Back to top

Image: Bigstock

Regeneron (REGN) Rides on Solid Product Portfolio: Should You Buy?

Read MoreHide Full Article

Biotechnology company, Regeneron Pharmaceuticals (REGN - Free Report) , performed well in the past year on the back of solid performance of key drugs and contribution from COVID-19 antibody cocktail. The stock has been one of the outperformers in this volatile biotech industry which was in red in this time frame.

Favorable Rank and Rising Estimates: Regeneron’s shares have gained 14.2% in the past year against the industry’s decline of 38.2%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Regeneron currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Earnings per share estimates have increased to $48.19 from $47.77 for 2022 in the past seven days.

Lead Drug Eylea Continues to Drive Growth: Demand for lead ophthalmology drug Eylea (approved for neovascular age-related macular degeneration, diabetic macular edema and macular edema, among others) maintained momentum last year after a slowdown earlier on. The same is expected to be strong in 2022. Regeneron has a collaboration agreement with Bayer (BAYRY - Free Report) for Eylea. While REGN records net product sales of Eylea in the United States, Bayer records net product sales of the drug outside the country. Regeneron records its share of profits/losses in connection with the international sales of Eylea. 

Recent label expansions into additional indications have boosted sales and should maintain momentum for the drug despite lingering competition.  The company is working on expanding the drug’s label further, which should boost performance.

Asthma Drug Dupixent Propels Growth:  Regeneron has a collaboration agreement with Sanofi (SNY - Free Report) for some of its other drugs like Dupixent, Kevzara, among others. Strong performance of Dupixent has driven growth for Regeneron in the last couple of years. The drug is approved for moderate-to-severe atopic dermatitis (AD) and asthma, among others. Continued label expansion of the drug has boosted sales further, making it an important sales contributor for Regeneron.  Sanofi records global net product sales of Dupixent, Kevzara and ZALTRAP. Regeneron records its share of profits/losses in connection with global sales of Dupixent and Kevzara, and Sanofi pays the company a percentage of net sales of ZALTRAP.

The FDA approved the drug for children aged six to 11 years with moderate-to-severe asthma in October 2021. Both the companies are working on expanding the drug’s label, which should propel sales further.

Approvals of Other Drugs Diversify Revenue Base: The FDA approval of Libtayo for the treatment of patients with metastatic or locally advanced cutaneous squamous cell carcinoma (CSCC) who are not candidates for curative surgery or curative radiation has diversified the portfolio. The drug’s label was recently expanded to include non-small cell lung cancer (NSCLC) and basal cell carcinoma (BCC). It is under review for the indication of cervical cancer in the United States. Approval in additional indications will boost sales further as the oncology market holds great potential.

Regeneron’s efforts to bring additional products to the market are impressive. Moreover, these drugs diversify the company’s revenue base.

Antibody Cocktail Boosts Top Line:  Incremental contribution from REGEN-COV, its antibody cocktail (casirivimab and imdevimab) for COVID-19, significantly boosted the top line in 2021. The European Commission recently approved the cocktail as Ronapreve in the European Union and other countries. In October, the FDA accepted for priority review the first of two biologics license applications (BLAs) for REGEN-COV to treat COVID-19 in non-hospitalized patients and as prophylaxis in certain individuals.

Earlier, the company announced that its currently authorized REGEN-COV antibodies have diminished potency versus Omicron.  With Omicron gaining steam rapidly, the diminished potency against the same does not bode well for Regeneron.

Nevertheless, with Omicron not posing that great a risk so far and other variants being more deadly, demand should more or less maintain momentum.

Roche has a collaboration agreement with Roche (RHHBY - Free Report) for the same. While Regeneron invented the antibody cocktail, Roche is primarily responsible for development and distribution outside the United States.

Conclusion

Regeneron has a solid and diverse portfolio, which is expected to maintain the company’s momentum further despite stiff competition for its key drugs. The promising pipeline also sets the stage for further growth.