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Regeneron Pharmaceuticals Inc And Sanofi SA (ADR) Win EU Nod For Cholesterol Drug, Praluent

Regeneron Pharmaceuticals Inc And Sanofi SA (ADR) Win EU Nod For Cholesterol Drug, Praluent

The EC’s approval for Regeneron and Sanofi's cholesterol drug will make it available in all EU countries

Regeneron Pharmaceuticals Inc. (NASDAQ:REGN), a leader in the biotech sector, and Sanofi SA (ADR) (NYSE:SNY), the French pharmaceutical giant, have fetched a victory adding to their success in the pharmaceutical sector. The companies announced today that their cholesterol lowering drug, Praluent, has received a green signal from the European Commission (EC) for treating patients with low-density lipoprotein (LDL) cholesterol, and adult patients suffering from hypercholesterolemia.

The EC’s approval will make the drug available in all 28 EU countries. This is bound to extend the success of the partnership between the two pharmaceutical giants which began in 2007, for discovering and developing fully human antibodies, and making use of the proprietary Veloclmmune technology platform by Regeneron. This collaboration was expanded further in 2009, aimed at developing 20-30 new antibodies and moving them all to clinical stage development by 2017. The two companies began working on the emerging class of PCSK9 inhibitors in 2013, when they joined hands with the American College of Cardiology; their efforts in this area have borne fruit in the form of Praluent.

Praluent is the first cholesterol lowering drug belonging to a new class of PCSK9 (proprotein convertase subtilisin/kexin type 9) inhibiting drugs, and the first of its kind to have been approved by the EC, which puts it in the position to grab greater revenue for the company in the long run, via its pioneering advantage. The drug was approved by the US Food and Drug Administration (FDA) in July this year.

Europe and the US have a high proportion of population suffering from a bad cholesterol condition, which is considered one the most significant contributors towards cardiovascular disease (CVD). According to World Health Organization (WHO) data, Europe has the highest prevalence per capita of high cholesterol in the world at 54%, while America falls second with 48%. Due to ineffective conventional treatments for cholesterol, which include statins and various other lipid-lowering treatments, most LDL-cholesterol patients continue to suffer from high cholesterol levels.

The approval for Praluent came after positive results from 10 late stage clinical studies called ODYSSEY trials, half of which were ezetimibe-controlled, while the other half was placebo-controlled. Results from these trials established Praluent’s efficacy in significantly reducing LDL-cholesterol levels in patients, in comparison to a placebo or ezetimibe. In addition, all these studies were also successful in meeting the respective primary goals of the studies.

Leonard S. Schleifer, Founder, President and Chief Executive Officer (CEO) at Regeneron, seemed very positive of the long term growth potential of the cholesterol drug and said in a press release made public today: "We are pleased to bring Praluent to European patients in need of further LDL-cholesterol lowering. This approval was made possible through the tremendous hard work of our innovative scientists who translated a genetics-based discovery into an important new medicine, as well as thousands of dedicated investigators and patient participants."

However, the path for Regeneron and Sanofi in the emerging class of PCSK9 inhibiting cholesterol drugs involves competition. Both drug makers face serious competition from Amgen Inc. (NASDAQ:AMGN) which stepped into the said market with its drug Repatha. Meant for the same class of high cholesterol population, Repatha is priced at a hefty $14,100 for one year; while Regeneron’s Praluent is priced at $14,600 per year. Targeting a huge population and priced at hefty levels, both drugs hold significant potential to garner soaring revenues in the long run. Whether Regeneron will maintain its lead over Amgen is still to be seen.

Sell Side

The sell side is bullish on Regeneron and Sanofi stocks. Of 25 analysts covering Regeneron stock, 15 rate it a Buy, while the other 10 call it a Hold. The 12 month average target price assigned by analysts is $613, representing an upside potential of 24.9%, compared to the stock’s closing price of $490.67 on Friday, September 25.

Analysts maintain a bullish stance for Sanofi stock. Of 6 analysts, five rate it as a Buy, while only one indicates a Sell. The 12 month average target price assigned by analysts is $59.57, which signifies an upside potential of 25.44%, compared to the stock’s closing price of $47.49 on Friday, September 25.

Stock Performance

Regeneron and Sanofi stock have performed well above the market for the year so far. Regeneron stock has gained 19.6% YTD and Sanofi stock is up 4.12%, performing better than the NYSE ARCA Index (DRG), which lost 0.83% in the duration.

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