Regeneron Is Now A Sell For Chardan

• Regeneron Pharmaceuticals Inc. REGN shares have been trending south so far in 2016 and are down 11 percent since January 4.
• Chardan Capital Markets’ Gbola Amusa downgraded the rating for the company from Neutral to Sell, while reducing the price target from $525 to $400.
• Uncertainty and risk related to an ensuing patent infringement case are likely to weigh on Regeneron’s stock performance, Amusa stated.

Analyst Gbola Amusa mentioned that Regeneron is likely to face significant risks from the ensuring patent infringement case for Praluent. The suit could be a key driver of the company’s share price movement in the near future.

The company, along with its partner Sanofi SA (ADR) SNY, launched Praluent in the US in 2015, after the filing of a patent infringement suit by Amgen, Inc AMGN. The suit relates to patents for “monoclonal antibodies (mAbs) that bind PCSK9,” Amusa mentioned.

The analyst believes that since the Sanofi-Regeneron partnership is likely infringing on Amgen’s Repatha patents, the former could try and settle the issue ahead of the trial by agreeing to pay 10-20 percent of royalties to Amgen for US Praluent sales.

“Such an outcome we estimate could transfer roughly $750 mm of operating income per year to Amgen,” the Chardan Capital Markets report stated, while adding that Regeneron is also likely to face competition from Novartis AG (ADR) NVS and its partner Ophthotech Corp OPHT which may continue their progress for Fovista.

“Catalysts surrounding the patent infringement trial with Amgen are likely to play out from late February to late March,” Amusa wrote. He added that there is a likelihood of both parties opting to settle the case for a reasonable royalty.