Regeneron Pharmaceuticals Inc. (REGN) saw its shares tumble 9.8% to $629.68 on Monday, marking the stock's worst day in recent memory, after the company disclosed that its late-stage melanoma drug trial failed to achieve its primary goal. The steep decline outpaced broader market losses, with the Nasdaq Composite falling just 0.5% and the S&P 500 edging down 0.1%.
Clinical Setback
Regeneron announced late Friday that the combination of fianlimab and its cancer drug cemiplimab did not reach statistical significance for improving progression-free survival compared to Merck's Keytruda (pembrolizumab). While the high-dose fianlimab combo showed a median progression-free survival of 11.5 months versus Keytruda's 6.4 months, the p-value of 0.0627 fell short of the standard 0.05 threshold required for significance.
This setback is particularly significant because fianlimab was considered a top pipeline asset for Regeneron, especially as investors have grown concerned about declining sales of its blockbuster eye drug Eylea. The failed trial adds pressure on the company to demonstrate growth from its pipeline.
Market Reaction
At least 10 brokerages slashed their price targets on Regeneron following the news. BMO Capital Markets analyst Evan Seigerman noted that "back-to-back key pipeline misses amp up the pressure," while Evercore's Cory Kasimov called it the "worst-case scenario." The stock opened at $615.93 and hit a session low of $610.60 before closing slightly higher.
The broader market was mixed, with the Dow Jones Industrial Average gaining 0.3%, but the tech-heavy Nasdaq and the S&P 500 both declined. Regeneron's drop far exceeded any index movement, highlighting the company-specific nature of the selloff.
Financial Context
Despite the pipeline disappointment, Regeneron reported solid first-quarter results. Revenue rose 19% year-over-year to $3.6 billion, driven by strong immunology sales. Global Dupixent net sales, reported by partner Sanofi, surged 33% to $4.9 billion. However, U.S. sales of Eylea HD and Eylea fell 10% to $941 million, underscoring the ongoing challenges in its eye care franchise.
Pipeline and Partnerships
In a separate move, Regeneron announced a partnership with private biotech Parabilis Medicines, providing $125 million in upfront and equity payments, with potential milestone payments of up to $2.2 billion. George Yancopoulos, Regeneron's co-chair and chief scientific officer, described the collaboration as part of the company's commitment to "cutting-edge and diversified science."
The company still has another Phase 3 trial underway testing a high-dose fianlimab combo against Bristol Myers Squibb's Opdualag for first-line advanced melanoma. Regeneron plans to present full results from the failed study at an upcoming medical conference.
Outlook
While the Opdualag trial could still yield positive results, and Regeneron has other revenue-generating products beyond fianlimab, the pipeline miss has shifted investor sentiment. With Eylea under pressure and no clear near-term pipeline wins, Monday's selloff may not be the last. The next 12 to 18 months will be critical for Regeneron as it seeks to prove its pipeline can deliver growth.
