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A Biotech With a Growing Moat

Regeneron's moat is widening thanks to recent clinical successes and a productive pipeline; however, investors should wait for a better price before buying.


Stefan Quenneville: Regeneron (REGN) is a biotechnology company that we rate as having a narrow moat and a positive moat trend. We think its positive moat trend is driven by its recent string of clinical and commercial successes, as well as its very full and productive drug-development pipeline.

The company turned profitable in 2012, largely due to its key drug Eylea, which is a growing blockbuster that treats degenerative eye diseases. What's really important, though, from a moat perspective is the company's ability to reinvest those profits to develop new drugs that target attractive market opportunities. This is a very challenging thing to do for a lot of biotechs; a lot of biotechs fail here. But Regeneron has been able to do this successfully, and we really think this is what's driving its long-term competitive advantage, or its moat.

Stefan Quenneville, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.