- Investors and analysts convened in San Francisco last week to hear healthcare company presentations.
- Industry prospects remain favorable (excluding foreign currency translations), given an improving economy, the ACA and demographics.
- Just as monoclonal antibody technology took decades to develop, but then led to significant drug development, newer therapies are beginning to favorably impact hematology, oncology, hepatology and nephrology.
- The current "research renaissance" in pharmacology will not only dramatically improve healthcare, but will also lead to tremendous investment opportunities.
Regeneron's Valuation Has Moved Ahead Of Its Growth Potential
- Regeneron Pharmaceuticals has used the success of Eylea to become a major player in the U.S. biotechnology sector.
- Its share price has delivered stunning returns in recent years, but the stock now trades at approximately 35 times projected forward earnings.
- Although the firm has an impressive balance sheet and an estimated long term earnings growth rate of more than 20%, the DRAG framework suggests its shares are overvalued by 10%.
The FDA Breakthrough Designation Further Validates Regeneron's Pipeline
- A research based company's pipeline determines its fate going forward.
- Early positive clinical results can give an investor an early read as to the future path of the company's share price.
- The recent string of high profile successes have stoked my bullish fervor even more.
Regeneron Pharmaceuticals Offers More Upside Than Gilead Sciences
- Regeneron continues to perform as the shares continue their ascent higher.
- The company's main compounds continue to show significant promise in Phase III testing.
- Sanofi holds over 20% of the shares outstanding offering a built in suitor if the compounds deliver on their promise.
- I expect the shares to potentially outperform Gilead Sciences in 2015 as will be detailed below.
Regeneron Plunges In What Barron's Calls A Significant Disappointment: My Analysis
- Regeneron missed some analysts' expectations for sales and EPS, sparking a nearly 6% sell-off in the shares.
- Barron's jumped on the bearish bandwagon.
- Yet the bull case for Regeneron continues to strengthen, as this article discusses.
- Regeneron's shares went up by more than 30% year-to-date, despite the tumbling performance of the entire biotechnology sector.
- According to analysts at UBS, Regeneron's blockbuster drug EYLEA's sales are expected to hit $3.7 billion by 2020.
- Regeneron received Breakthrough Therapy designation for EYLEA for the treatment of patients suffering from diabetic retinopathy.
- Once approved, Regeneron and Sanofi's drug, Alirocumab, could hit more than $4 billion in annual sales.
Regeneron Is Regenerating Growth In My Portfolio Once Again
- Regeneron is a biotech company which gave me a great return in a short amount of time and I just wanted to lock up some profits in the name.
- Regeneron was beaten down quite a bit on the back of profit taking just the week before the Alibaba IPO, presenting an excellent opportunity to buy back in.
- I fear there may be a slowdown in construction in America that it made me want to close my position in United Rentals.
There Is Further Upside Potential In Regeneron Pharmaceuticals
- Regeneron Pharmaceuticals is up more than 25% this year.
- The company, along with Sanofi, recently bought priority review voucher for alirocumab FDA submission.
- With the voucher, alirocumab has the chance to beat Amgen’s evolocumab to the market.
- Based on the huge potential for PCSK9 inhibitors and EYLEA sales, which remain on track, Regeneron still has further upside potential.
Challenging Consensus On PCSK9 Inhibitors: Focus On Regeneron And Amgen
- Amgen has filed for approval the first of a new class of proteins to lower LDL cholesterol.
- These PCSK9 inhibitors are expected to see Amgen's evolocumab and Regeneron/Sanofi's alirocumab reach market within a year.
- Enough information has been released to allow preliminary analysis of the commercial potential of these drugs and the entire class.
- One factor to consider is insider accumulation at Regeneron.
- Regeneron has just announced a surprise data release on its main pipeline drug over the Labor Day weekend.
- I speculate that the news will be favorable.
- The stock is acting well and Regeneron has been doing well operationally.
- Valuation may explain why there is a decent short position on the stock, but the shorts may be getting uncomfortable now.
The Case That Regeneron May Be Significantly Undervalued
- Regeneron announced an upside surprise for sales of its lead product Eylea this week.
- It has a powerful pipeline and important collaborations with Sanofi and Bayer HealthCare.
- The combination of high R&D spending and elevated pre-launch expenses for its late-stage cholesterol reducer alirocumab means that P/E is the wrong metric investors should look at.
- Sales of Regeneron's highest selling medication, Eylea, are expected to rise rapidly over the next few years as it gains market share.
- Eylea is expected to be approved by the FDA to treat diabetic macular edema.
- Long-term partner Sanofi increased its stake in Regeneron to 22.5%.
- High research spending and a diverse pipeline of potential products should help Regeneron get more drugs to market.
If You Want GARP, Look Into Biotech, Not Utilities, But Do The Valuations
- If there is a rotation in stocks, it is more apparently from high growth into low growth than into quality.
- Just look at revenue growth versus multiple expansion over the past 2.5 years among top biotechs being sold off, and you'll see what I mean.
- The biotech selloff is at best indiscriminate, at worst contrived to rock others out of the boat.
Why Regeneron Pharmaceuticals Has A Bright Future Ahead
Fri, Jan. 23, 8:58 AM
- The European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) adopts a positive opinion supporting marketing authorization for Regeneron Pharmaceuticals' (NASDAQ:REGN) Eylea (aflibercept) for the treatment of visual impairment due to macular edema secondary to central or branch retinal vein occlusion (CRVO/BRVO).
- Eylea is currently approved in the EU for the treatment of age-related macular degeneration, diabetic macular edema and macular edema following central vein occlusion.
- A final decision by the European Commission usually takes ~60 days.
Wed, Jan. 14, 9:13 AM
- Express Scripts' (NASDAQ:ESRX) success in containing the prices of new HCV therapies by pitting Gilead Sciences (NASDAQ:GILD) against AbbVie (NYSE:ABBV) is sending shock waves through the biotech/pharma industry. Most of the big players slumped yesterday as investors fear that ESRX's tactics will spread to other high cost areas like cancer and cholesterol.
- At JPM15 yesterday, CEO George Paz said that the new cholesterol-lowering post-statin PCSK9 inhibitors will be the next big opportunity to pit drug firms against each other in order to drive costs down. FDA clearance of the first two therapies, one from Amgen (NASDAQ:AMGN) and the other from Regeneron Pharmaceuticals (NASDAQ:REGN) (NYSE:SNY), is expected to occur at about the same time.
- The prices of emerging cancer therapies will also be in payers' crosshairs. Amgen's Blincyto, for example, costs $178,000 per standard course of treatment while Merck's (NYSE:MRK) Keytruda is close behind at $150,000.
- Related tickers: (NYSE:AZN) (NYSE:GSK) (NYSE:LLY) (ABBV) (NYSE:PFE) (NASDAQ:BIIB) (NYSE:ABT) (NASDAQ:CELG) (NYSE:BMY) (OTCQX:RHHBY) (NYSE:JNJ) (NYSE:NVS) (OTCPK:BAYRY)
Mon, Jan. 12, 7:37 AM
- Regeneron Pharmaceuticals (NASDAQ:REGN) and Sanofi (NYSE:SNY) announce that the European Medicines Agency (EMA) accepts for review the Marketing Authorization Application (MAA) for the PCSK9 inhibitor Praluent (alirocumab) for the treatment of patients with hypercholesterolemia.
- Praluent is a PCSK9 (proprotein convertase subtilisin/kexin type 9) inhibitor that represents the next generation of cholesterol-lowering medicines beyond statins.
- The BLA for Praluent was submitted to the FDA last quarter. The firms seek approval under the Priority Review process.
- Previously: Biotechs to use priority review voucher for cholesterol-lowering drug candidate (July 30, 2014)
Fri, Jan. 9, 10:00 AM
Fri, Jan. 9, 7:31 AM
- Sanofi (NYSE:SNY) and Regeneron Pharmaceuticals (NASDAQ:REGN) announce that two Phase 3 clinical trials evaluating alirocumab dosed once every four weeks for the treatment of hypercholesterolemia met their primary efficacy endpoints.
- The first study, Odyssey Choice I, evaluated the safety and efficacy of 300 mg alirocumab compared to placebo in 803 patients with hypercholesterolemia at moderate-to-high cardiovascular risk (CV). More than two thirds of the subjects also received statin therapy.
- The second study, Odyssey Choice II, evaluated the safety and efficacy of 150 mg alirocumab in 233 patients with hypercholesterolemia with high CV risk and/or a history of intolerance to two or more statins. No subjects received statin therapy.
- Both trials met their primary efficacy endpoint of a reduction from baseline in low-density lipoprotein cholesterol (LDL-C) at Week 24 versus placebo. The results were comparable to previous studies evaluating a dosing regimen of once every two weeks of alirocumab.
- Alirocumab is a monoclonal antibody targeting proprotein convertase subtilisin/kexin type 9 (PCSK9).
- The data will be presented at a future medical conference.
Dec. 15, 2014, 10:03 AM
- Germany's healthcare cost watchdog, the German Institute for Quality and Efficiency in Health Care, determines that Bayer's (OTCPK:BAYRY +0.9%) (OTCPK:BAYZF) eye drug Eylea (aflibercept) offers no additional benefit over Novartis' (NVS -0.6%) Lucentis (ranibizumab) for the treatment of diabetic macular edema. The agency's decision could affect the amount of reimbursement for Eylea.
- In January, the Institute came to the same conclusion for the indication of macular edema. Last year, it determined that it could not assess the potential advantages of Eylea in wet age-related macular degeneration because Bayer has not provided the relevant data.
- Eylea was developed by Regeneron Pharmaceuticals (REGN -1.5%) and licensed to Bayer in ex-U.S. territories.
Dec. 1, 2014, 7:56 AM
- The FDA accepts for Priority Review Regeneron Pharmaceuticals' (NASDAQ:REGN) supplemental biologics license application (sBLA) for Eylea (aflibercept) for the treatment of diabetic retinopathy in patients with diabetic macular edema (DME). The PDUFA date for the Breakthrough Therapy-designated indication is March 30, 2015.
- Elyea is currently approved for the treatment of diabetic macular edema, macular edema following retinal vein occlusion and wet age-related macular degeneration.
Nov. 24, 2014, 8:02 AM
- The European Commission approves AstraZeneca's (NYSE:AZN) Duaklir Genuair (aclidium bromide/formoterol fumarate 340/12 mcg) for the maintenance bronchodilator treatment in adults with chronic obstructive pulmonary disease (COPD).
- The product is a fixed dose combination of two approved long-acting bronchodilators with different mechanisms of action. Aclidium bromide is an anticholinergic or long-acting muscarinic antagonist that produces bronchodilation by inhibiting the muscarinic M3 receptor in the airway smooth muscle. Formoterol fumarate is a long-acting beta-agonist that stimulates the B2-receptors in the bronchial smooth muscle resulting in bronchodilation. Both are currently approved as stand-alone therapies for the maintenance treatment of COPD in the U.S. and Europe.
- Genuair is a multi-dose pre-loaded dry powder inhaler that utilizes optical and acoustic signals to inform the patient that the correct dose has been delivered.
- COPD-related tickers: (NYSE:GSK) (NYSE:NVS) (NASDAQ:THRX) (NASDAQ:REGN) (NYSE:SNY) (NYSE:TEVA) (OTCQX:RHHBY)
Nov. 20, 2014, 8:16 AM
- The FDA grants Breakthrough Therapy status to Regeneron Pharmaceuticals (NASDAQ:REGN) and Sanofi's (NYSE:SNY) (OTCQB:SNYNF) dupilumab for the treatment of adults with moderate-to-severe atopic dermatitis who are not adequately controlled with topical prescription therapy and/or for whom these treatments are not appropriate. Dupilumab is currently in Phase 3 development.
- The Breakthrough Therapy designation includes all of the Fast Track features as well as more intensive FDA guidance and discussion including access to more senior agency managers.
Nov. 19, 2014, 12:35 PM
- During the scientific sessions at the American Heart Association meeting in Chicago, investigators presented results from six Phase 3 clinical trials of Regeneron Pharmaceuticals (REGN +1.2%) and Sanofi's (SNY -0.2%) (OTCQB:SNYNF) cholesterol-lowering product candidate, alirocumab, compared to placebo or statins.
- The trials assessed alirocumab in patients with hypercholesterolemia who were at high cardiovascular risk, had an inherited form of high cholesterol known as heterozygous familial hypercholesterolemia (HeFH) and/or a history of intolerance to two or more statins. All six studies met their primary efficacy endpoint of change from baseline in LDL-C at week 24. Patients receiving alirocumab showed a mean reduction in LDL-C from baseline of 36 - 62%, depending on the study, compared to the comparator drugs' mean reduction of 0.5 - 23%.
- Regulatory submissions will be made to the FDA and EMA by the end of next month.
- Alirocumab is a PCSK9 inhibitor that will compete with Amgen's (AMGN +0.2%) evolocumab for supremacy in what is expected to be a $10B post-statin market. Amgen filed its BLA in August, but Regeneron and Sanofi bought an FDA voucher for $67.5M a few months ago that will cut the FDA's review time from 10 months to six, meaning that the projected approval time for both drugs will be about the same (June).
- Amgen filed a patent infringement lawsuit against the two firms last month.
- Previously: Amgen sues Sanofi and Regeneron
- Previously: FDA OK with Amgen's BLA for cholesterol-lowering drug
- Previously: Biotechs to use priority review voucher for cholesterol-lowering drug candidate
Nov. 18, 2014, 9:32 AM
- The Japanese Ministry of Health, Labour and Welfare approves Regeneron Pharmaceuticals (NASDAQ:REGN) and Sanofi's (NYSE:SNY) (OTCQB:SNYNF) Eylea (aflibercept) for the treatment of diabetic macular edema.
- Eylea was previously cleared for the treatment of neovascular age-related macular degeneration, macular edema secondary to central retinal vein occlusion and myopic choroidal neovascularization.
Nov. 14, 2014, 12:00 PM| 41 Comments
Nov. 11, 2014, 7:44 AM
- Dupilumab, a fully-human monoclonal antibody being co-developed by Sanofi (NYSE:SNY) (OTCQB:SNYNF) and Regeneron Pharmaceuticals (NASDAQ:REGN), showed showed positive results in a 776-patient Phase 2b dose-ranging clinical trial in adults with moderate-to-severe uncontrolled asthma.
- The three highest doses of dupilumab in combination with standard-of-care therapy met the primary endpoint of a statistically significant improvement from baseline in forced expiratory volume over one second (FEV1) at week 12 in patients with high blood eosinophils (>= 300 cells/microliter) compared to placebo in combination with standard-of-care therapy. Also, two doses of dupilumab (200 mg every other week and 300 mg every other week) showed a statistically significant improvement in mean percent change in FEV1 and a reduction in severe exacerbations, both in the high eosinophils group and the overall study population.
- Dupilumab blocks IL-4 and IL-13, two cytokines required by the Th2 immune response. Some researchers believed that targeting the Th2 pathway would limit the benefit in asthmatics with high eosinophils, but this study demonstrated that it could be effective. Final results from the trial will be presented at a future medical conference.
- Sanofi plans to proceed to Phase 3 development.
- Asthma-related tickers: (NYSE:GSK) (NYSE:TEVA) (NYSE:AZN) (OTCQX:RHHBY) (NASDAQ:AMGN) (NYSE:MRK) (NYSE:NVS) (NASDAQ:THRX)
Nov. 6, 2014, 11:09 AM
- Regeneron (REGN +1.1%) Q3 results: Revenues: $725.8M (+21.6%); Eylea Sales: $448.8M (+22.3%); R&D Expense: $337.7M (+50.8%); SG&A: $149.7M (+53.4%); Operating Income: $182.7M (-22.8%); Net Income: $79.7M (-43.6%); EPS: $0.70 (-44.0%); Quick Assets: $1,495.6M (+38.0%).
- 2014 Guidance: Eylea sales: $1.7B - 1.74B from $1.7B - 1.8B; R&D: $490M - 510M from $470M - 510M; SG&A: $330M - 350M from $310M - 350M; CAPEX: $300M - 350M from $350M - 425M.
- Follow up from initial post on November 4.
Nov. 4, 2014, 9:15 AM
Nov. 4, 2014, 6:31 AM| 1 Comment
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