What's Next For Regeneron After A Therapy Trial Failure?

Regeneron Pharmaceuticals Inc REGN announced results Monday from two mid-stage studies for diabetic macular edema and age-related macular degeneration therapies.

The combo did not provide sufficient differentiation to warrant a Phase 3 development,Regeneron said.

The Analyst

Canaccord Genuity analyst John Newman maintained a Buy rating on the shares of Regeneron and a P/E-derived price target of $522.

The Thesis

The outcome of the two studies — RUBY and ONYX — that evaluated the combo was in line with the firm's expectations, given the high bar of success posed by EYLEA control, Newman said. (See Newman's track record here.) 

Regeneron is now likely to focus on additional indications for Dupixent, including adult/adolescent uncontrolled asthma, Newman said. U.S. approval is likely in 2018, the analyst said.

Given that Amgen, Inc. AMGN's tezepelumab is still in Phase 2 trials as opposed to Dupixent being tested in Phase 3 trials, Newman expects the latter to enter the market earlier, lending upside to the stock price.

Dupixent showed efficacy similar to tezepelumab in patients with severe asthma and those with high eosinophil counts, although Amgen's scored over in terms of efficacy in the overall population.

The Price Action

Regeneron shares are in the red year-to-date, having dropped roughly 1 percent.

At the time of writing, the shares of the company were down 3.48 percent at $361.48.

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