Raising Our Regeneron FVE to $690 After Incorporating High-Dose Eylea and U.S. Drug Pricing Policy

We’ve raised our Regeneron fair value estimate to $690 from $620, largely due to the recent positive data for the 8 mg high-dose version of the firm’s ophthalmology drug Eylea (already approved at a 2 mg dose). We think Eylea sales will peak this year at nearly $10 billion, but we now assume that branded competition (Roche’s Vabysmo) and biosimilar Eylea (launching in 2024) will only lead to franchise declines in mid-single-digit territory. The new valuation also incorporates slightly higher sales for LAG3 antibody fianlimab (recent positive data in combination with Libtayo in melanoma) as well as a small placeholder for PSMA-targeted bispecific programs (which are also beginning to generate promising data). We think Regeneron’s narrow moat is increasingly well supported, with positive data in oncology pushing the firm closer to a wide moat.