Is Regeneron Pharmaceuticals Stock a Buy? The coronavirus pandemics has had an undeniable impact on the global economy, and any business focused on fighting viruses has a spotlight and stage in 2020.
Although a variety of COVID-19 cures have been touted throughout the media, one of the smaller, lesser-known companies involved is Regeneron Pharmaceuticals [REGN]. And it’s not the only health concern the company is fighting – a cancer treatment called Libtayo, blindness medication named Eylea, and an atopic dermatitis drug called Dupixent.
Some investors are betting the underdog drug maker is also making all the right moves to survive and thrive in today’s rocky economy. Can this business make a killing by saving people’s lives from debilitating diseases, and does it have the chops to compete against others racing for the cures?
In short, is Regeneron Pharmaceuticals stock a buy for investors? While it may be called an underdog, that doesn’t mean it’s a mom-and-pop operation, nor is it new to the game. In fact, the company has been in business for over three decades. Here’s the lowdown on Regeneron Pharmaceuticals, Inc.
Regeneron Has A Broad Drug Pipeline
Regeneron is a biotechnology company founded in New York in 1988. Initially focused on neurotrophic research, it soon expanded into other body receptors.
Its first FDA-approved medication was Arcalyst, which helped treat rare autoinflammatory conditions by blocking the protein receptors associated with inflammation.
It then developed drugs to help reduce cholesterol, along with several immune-oncology medications.
The company has drugs focused on inhibiting pain and inflammation related to a variety of conditions, including Ebola, which is known as one of the world’s deadliest diseases. REGN-EB3, the company’s Ebola treatment, has a high recovery rate in patients approaching 70-90% ranges. This gave the world hope in our battle against an invisible enemy.
By early 2020, the company reached a deal with the U.S. government for federal funding toward any of its COVID-19 treatment research.
It wasn’t long before the company organized a buyout of $5 billion worth of its shares from leading minority investor Sanofi [SNY].
The proposed drug cocktail (which includes Kevzara, a rheumatoid arthritis treatment, along with another yet-unnamed drug) treatment is still undergoing FDA clinical trials, but it shows promise in critical patients. The second piece of the cocktail is created from antibodies from recovered COVID-19 patients.
This broad portfolio of successful medical research and collaborative products makes it interesting to investors.
Is Regeneron Pharmaceuticals Stock A Buy?
Any drugs that provide positive benefits against coronavirus symptoms are guaranteed to make sales in the aftermath of the global pandemic. Having the federal government footing the R&D bill is an asset as well.
According to Erin Duffin at Statista, the pharmaceutical and biotechnology’s R&D spending is the highest across all industries at 15% of total revenue. It’s nothing to sneeze at – in 2018, the company generated $6.711 billion in revenue, which increased to $7.763 billion in 2019.
This was all based on the company’s existing drug portfolio even before the novel coronavirus hit.
Eylea, which treats blindness caused by macular degeneration in the elderly, sold $1.9 billion in the first quarter of 2020. It’s not as steep of growth as some of its other products though.
Libtayo, for example, sold $75 million in the first quarter of 2020 after phase 3 trials indicated positive survival rates in patients with non-small cell lung cancer.
This represents a massive revenue boost of nearly 180%, showing the company’s growth potential. With so many great offerings, analysts agree Regeneron is a stock to watch and many have it at buy status.
Risks of Investing in Regeneron Pharmaceuticals
Even though it has a good outlook, there are risks inherent in Regeneron’s plans. One obstacle is the FDA – if the company’s Covid-cocktail treatment fails to prove efficacy in clinical trials, it’s unlikely to be accepted as a valid coronavirus treatment.
Even if results are positive, it could fall short of expectations, much like every other experimental treatment. At this point, it’s simply too early to tell.
There’s also the issue of pricing – Regeneron’s deal with the U.S. government guaranteed it price control over its own cure.
Should it work, there’s always the possibility that they overcharge and create negative publicity akin to Martin Shkreli’s Turing Pharmaceuticals did back in 2015 with its lifesaving drug Daraprim. Any number of possibilities can occur since the proposed cure is just an experimental drug for the time being.
Negative regulatory exposure is the biggest risk in Regeneron, but its next biggest risk is the competition. It’s not the only game in town – in fact, the market for coronavirus cures is quite competitive.
Will Regeneron Pharmaceuticals Competitors Beat It?
Regeneron is hardly the only company with a proposed COVID-19 cure. Gilead Sciences, for example, led the media buzz at the onset of the pandemic with Remdesivir, a broad-spectrum antiviral that was the furthest along in its FDA clinical trials.
Chloroquine and Hydroxychloroquine were also infamously name-dropped as coronavirus cures during the White House press briefings on the topic. A U.S. biotech firm called Moderna is also in human trials for its proposed cure.
The company is racing through trials this summer in anticipation of this outbreak continuing, and the numbers support the need for this continued research.
Regeneron’s focus on regenerative proteins makes it a dark horse in the race, but it’s anybody’s game at this point. Even if they aren’t the top dog, there’s plenty of financial crumbs to go around, so to speak.
Regeneron Pharmaceuticals Stock Forecast: The Bottom Line
Regeneron is one of many companies working on potential cures to a range of problems, from degenerative blindness caused by age to the 2019 novel coronavirus.
This puts it in the right place at the right time to generate revenue from our endless suffering. Pushing through clinical trials for COVID-19 gives it free government money, but whether it’s successful or not doesn’t ultimately matter.
It’s still creating revenue for its existing treatments and continuing a growth pattern that started even before the coronavirus pandemic.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.