Why Regeneron's Praluent Is Likely To Be Removed From The U.S. Market This Year

Chardan Capital’s Gbola Amusa maintained a Sell rating for Regeneron Pharmaceuticals Inc REGN, with a price target of $325, mentioning that Praluent is likely to be removed from the US market in 2016.

Growth Offset

Although the anti-PCKS9 market is expected to grow to $16.4 billion in 2020, the Praluent US economics are likely to be neutralized by Amgen, Inc AMGN patents for Repatha and potential royalties that Regeneron and Sanofi SA (ADR) SNY may have to pay following a settlement of the dispute, analyst Gbola Amusa stated.

The higher-than-expected royalties in the range of 10-20 percent to Amgen for US Praulent sales may lead to a potential transfer of about $750 million of operating income per year to Amgen. “With an injunctive hearing set for 23-24 March 2016, the worst case on our numbers is a $2bn EBIT transfer if Praluent is barred from the US market altogether, or its economics are later transferred to AMGN,” Amusa wrote.