It's one thing when the drug you make cures illnesses. That's par for the course for every pharmaceutical company out there. When the drug you make cures an illness that's making nationwide news, that's another thing altogether. And when the drug you make cures a household-name illness that happened to afflict the President of the United States, well, that should be the kind of thing that lets you write your own ticket.
That seems to be happening right now for Regeneron (NASDAQ:REGN), whose stock was up as much as 4% in pre-market trading.
A New Step for a Blockbuster Drug
Regeneron managed to win another big step today, likely thanks to the President's rapid recovery from coronavirus following his taking the drug, known as REGEN-COV2. Known as an “antibody treatment”, the drug is designed to mimic the actual infection, and cause an immune response infection to same.
REGEN-COV2 has already delivered some results for patients, not only reducing hospitalizations and emergency room visits, but also helping President Trump to knock his own case of coronavirus out with a three-day weekend at Walter Reed National Military Medical Center. The combination of effectiveness and visibility—and it doesn't get much more visible than Donald Trump—likely gave Regeneron's drug a whole new credibility it couldn't have had anywhere else.
With an emergency use authorization in place, the drug now exists in a strange place. It can be prescribed, it can be used...but not all of the data required for a full approval is in place yet, therefore its effectiveness can be doubted since the necessary studies haven't gone through. The FDA, meanwhile, pointed out why an “emergency use” category exists in the first place, when it noted that the “known and potential benefits” of the drug in question were greater than the “known and potential risks.”
Analysts Approve, on a Limited Basis
The analyst field, meanwhile, seems just a hair on the skeptical side, but only a hair. The consensus rating, based on our latest research, puts the company in “buy” territory, and with the same ratios it had three months ago. It's down slightly, however, from where it was a month ago. Back then, the company had nine “hold” ratings, 14 “buy” ratings and one “strong buy.” Now, it has 10 “hold”, 13 “buy” and one “strong buy.” That's hardly an “abandon ship” strategy, but someone has a little less confidence than they did.
The price target, however, has been steadily ramping up. A month ago, the company had a consensus price target of $622.13. Today, it's $628.52. Thus, any concern about the company's overall effectiveness should be tempered in view of that. Recent activity has been, overall, quiet; nothing at all has happened since Nov. 9, in which Morgan Stanley lowered the price target by $7, which means less than you think in a drop from $609 to $602.
A Critical—and Underserved—Market Strategy
While most of us have been absorbed in the horse race to develop a vaccine against coronavirus, many have forgotten that there are other strategies to pursue. We don't look for a vaccine to prevent the regular cold—as much as we've tried for the last several decades—we look instead for treatments. By offering a viable treatment program, Regeneron has offered us the potential to address one of the biggest problems about the coronavirus: overwhelmed hospitals. With a treatment in place, people no longer need to go to the hospital. Caught early enough, they can simply receive the treatment, probably in a small plastic bottle, and be on their way home to self-quarantine for a bit.
This also opens up a whole new market for Regeneron: those who doubt the effectiveness of vaccines. For those concerned about taking a vaccine that required, apparently, less than nine months to go from “it doesn't exist” to “now available in stores,” there's a whole new option: what amounts to a cold pill for COVID-19.
Given that the vaccines so far are highly sensitive and not exactly easy to produce, an alternative that allows current cases to be readily treated with an item that can be picked up in a Rite Aid (NYSE:RAD) certainly can't hurt. Since there will likely be production issues for vaccines as well, and national governments have already spoken for several vaccines' entire production runs, having a treatment available instead should knock out many current problems and make a market for Regeneron.
While a vaccine for coronavirus represents a major advance in science, let's not overlook the impact of a simple treatment program. Regeneron has exactly that now, and with that, a big new market to tap just as fast as it can produce.