Two biotech stocks get caught in the crossfire in Medicare negotiations

Confusion sent over new Medicare negotiation plans Regeneron Pharma (REG) And Halozyme Therapeutics (GLORIOLE) Stocks fall on Thursday. The REGN share fell below its 50-day moving average and the HALO share hit a low for the year.


Under a new program starting in 2026, the Centers for Medicare and Medicaid Services will begin negotiating the prices of the 10 most expensive US drugs. Drugs become negotiable 13 years after approval. Medicines out too AbbVie (ABBV), Bristol Myers Squibb (BMY) And Pfizer (PFE) will likely be on the list, according to Reuters.

But specific wording from the CMS draft guidance unveiled Wednesday slammed REGN stock and HALO stock. A drug is approved for CMS negotiations 13 years after the drug was first approved. Subsequent approvals for other uses and new formulations will not move the negotiation authorization date.

This could impact Regeneron’s Eylea and Halozyme’s Darzalex, which it co-produces with Johnson&Johnson (JNJ), analysts said. In response, REGN stock fell 2.8% near 739.20. HALO stock fell 3.9% to nearly 38.50. Overall, biotech stocks fell 1.4%.

REGN share: high-dose Eylea?

The biggest question on investors’ minds remains whether Regeneron’s high-dose strength of Eylea will be considered separately from its standard Eylea, RBC Capital Markets analyst Brian Abrahams said in a note to clients. Regeneron separately applied for approval of the high-dose Eylea.

Eylea was first approved in 2011, but a high-dose version of the drug is currently under review by the Food and Drug Administration. Abrahams says Regeneron cannot use this gap to restart the 13-year clock.

But the draft guidance says CMS will soon postpone negotiations over a drug’s cost to face a biosimilar, Evercore ISI analyst Umer Raffat said in a report. Regeneron is in that boat.

“We interpret (the draft guidance) to mean that the existence of a biosimilar version of standard Eylea, which is expected to hit the market in mid-2024, could actually prevent high-dose Eylea from being the subject of negotiations,” RBC’s Abrahams said.

Still, REGN stock has been flirting with the low side of a flat base, according to The base includes a buy point at 800.58.

Shots and HALO stick

Halozyme manufactures a substance that allows drugs to be administered subcutaneously, intravenously, without tapping a vein. Additionally, its most notable use is in J&J’s Darzalex Faspro, a drug for multiple myeloma.

The intravenous form of Darzalex received approval in 2015, meaning it would be eligible for CMS negotiations in 2028, SVB Securities analyst David Risinger said in a statement. But Darzalex Faspro has longer horizons following its approval in 2020.

The CMS draft guidance “may be detrimental to the company’s Darzalex royalties and the value of Medicare sales of Halozyme partner products,” Risinger said. “We also learned yesterday that an important European Union patent on Darzalex has been invalidated.”

Risinger downgraded HALO stock to a market performance rating and lowered its price target to 42 from 61.

REGN stock climbed its 50-day moving average after initially falling much further. Meanwhile, HALO stock is now well below its two main moving averages.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.


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