Regeneron Hq

Source: Regeneron Pharmaceuticals

Regeneron Pharmaceuticals (NASDAQ:REGN) just delivered second quarter financial results that by any measure were stellar. The company's sales and net income soared by 50% and 103% last quarter, respectively.

The company's impressive growth was fueled by rising demand for its vision loss treatment Eylea, but even greater growth could be coming following the recent approval of its new cholesterol busting drug, Praluent.

Delivering the goods
Eylea is Regeneron's only drug on the market and Regeneron maintains full rights to sales of Eylea in the United States. Last quarter, U.S. net sales of Eylea jumped 58% to $655 million.

Outside the U.S., Eylea is sold by Regeneron's marketing partner Bayer, which splits net profit on Eylea with Regeneron. In the second quarter, international Eylea sales increased from $247 million last year to $338 million this year. After factoring in costs associated with the drug, Regeneron's share of ex-U.S. profit grew to $107 million in Q2, up from $67 million a year ago.

Overall, greater revenue from Eylea, both in and outside the U.S., and collaboration revenue from Sanofi, Regeneron's partner on a range of monoclonal antibody therapies, including the recently approved Praluent, translated into total revenue of $999 million.

Importantly, leveraging sales growth against fixed costs allowed Regeneron to deliver increasingly more to the bottom line in spite of increases in both research and development and SG&A. In the quarter, total income from operations reached $344.8 million, up from $228 million last year and overall, non-GAAP net income per share hit $3.29, up from $2.88 last year.

Better times ahead
Eylea's success stems from label expansions that are allowing it to wrestle away market share from Novartis' multibillion eye-drug Lucentis, including an approval this past March for use in diabetics with a form of vision loss called diabetic macular edema -- a common cause of blindness in diabetes patients.

Because the number of cases of diabetes globally continues to climb and diabetic patients are living longer, the opportunity to continue to generate sales growth for this indication should provide long-term revenue tailwinds for the company.

But an even bigger growth opportunity may exist with Praluent, its recently approved therapy for lowering bad cholesterol levels.

Initially, Praluent will be used in patients with rare forms of high bad cholesterol not easily controlled by current standards of care, such as statins, or in patients who have previously suffered a heart attack or stroke.

Regeneron believes that as many as 10 million people may fall into that initial addressable market and given that Regeneron and Sanofi have priced Praluent at a whopping $14,600 annually, they'll only need a small portion of that patient population to get prescribed Praluent in order for it to become a multibillion dollar blockbuster.

Ongoing trials that could expand Praluent's use to include all patients at risk of heart disease could boost the addressable population into the tens of millions of people, which could lead to Praluent becoming one of the globe's best selling medicines.

Additionally, Regeneron and Sanofi are also collaborating on a host of other monoclonal antibodies that could become top sellers. For example, the two companies are developing sarilumab for rheumatoid arthritis, a multibillion indication, and plan to file it for FDA approval before the end of this year.

Looking forward
Regeneron isn't a cheap stock. It boast a market cap of $63 billion and its trading at 18.5 times sales and 44 times forward EPS expections. However, investors might want to look beyond those valuation metrics and think further out.

Because Eylea is likely to continue growing, Praluent has multibillion blockbuster potential that may not be fully baked into forecasts, and sarilumab could provide additional sales as early as late next year, Regeneron's future sales and profit could climb much higher over the coming years, thus bringing its valuation down to more reasonable levels. For that reason, Regeneron is fast becoming one of a select group of must-own big cap biotech companies. 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.