Why Regeneron, Cytori, and Endo Could Climb Higher Today
Good morning, fellow Foolish investors! Today we have three stocks that are likely to move higher today -- Regeneron , Cytori Therapeutics , and Endo Health Solutions .
Let's check in on the major headlines moving these three stocks this morning.
Regeneron rallies on robust third quarter earnings
First and foremost, investors should check in on Regeneron, which just reported its third-quarter earnings. The company reported non-GAAP earnings of $2.40 per diluted share -- an impressive 27% increase from the $1.89 per share it reported in the prior-year quarter. Revenue climbed 39.5% year-over-year to $597 million.
U.S. sales of the eye disease treatment Eylea, Regeneron's most important source of revenue, climbed 49% year-over-year to $363 million. Regeneron co-markets Eylea with Bayer, which retains the drug's marketing rights abroad. Eylea is currently approved for wet age-related macular degeneration (wet AMD) and macular edema following central retinal vein occlusion (CRVO) in the U.S. and Europe.
However, Eylea still faces stiff competition from Novartis' Lucentis, which is approved for both indications, as well as diabetic macular edema and macular edema following branch retinal vein occlusion in the U.S. and Europe. In Europe, Lucentis is also approved for choroidal neovascularization secondary to pathologic myopia. Eylea is currently in phase 3 trials for all three additional indications that Lucentis is approved for.
Regeneron also reported encouraging progress in its fully human monoclonal antibodies pipeline. The company's primary collaborator, Sanofi , currently has seven fully human monoclonal antibodies in their shared pipeline. During the quarter, the companies reported positive results for its cholesterol, asthma, dermatitis, and rheumatoid arthritis treatments.
All of these new treatments are expected to be superior to "humanized" monoclonal antibodies, since humanized monoclonal antibodies use mouse cells, whereas fully human monoclonal antibodies are developed from transgenic mice -- allowing them to be more easily accepted by the body's immune system. Regeneron is counting on the success of these next-generation treatments to eventually diversify the company's revenue away from Eylea.
It's a story that investors still believe in -- Regeneron stock is up nearly 100% over the past 12 months.
Cytori soars on a $531 million deal
A smaller company to watch is Cytori Therapeutics, which jumped 46% after-hours yesterday after the company announced a commercialization partnership with Lorem Vascular worth up to $531 million. Lorem intends to bring Cytori's cell therapy technologies to China, Hong Kong, Malaysia, Singapore, and Australia.
Cytori produces cell therapies that use stem and regenerative cells to repair soft tissue defects and treat cardiovascular diseases. The company generates revenue from its Celution and Puregraft systems -- which are used for body contouring procedures, such as fat grafting and liposuction -- as well as its StemSource Cell Banks for the storage of stem cells.
Cytori is currently unprofitable and posted a 48.2% year-over-year decline in revenue last quarter to $1.4 million. In addition, it only had $13.6 million in cash and equivalents at the end of last quarter -- which explains why a $531 million deal sent shares soaring.
Through the commercialization partnership, Lorem will pay license fees, agree to product purchase commitments, and purchase additional stock from Cytori. By the numbers, that equals $500 million in fees, $24 million in stock purchases valuing the company at $3 per share, and $7 million in additional purchase commitments.
In exchange, Lorem gets a 30-year exclusive license to Cytori's cell therapy technologies for all indications except for hair loss and body aesthetics.
Looking forward, there may be more potential upside to Cytori stock, especially since Lorem's equity purchase agreement values the stock at $3 per share, which may set a firm floor on the stock price. Shares of Cytori have declined nearly 40% over the past 12 months.
Endo Health Solutions acquires Paladin Labs
One final company to watch this morning is Endo Health Solutions, which is climbing after it announced its plans to to acquire Paladin Labs for $1.6 billion. Endo is paying an acquisition premium of 20% to Paladin's previous closing price.
Endo is an American company that focuses on branded and generic pharmaceuticals, medical devices, and health care services. Paladin, on the other hand, is a Canadian company focused on specialty pharmaceuticals. After the deal closes, both companies will be acquired by a new Irish holding company known as "New Endo."
Paladin shareholders will also retain a share of Knight Therapeutics, a newly created Canadian company specifically created to hold Impavido, Paladin's treatment for a disease spread by the female sandfly, which will be kept separate from the newly merged company.
While there will be synergies between the two companies, this deal closely resembles Perrigo's $8.6 billion acquisition of Irish company Elan in July, which was widely considered a move to reduce its corporate tax rate from 35% to 12.5%. New Endo will likely enjoy the same benefits, which could improve its bottom line growth considerably.
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The article Why Regeneron, Cytori, and Endo Could Climb Higher Today originally appeared on Fool.com.Leo Sun has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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