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3 Reasons Why Investors Should Love Regeneron's Q3 Update

By Keith Speights – Nov 5, 2021 at 6:01AM

Key Points

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The big biotech delivered an exceptionally strong performance in Q3.

Regeneron Pharmaceuticals (REGN 4.25%) announced its third-quarter earnings before the market opened on Thursday. Based on the stock's move, you might think that those results weren't very good. Regeneron's share price slipped more than 3% at one point in intraday trading.

The reality, though, is that Regeneron actually delivered a strong performance in the third quarter. Pharmaceutical stocks are under pressure this week because Democrats reached a deal on drug pricing reform. But don't let that overshadow Regeneron's good news. Here are three reasons why investors should love the company's Q3 update.

Two smiling people looking at a touchscreen tablet.

Image source: Getty Images.

1. Skyrocketing revenue

Regeneron reported revenue in the third quarter of $3.45 billion. This result reflects an impressive 51% year-over-year jump. It also blew past the consensus Wall Street revenue estimate of $2.82 billion. 

The big story for Regeneron in the third quarter was REGEN-COV. Sales for the COVID-19 antibody therapy totaled $1.2 billion in Q3 compared to only $40 million in the prior-year period. Regeneron recognized revenue of $804 million in the third quarter that was attributable to REGEN-COV.

But the COVID-19 drug wasn't the only bright spot for Regeneron. Sales for eye-disease drug Eylea increased 15% year over year to $2.4 billion. Dupixent, which is approved for several indications including asthma and atopic dermatitis, generated sales of nearly $1.7 billion, up 55% from the prior-year period. 

Other products in Regeneron's lineup also delivered strong growth. Sales for cancer drug Libtayo jumped 24% year over year to nearly $120 million. Cholesterol drug Praluent's sales rose 25% to close to $115 million. Sales for rheumatoid arthritis drug Kevzara soared 40% to $98 million.  

2. A big earnings beat 

With such strong revenue growth, Regeneron easily beat expectations on the bottom line as well. The company posted net income of $14.33 per share based on generally accepted accounting principles (GAAP) -- nearly doubling year over year. Its non-GAAP earnings per share came in at $15.37, up from $8.36 in the prior-year period and trouncing the average analysts' estimate of $9.56. 

What's especially impressive is that Regeneron even beat the most optimistic earnings projection. The highest Q3 earnings estimate among analysts surveyed by Refinitiv was $12.74 per share.

3. Solid pipeline progress

Arguably the most important part of Regeneron's Q3 update -- at least for the company's future prospects -- was its solid pipeline progress. The big biotech had good news on multiple fronts.

Regeneron expects to report results from two late-stage studies of Eylea in treating wet age-related macular degeneration and diabetic macular edema in the second half of 2022. Results from a phase 3 study of Dupixent in treating chronic skin disease prurigo nodularis should be on the way in the first half of next year. The drug recently picked up another U.S. approval in treating asthma in kids ages six to 11.

The U.S. Food and Drug Administration (FDA) is scheduled to make an approval decision for REGEN-COV in treating COVID-19 in non-hospitalized patients and as prophylaxis in some groups by April 13, 2022. Regeneron is also awaiting the FDA's review of a request to expand Emergency Use Authorization of the drug to include treatment in hospital settings.

The company could have another big catalyst on the way in January 2022 with potential FDA approval of Libtayo in treating patients with recurrent or metastatic cervical cancer whose disease progressed on or after chemotherapy. Regeneron also plans to file for European approval in this indication by the end of this year.

There's a lot going right for Regeneron these days. And a lot for investors to like.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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