Biotech companies use living organisms to develop their therapies, and much like some living things, biotech stocks can be notoriously volatile. Part of that is due to the complexities of making biotech therapies.
The success rate for biotech start-ups is low, but Gilead Sciences (GILD 0.23%), founded 36 years ago and Regeneron Pharmaceuticals (REGN -0.84%), founded 35 years ago, have already stood the test of time. Over the past decade, each of the stocks has seen triple-digit percentage increases in total price, annual revenue, and earnings per share. More growth is likely ahead for both, and the strong potential in their pipelines makes them great long-term holds for the next decade. Both companies also trade for less than 21 times earnings, making them well-priced compared to many biotech stocks.
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Gilead solidifies its base, branches out as well
Gilead is setting itself up for long-term success by growing its pipeline of oncology therapies in an effort to expand its portfolio beyond its core HIV/AIDS indication. Its goal is to have oncology account for a third of its revenue by 2030.
Trodelvy, already approved to treat several types of breast cancer and endometrial cancer, continues to add indications, and could be a blockbuster for Gilead. In the first quarter, the CAR-T therapy's sales jumped 52% year over year to $222 million.
In data released this month, Trodelvy fared well in long-term survival rates in a phase 3 study compared to chemotherapy in treating patients with several different types of metastatic breast cancer who previously received endocrine-based therapies and at least two chemotherapies.
Yescarta, another CAR-T therapy, approved to treat large B-cell lymphoma and relapsed or refractory follicular lymphoma, reported sales of $359 million in Q1, up 70% over the same period last year. In a long-term follow-up to a phase 3 study of Yescarta as a treatment for relapsed and refractory large B-cell lymphoma, it was found to have a significantly better overall survival rate after four years compared to the current standard of care, which typically involves several steps, including chemoimmunotherapy, chemotherapy, and a stem cell transplant.
Gilead's first-quarter earnings were skewed a bit because sales of Veklury, the company's COVID-19 antiviral, were down by 63% to $573 million, which isn't a surprise. Counting Veklury, Gilead's revenue slipped 3% year over year to $6.3 billion.
However, factoring out Veklury's sales, Gilead's quarterly revenue of $5.7 billion was up 17% year over year. Earnings rose from $0.02 per share in the first quarter a year ago to $0.80 per share this time. Most of the company's revenue came from its HIV/AIDS franchise, which reported sales of $4.19 billion, up 13% over the same period last year, but oncology drugs were responsible for $670 million, or 11% of overall revenue.
Gilead has a growing pipeline that includes 61 clinical-stage programs, but another great long-term reason to hold onto the stock is its dividend. The company has increased its payouts every year since it began distributing them in 2015, including a 2.7% bump this year to $0.75 per quarter. At the current share price, that works out to a yield of around 3.8%.
Regeneron has made a name for itself
Regeneron's stock is up a little more than 6% year to date. The biotech focuses mainly on treating cancers and autoimmune disorders, and in the first quarter alone, the company had six new regulatory approvals in the U.S. and Europe across five products, and has 35 programs in clinical development. Over the past five years, Regeneron has nearly doubled its annual revenues, going from $6.6 billion in 2018 to $12.2 billion in 2022.
Last year, Regeneron sales were led by anti-blindness treatment Eylea (aflibercept), which did $9.6 billion in total sales, up 4%, and immunology blockbuster Dupixent, which had $8.7 billion in total revenue, up 40%. (These sales figures also include the share of revenue booked by the drugs' other collaborators, Bayer and Sanofi, respectively.)
It is also seeing increased sales from the oncology drug Libtayo, which the company bought last year from Sanofi. It did $578 million in sales in 2022, up 26%, and sales are expected to grow with the drug recently gaining approval in new indications as a treatment for cervical cancer and advanced non-small cell lung cancer.
Eylea, which the company developed with Bayer, saw sales slide by 4% year over year in Q1 to $2.3 billion, but it is likely to bounce back. It should benefit this year with the FDA likely approving a high-dose version of the injectable therapy, making it more competitive with Roche's Vabysmo, which was approved in January 2022 to treat wet, or neovascular, age-related macular degeneration (AMD) and diabetic macular edema (DME).
Eylea's high-dose version did well in late-stage trials and the FDA granted the new indication priority review for its biologics license application. The therapy, currently given in doses of 2 milligrams every two months, was just as effective in doses of 8 milligrams given at longer intervals, with no new safety issues.
Eylea was also approved in February to be used to treat preterm infants with retinopathy of prematurity (ROP), a leading cause of childhood blindness.
The growth of the company's therapies was evident in the first quarter as Regeneron reported revenue of $3.16 billion, up 7%, year over year, though earnings slipped to $7.17 per share compared to $8.61 per share in the same quarter last year.
