Why Regeneron's Praluent Is Likely To Be Removed From The U.S. Market This Year

Chardan Capital’s Gbola Amusa maintained a Sell rating for Regeneron Pharmaceuticals Inc (NASDAQ: REGN), with a price target of $325, mentioning that Praluent is likely to be removed from the US market in 2016.

Growth Offset

Although the anti-PCKS9 market is expected to grow to $16.4 billion in 2020, the Praluent US economics are likely to be neutralized by Amgen, Inc (NASDAQ: AMGN) patents for Repatha and potential royalties that Regeneron and Sanofi SA (ADR) (NYSE: SNY) may have to pay following a settlement of the dispute, analyst Gbola Amusa stated.

The higher-than-expected royalties in the range of 10-20 percent to Amgen for US Praulent sales may lead to a potential transfer of about $750 million of operating income per year to Amgen. “With an injunctive hearing set for 23-24 March 2016, the worst case on our numbers is a $2bn EBIT transfer if Praluent is barred from the US market altogether, or its economics are later transferred to AMGN,” Amusa wrote.