Shares of Regeneron Pharmaceuticals (REGN 0.56%), a biotech giant, have been southbound over the past two years as the company navigates challenges to one of its main growth drivers, Eylea. This medicine for wet age-related macular degeneration (AMD) has faced competition, including biosimilars, which have eroded its sales.
However, Regeneron has made moves to protect its market share. The company recently notched another win in that department, which significantly jolted its share price. In light of these recent developments, should investors buy the stock?
Regeneron's Eylea strategy
Eylea faced competition from Roche Holding's Vabysmo, a medicine approved in early 2022 that offered a more convenient (that is, less frequent) dosing schedule. Then Regeneron had to contend with Amgen, which was allowed by a judge to launch Pavblu, a biosimilar version of the medicine. However, the biotech giant was able to strike back. In August 2023, Regeneron received approval for a higher-dose (HD) version of Eylea. HD Eylea doesn't have to contend with a cheaper biosimilar, and it can also offer less frequent dosing for patients with wet AMD.
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That has allowed Regeneron to somewhat mitigate declining sales from the original formulation of Eylea. In the third quarter, the company's revenue increased by 1% year over year to $3.75 billion. While that's not impressive sales growth, it's not bad considering the troubles Regeneron is facing. During the period, Eylea HD's sales in the U.S. (where Regeneron has exclusive rights to the medicine) grew by 10% year over year to $431 million, but combined sales with the original version dropped 28% year over year to $1.11 billion.
Here's the good news. Regeneron recently announced that Eylea HD received a label expansion from the U.S. Food and Drug Administration (FDA): It's now approved for macular edema following retinal vein occlusion (RVO). Importantly, the agency allowed a dosing schedule of up to every eight weeks (following an initial monthly dosing period), making it the first FDA-approved treatment for RVO with this dosing regimen.
Roche's Vabysmo is also approved in this indication, but HD Eylea should now have the edge and will be able to attract significantly more patients, including those who were previously on the original Eylea. This label expansion should allow Regeneron to boost sales growth in the medium term. It's no wonder, then, that its shares jumped as a result.
Is Regeneron stock a buy?
It's worth noting that Regeneron's other main growth driver, eczema treatment Dupixent, for which it shares the rights with Sanofi, continues to perform very well. In the third quarter, Dupixent's worldwide sales (recorded by Sanofi) jumped by 27% year over year to $4.86 billion. The medicine remains in high demand after earning a key label expansion for treating chronic obstructive pulmonary disease (COPD) last year.
And it's still at it. Regeneron and Sanofi just announced another approval for Dupixent in the European Union, this time for chronic spontaneous urticaria, a condition involving the unpredictable appearance of hives. Dupixent should maintain its northbound trajectory for a while, helping Regeneron move beyond its recent Eylea-related issues.
NASDAQ: REGN
Key Data Points
Meanwhile, the company is launching new products and posting strong mid- and late-stage clinical trial results for others. In July, the FDA approved its Lynozyfic, a medicine for multiple myeloma. And in August, Regeneron announced that cemdisiran, a potential therapy for myasthenia gravis (a chronic disease that causes muscle weakness), performed well in a late-stage clinical trial.
Regeneron is also looking to jump into the fast-growing weight loss market, albeit through a somewhat unconventional path. The company is developing medicines that can help patients on GLP-1 drugs maintain muscle mass while losing weight. Regeneron's candidate in this area performed well in phase 2 studies. Over the next few years, the company should launch a couple of new brands, which will help boost revenue.
So, Regeneron Pharmaceuticals will likely deliver strong financial results over the next five years. The company also has a strong stock buyback program in place and initiated a dividend this year, demonstrating its commitment to returning capital to shareholders. All these factors make the stock a buy for biotech investors.
