Regeneron Pharmaceuticals, Inc.

On April 10, 2024, the U.S. Department of Justice (“DOJ”) announced it had filed a complaint against Regeneron under the False Claims Act. According to the DOJ, the Company failed to report millions of dollars in discounts provided to drug distributors in the form of reimbursed credit card fees. As a result, the DOJ alleges that the ASP of Regeneron’s Eylea drug was inflated, which inappropriately increased Medicare reimbursements. By reimbursing credit card fees, Regeneron subsidized the treatment costs, thereby gaining a competitive advantage over other anti-VEGF treatments.

On this news, the price of Regeneron shares declined by $31.50 or 3.36%, over two consecutive trading days to close at $904.70 on April 12, 2024, on unusually heavy trading volume.

Then, on October 31, 2024, before the market opened, Regeneron released its third quarter 2024 financial results, revealing lagging U.S. net sales for Eylea HD and Eylea. The Company reported sales had only increased 3% versus the third quarter 2023, and quarterly sales of Eylea HD were only $392 million, missing consensus estimates of $415 million to $425 million. The Company also revealed that “[n]et product sales of EYLEA in the third quarter of 2024 were adversely impacted by a lower net selling price compared to the third quarter of 2023.” In the wake of this news, Reuters reported the Company had “reported weaker-than-expected quarterly sales of the higher dose version of its blockbuster eye disease drug Eylea.”

On this news, Regeneron’s stock price fell $84.59, or 9.2%, to close at $838.20 per share on October 31, 2024, on unusually heavy trading volume.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Regeneron paid credit card fees to distributors on the condition that distributors did not charge Eylea customers more to use a credit card; (2) that these payments subsidized the prices that customers paid when using credit cards to purchase Eylea; (3) that, as a result, Regeneron offered a price concession that lowered Eylea’s selling price; (4) that, because retina practices were sensitive to higher prices when using credit cards to purchase anti-VEGF medications, Regeneron’s price concessions provided a competitive advantage; (5) that, as a result of the foregoing, Regeneron misleadingly boosted reported Eylea sales; (6) that, by failing to report its payment of credit card fees as price concessions, Regeneron overstated the ASP reported to federal agencies, thereby violating the False Claims Act; and (7) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.