UBS Downgrades Regeneron Stock Amid Eylea Uncertainty

Regeneron Pharmaceuticals Inc. (REGN) has faced a setback as UBS downgraded its stock rating, citing concerns over the sales performance of its key drug, Eylea, and increased competition in the market. The downgrade comes amidst uncertainty surrounding Eylea's sales and market share, which has raised concerns about Regeneron's overall financial outlook.

Eylea, a drug used to treat wet age-related macular degeneration, has been a significant contributor to Regeneron's revenue. However, the company has been facing increased competition from Roche's Vabysmo, which has been surging in the market. In the first three quarters of 2024, Vabysmo's sales reached $3.2 billion worldwide, raising the stakes in the ophthalmology face-off with Regeneron's Eylea.

Regeneron has been struggling to regain its market share as Vabysmo continues to surge. The company has been trying to switch patients from standard Eylea to Eylea HD, but the process has been slower than expected. This has raised serious doubts about Regeneron's ability to regain its hemorrhaging market share.

The uncertainty surrounding Eylea's sales and market share has a significant impact on Regeneron's overall financial outlook. Eylea is one of Regeneron's key products, contributing significantly to its revenue. In the first quarter of 2025, Eylea's U.S. sales fell to $1.43 billion, a 5% drop from the previous quarter, due to increased competition from Roche's Vabysmo. This decline in sales coincides with the launch of Vabysmo, which was approved in January 2024.

Regeneron's CEO, Len Schleifer, acknowledged the increased competitive pressure but tried to minimize the impact of Roche's drug on Eylea's sales. However, the company's commercial chief, Marion McCourt, later referred to "increasing competitive pressure" as a reason for Eylea's slide in sales. This uncertainty about Eylea's sales and market share is a concern for Regeneron's overall financial outlook, as it may lead to reduced revenue and profitability.

To mitigate the impact of Eylea's sales decline and restore investor confidence, Regeneron can consider several strategic moves. First, the company should focus on optimizing Eylea HD's market penetration by gaining approval for a prefilled syringe, extending dosing intervals, and expanding indications to maximize its potential. Regeneron has an FDA target date of April 20, 2025, for a decision on Eylea HD's dosing interval extension to 24 weeks for patients with macular degeneration. If approved, this could help Eylea HD regain market share. Additionally, Regeneron plans to submit data for Eylea HD's four-week dosing and retinal vein occlusion in early 2025, which could further expand its treatment options.

Second, Regeneron should strengthen its pipeline and diversify revenue streams by focusing on the development and commercialization of its approximately 40 investigational candidates targeting a market potential exceeding $220 billion by 2030. Some near-term highlights include Itepekimab (IL-33) for COPD, Fianlimab (LAG3) for melanoma, Linvoseltamab (BCMAxCD3) for multiple myeloma, Odronextamab (CD20xCD3) for lymphoma, multiple approaches to obesity, BCMAxCD3/Dupixent in severe allergy, and C5 Combo (pozelimab and cemdisiran) in complement-mediated diseases. By focusing on these candidates, Regeneron can mitigate the impact of Eylea's sales decline and restore investor confidence in the company's long-term growth prospects.

Lastly, Regeneron can leverage strategic collaborations and partnerships, such as its collaboration with Truveta and Illumina to expand its DNA-linked healthcare database. This can accelerate drug discovery and optimize healthcare delivery, ultimately driving growth and restoring investor confidence.

In conclusion, UBS's downgrade of Regeneron's stock rating highlights the uncertainty surrounding Eylea's sales and market share, which has raised concerns about the company's overall financial outlook. To mitigate the impact of Eylea's sales decline and restore investor confidence, Regeneron should focus on optimizing Eylea HD's market penetration, strengthening its pipeline, and leveraging strategic collaborations and partnerships. By taking these strategic moves, Regeneron can work to mitigate the impact of Eylea's sales decline and restore investor confidence in the company's long-term growth prospects.