Why Regeneron Pharmaceuticals Shares Spiked
Feb 11th 2013 1:24PM
Updated Feb 11th 2013 3:05PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of biotech company Regeneron Pharmaceuticals shot higher by as much as 10% after Sanofi announced its intent to boost its stake in Regeneron by purchasing shares on the open market.
So what: According to Reuters, Sanofi currently owns 16.7% of Regeneron's stock and, in an email correspondence, noted that it may be willing to increase its stake up to 30%. Because of an agreement between the two companies in 2007, Sanofi is prohibited from acquiring more than 30% of all outstanding shares. Regeneron and Sanofi both developed the now FDA and EU-approved Zaltrap for aggressive cases of colorectal cancer and are working on multiple other clinical studies.
Now what: With Sanofi intending to increase its stake in Regeneron, the rumor mill will again swirl that a buyout offer could be coming; however, that appears highly unlikely given Regeneron's already lofty valuation due to the success of its wet age-related macular degeneration drug, Eylea. In addition, Regeneron comes with the extra baggage of having Bayer as its partner for Eylea, meaning that a buyout of Regeneron likely wouldn't be simple. Today's purchase is a golf clap for Regeneron, but it'll need Eylea to do its talking if it hopes to maintain its current valuation.
Craving more input? Start by adding Regeneron Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.
While you can certainly make huge gains in biotechs like Regeneron, the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.
The article Why Regeneron Pharmaceuticals Shares Spiked originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.