If you had invested $10,000 during Regeneron Pharmaceuticals' (REGN 0.01%) inception in the 1990s, that investment would have turned into more than $317,000 as of Jan. 11, 2021. That is a staggering outperformance compared to the S&P 500's 1,310% return during the same period. What's more, despite all the turmoil in the markets in 2020, Regeneron has jumped another 32% over the last 12 months.
Given this rate of return, Regeneron stock can turn investors into millionaires based on a small investment after one or two more decades. Today, let's look at why its shares are a fantastic buy-and-hold option for the long term.
A marvelous business
Regeneron currently markets Eylea, one of the most popular treatments for various types of retinal doses. There have been 30 million doses of Eylea administered since launch. In fourth-quarter 2020, the injection brought in $1.34 billion in sales, up 10% year over year.
Another of the company's core products is its allergy and anti-inflammatory medication, Dupixent. In third-quarter 2020, the therapeutic surpassed $1 billion in quarterly sales. Right now, Dupixent treats about 190,000 out of three million patients in the U.S. alone. By 2023, the company expects to expand its label to treat a further one million patients in the U.S. across eight conditions.
Regeneron also has a robust oncology portfolio that includes its flagship drug Libtayo. Libtayo is an anti-PD-1 immunotherapy and a first-line treatment for patients with a severe form of skin cancer. The biologic generates about $97 million in quarterly revenue.
There is a massive catalyst ahead as the company expects Libtayo to pass regulatory clearance for treating more common forms of skin and lung cancer. The market opportunity for anti-PD-1 cancer is greater than $25 billion globally and is growing at an astonishing rate of 25% per year.
Lastly, Regeneron managed to bring its antibody cocktail to market for combating COVID-19. Patients who received the therapy had remarkable rates of reduction in terms of hospitalizations for COVID-19. The biologic brought in $144 million of sales in Q4, with the U.S. government ordering 300,000 doses.
Overall, the company generates about $2.29 billion in revenue per quarter and $961 million in profit, both growing at nearly 30% year over year. A big driver behind its momentum lies in its commitment to research and development. The company estimates it spent $2.8 billion of its sales on research efforts last year.
At a great price too
Like most growth stocks, Regeneron stock has a premium. It is trading for about 6.3 times revenue and 36.7 times earnings. Given its track record and impressive product mix, I think the company is well worth it, given its potential. Furthermore, the company has more than $3 billion in cash on its balance sheet, which is more than enough to cover $2.68 billion in long-term debt and leases.
A biotech with minimal leverage and bringing in substantial revenue and profits is just what investors need for respectable long-term gains. Due to these reasons, I think Regeneron could become a millionaire-maker biotech.