NEW YORK (AP) - Shares of Regeneron Pharmaceuticals Inc. soared Thursday
after drug maker Sanofi-Aventis said it signed a development deal with Regeneron
and increased its stake.
Sanofi-Aventis, the world's third-biggest drug maker, said it signed a deal
with Regeneron to develop therapeutic antibodies and also agreed to raise its
stake in Tarrytown, N.Y.-based Regeneron to 19 percent from 4 percent at a cost
of $312 million.
Regeneron's stock spiked $3.96, or 23.1 percent, to $21.11 Thursday during
trading with higher-than-average volume. Over the past year, the stock has
ranged between $13.55 and $28.74.
In a note to investors, Morgan Stanley analyst Dr. Steven Harr called the
agreement "another winner deal" for Regeneron and raised his price target to $31
from $29.
Harr said investors underestimate the value of the company's assets and he
expects Regeneron to trade to only a modest discount of Sanofi's $26 per share
purchase price.
He said he boosted the price target because "the deal significantly
mitigates near-term financial and operational risks. Additionally, it should
allow the company to bring forward a significantly greater number of antibodies
into clinical development over the next five years (goal is at least 2 per
year), which increases the probability that the commercial value of the antibody
technology will be realized."
Lehman Brothers analyst Dr. Jim Birchenough reiterated his "Overweight"
rating and $17.15 price target.
In a note to clients, he said the deal validates Regeneron's new antibody
platform.
The company's clinical development programs include several protein-based
product candidates in areas ranging from cancer to metabolic diseases.
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