Regeneron Earnings: Maintaining Our $750 Valuation Following In-Line Results

Regeneron’s first-quarter results aligned with our expectations, and we’re not changing our $750 fair value estimate. Sales fell by 1% overall, largely due to the lack of covid-19 antibody sales and a 2% decline in sales of Regeneron’s ophthalmology drug Eylea in the United States (including sales of the new, high-dose Eylea). Eylea’s decline was partly due to lower wholesaler inventories but also due to lower volume and price in a competitive market. Roche’s Vabysmo has had a strong launch. While Eylea HD has gained an important billing code for Medicare effective in the second quarter, we continue to see Vabysmo’s efficacy and convenience reflecting a solid long-term competitor. Regeneron’s collaboration revenue from partner Sanofi increased 14% to $910 million, as immunology drug Dupixent sales continue to grow strongly (24% sales growth), with potential approval in COPD later this year standing as the next catalyst for growth. Regeneron’s narrow moat, with a foundation in Eylea and Dupixent, is also supported by a growing pipeline in other therapeutic areas. However, we await further data before increasing our pipeline sales estimates.