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Headwinds For Regeneron's Dupixent Will Dissipate


  • Dupixent and Eylea are critical to Regeneron's revenue growth but the former has plenty of catalysts ahead.
  • Upcoming approvals.
  • Regeneron's stock is undervalued by at least 10 percent and has up to 30 percent upside.

In the month following Regeneron’s (NASDAQ:REGN) fourth quarter results, the stock is mostly lower despite the company beating consensus estimates. The company earned $5.23 a share as revenue grew 28.5% year-over-year to $1.58 billion. At a forward P/E of around 16 times, why is Regeneron near a yearly low as analysts add to the bearishness by downgrading the stock?

Regeneron (NASDAQ:<a href=

2017 a Banner Year for Regeneron

Regeneron received regulatory approval for Dupixent, which treats atopic dermatitis (“AD”), and Keyzara, a drug that treats Rheumatoid Arthritis. The treatment market size for AD was $4.04 billion in 2016 and is expected to reach $7.66 billion by 2025, or a CAGR of 7.4 percent. Rheumatoid Arthritis has an addressable market of $30.4 billion by 2025 with a CAGR of 4.6 percent. Let’s focus on AD’s market potential. If Dupixent has a high success rate and faces no competition, why is the market not forecasting up to $7.66 billion in revenue for Regeneron for this product alone?

The current, traditional treatment for patients suffering AD is corticosteroids. This is administered as an ointment, so it is easy for patients to apply. The treatment also is cheaper than Dupixent. Patients administer Dupixent by injection. As a new product on the market, the drug is comparably more expensive than current topical therapies. Regeneron needs insurance companies to cover plan holders to realize the expected revenue growth. This takes time, so until coverage from most insurance companies is assured, REGN stock will not price in Dupixent’s success on the market.

Regeneron’s core drug product since 2011, Eylea, will face competition in late 2019. Eylea sales grew 11 percent Y/Y in the U.S. and 19% outside this market. Overall sales rose to $975 million in the quarter and $3.7 billion in 2017, compared to $858 million in Q4/2016 and $3.32 billion in the full year of 2016. The CEO did not

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This article was written by

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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in REGN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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