In a July 2 research note, H.C. Wainwright & Co. analyst Michael King reported that "investment in Regeneron Pharmaceuticals Inc. (REGN:NASDAQ) pays off again" with its identification of a novel target for protection against obesity.
This target, isolated by Regeneron's genetics center, along with United States, United Kingdom and Mexican scientists, is gene GPR75, located in the brain's hypothalamus, "where much of the body’s regulation of energy balance takes place."
King reviewed the team's efforts and progress to date. In what he described as a "technical tour de force," researchers sequenced more than 654,000 exomes, or gene coding regions, from people living in the U.S., U.K. and Mexico to identify a mutation in five brain-expressed G-protein coupled receptors, including GPR75. These mutations are found in about 4 out of every 10,000 people.
Next, researchers showed, through an animal study, that mutation of GPR75 does what they purport. They fed a high fat diet to two sets of mice, those lacking the GPR75 gene (a Regeneron-created mouse model) and those with a normal copy of it. Those with the gene gained 44% more weight than their counterparts without it. Science Today published a paper by Regeneron that detailed this work.
"The significance of the Science Today paper is twofold," wrote King. "Not only do the collaborators find additional uncommon genetic alleles that are associated with weight loss, they also validated other putative obesity genes associated with weight gain, in particular those associated with the melanocortin 4 (MC4R) receptor."
Currently, King pointed out, Regeneron is working on developing antibody-based therapies that mimic the loss of the GPR75 gene. Also, it collaborating with other biopharmas, such as Alnylam, to develop a small inhibitory RNA (siRNA) approach to silencing the gene.
"Given the strength of Alnylam's technology platform, a candidate siRNA may soon emerge," added King.
The next hurdle for Regeneron relative to this program is to validate, via a clinical trial, that GPR75 is a legitimate target in humans, King highlighted.
"Whether or not GPR75 can be successfully developed in the clinic remains to be seen," King wrote. "No matter the case, Regeneron has succeeded in finding the proverbial genetic needle in a haystack."
H.C. Wainwright has a Buy rating and a $703 price target on Regeneron, the stock of which is trading now at around $583.38 per share.[NLINSERT]
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Disclosures from H.C. Wainwright & Co., Regeneron Pharmaceuticals, Inc., First Take, July 2, 2021
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Michael G. King, Jr. , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst's household has a financial interest in the securities of Regeneron Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of June 30, 2021 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Regeneron Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc.
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The firm or its affiliates received compensation from Alnylam Pharmaceuticals, Inc. for non-investment banking services in the previous 12 months.
The Firm or its affiliates did not receive compensation from Regeneron Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in Regeneron Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc. as of the date of this research report.
H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.