Biotechs and politics intersect regularly, but the meeting has hardly ever been this dramatic. Regeneron (REGN) is on Wall Street’s radar after it became known that President Trump had been administered with the company’s experimental antibody cocktail REGN-COV2 for treating COVID-19.
While it is difficult to truly gauge Trump’s condition, he was released from Walter Reed National Military Medical Centre on Monday evening, suggesting the as yet unapproved treatment was doing its intended job.
What it also means, according to SVB Leerink analyst Geoff Porges, is that REGN-COV2 is about to be granted EUA (emergency use authorization) status shortly. The increasing likelihood has resulted in an adjustment to the analyst’s Regeneron estimates.
“We have added the product to our company model with an 80% probability of success, which seems appropriate since the phase III trials have not been completed yet, and the FDA’s review has not even started,” Porges said. “We do expect the approval to occur within days, and anticipate significant uptake in the remainder of the year, particularly as COVID resurges in all but the most isolated and socially distanced countries, states, towns and communities.”
So, what might the treatment be worth to Regeneron?
In-line with Gilead’s remdesivir, Porges assumes the treatment will cost $3,000 per vial and estimates US sales of $150 million this year, increasing to roughly $900 million for 2021, and dropping to $450 million by 2023.
Porges’ forecast is based solely on REGN-COV2 being used as a treatment, while its prophylactic use “appears less likely given the fast progress of vaccine development.”
Overall, the addition of REGN-COV2 increases Porges’ total revenue estimates by 2% this year, 12% next year, and between 4 to 7% for 2022-2024.
So, what does it mean for investors, then? All the above results in a bump to the price target, which rises from $629 to $650, and implies upside of 8% from current levels. Porges’ rating on REGN stays an Outperform (i.e. Buy). (To watch Porges’ track record, click here)
The rest of the Street remains cautiously optimistic on Regeneron’s prospects. The stock qualifies as a Moderate Buy based on 9 Buys and 7 holds. Given the $666.86 average price target, the analysts expect shares to add 11% of muscle over the next months. (See REGN stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
