(Bloomberg) -- Regeneron Pharmaceuticals Inc. shares are headed for their biggest monthly drop since mid-2019 after a legal setback that opens the door to an early launch of a competing therapy to the drugmaker’s blockbuster eye treatment, Eylea.
The stock is down about 12% in September and is also the worst performer in the S&P 500 Index this week. The shares edged higher on Friday after news that the company received approval in the US for a separate drug, and they’re still up about 19% in 2024.
The shares had a rough start to the week. The big blow came Monday after a court ruling raised the possibility of Amgen Inc. launching a copycat version — known as a biosimilar — of Eylea as a federal judge in West Virginia denied Regeneron’s motion for a preliminary injunction against Amgen’s drug, Pavblu.
The decision “creates uncertainty about prospects for the US Eylea franchise,” according to David Risinger, a Leerink Partners analyst who downgraded the stock this week to a market perform rating from outperform.
Risinger said he had previously expected that Regeneron, which is based in Tarrytown, New York, would be able to settle with all copycat challengers for them to enter the market in 2026, “but we now cannot rule out the possibility of Amgen launching its biosimilar Eylea earlier.”
An earlier-than-expected launch of a biosimilar to the lower-dose version of Eylea would make it harder for Regeneron to convert users to a higher-dose version, according to Brian Abrahams, an analyst at RBC Capital Markets.
Still, he says the selloff is overdone. He sees growth from the rest of Regeneron’s portfolio — including Dupixent, which has been cleared for a chronic lung disorder in the US and was developed with drugmaker Sanofi — offsetting any erosion from the eye-drug franchise. He maintains an outperform rating on Regeneron’s stock.
Amgen Win
For Amgen, analysts see the ruling as a win, allowing the California firm to launch “at risk” — meaning it can take its generic drug to market even while its patent dispute with Regeneron hasn’t been resolved. Amgen received approval from the US Food and Drug Administration for its biosimilar to the lower dose of Eylea in August.
Amgen’s shares still dropped this week after it gave updates from its immunology and rare-disease-development pipeline that disappointed Wall Street.
As for Regeneron, Wall Street remains generally bullish, with 22 of 29 analysts tracked by Bloomberg giving the stock a buy-equivalent rating. Five analysts grade it a hold while two recommend selling.
The stock’s 2024 advance puts it ahead of the S&P 500 Biotech Index, which is up around 13% through Friday’s close. The Street consensus is for Regeneron shares to gain roughly 12% from current levels over the next year.
At BMO Capital Markets, analyst Evan Seigerman pointed out that the denial of Regeneron’s motion for a preliminary injunction isn’t the end of the road in the patent infringement case.
“Amgen is potentially able to launch its biosimilar ‘at risk’, but a decision in Regeneron’s favor would allow the company to recoup lost revenue and force the removal of Amgen’s product from the market,” he said.
(Updates with Friday’s closing prices.)
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