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Why Regeneron Pharmaceuticals Stock Is Bolting Higher Today

By George Budwell - Updated Mar 17, 2020 at 12:53PM

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The biotech announces that it is working on an antibody cocktail to be used against COVID-19.

What happened

Shares of Regeneron Pharmaceuticals (REGN -2.74%), a large-cap biotech company, are on fire today. The stock is up by a handsome 15.1% as of 11:52 a.m. EDT Tuesday.

The spark? Before the opening bell, Regeneron announced that its scientists had isolated hundreds of virus-neutralizing, fully human antibodies from genetically modified mice, as well as from humans who have recovered from COVID-19, in an effort to build a preventive cocktail treatment against the deadly respiratory disease. 

A pair of hands cusping a tiny globe with a facemask that has the word "coronavirus" written on it.

Image source: Getty Images.

So what

To rapidly isolate an appropriate set of initial antibody candidates for COVID-19, the company's research and development team used VelocImmune mice, which have been genetically engineered to have a human immune system. Previously, Regeneron used this same technique to develop an experimental treatment for Ebola, which is currently under review with the Food and Drug Administration. 

The big deal is that a safe and effective COVID-19 therapy would have mega-blockbuster sales potential. This ailment has now fanned out across the globe and killed over 7,500 people. So Regeneron's double-digit rally today seems to be justified, at least on the surface. 

Now what

Regeneron hopes to begin human trials as soon as this summer. While a summer start is unquestionably a rapid development timeline for a complex biologic therapy, the bad news is that Gilead Sciences (GILD -1.09%) will probably have already released its remdesivir data by then.

That's not to say that remdesivir, Gilead's COVID-19 drug candidate, will make preventive treatments like Regeneron's unnecessary by any means. But its broad use could tamp down the current pandemic in a big way (assuming it's effective).

Put simply, Regeneron's COVID-19 therapy may not be the mega-blockbuster-in-the-making that the market seems to be forecasting, per today's action. Summer is a long way off, and a lot can happen by the time this biologic therapy is ready for widespread use in humans. 

 

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Regeneron Pharmaceuticals, Inc. Stock Quote
Regeneron Pharmaceuticals, Inc.
REGN
$623.90 (-2.74%) $-17.59
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
GILD
$62.45 (-1.09%) $0.69

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