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UPDATE: Canaccord Genuity Downgrades Regeneron Pharma (REGN) to Hold on Slowing EYLEA Growth and Lower Praluent Revenues

January 27, 2016 7:32 AM EST
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Price: $966.30 --0%

Rating Summary:
    29 Buy, 13 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 10
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(Updated - January 27, 2016 9:00 AM EST)

Canaccord Genuity downgraded Regeneron Pharma (NASDAQ: REGN) from Buy to Hold with a price target of $525.00 (from $700.00). Analyst John Newman pointed out moderating EYLEA growth, a slow Praluent start, and competitive risks.

"We anticipate a slowing growth trajectory for EYLEA, as we believe the boost from Protocol-T has largely been realized," said Newman. "Specifically, we model ~22.5% annual US growth in 2016, ~15% in 2017, 12.5% in 2018, and 10% in 2019. Importantly, we believe the greater adoption of pharmacotherapy in DME vs laser will benefit EYLEA, but gradually. We remind investors that price increases are not likely for EYLEA due to the steep discount offered by off-label Avastin usage. We look for progress on wholly-owned followon combinations with EYLEA, such as Ang-2 antibody, in order to re-accelerate long-term growth for REGN's ophthalmology franchise."

Discussing Praluent's launch, the analsyt said, "Praluent’s launch trajectory will likely be slower than expected, given (1) residual price concerns, (2) injectable formulation, and (3) typical flatter trajectory for lipid therapies. We are lowering our US peak sales estimates to $1.4B by 2025 from $2.6B, but note that we conservatively assume only 40% adherence and the total US Praluent-eligible market at only ~1.6M patients. Importantly, even if Praluent does exceed estimates, the revenue and EPS impact will be dampened by the revenue split with Sanofi. Also, we expect that Amgen’s outcomes data will surface ahead of Regeneron’s, with initial readout potentially by YE16, which could give Amgen a temporary, but slight advantage."

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 $463.56 yesterday.



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