Biotech giant Regeneron Pharmaceuticals (Nasdaq: rain) saw its fortunes reversed last year. Though the drugmaker had performed well since the beginning of the decade, it encountered issues that sank its stock price, mostly related to one of its biggest growth drivers (more on that below).
Regeneron’s shares are down by 30% over the trailing-12-month period. However, there are still excellent reasons to invest in this stock for the long run. Here’s the rundown.
Regeneron’s issues in the past year are almost entirely related to Eylea, a medicine for wet age-related macular degeneration, which it co-markets with Bayer. The Eylea franchise — including a high-dose (HD) formulation that first earned approval in 2023 — is facing stiff competition, biosimilar and otherwise. The medicine’s sales growth has slowed considerably as a result. And it might even get worse for Regeneron since Amgen’s Pavblu, a biosimilar version of Eylea, hit the market only six months ago. In the fourth quarter, combined U.S. sales of Eylea and Eylea HD increased by only 2% year over year to $1.5 billion.
Eylea has been one of Regeneron’s top growth drivers for a while, so its headwinds were naturally going to spook investors. However, the biotech can rely on Dupixent, an eczema treatment it co-markets with Sanofi, to pick up much of the slack. In fact, despite the Eylea franchise’s unimpressive performance in the fourth quarter, Regeneron’s total top line grew by a healthy 10% year over year to $3.8 billion.
That was because of Dupixent, whose global sales for the period (recorded by Sanofi) jumped by 15% year over year to $3.7 billion. Last year, Dupixent was among the 10 best-selling drugs in the world, and there’s more where that came from, considering recent clinical and regulatory wins. Though the most important is a new indication in COPD the drug earned last year, there are others.
Regeneron and Sanofi are also seeking a label expansion for Dupixent in treating a rare skin disease called bullous pemphigoid. If approved, it would become the first targeted medicine in this narrow indication in the U.S. Between the COPD label expansions and others, Dupixent’s sales will continue on their upward trajectory for a while; they should succeed in recouping some of Regeneron’s Eylea-related losses.
Another reason to be bullish on Regeneron is that the company can and will develop newer medicines. The biotech’s pipeline features several promising candidates. One of them is a gene therapy for a rare form of congenital deafness that is already producing highly encouraging results. Last year, Regeneron reported some data from an ongoing early-stage clinical trial for this product, showing that it had restored hearing in two patients who were deaf from birth.
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