Is Regeneron’s ‘great science premium’ a thing of the past?

Famed biotech analyst Mark Schoenebaum used to have a word of caution for anyone looking to bet against Regeneron Pharmaceuticals: Beware the “great science premium.” That phrase referred to the fact that Regeneron’s share price always seemed to reflect a market assumption that Drs. Leonard Schleifer and George Yancopoulos, the avuncular brains of the operation, were just simply better at biotech than everyone else, making shorting the stock a perilous idea.

But in 2019, with Regeneron having lost 30% of its value since March, that principle seems to have lapsed. SVB Leerink analyst Geoffrey Porges ran the numbers on Regeneron’s current share price and concluded that it “reflects an outcome that is considerably worse than our worst case scenario.”

There’s well-founded concern that changes to reimbursement and mounting competition will cut into profits from Eylea, Regeneron’s biggest product, but nothing on the order of what the market reflects, according to Porges. And, for whatever reason, Wall Street seems less convinced than ever that Schleifer and Yancopoulos can science their way into a brighter future.