UBS Group AG: Resumes coverage of Regeneron Pharmaceuticals, Inc. (REGN.US) with a "Buy" rating; blockbuster drug Dupixent's potential is underestimated.

UBS Group AG has resumed coverage of Regeneron Pharmaceuticals, Inc. (REGN.US) with a "Buy" rating and a price target of $978, about 30% above the latest closing price. The bank had previously rated the stock "Neutral." UBS Group AG analyst Joon Lee said the market is currently not fully pricing in two things: first, Regeneron's potential to develop follow-on products to its Dupixent (dupilumab); and second, the prospect that the drug's exclusivity period could be extended. Dupixent is a blockbuster drug developed by Regeneron in collaboration with Sanofi (SNY.US). Lee noted that next-generation Dupixent candidates "could potentially fill the gap" created by the expiration of patent exclusivity. The company may be able to extend exclusivity beyond 2031. Of the four next-generation Dupixent candidates in development, one may report data early next year, followed by the start of Phase 3 trials in the second half of 2027. Lee noted that the other three next-generation candidates are planned to enter Phase 1/2 clinical trials in early 2027, with Phase 3 studies starting between 2027 and 2028. Lee also mentioned that patent reviews show these candidates have differentiated features. For example, they can achieve "optimized target binding" in a pH-dependent manner, thereby improving target clearance and drug durability, among other things. He expects Dupixent revenue to reach $16 billion by 2035, while consensus expectations are $13 billion. Lee added: "Dupixent's multi-layered intellectual property system and its partner Sanofi's comments on intellectual property protection through 2046 are indeed worth considering from a risk-adjusted perspective. The litigation involves more than 50 patents, is time-consuming and resource-intensive, and carries high product launch risk, as competitors may therefore bear damages liability... These are all key considerations."