for rights to fasinumab, Regneron's Phase 3 NGF antibody for chronic pain. The market for anti-NGF antibodies could be significant given the prevalence of chronic pain and osteoarthritis, but the mechanism has been plagued by safety concerns.

In return for a $250M upfront payment, Teva gains a 50% stake in the drug, worldwide (excluding other collaborations with Mitsubishi Tanabe in Asia), including rights to revenues and the obligation to pay what Regeneron estimates as about $1B in development costs. Both companies will share in commercialization costs, and Regeneron will be eligible to receive milestone payments along the way on development, regulatory, and sales-related events, worth up to almost $2.4B.

The potential market for osteoarthritis and chronic pain is estimated to be in the tens of millions of patients in the U.S. However, the anti-NGF mechanism has a troubled history and revenue from this product is likely not embedded in expectations.

No change to the price target of $448.

For an analyst ratings summary and ratings history on Regeneron Pharma click here. For more ratings news on Regeneron Pharma click here.

Shares of Regeneron Pharma closed at $406.24 yesterday.

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