Stay Of Court Injunction A Mild Positive For Regeneron

Injunction Stayed

The U.S. Court of Appeals granted a stay on a decision in January that Praluent violated Amgen, Inc. AMGN's patents on the rival PCKS9 cholesterol drug Repatha, which would have taken Praluent off the market.

Analyst Alethia Young noted that post the announcement of the injunction in January, sentiment toward Regeneron had turned fairly negative. The analyst clarified that the stay merely permits the sale of Praluent during the appeals process but does not overrule the previous ruling.

Credit Suisse's Praluent Model

Credit Suisse reminded that Praluent is worth about $50 per share to its model and every 10 percent of U.S. royalty, starting in 2018, is worth about $10 per share. On the contrary, if Amgen gets all of the U.S. Praluent sales, it would add $12 per share and every 10 percent royalty is worth $1 to $2 per share. The numbers are premised on Regeneron paying a 10 percent royalty on the U.S. sales.

Appeal To Run Through A Year

Credit Suisse believes the appeals process would run through for a year, although it did not rule out a settlement before that. The firm, therefore, expects Praluent to remain in the market potentially during that time. This, according to the firm, is a positive, given the worries that doctors would start shifting their patients to Repatha. That said, the firm believes uncertainty about the ruling could remain an overhang on Regeneron shares.

Credit Suisse has an Outperform rating on the shares of Regeneron, while its price target is $485.

At the time of writing, shares of Regeneron were up 2.90 percent at $363.48 and Sanofi SA (ADR) SNY was climbing 2.98 percent to $42.44. However, Amgen was slipping 0.50 percent to $167.27.