Regeneron Pharma Stock Forecast: Despite centuries of progress in medicine – and a collection of high-impact advances in the past 50 years – millions of people continue to live with and die from painful, debilitating diseases.
Treatments for non-communicable conditions like heart disease, diabetes, and cancer have improved, but heart disease still causes the death of 800,000 Americans each year. Diabetes kills approximately 80,000 people in the United States every year, and cancer is responsible for more than 606,000 deaths annually.
Progress is even more elusive for certain mysterious genetic conditions. Some are so rare that fewer than 200,000 cases exist in the United States, creating a different problem for the afflicted. Individuals with rare diseases struggle to pique the interest of the medical research community, and funding is hard to come by. As a result, treatments and cures are delayed.
Biotech companies specialize in finding new ways to use natural materials – typically living organisms – to solve complex medical problems. Through research and rigorous scientific testing, these companies develop new methods of treating the world’s most debilitating and deadly diseases.
Some focus on a narrow set of conditions, while others expand therapies for a range of medical disorders. In either case, these companies rely on investors to make their life-saving work possible.
Investors may choose to fund research that shows promise because they are driven by a personal cause. However, most are interested in buying stock in biotech companies that are most likely to generate strong returns. Does Regeneron Pharma fit that description? In other words, is Regeneron stock a buy?
Regeneron Pharma is a biotech company that is dedicated to finding better treatment options for a wide range of diseases. Among others, Regeneron is working on advanced therapies for asthma, atopic dermatitis, cancer, infectious diseases, pain conditions, retinal eye diseases, and rheumatoid arthritis.
It already has in-demand products on the market, such as Arcalyst, Dupixent, Eylea, Kevzara, Libtayo, Praluent, and Zaltrap.
In addition, there are more than 30 investigational medicines at various stages of preclinical and clinical research in Regeneron’s pipeline.
Some of the most exciting include advanced treatments for age-related macular degeneration (AMD), diabetic macular edema (DME), lung cancer, melanoma, and chronic obstructive pulmonary disease (COPD). Regeneron is also working on treatments for COVID-19 variants, including Omicron and all of its permutations.
Regeneron Pharma Revenues & Growth
COVID-19 has killed approximately 1.3 million people in the United States to date. More than 350,000 of those deaths occurred in 2020, the first full year of the pandemic. That figure only includes cases in which COVID-19 was the direct cause of death. The virus was a contributing factor in thousands of other fatalities.
As soon as COVID-19 was identified, biotech and pharmaceutical companies sprang into action. They immediately began working on a vaccine, along with treatments to prevent the worst symptoms of the disease in patients who tested positive.
Regeneron was one of the first to introduce an effective therapy for COVID-19 – an antibody cocktail called REGEN-COV.
As the virus evolved, REGEN-COV couldn’t keep up, and by January 2022, REGEN-COV lost its FDA authorization for emergency use. The FDA determined that Pfizer’s Paxlovid and Merck’s Lagevrio were more effective against the Omicron variant.
The FDA decision prompted Regeneron to discontinue its trials of REGEN-COV for younger and immunocompromised patients in early August, which was a big disappointment for investors.
REGEN-COV, introduced in November 2020, was responsible for dramatic revenue growth in 2021. Without it, Regeneron’s revenue dropped considerably in 2022.
Regeneron announced its second-quarter 2022 results on August 3rd. Though revenue growth was strong compared to second-quarter 2020, it declined 44 percent to $2.86 billion compared to second-quarter 2021.
However, the picture is far more positive if REGEN-COV is taken out of the equation. With REGEN-COV excluded, Regeneron revenues are up 20 percent year-over-year.
Much of that growth came from sales of Eylea and Dupixent, which are up 14 percent and 40 percent, respectively. Eylea’s net US sales came in at a record $1.62 billion, and Dupixent net global sales totaled $2.09 billion.
Regeneron Pharma Earnings
On the earnings side, Regeneron delivered GAAP diluted earnings per share (EPS) of $7.47 for the second quarter, while non-GAAP diluted EPS totaled $9.77. That figure is $1.71 lower than it would otherwise be as a result of acquiring in-process research and development (IPR&D).
For example, during the quarter, Regeneron demonstrated its commitment to building a formidable presence in the field of oncology research by increasing its stake in the drug Libtayo.
Libtayo is a leading treatment for non–small cell lung cancer (NSCLC), basal cell carcinoma (BCC), and cutaneous squamous cell carcinoma (CSCC).
In the second quarter, Regeneron also acquired Checkmate Pharmaceuticals, a smaller biotech dedicated to the development of immuno-oncology therapies. Regeneron purchased Checkmate Pharmaceuticals in a cash transaction totaling $250 million.
Regeneron’s second-quarter earnings report was well-received. Share prices reflected the positive results with a share price increase of roughly five percent in the first trading day after the results were released.
The company’s market cap is currently $67.55 billion, and shares are trading around $615 with a P/E ratio of 12.28.
Some analysts consider that figure to be unreasonably low. A more appropriate P/E ratio based on the company’s financials and industry trends would be around 22, which means Regeneron stock is undervalued.
Regeneron’s 52-week low was approximately $538 per share, and its 52-week high was over $745 per share.
Regeneron Pharma Risks
Biotech companies have certain risks in common. The biggest is that promising new drugs simply won’t make it to market. An intensive clinical trial process measures drug efficacy against adverse events in patients, and it is quite common for medications to miss their goals.
Approximately 90 percent of drugs that enter the clinical trial phase never make it to the point of FDA review. In 2021, major disappointments included a vaccine against HIV/AIDS from Johnson & Johnson, a new treatment for Alzheimer’s disease from Biogen, and a new treatment for Huntington’s disease from Roche. Regeneron has dozens of drugs in its pipeline, but statistically speaking, the chances of success are slim.
For now, Regeneron has a number of popular drugs on the market to generate revenue and fund pipeline research, but that brings up other risks. The company’s financial stability relies on sales of Eylea and Dupixent. There is always the possibility of another company releasing a more effective alternative.
Finally, Regeneron faces the risks that all companies must contend with during the current period of uncertainty. Supply chain issues can impact manufacturing capabilities, and a resurgence of COVID-19 may cause a labor shortage.
Healthcare is a highly regulated environment, and changes in the law may reduce profitability. Medication pricing is a hot topic in politics at the moment, and there is a strong possibility reimbursement rates will be capped by third-party payors (e.g., Medicare).
Regeneron works in various medical specialties, including eye diseases, allergies, asthma, and oncology, making it more resilient than most biotech companies.
In contrast, poor patient outcomes caused TG Therapeutics to discontinue sales of its only approved drug, Ukoniq, in April 2022. The fact that Regeneron has two top-sellers and a number of late-stage clinical trials puts Regeneron in a far better position than its much-smaller industry peers. However, it is not immune to the threat of competition.
For now, analysts are most concerned about the potential for Roche’s Vabysmo to pull market share away from Eylea. The newly approved Vabysmo is in the same drug class as Eylea (anti-VEGF) and is approved for the same conditions – particularly macular degeneration.
While Eylea remains the gold standard in treatment protocols, that leadership position isn’t guaranteed long-term. Regeneron is currently testing high-dose regimens of Eylea for the treatment of two chronic diseases of the eye. If those trials are successful, Eylea will be in a stronger competitive position, so investors are anxiously awaiting results.
Regeneron Pharma Stock Forecast
Though financial data suggests that Regeneron stock is undervalued, which indicates it is a good time to buy, analysts are evenly divided on whether Regeneron stock is a buy or hold.
The hold opinions are primarily due to concerns over the company’s significant cash outlays for its recent acquisitions coupled with the dramatic drop in revenue due to REGEN-COV’s discontinuation.
Regeneron Pharma stock price forecasts range from $536 per share to $796 per share over the next 12 months. The median price forecast is $665.50, which – if accurate – would represent an increase of more than eight percent.
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.