Shares of REGN stock jumped Monday after the Food and Drug Administration approved Regeneron Pharmaceuticals' high-dose Eylea following a delay this summer.
Late Friday, the FDA signed off on an 8-milligram dose of Eylea to treat three eye diseases: wet age-related macular degeneration, diabetic macular edema and diabetic retinopathy. In late June, the FDA rejected Regeneron's application for approval as it still needed to review a manufacturing inspection.
The approval came about two months earlier than expected. Yet, Piper Sandler analyst Christopher Raymond says it "could not come soon enough." Regeneron was reportedly offering discounts to keep market share for standard, 2-milligram doses of Eylea in the face of competition from Novartis' Vabysmo.
"We believe now this franchise is well positioned to return to growth," Raymond said in a note to clients. He expects Eylea to bring in $6.2 billion, $6.75 billion and $6.85 billion in sales from 2023 to 2025, respectively.
On the stock market today, REGN stock rose 3.9% to close at 844.37. Regeneron shares jumped within a buy zone which runs from 794 to 833.70. The biotech stock broke out of a double-bottom base earlier this month. Shares hit a new record high.
Novartis stock also rose 1.9%, ending the regular session at 102.98.
REGN Stock: Competing With Novartis
Regeneron also announced it will charge $2,625 per vial of high-dose Eylea. By comparison, standard Eylea costs $1,850 per vial and Vabysmo goes for $2,190 a vial. These are wholesale acquisition costs and don't include any insurance discounts.
But Piper Sandler's Raymond says the annual prices line up well with Vabysmo. Based on the different dosages, high-dose Eylea will cost about $13,025 to $15,650. Vabysmo costs $13,000 to $15,000 per year.
"Bottom line, while there is historically a significant level of variability in dose frequency, we think Regeneron has arrived at a wholesale acquisition cost price very similar to that of Vabysmo," he said.
Raymond has an overweight rating on REGN stock.
Drug Price Negotiations Loom
There are other factors that make the approval of high-dose Eylea particularly sweet for Regeneron, according to RBC Capital Markets analyst Brian Abrahams.
Standard Eylea is soon to face competition from lower-cost knockoffs called biosimilars. Meanwhile, the Centers for Medicare and Medicaid Services is prepping to soon begin negotiating the prices of a handful of the most expensive drugs. Analysts largely expect Eylea to eventually be on that annual list. But the launch of biosimilars will delay its inclusion by two years.
All in all, high-dose Eylea could extend Regeneron's market share in treatments of these three eye diseases by two to three years, Abrahams said in his note to clients.
"We see shares as having appreciated closer to fair value, though this news does help remove an important overhang," he said.
Abrahams kept his sector perform rating on REGN stock, but raised his price target by 10 to 830.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
