Regeneron Prices $1.25B Public Offering; Analyst Cautious On Valuation

Regeneron Pharmaceuticals (REGN) has now announced the pricing of an underwritten offering of $1.250 billion aggregate principal amount of senior unsecured notes due 2030 and $750 million aggregate principal amount of senior unsecured notes due 2050.

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The 2030 notes will bear interest at 1.750% per annum and will mature on September 15, 2030. The 2050 notes will bear interest at 2.800% per annum and will mature on September 15, 2050.

According to the statement, the issuance of the notes is expected to close on or around August 12, 2020, subject to customary closing conditions.

Regeneron intends to use the net proceeds from the offering to repay in full the $1.5 billion principal amount of loans outstanding under the bridge facility incurred to fund a portion of the repurchase by Regeneron of shares of its common stock held by Sanofi in May 2020, and to pay accrued interest and related fees and expenses.

The remainder will be used for other general corporate purposes, the company says.

Shares in Regeneron have surged 65% year-to-date, and the stock has a cautiously optimistic Moderate Buy consensus from the Street. That comes with an average analyst price target of $651- indicating only 5% upside potential lies ahead.

“While REGN continues to execute well, valuation forms the basis of our Neutral rating” commented JP Morgan analyst Cory Kasimov on August 5.

He boosted his price target to $550 from $501 after the company reported a straightforward 2Q with a top and bottom line beat. Progress on the development of a COVID-19 antibody cocktail remains on track with initial results expected in September, the analyst noted.

“In the near-to-intermediate term, we expect focus to be on COVID-19 development efforts, Eylea / Dupixent trends, and to better understand the potential of the company’s emerging IO platform (with a specific focus on Libtayo’s opportunity in NSCLC and upcoming bispecific updates)” he added. (See REGN stock analysis on TipRanks).