Regeneron Emerges as Strong Biotech Buy With Robust Pipeline and Revenue Growth

Regeneron has progressively increased earnings over more than 35 years, with annual net income reaching billions of dollars. The biotech company sells a number of products, from treatments for inflammation to those for cholesterol and eye disease.

Dupixent, a product Regeneron commercializes with partner Sanofi, has delivered blockbuster revenue. The drug is sold for eight inflammation-linked conditions, including common ones such as asthma and atopic dermatitis (also known as eczema). More than one million patients worldwide take this drug, making it a crucial revenue pillar for the company.

The company has also relied on Eylea for growth. This is a treatment for wet age-related macular degeneration as well as other diseases of the retina. The lower dose form of Eylea has seen growth slow due to competition, and some of the competition has come from Regeneron's higher dose version of the treatment, Eylea HD. In the recent quarter, Eylea HD saw U.S. revenue soar 66% to more than $500 million, exceeding expectations and demonstrating that this product remains a robust growth driver.

Regeneron has an enormous pipeline with many late-stage programs across therapeutic areas. The company currently has more than a dozen candidates involved in phase 3 trials, from immunology and inflammation to cardiovascular, oncology, and rare diseases. This is just to mention candidates that may be approaching the finish line; Regeneron also has a significant number of candidates in earlier-stage trials.

Even if only a portion of these candidates reaches commercialization, Regeneron may see growth take off in the coming years. The deep pipeline ensures sustained growth and new product launches in the future, with new launches to compensate for declines in older drugs.

The company is accelerating drug development using its proprietary technologies, such as VelociSuite, which produces optimized fully human antibodies and new classes of bispecific antibodies. VelociSuite consists of VelocImmune, VelociGene, VelociMouse, VelociMab, Veloci-Bi, VelociT, VelociHum, and other related technologies.

Regeneron is currently trading at 17x forward earnings estimates, down from more than 25x in the second half of 2024. Considering this biotech's track record of growth and its solid pipeline, the valuation appears attractive at these levels.