Regeneron Outlook Optimistic

Regeneron Pharmaceuticals Inc. (REGN - Analyst Report) lead candidates are VEGF-Trap for the treatment of cancers, eye diseases, and IL-1 Trap for CAPS, a rare genetic disorder, and gout. The company recently received the approval from the Food and Drug Administration on Arcalyst for CAPS. It also has a number of pre-clinical drug candidates for other disorders.

The company made impressive progress in recent months in terms of clinical developments and business developments. We maintain our Buy rating on the shares.

We are optimistic about the company’s Trap Technology. The Bayer collaboration on VEGF-Trap-Eye validates this technology and its value for eye diseases. The VEGF-Trap-Cancer programs with Sanofi-Aventis (SNY - Analyst Report) are progressing very well. We are impressed by the new deal with Sanofi-Aventis to develop antibody drugs. We are also pleased to see the license deals with AstraZeneca (AZN - Analyst Report) and Astellas to monetize and validate the company’s VelocImmune technology.

We think recent decline of share price are mainly due to two factors: the broad market meltdown and investor reactions to recent phase II ovarian cancer data. For the latter, we think the market overreacted to the data. Even if Aflibercept fails in this cancer category as a single agent, we don’t think it will impact the potential of this drug candidate.

Our $28 price target is derived from our 2011 estimated EPS of $1.27, multiplied
by biotech industry average P/E ratio of 38, discounted at 20% for three years. This target is based on our belief that Regeneron’s VEGF-Trap candidates have commercial viability in various oncology or eye-disorder indications.

Read the full analyst report on REGN

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Read the full analyst report on AZN

Read the full analyst report on REGN

Read the full analyst report on AZN

Read the full analyst report on SNY