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Regeneron Pharmaceuticals Under Legal Scrutiny: A Deep Dive into Class Action Claims

In a significant turn of events, Regeneron Pharmaceuticals, Inc., traded on NASDAQ under the ticker symbol REGN, is facing a securities fraud class action that has emerged following a substantial drop in its stock price. The decline, which occurred on October 31, 2024, saw shares plunge by $84.59, collectively erasing approximately $9 billion in market capitalization. This sharp reaction from the market was largely in response to the disappointing earnings report for the third quarter of 2024.

The law firm Hagens Berman, known for taking on corporate accountability cases, has initiated an investigation into whether Regeneron may have misled investors regarding its marketing and reimbursement practices, particularly concerning its EYLEA® product. EYLEA, an injection designed to treat age-related macular degeneration by inhibiting anti-vascular endothelial growth factor (anti-VEGF), has been at the center of scrutiny due to the claims surrounding its sales reporting and pricing strategies.

Allegations Against Regeneron

The class action lawsuit revolves around allegations stating that Regeneron made misleading statements concerning its compliance with Medicare reimbursement regulations. Specific assertions within the complaint include:

• - Regeneron allegedly charged credit card fees to distributors, with stipulations preventing them from imposing higher prices on customers purchasing EYLEA with credit cards.
• - These credit card payments effectively subsidized the costs for customers, inadvertently lowering the sale price of EYLEA.
• - Due to the competitive landscape where retina practices are sensitive to pricing, these concessions purportedly gave Regeneron an unfair advantage, inflating the reported sales figures for EYLEA.
• - The company failed to disclose these practices, which could constitute a violation of the False Claims Act by overstating the average selling price (ASP) reported to federal health agencies.

The legal troubles escalated when, on April 10, 2024, the Department of Justice filed a lawsuit against Regeneron, claiming the company fraudulently inflated Medicare reimbursement rates by misreporting its ASP, disregarding their price concessions. Such alleged misconduct aimed to provide Regeneron with a competitive edge in the marketplace by promoting the stability of EYLEA's ASP to healthcare providers.

The Aftermath of Q3 2024 Earnings Report

The Q3 2024 financial results, published on October 31, revealed that U.S. net sales for EYLEA and its derivative, EYLEA HD, were troubling. The report indicated only a 3% increase in sales compared to the prior year, attributing this stagnation to lower net selling prices and competitive pricing pressure within the anti-VEGF category. The immediate fallout saw Regeneron’s stocks drop by over 9%, leading to a financial hit that many investors are now seeking restitution for through the ongoing class action.

Reed Kathrein, a partner at Hagens Berman spearheading the investigation, stated, "We are probing whether Regeneron intentionally mislead investors regarding the legality of its reported revenues." This examination includes analyzing communication to investors in relation to pricing strategies and compliance with federal regulations, particularly regarding how EYLEA's pricing and associated fees were reported.

Navigating the Class Action Landscape

For investors who acquired Regeneron shares during the specified period—from November 2, 2023, up to October 30, 2024—and feel they have suffered significant losses, it is imperative to act quickly. Hagens Berman has set a lead plaintiff deadline for submissions by March 10, 2025, encouraging affected shareholders to submit their claims through the firm's known platforms.

This ongoing situation serves as a reminder of the risks associated with investing in pharmaceutical companies, where practices surrounding marketing and compliance can have serious implications for stock performance. As the legal proceedings unfold, shareholders and potential investors are left to ponder the regulatory landscape surrounding biotech companies and the impacts of their operational disclosures on market trust.

Conclusion

As Regeneron Pharmaceuticals enters this tumultuous chapter, it will be essential for the firm to navigate the allegations effectively. The outcome of this class action may not only influence Regeneron’s future but also shape how similar companies approach transparency and regulatory compliance in the fiercely competitive pharma sector.