Regeneron Pharmaceuticals' (REGN) fianlimab trial miss might lead some investors to question the company's broader strategy and execution, RBC Capital Markets said.

The company reported late Friday that two dose levels of fianlimab in combination with cemiplimab, evaluated as a first-line treatment in unresectable locally advanced or metastatic melanoma, failed to meet a primary endpoint in its phase 3 trial.

RBC said the miss was disappointing as they had estimated peak worldwide probability-adjusted sales of about $1.6 billion to $1.8 billion for the drug, making it a meaningful setback for the company's pipeline.

The investment firm said it does not see the miss as critical given several ongoing strengths, including continued strong growth from Dupixent, improving momentum for Eylea HD, expanded Dupixent lifecycle initiatives, and the expected increase in Sanofi (SNY) royalty contributions.

The brokerage said this failure adds to a series of recent missteps, including the itepekimab setback, a less competitive launch label for Eylea HD, and manufacturing issues. Together, these events may lead some skeptics to question the company's overall direction.

"In short, near-miss is a tough break, and still there are lots of pipeline and other drivers, but disappointment in light of high expectations going in could raise bigger-picture questions," according to the note Sunday.

RBC lowered its price target on Regeneron Pharmaceuticals to $707 from $762 while keeping its sector perform rating.

Shares of Regeneron were down more than 10% in Monday trading.

Price: 626.50, Change: -71.76, Percent Change: -10.28