Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of biotech company Regeneron Pharmaceuticals shot higher by as much as 10% after Sanofi announced its intent to boost its stake in Regeneron by purchasing shares on the open market.
So what: According to Reuters, Sanofi currently owns 16.7% of Regeneron's stock and, in an email correspondence, noted that it may be willing to increase its stake up to 30%. Because of an agreement between the two companies in 2007, Sanofi is prohibited from acquiring more than 30% of all outstanding shares. Regeneron and Sanofi both developed the now FDA and EU-approved Zaltrap for aggressive cases of colorectal cancer and are working on multiple other clinical studies.
Now what: With Sanofi intending to increase its stake in Regeneron, the rumor mill will again swirl that a buyout offer could be coming; however, that appears highly unlikely given Regeneron's already lofty valuation due to the success of its wet age-related macular degeneration drug, Eylea. In addition, Regeneron comes with the extra baggage of having Bayer as its partner for Eylea, meaning that a buyout of Regeneron likely wouldn't be simple. Today's purchase is a golf clap for Regeneron, but it'll need Eylea to do its talking if it hopes to maintain its current valuation.
Craving more input? Start by adding Regeneron Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.
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The article Why Regeneron Pharmaceuticals Shares Spiked originally appeared on Fool.com.
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