Regeneron Pharmaceuticals (REGN 0.79%) is one of the few companies selling a treatment for COVID-19. The U.S. Food and Drug Administration (FDA) authorized its antibody cocktail in November. Orders from the U.S. government represent more than $2.6 billion in sales so far. Regeneron sells other products, including blockbuster eye drug Eylea. And the company has more than 30 candidates in the pipeline.
But this hasn't helped share performance over the past year. The stock has slipped over that time period. The tide may be turning, however. Let's find out why shares of this innovative biotech company may be about to head higher.
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The major challenge
The FDA authorized Regeneron's antibody cocktail for mild-to-moderate COVID-19 cases in high-risk patients. The idea is to prevent severe disease and hospitalization. But a major challenge has been getting doctors and patients to use the antibody cocktail.
Here's why: It must be infused in a healthcare setting. This means hospitals or clinics must set up areas where infusions can be administered. It also means they need medical staff to monitor the process -- an infusion takes at least 20 minutes. As for individuals suffering from COVID-19, they must be willing to come to such a setting for treatment. In many cases, these requirements have discouraged clinics and potential patients.
But Regeneron is working on a solution to the problem. The company is studying the cocktail as a subcutaneous injection. So far, results are positive. And the best news is Regeneron has gathered enough data in one patient group to request an expansion of its Emergency Use Authorization. Subcutaneous injection of the cocktail cut risk of symptomatic COVID-19 by 81% in individuals in close contact with coronavirus patients. So a nod from the FDA would allow the cocktail to be used in this group.
In another study, Regeneron found the cocktail in asymptomatic patients reduced risk of progression to symptomatic coronavirus by 76%.
Product use may pick up
If Regeneron is able to make its cocktail available for several patient groups as a subcutaneous injection, use of the product could pick up dramatically. Though some countries have made great progress in vaccination, treatments still will be needed well into the future. Vaccines aren't 100% effective. And some people can't or won't opt for vaccination. Also, experts say the coronavirus will be around well into the future.
Speaking of vaccines, vaccine makers have taken center stage over the past year when it comes to stock market performance. I'm thinking of two biotech companies in the vaccine space: Moderna and Novavax. They've soared while fellow biotech Regeneron has declined.
Now that the vaccine rollout is well underway and companies have even started reporting vaccine revenue, investors may turn their attention to the next race. And that's the race to develop an effective treatment that could be used across a broad range of coronavirus patients.
Regeneron aims to expand the use of its cocktail. It's studied the therapy in more than 25,000 patients. And clinical trials continue in coronavirus prevention and the treatment of non-hospitalized and some hospitalized patient groups. The antibody cocktail could be a significant recurrent revenue opportunity for Regeneron.
Plenty of revenue drivers
Beyond the coronavirus program, Regeneron has plenty of other revenue drivers. Eylea last year generated $4.9 billion in U.S. sales. That's a 7% year-over-year increase. Four of the company's seven other products produced double-digit sales gains last year.
And more growth is ahead. Cancer drug Libtayo may soon be available for use in a fourth type of cancer. Recently, Regeneron stopped a Libtayo trial early for positive overall survival. The study examined Libtayo as a monotherapy for advanced cervical cancer. The company plans on a regulatory submission this year.
Regeneron's annual revenue and net income generally have increased over the past decade.
REGN Revenue (Annual) data by YCharts
And today, Regeneron shares are trading at a little more than 10 times forward earnings estimates. Considering the company's track record and growth ahead, this looks like a good entry point. And all of these factors could drive shares of this biotech company higher now -- and over the long term.
