Chardan Downgrades Regeneron To Sell

Chardan Capital Markets analyst Gbola Amusa has downgraded Regeneron Pharmaceuticals Inc REGN to Sell after Amgen, Inc. AMGN won a patent lawsuit against Regeneron Pharmaceuticals Inc REGN and its partner Sanofi SA (ADR) SNY over its cholesterol-lowering drug Repatha. Related Link: http://www.benzinga.com/general/biotech/16/03/7723547/jury-in-repatha-patent-case-ruled-in-favor-of-amgen-against-regeneron- In January, after reviewing relevant PCSK9 inhibitor patents, Chardan downgraded Regeneron to Sell on its counter-consensus belief that Regeneron and partner Sanofi infringe Amgen's PCSK9 patents. "We now return (downgrade) to a Sell rating for Regeneron, noting some market views that diminish Amgen's patents," Amusa wrote in a note to clients. "We believe some in the market are diminishing the importance of today's verdict, taking the view that 1) an appeal could take years, 2) potential settlement royalties would still be around 5% based on the Roche (unrated) Eylea suit precedent, and 3) Praluent is not selling as well as we or others had expected," Amusa added. Meanwhile, a permanent injunction hearing is due from March 23 2016. The analyst said if a permanent injunction goes in Amgen's favor, while Sanofi/REGN will likely file for a stay on the injunction during the appeal process, an Amgen victory in the appeal would require all proceeds earned during the stay be transferred to Amgen under damages. "On our estimates, such a result could lead to up to a $2bn/year EBIT transfer from Sanofi/REGN to AMGN," Amusa noted. The analyst highlighted that Sanofi/REGN have made errors in writing their Praluent patents, and Sanofi has accepted (stipulated) infringement, making the case about the validity of Amgen's patents. "Indeed, we see an increasing possibility that AMGN will not even consider a settlement from here," Amusa noted. The analyst also expressed caution on the ability of Eylea and combos to drive earnings momentum and slashed the price target on REGN to $325 from $375. Shares of REGN closed Wednesday's trading up 0.34 percent at $368.46.