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Regeneron: Favorable Performance Of Current Product Portfolio, Impressive Pipeline Bode Well For Growth Over The Next Decade

Leonard Yaffe profile picture
Leonard Yaffe


  • Regeneron has both added to its current growth drivers and developed an impressive pipeline that should fuel performance throughout the decade.
  • Eylea will benefit from the opportunity in diabetic macular edema and the side effect issues associated with Beovu.
  • Dupixent has recently received approval to expand the age range for atopic dermatitis and it demonstrated positive Phase 3 results in eosinophilic esophagitis.
  • Libtayo is a leading PD-(L)1 inhibitor in dermatooncology, and regulatory submission for first line monotherapy use in NSCLC is slated for the second half of 2020.
  • Regeneron is pursuing two efforts in COVID-19; an antibody cocktail binding to the spike protein for treatment and prevention, and Kevzara, its IL-6 receptor antibody, for critical patients.

Regeneron (NASDAQ:REGN) has done an admirable job in diversifying beyond Eylea. In the first quarter of 2020, total product sales (some of which are recorded by Bayer (OTCPK:BAYZF) and Sanofi (SNY)) were $3.0 billion, and Eylea accounted for $1.9 billion (63%). This compares with the first quarter of 2019, when total product sales were $2.3 billion, and Eylea sales were $1.7 billion (77%). The main driver of the increase was Dupixent, which increased by 129% to $855 million. This drug, an IL4/IL 13 inhibitor, is rapidly attaining the corporate goal of becoming a pipeline in a product. It is currently approved for uncontrolled moderate to severe atopic dermatitis for patients age six and above, certain types of asthma, and chronic rhinosinusitis with nasal polyposis in patients age eighteen or greater. It is also being studied in other indications and as part of a combination regimen for grass and peanut allergies. Worldwide Dupixent revenues should increase to nearly $4.0 billion in 2020 versus $2.3 billion in 2019, and they should continue to grow at a 20+% rate.

Libtayo revenues were $194 million in 2019 and they should double this year. In 2020, it will be filed for approval to treat PD-L1 high first line non small cell lung cancer (NSCLC) patients and for basal cell carcinoma. Management noted at its recent ASCO update that the PD-(L)1 market exceeds $21 billion. With a growing list of indications, I forecast it to exceed $45 billion by 2025. It should be noted that Regeneron is also studying Libtayo in combination with chemotherapy in all PD-L1 first line NSCLC patients, and in combination with its BiSpecific antibodies. The company also has seven external clinical stage combinations with Libtayo for indications including renal cell carcinoma, glioblastoma, prostate cancer and cervical cancer. I project Libtayo sales to exceed $1 billion in 2022.

This article was written by

Leonard Yaffe profile picture
I am an MD by background who runs a healthcare hedge fund. I worked as a sell-side medical analyst for 20 years, covering pharmaceuticals, medical devices, PBMs and drug distributors.

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

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

REGN up almost 60% this year and without any new catalysts, likely to remain range bound for a while. We will probably buy some more if it falls before $550 with a major market correction which may come sooner than later! It expensive right now at a 30 P/E! Long REGN! :-)
Leonard Yaffe profile picture
Many thanks for the comments. The catalysts in 2020 include data on Dupixent, fasinumab, and the COVID-19 efforts. By my calculation, the stock sells for 21x 2020 and 19x 2021 on a non-GAAP basis.
Very good succinct macro look at REGN. A little frustrating to see it down about $19 today with the broader market up big but it looks like alot of biotechs down today. Perhaps political risk in the District of Columbia or some sector rotation going on. Who knows. If you own REGN you better have the conviction to ride out the volatility in return for superior returns. Thanks for the article.
Leonard Yaffe profile picture
I believe it is market rotation, which has been volatile. Of note, on 6/4, the American Society of Retinal Specialists released an update that stated that the Safety Review Committee found that their observed incidences of both retinal vasculitis and retinal vascular occlusion with Beovu were higher than the incidences reported by the investigators. This conclusion, while unfortunate for Beovu, should benefit Eylea.
Great article, I wish it was longer as the Company has so much going on (per their detailed presentation at ASCO to WS analysts, much of which I did not understand other to react with almost disbelief that one company could be R&Ding, potentially manufacturing, trialing and commercialising so many treatments for so many indications, almost all of which, according to them, could become the standard of care.
So, I wonder if you have insights into the realism behind those claims, even if their management team seems to be full of exceptionally capable people, esp. the CEO, CFO, CSO and Head of Commercial.
With biotechs, it is always a hit and run investment, but since being a believer for some 6+ years (partly because of my asthma condition), and with so much 'pain' for my oftentimes 'blind faith', I wish it becomes the dream phama company it deserves to be.
Leonard Yaffe profile picture
Great comments....many companies talk about "shots on goal", with the idea that a small percentage should work, but that is often not the case. The BiSpecific antibody area is attracting a great deal of interest, in addition to ADCs and CAR-Ts. As you stated, and I agree, Regeneron has excellent scientists and drug discovery people--this is critical. So, while short term results will be driven by Dupixent and Libtayo, along with continued growth in Eylea and possible success in COVID-19, the long term looks promising. I also point out the collaborations with Intellia, Alnylam and bluebird. Len
Keeping fingers crossed, as the saying goes, but I wonder if you have a preferred list of long term biotech stocks to buy and hold. Since you also cover medtech, do you have preferences there? I've long been in ISRG, and recently, with lots of pain, DXCM. It seems one should just wear a 'blind' and be long BSX, MDT, ABT?
I'm your "follower" going forward....
Leonard Yaffe profile picture
Many thanks for the comments. I look for two factors---major trends in healthcare AND leaders in a field. Regarding the former, I have stated for years that US healthcare expenditures will grow at an average annualized rate of 6% through 2030, at which time they will exceed $7.5 trillion and represent 25% of GDP (vs 18% currently, and this could be higher depending on the rate of economic growth coming out of the pandemic). This is driven by demographics (people over 65 spend 4x the dollars annually on healthcare than those aged 19-64, and this population is growing 3x the US the US population as a whole. Second is the prevalence of chronic diseases, which contributes to the fact that 50% of healthcare dollars in the US are spent on 5% of the population (Please refer to my article "Solving America's Healthcare Crisis"). So with these two tailwinds, it is important to find those subsectors that will benefit from these trends. Here, I put diabetes, NASH, oncology, less invasive surgery and autoimmune disease. I shall list a few companies with the absolute caveat that I cannot be responsible for updates, and knowing when to sell a stock is harder than knowing when to buy it. My list at this time includes TNDM, DXCM, ISRG, ABBV, NVO, AZN, GILD (note a story today by Bloomberg that AZN may want to combine with GILD), REGN. I am also suggesting CVS, with the stock selling at a P/E of 9x, as I believe that there will be many more flu vaccines given in the future (think doctor's office, pharmacy) and if there is a successful COVID-19 vaccine, then that would be incremental revenues.
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