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Why Regeneron Shares Rose 31.6% in February

By Adria Cimino - Mar 5, 2020 at 6:44AM

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Regeneron’s work on a coronavirus treatment gave the stock a lift.

What happened

Shares of Regeneron Pharmaceuticals (REGN 0.61%) rose 31.6% in February, according to data provided by S&P Global Market Intelligence, after the company expanded its work with the U.S. government to develop a coronavirus treatment.

Regeneron already was working on antibodies targeting as many as 10 pathogens considered public health risks. Now, the deal with the U.S. Department of Health and Human Services (HHS) includes the coronavirus involved in the outbreak that has infected more than 93,000 people worldwide.

A blood sample for a coronavirus test is shown on a lab counter.

Image source: Getty Images.

So what

Biotech and big pharmaceutical companies have been racing to develop treatments and vaccines for the coronavirus as the outbreak has accelerated, moving from China in January to countries around the globe only a few weeks later. Working on such a high-profile subject is getting Regeneron attention as well as investment in its research. HHS will pay 80% of the costs for treatments considered promising, lawmakers wrote in a Feb. 20 letter to President Donald Trump, asking him to ensure the affordability of any treatment developed. While attention and investment are both positive, now the question is: How much can a company make addressing an outbreak? Due to the short time frame of epidemics and pandemics and the ethical question behind pricing high, it is unlikely treatments for outbreaks represent huge gains for pharmaceutical companies over the long term.

Now what

Regeneron aims to have a coronavirus treatment ready for testing in humans by August, the company's chief executive officer told CNBC. In the interview, he said the company already has a selection of antibodies and, during the coming weeks, will screen them to find the best candidates to address the coronavirus. Then, the plan is to produce 200,000 doses by late summer. Though in the long term a coronavirus treatment may not be as big for Regeneron's earnings as other drugs, any positive news from this program clearly will boost the shares. Unless the company reaches a stumbling block, while the coronavirus stays in the headlines, it's likely Regeneron shares are set for further gains.

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