Regeneron's (NASDAQ:REGN) stock has increased by 34% in 2020 as the company and its partner Sanofi (NASDAQ:SNY) initiated two large scale phase 2/3 clinical trials in March where it is providing an existing drug, Kevzara, to treat patients with severe COVID-19, the disease caused by the novel coronavirus. This development has investors optimistic about its prospects. But Regeneron's financial performance for the full year will be driven by the company's core business of treating eye diseases, asthma, eczema, and cancer.

Let's take a closer look at the biotech stock's main revenue drivers to decide if it's a buy today.

A woman looks at a microscope

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Kevzara for treating COVID-19

As of April 9, there have been over 1.4 million worldwide confirmed COVID-19 cases and almost 90,000 virus-related deaths. While there are no approved drugs to effectively treat COVID-19 patients, many companies, including Regeneron, have commenced clinical trials to determine whether existing compounds used for other diseases can help these patients recover. 

In March, Regeneron and Sanofi announced that they initiated two large phase 2/3 trials to assess whether Kevzara can prevent lung damage and respiratory distress in patients with severe COVID-19. Regeneron and Sanofi currently market Kevzara as a treatment for adult patients with rheumatoid arthritis (RA). Kevzara blocks the interleukin-6 (IL-6) protein, which may cause a patient's immune system to overreact and damage the lungs. 

Recently, a preliminary study performed at a Munich Hospital found patients who have a minimal amount of IL-6 protein have significantly lower rates of respiratory failure and may not need mechanical ventilation. Earlier, a small Chinese study showed that patients who received Actemra, Roche Holdings' (OTC:RHHBY) IL-6 receptor antagonist and competing RA drug, were able to be discharged from the hospital and return home.

Eylea for preventing blindness

Eylea, an injectable drug that prevents blindness, grew by 14% in the U.S. to over $4.6 billion in 2019 (about 60% of Regeneron's sales). Eylea's revenues should continue to increase as it the company fully launches a pre-filled syringe delivery option for physicians and continues to market to the drug to adults with age-related macular degeneration (AMD), a disease that affects almost 11 million people in the U.S and is the leading cause of vision loss in Americans 60 and older. Eylea prevents the disease from progressing to an advanced stage and results in rapid, large sustained improvement for patients with mild to moderate AMD. 

Regeneron will also benefit from growth in its diabetic eye business as it has established a dedicated salesforce to specifically contact specialists that see these types of patients. The company is devoting a significant amount of resources to improve on the low current rates of diagnosis and treatment of diabetic retinopathy (DR). DR is a complication of diabetes that causes damage to the retina and can lead to severe vision loss. Early treatment with Eylea, however, can halt the progress of DR, reducing the risk of blindness. This is a welcome development for the almost 8 million people who have DR.

Dupixent treats eczema

Dupixent sales reported by Sanofi grew by almost 151% to over $2.3 billion in 2019 as physicians prescribed the drug to other adult patients with eczema and treated patients in three new sub-segments (asthma, children with eczema, and adults with chronic long-term sinus inflammation linked to nasal polyps). While Sanofi records all of global Dupixent sales on its income statement, it paid Regeneron over $1.4 billion in contribution revenue in 2019, up 40%, relating to royalties and profits from Dupixent (and two other drugs).

Dupixent should continue to grow as it is used for other patients in these three markets and it will enjoy further growth if it obtains approval from the Food and Drug Administration (FDA) for using the drug for asthma in pediatrics, chronic obstructive pulmonary disease, eczema in pediatrics, and several other indications.

Cancer treatment Libtayo

Regeneron generated $176 million in revenue from Libatyo in 2019, up from almost $15 million in 2018. Libtayo treats advanced Cutaneous Squamous Cell Carcinoma (CSCC), a form of skin cancer that accounts for an estimated 7,000 deaths each year in the U.S. As of November 2019, its share of U.S. patients with CSCC was 43%, up from 3% when it was launched in October 2018.

Regeneron is currently testing Libtayo in Non-Small Cell Lung Cancer (NSCLC) patients, cervical cancer, and Basal Cell Carcinoma (BCC; the most common form of skin cancer). Libtayo's revenues should increase in the near-term as physicians continue to prescribe the drug for their CSCC patients and the drug is eventually used in other types of cancers.

Is Regeneron a buy? 

I consider to be Regeneron a buy right now because it has ample opportunity to increase the revenue and profits it currently generates from its three key drugs, Eylea, Dupixent, and Libtayo. While investors will be waiting for further updates on Kevzara, they should focus and monitor Regeneron's progress in expanding its the diabetic eye segment, further penetrating the three emerging areas for Dupixent, gaining market share in CSCC, and obtaining FDA approval for treating other indications with these drugs.

While it's easy to be enthralled by its progress in the COVID-19 space, investors thinking about buying Regeneron would do well to consider the stock from a more holistic stance. And it looks good from here.