The late-stage miss shakes analyst confidence in Regeneron’s clinical execution, according to BMO Capital Markets, also noting last year’s Phase 3 failure in chronic obstructive pulmonary disease.
Regeneron’s investigational LAG-3 inhibitor, when used with the company’s FDA-approved PD-1 blocker Libtayo, does not offer significant survival benefits as a first-line treatment option for patients with unresectable or metastatic melanoma.
“This was to be the defining catalyst of 1H26,” analysts at BMO Capital Markets told investors in a note on Sunday evening, adding that “even more pressure has been placed on the company’s pipeline” because of the miss. Truist Securities agreed, calling the readout a “mishap” and saying that “investors may need to wait longer for a strong pipeline driver to emerge.”
Regeneron crashed 10% to $624 before Monday’s opening bell.
The pharma ran a Phase 3 melanoma study to test its anti-LAG-3 antibody fianlimab as part of a combination regimen with its PD-1 blocker Libtayo against Merck’s mega-blockbuster therapy Keytruda. Results, disclosed late on Friday, showed median progression-free survival (PFS) of 11.5 months in patients with unresectable or metastatic disease who were given the high-dose combo regimen, and 9.6 months in those treated with the low-dose schedule. Comparators on Keytruda, meanwhile, saw a median PFS of 6.4 months. The treatment difference failed to reach statistical significance for both test arms.
Truist said that these data “suggest minimal treatment benefit” of the fianlimab doublet versus Keytruda.
After speaking with Regeneron management, BMO was able to add more color to the readout. The miss, according to the pharma, was due to “late-separation in PFS curves,” the analysts wrote on Sunday. Regeneron also detected a trend toward improvement in overall survival.
But the analysts were unimpressed. “Regardless of how close fianlimab was to success, close does not count,” they wrote. “Commercial dynamics may be improving, but R&D struggles . . . still hold true and need to be addressed.”
In particular, BMO pointed to the pharma’s late-stage stumble for the IL-33 itepekimab in May 2025. Itepekimab at the time only aced one of two Phase 3 trials in chronic obstructive pulmonary disease, both of which looked at the asset’s ability to reduce the risk of moderate to severe exacerbations. Regeneron had been positioning itepekimab as the successor of its blockbuster drug Dupixent, and the failure triggered an 18% slide in shares.
“Confidence shaken; frustration mounting around R&D execution,” BMO wrote on Sunday. “We find it hard to reconcile misstep after misstep,” the firm added, expressing dissatisfaction with the pharma’s clinical execution.
“Refocusing R&D efforts, capital deployment, and easing the tension between management and the investment community remain to be improved,” the firm said. “We expect more from Regeneron.”
