Hello all,
I am long Regeneron, gave 10 shares @ 497$. Not financial advise. I saw this yesterday and didn't see it discussed, yet.
TLDR: REGENERON received on June 4th the FDA clearance to use 1200 mg instead of 2400 mg. it seems this news might boost income by 13% (assuming that there are little extra cost to implement) based on the guaranteed US deal until June 30 alone.
I think the timing of this (early June) will impact the stock very positively according to this article:
The U.S. government will purchase all REGEN-COV doses delivered by June 30, 2021 and may accept additional doses through September 30, 2021 at its discretion, up to a maximum amount of 1.25 million doses.
Considering that one former dose is now effectively 2 doses, they will earn double for basically no extra cost (except packaging and shipping, or maybe just relabeling the vials, I guess) for doses to be delivered in June. Depending on how fast this is possible to implement, of course... For the potential doses until September, I would expect them to have half the production cost accordingly.
According to this barron's article,
The lower-dose level would allow it to deliver more doses and could increase the amount of the possible payout, for a total of up to $2.6 billion.
[...]
Regeneron now says it expects to deliver at least 1 million doses to the U.S. government in the second quarter of the year, depending on manufacturing operations. At the $2,100 per-dose level implied by the information Regeneron has provided about its contract, the U.S. government would pay $2.1 billion for those 1 million doses.
More specifically
Under the new deal, the government will purchase up to 1.25 million doses delivered by June 30. Hitting that benchmark would be contingent on Regeneron being authorized to sell the cocktail at a smaller dosage level than is currently authorized; at the current dosage level, the company will deliver 750,000 doses by June 30.
The company said that the government would pay $2.625 billion if all 1.25 million doses are delivered, implying a price of $2,100 per dose. That is well over the implied price of $1,500 per treatment course the company charged in its first agreement with the government.
So, from past delivery estimates of 750 k doses to 1 M doses by June 30 would be additional revenue of 250 k * 2,100 $ = 525 M $ at presumably little production cost for Regeneron. According to finviz, past sales of 9.2 B $ and income of 4 B $ that would be 5.7% increased sales or 13.1% additional income.
That is not taking the potential 250 k additional doses that the US might accept between until and Sept 30. And not taking the European deal for 55 k doses (if EMA approved) or the Swiss extra 3 k doses into account.
Cheers
Submitted June 05, 2021 at 06:14AM by MathematicianWide339 https://ift.tt/3x4LGdH
