Why Allergan's Pain Is Regeneron's Gain
May 1st 2013 8:12PM
Updated May 1st 2013 9:00PM
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 biopharmaceutical companies Allergan and Regeneron Pharmaceuticals are heading in notably different directions today following an announcement from Allergan that data from its phase 2 study of vision-loss drug DARPin didn't support proceeding to late-stage trials. Allergan shares fell 15% on the news while Regeneron shares spiked as much as 17%.
So what: It's been a miserable day for Allergan, which started the day off by slightly lowering its full-year EPS forecast from a range of $4.75-$4.83 to $4.70-$4.76. To add the icing on the cake, its midday report that DARPin did show some differentiation from Novartis and Roche's Lucentis but didn't demonstrate enough to move the drug onto phase 3 trials, sent Allergan into the abyss. It probably doesn't help, either, that MAP's inhaled migraine drug Levadex, which Allergan acquired when it purchased MAP for nearly $1 billion earlier this year, also recently received its second complete response letter. Allergan just can't seem to catch a break.
On the flipside, Regeneron shares are soaring on the news as DARPin would have been a direct competitor to its lead drug Eylea in terms of wet age-related macular degeneration. With DARPin's development delayed, Eylea has a chance to continue to grow sales at a tremendous pace. Deutsche Bank took the opportunity to boost its price target on Regeneron up to $310.
Now what: And this is precisely why I wanted Eylea as my lead drug candidate in my fantasy biotech draft! There really isn't a drug out there that's set to challenge Eylea's dominance in wet-AMD, and Eylea trumps Novartis and Roche's Lucentis on price, albeit marginally. For Allergan, it's been a disappointing day. More so, I'm growing concerned with two recent defeats to its development pipeline. While I do expect an eventual approval for Levadex, investors had been counting on DARPin to add to Allergan's impressive product portfolio. With DARPin now on hold, Allergan has lost a lot of its luster.
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The article Why Allergan's Pain Is Regeneron's Gain 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. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.
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