Company Reports

Regeneron's second-quarter revenue grew 17% year on year and non-GAAP EPS rose 11%. Management's updated guidance ranges are in line with its previous ranges. Cemdisiran received a US target regulatory action date in November 2026 for its first approval application in generalized myasthenia gravis.

Regeneron has leveraged its monoclonal antibody research and development platform to become one of the few biotechs to be a profitable commercial operation and establish a narrow moat. Lead drug Eylea had global sales of just under $10 billion in 2024 and is approved for wet age-related macular degeneration and other eye-related indications. The majority of sales are for original-dose Eylea, but over the next few years, we expect most of its sales to shift to long-acting Eylea HD, a higher-dose formulation.

Year over year in the quarter, revenue grew 19% and adjusted EPS rose 15%. GAAP gross profit margin on product sales fell 5 percentage points, and Regeneron lowered its guidance range for non-GAAP gross margin on product sales to 77%-78%, or 1 percentage point lower than previous guidance.

Revenue for the quarter grew 3% year on year, and non-GAAP earnings per share declined 5%. Full-year revenue was $14.3 billion, or 1% growth. The US Eylea franchise declined 28%, and Sanofi collaboration revenue grew 35%, largely offsetting each other.

Regeneron Pharmaceuticals' third-quarter revenue grew 1% year on year, as growth in Dupixent revenue offset declines in the Eylea franchise. US sales of original-dose Eylea fell 41% year on year and 10% sequentially, while US sales of Eylea HD increased 10% year on year and sequentially.

Regeneron has leveraged its monoclonal antibody research and development platform to become one of the few biotechs to be a profitable commercial operation and establish a narrow moat. Lead drug Eylea had global sales of just under $10 billion in 2024 and is approved for wet age-related macular degeneration and other eye-related indications. The majority of sales are for original-dose Eylea, but over the next few years, we expect most of its sales to shift to long-acting Eylea HD, a higher-dose formulation.

Regeneron’s second-quarter revenue grew 4% year on year, with declines in the Eylea franchise offset by growth in Dupixent revenue. US sales of original-dose Eylea declined 39% year on year but increased 2% sequentially, while US sales of Eylea HD increased 29% year on year and 28% sequentially.

Itepekimab met its primary efficacy endpoint in AERIFY-1 for treating former smokers with chronic obstructive pulmonary disease, or COPD, but it failed to meet the same endpoint in AERIFY-2. The companies are currently assessing the data to decide next steps.

Regeneron reported quarterly revenue contraction of 4% year on year, which was largely driven by declines in its Eylea franchise. Original dose Eylea declined 39% year on year and 38% sequentially, and although Eylea HD grew 54% year-on-year, it only grew 0.7% on a sequential basis.

Regeneron has leveraged its monoclonal antibody research and development platform to become one of the few biotechs to emerge as a profitable commercial operation and establish a narrow moat. Lead drug Eylea had global sales of just under $10 billion in 2024 and is approved for wet age-related macular degeneration and other eye-related indications. The majority of sales are for original-dose Eylea, but over the next few years we expect most of its sales to shift to long-acting Eylea HD, a higher-dose formulation.

Narrow-moat Regeneron’s fourth-quarter results were in line with our expectations. Flattening sales in the Eylea ophthalmology franchise were more than offset by strong sales from immunology drug Dupixent and oncology drug Libtayo. Despite strong competitive pressures facing the Eylea franchise, we think our estimates are suitably conservative and maintain our $830 fair value estimate. With the recent selloff, we view shares as undervalued.

Following President-elect Donald Trump’s Nov. 14 announcement of the nomination of Robert F. Kennedy Jr. as secretary of the US Department of Health and Human Services, there have seen several more nominations for leadership in the 13 HHS divisions, including Dr. Mehmet Oz (Centers for Medicare and Medicaid Services) on Nov. 19, Dr. Marty Makary (US Food and Drug Administration) and Dr. Dave Weldon (Centers for Disease Control and Prevention) on Nov. 22, and Dr. Jay Bhattacharya (National Institutes of Health) on Nov. 26. Overall, we think these selections show a consistent theme of introducing potential disruptive forces to US healthcare, although their lack of experience and the power of career staffers in these agencies could serve to blunt any significant proposed changes. We continue to see obesity drugs and vaccines as areas of potential scrutiny, although without any clarity on proposals, we’re not making any changes to our fair value estimates following these announcements.

President-elect Donald Trump announced on Nov. 14 that he is nominating Robert F. Kennedy Jr. to be secretary of the Department of Health and Human Services under his new administration in 2025. RFK Jr. has strong views on public health and, if confirmed, could use his position to make changes at several of the 13 HHS divisions. In our Nov. 8 note, we discussed the potential tailwinds of a Trump administration, including possible repeal of the Medicare negotiation provision in the Inflation Reduction Act, less Federal Trade Commission scrutiny of acquisitions, and a likely continuation of lower corporate taxes. However, if RFK’s nomination is confirmed, we expect more “wild card” headwinds to the industry will come to fruition. As the HHS covers the US Food and Drug Administration and the Centers for Disease Control and Prevention, an HHS secretary skeptical of vaccine and obesity drug benefits could work to erode public trust, put up roadblocks for approval of new vaccines, and prevent the CDC from recommending any vaccines that make it through the approval process. With less federal guidance, we think it is possible certain states could waver in support of broad mandates for childhood vaccines. All of these could weigh on sales of vaccines in the US, including covid vaccine makers Moderna and BioNTech and big biopharma vaccine makers like GSK (we model 14% of GSK revenue from US vaccine sales in 2024), Pfizer (12%), Merck (9%), and Sanofi (6%).

We think that President-elect Donald Trump brings a mix of potential headwinds and tailwinds to the biopharma industry, and we’re not making any adjustments to our fair value estimates at this time. We had previously assumed that the most likely case was split control of the presidency and Congress by Democrats and Republicans. However, with Republicans locking in control of the Senate and holding a lead in elections in the House, we think it looks increasingly likely that Trump and his party could have control across both branches of government, making any potential policy priorities more likely to be implemented.

Narrow-moat Regeneron’s third-quarter results were in line with our expectations, thanks to resilient sales in the Eylea franchise and strong global sales of Sanofi and Regeneron’s immunology drug Dupixent. Despite competitive pressure from Amgen’s recent decision to launch its own Eylea biosimilar, we think our estimates are suitably conservative and maintain our $830 fair value estimate.

Regeneron has leveraged its monoclonal antibody research and development platform to become one of the few biotechs to emerge as a profitable commercial operation and establish a narrow moat. Lead drug Eylea has global sales approaching $10 billion annually and is approved for wet age-related macular degeneration and other eye-related indications. The drug remains well positioned, as its high-dose formulation should allow it to continue to hold strong market share against biosimilars and Roche's new branded drug, Vabysmo.

Regeneron has leveraged its monoclonal antibody research and development platform to become one of the few biotechs to emerge as a profitable commercial operation and establish a narrow moat. Lead drug Eylea has global sales approaching $10 billion annually and is approved for wet age-related macular degeneration and other eye-related indications. The drug remains well positioned, as its high-dose formulation should allow it to continue to hold strong market share against biosimilars and Roche's new branded drug, Vabysmo.

We’re raising our Regeneron fair value estimate to $830 from $750 following solid 12% top-line growth and 13% non-GAAP EPS growth in the second quarter. Performance was driven by a promising transition of sales from ophthalmology drug Eylea to high-dose Eylea, as well as global sales of Sanofi and Regeneron’s immunology drug Dupixent ahead of our expectations. Regeneron’s reported US sales of Eylea and Eylea HD grew 2% to more than $1.5 billion in the quarter, as patients transitioned to the newer high-dose product and more new patients initiated therapy, drawn by the convenience of less-frequent eye injections. We’re impressed by Regeneron’s performance despite the very strong competing US launch of Roche’s Vabysmo, which grew 68% in the second quarter to more than CHF 700 million in US sales. We now think that US Eylea/Eylea HD sales could grow to $6.5 billion in 2027 ahead of biosimilar competition and potential Medicare negotiation. Dupixent sales grew 27% and Regeneron’s collaboration revenue from Sanofi grew 21%, as sales of the key immunology drug benefit from expanding market share, indications, and geographic reach. Dupixent is now approved in COPD in Europe and should receive US Food and Drug Administration approval in this new indication in September, which should further support our expectation of $21 billion in global Dupixent revenue by 2029. Overall, we think Regeneron’s Eylea and Dupixent support a narrow moat, with further expansion into oncology or rare diseases adding a potential pathway to a wide moat.

Regeneron has leveraged its monoclonal antibody research and development platform to become one of the few biotechs to emerge as a profitable commercial operation and establish a narrow moat. Lead drug Eylea has global sales approaching $10 billion annually and is approved for wet age-related macular degeneration and other eye-related indications. The drug remains well positioned, as its high-dose formulation should allow it to continue to hold strong market share against biosimilars and Roche's new branded drug, Vabysmo.

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.