Regeneron Sags With FDA Decisions On Horizon


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Regeneron Pharmaceuticals Inc. [$REGN] has a number of developmental drugs pending FDA decisions in the coming months.  One announcement is due out before the end of October, while another is set to come out before late March in 2017. 

Investor trepidation about REGN has risen lately.  The stock price has drifted lower in recent weeks, while Implied Volatility has climbed to a two-month high.

Regeneron and Sanofi are developing Sarilumab for the treatment of active, moderate-to-severe rheumatoid arthritis.  The FDA is slated to give its decision on the drug on October 30.

In a head-to-head study, Sarilumab was shown to be superior to AbbVie’s [$ABBV] Humira in improving signs and symptoms in patients with active rheumatoid arthritis at Week 24.

Sarilumab belongs to the same class of drugs as Roche's Actemra, another treatment for moderate-to-severe rheumatoid arthritis, as well as for juvenile idiopathic arthritis.  Actemra had sales of about $1.4 billion in 2015.  This represented an improvement of 23% compared to 2014.

Along with Sarilumab, the Regeneron/Sanofi partnership has another product in the pipeline: Dupixent, a treatment for atopic dermatitis.  The Biologics License Application was accepted in September and the FDA decision is expected by March 29, 2017.

Implied Volatility for REGN has been pushing higher since late September.  From a level of 28.7 on September 27, to a close of 39.1 on October 12.  This was the highest level since late June.

Meanwhile, the stock price for REGN has been drifting lower.  It has declined from a level of $421.45 on September 27 to a close of $373.47 on October 12.  This reached the low end of a range, testing a level not seen since mid-July.

The ATM Straddle Premium for the October 28 expiration is $22.35 or 6.0%.  For the November 4 expiration, the premium stands at $31.85, or 8.5%.  The company is also scheduled to release its quarterly results on November 4.

Looking further ahead, the May 17 expiration has an ATM Straddle Premium of $87.68, or 23.5%.