Regeneron Pharmaceuticals Gains A Bull Ahead Of Earnings

Ahead of Regeneron Pharmaceuticals Inc REGN's quarterly report, scheduled for Wednesday, Nov. 8, the company's shares won an upgrade.

Regeneron shares fell beneath Baird's price target after an August downgrade, analyst Brian Skorney said in a Friday note. With better-than-expected sales from the eczema drug Dupixent, Skorney upgraded Regeneron from Underperform to Neutral with a $408 price target. (See Skorney's track record here.)  

At the time of writing, shares of Regeneron were up 0.97 percent at $401.29.

Sanofi SA (ADR) SNY reported Dupixent sales of $88 million in the third quarter, ahead of the consensus estimate of $73 million and Skorney's estimate of $66 million, the analyst said — up from $29 million in the second quarter. 

Dupixent is an injectable formulation of a medicine jointly developed by Sanofi and Regeneron, intended to treat adults with moderate-to-severe atopic dermatitis. It was approved by the FDA in March. 

Patient, Prescriber Numbers Rise 

Dupixent has had 23,000 prescribed patients since launch, and its prescriber base has increased from about 5,100 doctors as of second-quarter earnings to 7,100. The initial sales target was 7,000. About 70 percent of the target physicians were repeat prescribers, according to Baird. 

Near-term estimates for the drug franchise are achievable, although competitive pressures may thwart out-year estimates, Skorney said. 

The lack of investor reaction to Dupixent sales could be due to increasing concerns around the competitive landscape in both atopic dermatitis and asthma, Skorney said. Concerns surrounding the long-term outlook are weighing on the stock, the analyst said. 

Sanofi reported sluggish sales of the cholestrol treatment Praluent, essentially flat with the previous quarter, according to Baird. 

There's more downside risk than upside to Regeneron's earnings, given that expectations already discount strong sales of Eylea, an injection used to treat macular degeneration, Skorney said. 

"Weakness there, coupled with upcoming data for RTH258 (which we expect will look a little better than Eylea) and potential Eylea/nesvacumab combo data (which we expect may fail), would call long-term growth into question like we saw last week with a few of the other large caps," the analyst said. 

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