- 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
Mar. 7, 2014, 4:24 PM
- The FDA requests that Regeneron (REGN) and Sanofi (SNY) assess potential neurocognitive side effects of their late stage cholesterol drug alirocumab, a PCSK9 inhibitor.
- Memory loss, impaired concentration and paranoia, though rare, have been associated with the use of statins for lowering LDL cholesterol.
- Both firms disclosed in their regulatory filings that the appearance of these side effects could delay or stop the product's development.
- Pfizer (PFE) and Amgen (AMGN) are also working on PCSK9 inhibitors.
Mar. 3, 2014, 10:20 AM
- Bayer (BAYRY) has filed for Japanese approval of Regeneron's (REGN) Eylea therapy for treating patients with diabetic macular edema, the companies have said. Bayer has the rights to sell Eyelea outside the U.S.
- The submission is based on Phase 3 clinical trials that proved a statistically significant improvement in best-corrected visual acuity from baseline at 52 weeks compared with laser photcoagulation.
- The companies didn't provide a timetable for marketing approval, although the process is usually slower than with the FDA in the U.S. (PR)
Feb. 28, 2014, 7:37 AM
- Bayer believes that Xarelto (blood thinner) and Eylea (eye), which is developed by Regeneron (REGN), will hit peak revenues in 5-6 years. Bayer holds the license to sell Eylea outside the U.S.
- Bayer has increased its combined peak annual sales forecast for its five most important drugs - Adempas (lung), Stivarga (cancer) and Xofigo (cancer), as well as Eylea and Xarelto - to at least €7.5B from a prior forecast of €5.5B. The treatments generated sales of €1.52B in 2013.
- See Bayer's earnings
Feb. 24, 2014, 9:18 AM
- The FDA has accepted Regeneron's (REGN +3.3%) application to expand the use of its Eylea therapy to treat Macular Edema Following Branch Retinal Vein Occlusion, a common vascular disease among the elderly that is caused by a blockage of one of the small veins that carry blood away from the retina.
- Regeneron's application follows a successful Phase III trial.
- Eylea has already been authorized for other indications, including wet age-related macular edema.
Feb. 11, 2014, 4:48 PM
- Regeneron's (REGN) 7.4% gain topped today's S&P leader board following Q4 earnings which featured good news on the company’s blockbuster-to-be, Eylea.
- Q4 U.S. sales of the sight-saving drug rose 46% Y/Y to $402M, and REGN forecasts U.S. sales to reach $1.7B-$1.8B this year as it expects the drug to win approval for newer uses.
- RBC Capital thinks Eylea sales could be better than forecast, given that management is typically viewed as conservative when it comes to guidance.
- Brean Capital raises its price on shares to $380 from $367, as it looks to several Phase 3 trials for alirocumab - part of a new class of injectable cholesterol medicines - reading out around mid-2014; the firm views the drug as the next major value driver.
Feb. 11, 2014, 7:29 AM
- Regeneron (REGN +2%) net profit -79% to $97M, due to a non-cash tax benefit of $336M in Q4 2012, an income tax provision in 2013, and higher operating costs last year.
- Eylea net U.S. sales $402M vs $276M a year earlier; international $184M vs $19M.
- Cash position: $1.08B at end of 2013 vs $588M.
- Forecasts 2014 Eylea net product sales of $1.7-1.8B in U.S. vs. $1.41B in 2013.
- Expects Eylea to continue growing "through demographic and geographic expansion," as well as via potential approvals in new indications. (PR)
Feb. 11, 2014, 6:31 AM| Comment!
Feb. 11, 2014, 12:05 AM
Feb. 10, 2014, 5:30 PM
Feb. 10, 2014, 8:16 AM
- Regeneron's (REGN +3.15%) Eylea treatment improved vision and maintained that improvement over two years in a Phase III trial of patients with diabetic macular edema (DME).
- DME is a leading cause of blindness in younger and middle-aged adults; Eylea could potentially treat over 6M sufferers globally.
- Regeneron and partner Bayer (BAYRY) are waiting for U.S. and EU approval of Eylea to treat DME; the therapy has already been authorized for other indications, including wet age-related macular edema. (PR)
Jan. 15, 2014, 9:55 AM
- Shares of Regeneron (REGN -4.4%) are pulling back after a big run Tuesday.
- BMO has downgraded the stock to Market Perform from Outperform.
- Price target is unchanged at $331.
- See also: Roth upbeat on REGN amid new Bayer deal, genetics initiative
Jan. 14, 2014, 12:43 PM
- Roth Capital is out with a bullish note on Regeneron (REGN +9.1%) on the heels of the company's announcement of a new development agreement with Bayer.
- Here's analyst Joseph Pantginis, commenting: "Preclinical studies have suggested that blocking both PDGFR-beta and vascular endothelial growth factor (VEGF) can provide additional benefit over anti-VEGF treatment (such as EYLEA) alone in wet AMD."
- Buy rating maintained.
- Price target is $362.
- In other company news, REGN has announced a collaboration with Geisinger Health System under which the companies will "study the genetic determinants of human disease." Additionally, Sanofi (SNY) has amended its investor agreement with REGN and retains the right to "acquire up to 30% of REGN's outstanding common stock and Class A stock [while gaining] the right to nominate a single independent director to the Regeneron Board of Directors upon reaching 20% ownership [stake]."
Jan. 14, 2014, 7:40 AM
- Regeneron Pharmaceuticals (REGN) and Bayer (BAYZF) are deepening their relationship with a plan develop a new therapy for wet age-related macular degeneration.
- Bayer will make an upfront payment of $25.5M to Regeneron and up to $40M in options and milestone payments, and it will pay royalties on any product sales outside the U.S.
- Regeneron will retain 100% of U.S. profits.
- Human clinical studies are planned for early this year. (PR)
Jan. 2, 2014, 1:54 PM
- IQWiG, Germany's cost gatekeeper, struck a blow to Regeneron (REGN -0.5%) and Bayer's (BAYZF -4.1%) Eylea Thursday, saying it could not determine whether the drug is superior to Lucentis (NVS -2.1%) in treating macular edema.
- As Reuters notes, the institute's position "could affect the level of reimbursement by public insurers for Eylea in Germany."
Dec. 18, 2013, 7:46 AM
Dec. 10, 2013, 3:24 PM| 3 Comments
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