Regeneron: Still Very Strong

Summary

• Regeneron has seen continued growth and diversification away from EYLEA.
• This is largely driven by a very successful partnership with Sanofi.
• I like the progress made and have doubled my money in just two years, although recent momentum provides an opportunity to cash some chips.
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Regeneron Pharmaceuticals (NASDAQ:REGN) has seen quite some momentum as of late. The company has been a great long-term success; after all, this was just a $20 stock a decade ago. What followed was a relentless momentum run with shares hitting the $600 mark in 2015, only to ever since be stagnant in a $300-$600 range since. Trading comfortably below the $300 mark in September, shares have doubled in a time frame of just little over half a year as investors are pleased with some recent developments.

The Old Thesis

I have last looked at Regeneron in May 2018, exactly two years ago. I concluded that I was initiating a position at the time, with shares trading at the low $300s at the time.

The great success of Regeneron and the momentum seen over the past decade has been the outcome of the company obtaining approval for EYLEA back in 2011, giving the company a great blockbuster at hand. This great success comes at an expense, or risk, as it creates reliance on a top selling drug. Regeneron has aimed to diversify by entering co-development programs with European pharmaceutical names like Sanofi (SNY) and Bayer (OTCPK:BAYZF), as well as own development programs.

Having looked at the business in spring of 2018, the 2017 results were just released at that time. The company had generated $3.7 billion in sales from EYLEA, and a mediocre $16 million in sales from ARCALYST as the growth came from the co-development programs at the time. International sales of EYLEA (under the Bayer partnership) rose by 19% to $2.23 billion (that is before taking into account Regeneron’s share).

The company furthermore reported revenues of Dupixent, developed with Sanofi. The drug made its debut in the second quarter of 2017, as fourth-quarter sales already came in at $139 million, for a run rate

Analyst’s Disclosure:I am/we are long REGN. 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.