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Regeneron Gains 13.5% Year to date: How to Play the Stock?
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Shares of Regeneron Pharmaceuticals, Inc. (REGN - Free Report) have gained 13.5% in the year so far against the industry’s decline of 2.8%.
The stock has outperformed the sector during this timeframe but underperformed the S&P 500 Index.
REGN Outperforms Industry & Sector
Image Source: Zacks Investment Research
Regeneron’s efforts to diversify its portfolio have impressed its investors, even as lead drug Eylea faces challenges.
Regeneron’s EYLEA HD Stabilizes Ophthalmology Unit
Eylea is an anti-vascular endothelial growth factor inhibitor, approved for various ophthalmology indications.
However, Eylea sales have been under pressure due to competition from Roche’s (RHHBY - Free Report) Vabysmo. The uptake of Roche’s Vabysmo has been outstanding. Roche has designed Vabysmo to block pathways involving Ang-2 and VEGF-A.
To counter the decline in Eylea sales, Regeneron developed a higher dose of the drug. The initial uptake of Eylea HD is encouraging as Eylea patients transition to the higher dose.
Eylea and Eylea HD sales totaled $2.9 billion in the United States in the first half of 2024.
Regeneron has a collaboration agreement with Bayer (BAYRY - Free Report) for Eylea. Regeneron records the net product sales of Eylea and Eylea HD in the United States and Bayer records its net product sales outside the country. Regeneron records its share of profits in connection with sales of Eylea outside the United States.
Dupixent Boosts REGN’s Top Line
The company’s top line benefits from its share of profits/losses in connection with the global sales of Dupixent. Partner Sanofi (SNY - Free Report) records global net product sales of Dupixent.
Solid sales of Dupixent (approved for use in certain patients with atopic dermatitis, asthma, chronic rhinosinusitis with nasal polyposis and eosinophilic esophagitis) have fueled the top line for both Sanofi and Regeneron.
SNY and REGN are striving hard to expand the drug’s label further. The FDA recently approved Dupixent for chronic obstructive pulmonary disease (COPD). The approved indication is an add-on maintenance treatment for adults with inadequately controlled COPD and an eosinophilic phenotype. Strong demand trends should fuel Dupixent sales.
REGN’s Focus on Oncology
The company also has other arrows in its quiver. It is looking to strengthen its oncology franchise, which currently comprises Libtayo (cemiplimab-rwlc), indicated in certain patients with advanced basal cell carcinoma, advanced cutaneous squamous cell carcinoma and advanced non-small cell lung cancer.
REGN’s oncology franchise got a boost with the European Commission's approval of odronextamab for treating adult patients with relapsed or refractory (R/R) follicular lymphoma (FL) or R/R diffuse large B-cell lymphoma (DLBCL) after two or more lines of systemic therapy. The drug has been approved under the brand name Ordspono.
However, the company’s efforts to get odronextamab approved in the United States suffered a setback. The regulatory body issued complete response letters for its BLA for odronextamab in March 2024.
The company is investigating the use of odronextamab as a monotherapy and in combination across earlier lines of therapy in challenging-to-treat lymphomas.
A phase II study for fianlimab, an antibody to LAG-3, in combination with Libtayo for perioperative non-small cell lung cancer, was also initiated. A phase II/III study for fianlimab, in combination with Libtayo for perioperative melanoma, was also initiated.
The successful development of these oncology drugs should be a great boost for REGN.
Valuation & Estimates
Image Source: Zacks Investment Research
Going by the price/sales ratio, REGN shares currently trade at 7.31x forward sales, lower than its mean of 6.55x and the large cap pharma industry’s 7.10x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings per share has remained stable at $44.86 over the past 60 days.
Conclusion
Large biotech companies are generally considered safe havens for investors interested in this sector.
Last month, the stock took a hit after an unfavorable ruling in its lawsuit against Amgen in the United States District Court for the Northern District of West Virginia related to a biosimilar of its Eylea. As a result of this ruling, Amgen can launch its biosimilar amid the ongoing litigation.
The FDA recently approved Amgen’s biosimilar of Eylea — Pavblu. This is the fifth biosimilar approved for Eylea. The entry of a biosimilar will dent Eylea sales.
While the near-term pipeline setbacks and biosimilar challenges with Eylea might be a headwind, Regeneron has solid long-term growth prospects and should maintain the momentum going forward. Any dip in the stock price can be a buying opportunity for long-term investors.
Image: Bigstock
Regeneron Gains 13.5% Year to date: How to Play the Stock?
Shares of Regeneron Pharmaceuticals, Inc. (REGN - Free Report) have gained 13.5% in the year so far against the industry’s decline of 2.8%.
The stock has outperformed the sector during this timeframe but underperformed the S&P 500 Index.
REGN Outperforms Industry & Sector
Image Source: Zacks Investment Research
Regeneron’s efforts to diversify its portfolio have impressed its investors, even as lead drug Eylea faces challenges.
Regeneron’s EYLEA HD Stabilizes Ophthalmology Unit
Eylea is an anti-vascular endothelial growth factor inhibitor, approved for various ophthalmology indications.
However, Eylea sales have been under pressure due to competition from Roche’s (RHHBY - Free Report) Vabysmo. The uptake of Roche’s Vabysmo has been outstanding. Roche has designed Vabysmo to block pathways involving Ang-2 and VEGF-A.
To counter the decline in Eylea sales, Regeneron developed a higher dose of the drug. The initial uptake of Eylea HD is encouraging as Eylea patients transition to the higher dose.
Eylea and Eylea HD sales totaled $2.9 billion in the United States in the first half of 2024.
Regeneron has a collaboration agreement with Bayer (BAYRY - Free Report) for Eylea. Regeneron records the net product sales of Eylea and Eylea HD in the United States and Bayer records its net product sales outside the country. Regeneron records its share of profits in connection with sales of Eylea outside the United States.
Dupixent Boosts REGN’s Top Line
The company’s top line benefits from its share of profits/losses in connection with the global sales of Dupixent. Partner Sanofi (SNY - Free Report) records global net product sales of Dupixent.
Solid sales of Dupixent (approved for use in certain patients with atopic dermatitis, asthma, chronic rhinosinusitis with nasal polyposis and eosinophilic esophagitis) have fueled the top line for both Sanofi and Regeneron.
SNY and REGN are striving hard to expand the drug’s label further. The FDA recently approved Dupixent for chronic obstructive pulmonary disease (COPD). The approved indication is an add-on maintenance treatment for adults with inadequately controlled COPD and an eosinophilic phenotype.
Strong demand trends should fuel Dupixent sales.
REGN’s Focus on Oncology
The company also has other arrows in its quiver. It is looking to strengthen its oncology franchise, which currently comprises Libtayo (cemiplimab-rwlc), indicated in certain patients with advanced basal cell carcinoma, advanced cutaneous squamous cell carcinoma and advanced non-small cell lung cancer.
REGN’s oncology franchise got a boost with the European Commission's approval of odronextamab for treating adult patients with relapsed or refractory (R/R) follicular lymphoma (FL) or R/R diffuse large B-cell lymphoma (DLBCL) after two or more lines of systemic therapy. The drug has been approved under the brand name Ordspono.
However, the company’s efforts to get odronextamab approved in the United States suffered a setback. The regulatory body issued complete response letters for its BLA for odronextamab in March 2024.
The company is investigating the use of odronextamab as a monotherapy and in combination across earlier lines of therapy in challenging-to-treat lymphomas.
A phase II study for fianlimab, an antibody to LAG-3, in combination with Libtayo for perioperative non-small cell lung cancer, was also initiated. A phase II/III study for fianlimab, in combination with Libtayo for perioperative melanoma, was also initiated.
The successful development of these oncology drugs should be a great boost for REGN.
Valuation & Estimates
Image Source: Zacks Investment Research
Going by the price/sales ratio, REGN shares currently trade at 7.31x forward sales, lower than its mean of 6.55x and the large cap pharma industry’s 7.10x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings per share has remained stable at $44.86 over the past 60 days.
Conclusion
Large biotech companies are generally considered safe havens for investors interested in this sector.
Last month, the stock took a hit after an unfavorable ruling in its lawsuit against Amgen in the United States District Court for the Northern District of West Virginia related to a biosimilar of its Eylea. As a result of this ruling, Amgen can launch its biosimilar amid the ongoing litigation.
The FDA recently approved Amgen’s biosimilar of Eylea — Pavblu. This is the fifth biosimilar approved for Eylea. The entry of a biosimilar will dent Eylea sales.
While the near-term pipeline setbacks and biosimilar challenges with Eylea might be a headwind, Regeneron has solid long-term growth prospects and should maintain the momentum going forward. Any dip in the stock price can be a buying opportunity for long-term investors.
REGN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.