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Regeneron (REGN) Outperforms Industry YTD: What Lies Ahead?

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Shares of Regeneron Pharmaceuticals (REGN - Free Report) have gained 17% in the year so far against the industry’s decline of 12%.

Zacks Investment Research
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Last year was promising for the company on the back of the solid performance of key drugs and contribution from the COVID-19 antibody cocktail, REGEN-COV.

However, in January 2022, the FDA revised the authorizations for a few monoclonal antibody treatments, including Regeneron’s REGEN-COV (casirivimab and imdevimab), as data indicated that these treatments are highly unlikely to be active against the Omicron variant.  Hence, this will be dent sales in 2022 from this stream.

Nevertheless, Regeneron has two key growth drivers – Eylea and Dupixent – which should drive growth in 2022 and beyond.

Demand for lead ophthalmology drug Eylea (approved for neovascular age-related macular degeneration, diabetic macular edema and macular edema, among others) maintains momentum for the company on strong demand. Regeneron has a collaboration agreement with Bayer (BAYRY - Free Report) for 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.

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. 

Regeneron has a collaboration agreement with Sanofi (SNY - Free Report) for some of its other drugs like Dupixent and Kevzara, among others. 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.  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. The European Commission recently expanded the label of Dupixent in the European Union. Dupixent is now also approved for children aged 6 to 11 years as an add-on maintenance treatment for severe asthma with type 2 inflammation characterized by raised blood eosinophils and/or raised fractional exhaled nitric oxide (FeNO), who are inadequately controlled with medium to high dose inhaled corticosteroids (ICS) plus another medicinal product for maintenance treatment.

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). 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. 

Earlier in the year, Regeneron and partner Intellia Therapeutics, Inc. (NTLA - Free Report) announced positive interim data from an ongoing phase I study of their lead in vivo genome editing candidate, NTLA-2001, which is being developed as a single-dose treatment for transthyretin (ATTR) amyloidosis.  Treatment with NTLA-2001 led to dose-dependent reductions in serum TTR and achieved maximal reductions by day 28.  Intellia expects to complete enrollment of the phase I study for both ATTRv-PN and ATTR-CM subjects in 2022 and present additional data at a medical meeting later this year. Intellia and Regeneron plan to move toward pivotal studies for both forms of ATTR amyloidosis, with an initial focus on the cardiomyopathy manifestations of the disease.

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 sets the stage for further growth.

Regeneron currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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