Investing wisdom tells us to buy low, but what exactly constitutes a "low" point? Consider the case of Regeneron (REGN -0.84%), a biotech company that has beaten the market in recent years. Despite its doing so, one could argue that the drugmaker, which isn't that far off from its 52-week high, is still worth buying at current levels, given the company's prospects and upside potential.
Let's discuss recent developments with Regeneron and determine why the company's shares are still worth buying.
Fighting off the competition
One of Regeneron's most important products is Eylea, which treats wet age-related macular degeneration, an eye disease. Regeneron co-markets Eylea with Bayer. In the second quarter, Regeneron's total revenue from Eylea (including U.S. sales of the medicine where it holds the rights to market it and collaboration revenue collected from Bayer for sales of Eylea outside the U.S.) came in at $1.88 million, which made up roughly 59% of the company's total revenue.
Unfortunately, Regeneron's recorded net sales of Eylea dropped 7% year over year to $1.5 million. The company blamed lower net selling prices due to increased competition for the decline. Regeneron has been fighting off Vabysmo, which was developed by Roche and first approved in early 2022. Still, despite the rivalry between Eylea and Vabysmo, Regeneron is managing to grow its top line.
Total revenue for the company in the second quarter increased by 11% year over year to $3.2 billion, largely thanks to its other growth driver, eczema treatment Dupixent (co-marketed with Sanofi). What's more, Regeneron recently earned approval for a high-dose formulation of Eylea that will help it better compete with Vabysmo. The high-dose version of Eylea will decrease the number of injections needed every year without compromising efficacy, a major selling point for many patients.
Thanks to this new approval, we should see Eylea's sales start moving in the right direction again.
Expanding the pipeline
Like any responsible biotech company, Regeneron is also looking beyond its two key products -- Eylea and Dupixent -- for growth. For instance, the company has partnered with Intellia Therapeutics, a gene-editing specialist. The two collaborators are developing a treatment called NTLA-2001, a potential therapy for transthyretin amyloidosis.
There is no known cure for this rare disease that causes heart problems, but NTLA-2001 could be the first. While it still has a long way to go, it looked promising in early stage clinical trials. The partners could start a late stage study by the end of the year. Regeneron and Intellia Therapeutics are collaborating on several other candidates earlier in their developmental stages.
But that's not all Regeneron has up its sleeve. The biotech recently announced the acquisition of Decibel Therapeutics, a gene therapy-focused clinical-stage biotech. Regeneron had previously worked with Decibel, and now it has bought out the company as well as its potential gene therapies for hearing loss.
Regeneron spent $109 million on this deal. That's a pretty small sum for a biotech company of this size, but one that could end up paying for itself several times over if Decibel Therapeutics' programs pan out. What if they don't? Not to worry, that's why Regeneron is casting a wide net, including its collaboration with Intellia Therapeutics and its internally developed programs.
The company's pipeline boasts several dozen programs, some of which will likely yield brand-new approvals eventually.
Still a solid buy
We barely even mentioned that Regeneron's Dupixent could be headed toward a major label expansion that will help its sales grow even faster than they already are. That, combined with the biotech's new version of Eylea and its excellent pipeline, make it a superb biotech stock to buy and hold, even as it has delivered market-beating returns over the past three years.
