Regeneron Pharmaceuticals Stock Forecast: Biotechnology is a notoriously difficult industry for stock investors to get their feet wet in.
For one, it requires investors to have a solid foundation in the underlying scientific fundamentals in order to judge which companies deserve a second look. In addition, the fate of biotechnology stocks can rise or fall based on the success or failure of a clinical trial.
Biotechnology companies may spend years and millions of dollars on research and development for a single product, only to find that it’s not effective enough to gain approval or that they’ve been outcompeted by their business rivals.
With this caveat in mind, there are a few biotechnology companies that seem to be a particularly interesting opportunity for curious investors. One such company is Regeneron Pharmaceuticals [NASDAQ: REGN], which produces a variety of medicines for diseases including asthma, cancer, and autoinflammatory conditions.
Regeneron stock has had a bumpy ride in 2019 thus far, losing more than $100 in value from its peak at the start of the year. Are shares of Regeneron worth the buy right now, or should investors think twice before investing in Regeneron?
What Does Regeneron Pharmaceuticals Do?
Regeneron Pharmaceuticals [NASDAQ: REGN] is a U.S. biotechnology company that designs, develops, and produces pharmaceutical solutions for serious medical conditions.
Founded in 1988, Regeneron is headquartered in Eastview, New York with international offices in London and Ireland. Regeneron currently employs more than 6,000 people and has a market capitalization of more than $30 billion.
Leonard Schleifer is the co-founder and current CEO and president of Regeneron, serving in these capacities since its inception. The company’s main competitors include other major pharmaceutical giants such as Novartis, Pfizer, Merck, and Roche.
Thus far, Regeneron has invented several ground-breaking medical treatments, including:
- Aflibercept (trade names Eylea and Zaltrap), which treats wet macular degeneration and metastatic colorectal cancer by inhibiting vascular endothelial growth factor.
- Rilonacept (trade name Arcalyst), which treats a family of autoinflammatory diseases known as cryopyrin-associated periodic syndrome by inhibiting interleukin-1.
Regeneron Pharmaceuticals [NASDAQ: REGN] has also innovated pharmaceutical treatments for conditions such as atopic dermatitis, rheumatoid arthritis, and atherosclerosis.
Is Regeneron Pharmaceuticals a Buy?
Regeneron generates most of its revenue from its Eylea drug for wet macular degeneration, which is the leading cause of severe vision loss in elderly patients. The company has reported that sales of Eylea in the U.S. alone topped $4 billion in 2018.
While Eylea is currently bringing home the majority of Regeneron’s revenue, the company also has a few other drugs of interest in its pipeline.
Regeneron’s alirocumab drug (trade name Praluent) for treating high cholesterol saw sales of $80 million in Q3 2018, up $31 million year over year. In April 2019 the U.S. FDA approved Praluent for reducing the risk of heart attacks, strokes, and unstable angina, making it likely that sales will increase even further in 2019.
Dupilumab (trade name Dupixent) is another Regeneron product that has the potential to be a serious money-maker in the future. In Q3 and Q4 2018, global sales of Dupixent were $262 million and $319 billion, respectively, which puts the drug on track to be a yearly billion-dollar asset for Regeneron.
On the financial side, Regeneron recently announced Q2 2019 results that should make would-be investors very happy. Quarterly revenues stood at $1.9 billion, a 20 percent increase year over year and exceeding analysts’ estimates of $1.8 billion. Net product sales also grew by 21 percent year over year to reach $1.2 billion.
What are the Risks of Buying Regeneron Pharmaceuticals?
As mentioned above, Regeneron Pharmaceuticals [NASDAQ: REGN] makes more than 75 percent of its revenue from one single product: Eylea. While the drug is currently a major success story, this also puts the company on shaky ground if one if its rivals were to develop a viable alternative for treating macular degeneration.
Regeneron’s patents for Eylea are set to expire in 2020 for the U.S. and in 2021 for Europe, leaving the drug exposed to generic competition. What’s more, competitor Novartis has already developed brolucizumab, a second option for treating wet macular degeneration that they hope to launch by the end of this year (pending FDA approval).
Uncertainty over the fate of Eylea is perhaps one reason why Regeneron stock has had a lackluster 2019 so far, losing more than 25 percent of its value since January.
Regeneron Pharmaceuticals Stock Forecast Summary
While Regeneron Pharmaceuticals [NASDAQ: REGN] is currently pinning most of its hopes on the success of Eylea, there’s no reason to assume that the company would crash and burn if viable competition for the drug emerges.
Even if Eylea lost half of its value for Regeneron, the remaining half would still be higher than the current price range of Regeneron stock.
The company also has several promising treatments in the works. Cemiplimab (trade name Libtayo), a drug for treating squamous cell skin cancer, received FDA approval in September 2018. Further down the pipeline, a drug currently named REGN1979 has shown positive results for treating patients with certain types of non-Hodgkin lymphoma.
For now probably best to hang on to shares of Regeneron for now, as we wait to see how increased competition for Eylea will impact the company’s bottom line.