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Will Regeneron Be Worth More Than Amazon by 2030?

By Adria Cimino – Oct 28, 2021 at 6:00AM

Key Points

  • Regeneron’s star product is an antibody cocktail to treat COVID-19.
  • The biotech sells a total of seven products across several treatment areas.
  • Regeneron has 37 candidates in the pipeline.

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Regeneron's market value has climbed more than 1,000% in a decade.

When it comes to market value, Regeneron Pharmaceuticals (REGN 0.15%) may look like small potatoes compared to Amazon. The biotech company's market capitalization totals $61 billion. The e-commerce giant's market cap tops $1.7 trillion.

Still, Regeneron is among the biggest biotech companies in terms of market value. In a surprise move, coronavirus vaccine giants Moderna and BioNTech slipped ahead by that measure this year. But the Regeneron story is far from over. And that may signal gains in market value down the road.

But how much of a gain are we talking about? Could Regeneron actually be worth more than a massive company like Amazon by 2030? Let's find out.

Person at a desk looking at something on a laptop.

Image source: Getty Images.

Coronavirus antibody treatment

Regeneron's made the news in recent times thanks to its coronavirus antibody treatment, REGEN-COV. The U.S. Food and Drug Administration (FDA) authorized the antibody cocktail late last year. And since, the company has sold billions of dollars' worth of doses. Most recently, Regeneron signed a $2.9 billion deal with the U.S. for the delivery of an additional 1.4 million doses through January. That follows two earlier orders from the U.S. government.

Now, the company is aiming for full approval of REGEN-COV. The FDA has accepted the application for priority review and set an action date of April 13. Regeneron says the FDA plans on holding an advisory committee meeting earlier -- so it is possible a decision may come ahead of the target date. The submission covers the use of REGEN-COV in non-hospitalized patients with mild-to-moderate coronavirus. And it also includes use as prophylaxis in some people. The company plans on submitting an application for use in hospitalized patients later in the year.

The antibody treatment is Regeneron's biggest product at the moment. In the second quarter, it generated more than $2.5 billion in sales. But it's only part of the Regeneron story. Regeneron sells seven other products in various treatment areas. Its second-biggest product is Eylea, a treatment for wet age-related macular degeneration. The blockbuster brought in more than $1.4 billion in revenue in the quarter.

Regeneron's annual revenue and net income generally have been on the rise since 2014.

Chart showing rise in Regeneron's revenue and net income since 2012.

REGN Revenue (Annual) data by YCharts

And Regeneron's return on invested capital has been climbing over the past year.

Chart showing rise in Regeneron's return on invested capital since 2019.

REGN Return on Invested Capital data by YCharts

37 candidates in the pipeline

Of course, this is the picture right now. To imagine Regeneron's market value in about 10 years, we'll have to look at what might drive growth at that time. And that brings me to the pipeline. The company has 37 candidates in the pipeline today in areas including oncology, eye disease, allergies, and osteoarthritis pain, to name a few. Importantly, 22 of those programs are in phase 2 or 3. If even a handful make it through to commercialization, we could expect significant revenue growth down the road.

Now, let's look at market value. Regeneron's market value climbed more than 1,000% over the past 10 years. To reach Amazon's current market value, Regeneron's market cap would have to increase more than 2,600% over the coming nine years. The potential success of pipeline programs could spur major gains. But it seems unlikely the company's market value would increase more than twice as much as it did over the past decade.

Of course, this doesn't mean you should turn your back on this dynamic biotech stock. Today, product revenue is growing. And the number of candidates in the pipeline makes me optimistic about revenue in the future. All of this should drive share price performance over time.

Speaking of price, you can pick up Regeneron shares for a bargain right now. The stock is trading at only about nine times forward earnings estimates. So, even if this biotech player doesn't surpass Amazon when it comes to market value, that's OK. It still offers solid growth prospects for long-term investors.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Moderna Inc. and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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