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Regeneron Pharmaceuticals, Inc. (REGN)

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March 14, 2025Undervalued
Compared to:

Vertex Pharmaceuticals, Inc. (VRTX) | Amgen, Inc. (AMGN) | Health Care Select Sector SPDR Fund (XLV)

Key takeaways
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Regeneron appears undervalued based on its strong financial performance, robust pipeline, and growth prospects, particularly with EYLEA HD and Dupixent. The company's valuation multiples are lower than industry averages despite superior profitability metrics and consistent revenue growth. However, risks such as product concentration and potential biosimilar competition temper the undervaluation assessment.

  • Regeneron's revenue is consistently growing, driven by key products like Dupixent and EYLEA/EYLEA HD, with Q4 2024 revenue reaching $3.789 billion.
  • Profitability metrics, such as gross profit margin (81.75% to 83.53%), significantly outperform the industry average, indicating efficient operations.
  • Despite strong financials, Regeneron has underperformed both the Health Care Select Sector SPDR Fund (XLV) and key competitors like Vertex Pharmaceuticals (VRTX) and Amgen (AMGN) over the past year, with a return of -28.94%.
  • The company is strategically focusing on EYLEA HD as a primary revenue driver, aiming for it to become the new standard of care in the anti-VEGF category, as highlighted in the earnings call.
  • Regeneron faces significant competitive pressure from biosimilars, particularly for EYLEA, which could erode market exclusivity and profitability, as detailed in SEC filings and the earnings call.
  • The initiation of a quarterly dividend ($0.88 per share) and a $3 billion share repurchase program signals confidence in future cash flows and a balanced approach to capital allocation.
  • R&D spending is projected to be $5 billion to $5.2 billion in 2025, reflecting a strong commitment to pipeline development and innovation.
  • The Enterprise Value to EBITDA ratio (16.26 to 25.00) is significantly lower than the industry average (49.38), suggesting potential undervaluation.
  • Management anticipates acceleration in EYLEA HD uptake in the second half of 2025 due to anticipated label enhancements, which could be a key catalyst for future growth.
  • Regeneron's success hinges on effective execution of its strategic initiatives, including pipeline diversification and managing competitive threats, to improve its market position and investor returns.
Evaluation summary
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  1. Company Overview:

    • Regeneron Pharmaceuticals, Inc. is a biotechnology company focused on discovering, developing, manufacturing, and commercializing medicines for serious diseases. Key products include Dupixent, EYLEA, EYLEA HD, and Libtayo.
    • Dupixent is a significant revenue driver, treating over 1 million patients globally across seven indications. EYLEA and EYLEA HD are treatments for eye conditions, with EYLEA HD positioned as a potential new standard of care. Libtayo achieved blockbuster status in 2024, indicating substantial sales.
    • For comparative analysis, Regeneron is benchmarked against the Health Care Select Sector SPDR Fund (XLV) and evaluated against industry peers Vertex Pharmaceuticals, Inc. (VRTX), and Amgen, Inc. (AMGN).

  2. Financial Performance:

    • Regeneron's revenue has shown consistent growth. Quarterly revenue increased from $3.145 billion in Q1 2024 to $3.789 billion in Q4 2024.
    • Net income has fluctuated, with a high of $1.432 billion in Q2 2024 and a low of $0.722 billion in Q1 2024. The net profit margin ranged from 22.96% to 40.38% across the four quarters of 2024.
    • The gross profit margin has remained consistently high, ranging from 81.75% to 83.53% across the four quarters of 2024, significantly outperforming the industry average of -817.71%.
    • Return on Assets (ROA) ranged from 11.98% to 13.37%, Return on Equity (ROE) from 15.28% to 17.17%, and Return on Invested Capital (ROIC) from 13.80% to 15.61%. These figures are significantly higher than the industry averages of -63.84% for ROA, -355.23% for ROE, and -119.89% for ROIC, indicating superior profitability.

  3. Operational Efficiency:

    • Total assets increased from $34.369 billion in Q1 2024 to $37.852 billion in Q4 2024, while total liabilities increased from $7.378 billion to $8.498 billion over the same period.
    • Working capital remained strong, ranging from $14.716 billion to $15.672 billion throughout 2024.
    • Net operating cash flow fluctuated, with a low of $354 million in Q2 2024 and a high of $1.512 billion in Q1 2024. Free cash flow to equity also varied, from $173.5 million in Q2 2024 to $1.378 billion in Q1 2024.
    • Capital expenditure increased from $161.8 million in Q1 2024 to $267 million in Q4 2024. Depreciation, depletion, and amortization remained relatively stable, ranging from $114.1 million to $126.4 million.
    • The company initiated a quarterly dividend program ($0.88 per share) and authorized an additional $3 billion share repurchase, increasing total buyback capacity to $4.5 billion.
    • The current ratio remained strong, ranging from 4.73 to 5.44, indicating good liquidity. The quick ratio also remained high, ranging from 3.95 to 4.62.
    • The debt-to-equity ratio remained relatively stable, ranging from 9.22% to 10.02%, indicating manageable leverage. The Debt / EBITDA ratio remained constant at approximately 0.59 across all quarters.

  4. Growth Opportunities:

    • Regeneron is focused on maximizing growth opportunities from existing brands like Dupixent and EYLEA HD. Dupixent is expanding into new indications, such as COPD, CSU, and bullous pemphigoid. EYLEA HD is expected to become the new standard of care in the anti-VEGF category.
    • The company has a robust pipeline with approximately 40 product candidates. Key programs include linvoseltamab, odronextamab, and Libtayo in adjuvant CSCC, with anticipated regulatory approvals and data readouts in 2025. R&D spending is projected to be $5 billion to $5.2 billion in 2025.
    • Regeneron is expanding its leadership in big data through collaborations, leveraging its large DNA sequence-linked healthcare database for drug discovery and development.
    • The company is pursuing a differentiated approach in earlier lines of therapy for its CD3 bispecifics and advancing a two-pronged approach to anticoagulation with Factor XI antibodies.

  5. Recent Developments and Market Sentiment:

    • The earnings call highlighted EYLEA HD as key to future growth, despite competitive pressures on EYLEA. The company is strategically shifting towards EYLEA HD as a primary revenue driver.
    • Regeneron plans numerous pivotal data readouts and regulatory submissions in 2025 to diversify revenue streams beyond established products.
    • The initiation of a dividend alongside continued significant share repurchases demonstrates a balanced approach to capital allocation.
    • Regeneron's investment in big data analytics positions the company for future innovation and potentially new revenue streams beyond drug development.
    • The competitive landscape remains challenging due to biosimilar competition and pricing pressures, requiring continuous innovation and strategic maneuvering.

  6. Risks and Threats:

    • Regeneron is substantially dependent on the success of EYLEA, EYLEA HD, and Dupixent. Setbacks in commercialization or regulatory approval could have a material adverse impact.
    • The biotechnology and pharmaceutical industry is highly competitive, with significant rivalry from other companies. Regeneron faces the risk of biosimilar competition, particularly for EYLEA, which could erode market exclusivity and profitability.
    • Regulatory compliance is a major challenge, with ongoing legal proceedings and investigations related to business practices. Failure to comply with healthcare laws and regulations could result in substantial penalties and reputational damage.
    • Regeneron relies on collaborations with partners like Sanofi and Bayer, and the termination or breach of these agreements could harm the company's ability to bring products to market.

  7. Valuation Analysis:

    • The Enterprise Value to EBITDA ratio ranged from 16.26 to 25.00 across the four quarters of 2024, significantly lower than the industry average of 49.38, suggesting that Regeneron may be undervalued compared to its peers.
    • The Enterprise Value to Sales ratio ranged from 5.28 to 8.46, also lower than the industry average of 8980.97, further indicating potential undervaluation.

  8. Price Performance:

    • Regeneron's stock price has fluctuated in early 2025, with a high of $744.83 on March 10, 2025, and a low of $663.00 on February 12, 2025.
    • Regeneron has generally underperformed the Health Care Select Sector SPDR Fund (XLV) and its peers, Vertex Pharmaceuticals (VRTX) and Amgen (AMGN), over the past year. REGN's return was -28.94%, compared to 23.03% for VRTX and 18.65% for AMGN.

  9. Future Outlook:

    • Management expects continued competitive pressure on EYLEA but anticipates acceleration in EYLEA HD uptake in the second half of 2025 due to anticipated label enhancements.
    • The company expects regulatory approvals for linvoseltamab, odronextamab, and a new Libtayo indication in 2025.
    • Several pivotal or proof-of-concept data readouts are anticipated in 2025 across various therapeutic areas.
    • The Sanofi development balance is expected to be fully reimbursed by the end of 2026.

  10. Summary:

    • Regeneron is a financially strong company with increasing revenue and high profitability, driven by key products like Dupixent and EYLEA HD. However, it faces significant competitive and regulatory risks.
    • Strengths: Strong financial performance, robust pipeline, and strategic focus on innovation.
    • Weaknesses: Dependence on key products, underperformance compared to peers, and potential EYLEA sales erosion.
    • Opportunities: Expansion of Dupixent into new indications, growth potential of EYLEA HD, and leveraging big data for drug discovery.
    • Threats: Biosimilar competition, regulatory challenges, and reliance on collaborations.
    • Regeneron's financial health is robust, with strong liquidity and manageable leverage. However, its recent underperformance and competitive pressures warrant careful monitoring. Key factors for future performance include the successful launch of EYLEA HD, pipeline diversification, and effective management of competitive threats. Stakeholders should monitor the progress of EYLEA HD uptake, regulatory approvals for pipeline candidates, and the impact of biosimilar competition on EYLEA sales.
    • Overall, Regeneron presents a mixed investment profile. While its financial performance is strong and it has significant growth potential, its underperformance relative to peers and the identified risks suggest a need for caution. The company's success will depend on its ability to execute its strategic initiatives and navigate the competitive landscape.
Price history
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Fundamentals
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Insights
  • Regeneron Pharmaceuticals, Inc. is a biotechnology company with a strong financial performance, driven by the success of its key products, Dupixent, Libtayo, and EYLEA/EYLEA HD.
  • The company's revenue growth is expected to continue, driven by new product launches and market expansion.
  • Regeneron's profitability is improving due to increasing margins and good expense control.
  • The company's liquidity position is strong, enabling it to meet short-term obligations and pursue growth opportunities.
  • Regeneron's solvency is strong, supported by its manageable debt levels and robust cash flow generation.
  • The company's operational efficiency is significantly higher than the industry average, suggesting that Regeneron is more efficient than its peers.
  • Regeneron's future outlook is positive, driven by its strong financial performance, robust pipeline, and commitment to innovation.
  • However, the company faces several risks, including dependence on the success of its key products, competition from other companies, regulatory compliance challenges, and reliance on collaborations.
Analysis
  • Revenue - Regeneron's revenue has been consistently increasing, indicating strong demand for its products. - This growth is driven by the success of key products like Dupixent, Libtayo, and EYLEA/EYLEA HD. - The company's revenue growth is expected to continue, driven by new product launches and market expansion.
    • Profitability
      • Regeneron's profitability has been improving, as evidenced by increasing gross margin, operating margin, and net margin.
      • The company's profitability is significantly higher than the industry average, suggesting that Regeneron is more efficient at generating profits from its sales, assets, and equity.
      • The company's profitability is expected to remain strong, supported by continued expense control and a favorable product mix.
    • Liquidity
      • Regeneron's liquidity position is strong, as indicated by its increasing cash and short-term investments and a current ratio above the industry average.
      • The company's strong cash position enables it to meet short-term obligations and pursue growth opportunities.
      • The company's liquidity is expected to remain strong, supported by its robust cash flow generation.
    • Solvency
      • Regeneron's solvency is strong, as indicated by its manageable debt levels and a debt / EBITDA ratio significantly lower than the industry average.
      • The company's strong earnings and cash flow generation provide a buffer against potential risks.
      • The company's solvency is expected to remain strong, supported by its continued strong earnings and cash flow generation.
    • Operational Efficiency
      • Regeneron is becoming more efficient at generating profits from its assets and sales, as evidenced by decreasing enterprise value to EBITDA and enterprise value to sales ratios.
      • The company's operational efficiency is significantly higher than the industry average, suggesting that Regeneron is more efficient than its peers.
      • The company's operational efficiency is expected to continue to improve, supported by its investments in manufacturing capacity and operational efficiencies.
    • Cash Flow Analysis
      • Regeneron's cash flow generation is strong, as indicated by its increasing operating cash flow and free cash flow.
      • The company's cash flow generation is significantly higher than the industry average, suggesting that Regeneron is more efficient at converting earnings into cash.
      • The company's cash flow is expected to remain strong, driven by continued revenue growth and investments in manufacturing capacity.
    • Risk Factors
      • Regeneron is heavily dependent on the success of its key products, EYLEA, EYLEA HD, and Dupixent. Any setbacks in the commercialization or regulatory approval of these products could have a material adverse impact on the company.
      • The biotechnology and pharmaceutical industry is highly competitive, with significant rivalry from other companies developing competing products and product candidates. Regeneron faces the risk of biosimilar competition, which could erode the market exclusivity and profitability of its products.
      • Regulatory compliance is a major challenge, with the company facing ongoing legal proceedings and investigations related to its business practices. Failure to comply with healthcare laws and regulations could result in substantial penalties and reputational damage.
      • Regeneron's reliance on collaborations with partners like Sanofi and Bayer for the development, manufacturing, and commercialization of certain products creates additional risks, as the termination or breach of these agreements could materially harm the company's ability to bring these products to market.
      • The company is making significant investments to expand its manufacturing capabilities, which are critical to supporting the commercial supply of its products and the advancement of its clinical pipeline. However, these efforts carry execution risks and could result in excess capacity or inventory if product launches or demand do not meet expectations.
    • Future Outlook
      • Regeneron's future outlook is positive, driven by its strong financial performance, robust pipeline, and commitment to innovation.
      • The company is well-positioned to continue to grow its revenue and profitability, driven by the success of its existing products and the development of new products.
      • The company's strong cash flow generation will enable it to continue to invest in its growth and return capital to shareholders.
Financial statements
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Public filings
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  • Regeneron is heavily dependent on the success of its key products, EYLEA, EYLEA HD, and Dupixent, which collectively account for a substantial portion of its revenues. Any setbacks in the commercialization or regulatory approval of these products could have a material adverse impact on the company.
  • The biotechnology and pharmaceutical industry is highly competitive, with significant rivalry from other companies developing competing products and product candidates. Regeneron faces the risk of biosimilar competition, which could erode the market exclusivity and profitability of its products.
  • Regulatory compliance is a major challenge, with the company facing ongoing legal proceedings and investigations related to its business practices. Failure to comply with healthcare laws and regulations could result in substantial penalties and reputational damage.
  • Regeneron's reliance on collaborations with partners like Sanofi and Bayer for the development, manufacturing, and commercialization of certain products creates additional risks, as the termination or breach of these agreements could materially harm the company's ability to bring these products to market.
  • The company is making significant investments to expand its manufacturing capabilities, which are critical to supporting the commercial supply of its products and the advancement of its clinical pipeline. However, these efforts carry execution risks and could result in excess capacity or inventory if product launches or demand do not meet expectations.

Core Business and Operations:

  • Regeneron Pharmaceuticals, Inc. is a fully integrated biotechnology company that invents, develops, manufactures, and commercializes medicines for people with serious diseases
  • Key products include EYLEA, EYLEA HD, Dupixent, Libtayo, and other marketed products developed through collaborations with partners like Sanofi and Bayer
  • Major customers include distributors and specialty pharmacies that sell the products directly to healthcare providers
  • Significant competition from other biotechnology and pharmaceutical companies, as well as potential biosimilar competition for products like EYLEA

Industry and Market Trends:

  • Biotechnology and pharmaceutical industry faces substantial regulation, with products requiring lengthy and costly development and approval processes
  • Increasing pressure on drug pricing and reimbursement, with various government initiatives and policies aimed at controlling healthcare costs
  • Competitive landscape is dynamic, with new products and product candidates continuously emerging

Recent Events:

  • Approval of EYLEA HD by the FDA in August 2023 for the treatment of wAMD, DME, and DR
  • Expanded commercial capabilities for Libtayo globally following amendment to Regeneron's collaboration with Sanofi
  • Acquisition of Decibel Therapeutics in September 2023 to bolster hearing loss pipeline
  • Acquisition of 2seventy bio's oncology and autoimmune cell therapy pipeline in April 2024

Risk Factors:

  • Substantial dependence on the success of EYLEA, EYLEA HD, and Dupixent
  • Risks related to obtaining and maintaining regulatory approvals for products
  • Potential safety issues or side effects associated with products
  • Intellectual property challenges and loss of market exclusivity
  • Manufacturing and supply chain constraints
  • Legal and regulatory compliance risks, including healthcare fraud and abuse laws
  • Reliance on collaborations with partners like Sanofi and Bayer

Legal Matters:

  • Ongoing patent litigation related to EYLEA and other products
  • Civil proceedings initiated by the U.S. Department of Justice and U.S. Attorney's Office for the District of Massachusetts regarding certain business activities
  • Other government investigations and lawsuits related to pricing, marketing, and patient assistance programs

Management's Discussion and Analysis:

  • Revenues primarily driven by net product sales of EYLEA, EYLEA HD, and Dupixent
  • Significant research and development expenses to support clinical pipeline
  • Reliance on collaborations for development, manufacturing, and commercialization of certain products
  • Ongoing investments in manufacturing capacity expansion and fill/finish capabilities
  • Share repurchase programs to return capital to shareholders
Earnings calls
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Earnings Report 2024Q4 (2025-02-04)

Key takeaways

  1. EYLEA HD is Key to Future Growth: Despite acknowledging competitive pressures on EYLEA, Regeneron's emphasis on EYLEA HD's potential to become the standard of care suggests a strategic shift towards this product as a primary revenue driver.

  2. Pipeline Diversification is Crucial: The numerous pivotal data readouts and regulatory submissions planned for 2025 highlight Regeneron's strategy to diversify its revenue streams beyond its established products and reduce reliance on any single product.

  3. Balanced Capital Allocation: The initiation of a dividend alongside continued significant share repurchases demonstrates a balanced approach to capital allocation, aiming to satisfy a broader range of investor preferences while maintaining substantial investment in R&D.

  4. Big Data Strategy is a Differentiator: Regeneron's investment in and leadership within big data analytics positions the company for future innovation and potentially new revenue streams beyond drug development.

  5. Competitive Landscape Remains Challenging: The ongoing discussion of biosimilar competition and pricing pressures underscores the need for continuous innovation and strategic maneuvering to maintain market share and profitability.

Focus of management’s prepared remarks

  • Strong Q4 and Full-Year 2024 Performance: Regeneron capped off 2024 with strong fourth-quarter results, showing 10% revenue growth, driven by Dupixent, Libtayo, and EYLEA/EYLEA HD. Full-year revenue also showed significant growth.

  • Dupixent's Continued Success: Dupixent remains a key driver of revenue, with over 1 million patients treated globally across seven indications. The company highlighted the ongoing COPD launch and potential future launches in CSU and bullous pemphigoid.

  • EYLEA HD's Growth Potential: Management emphasized the potential for EYLEA HD to become the new standard of care in the anti-VEGF category, citing anticipated label enhancements and clinical data supporting its superior profile.

  • Libtayo's Blockbuster Status and Future Growth: Libtayo achieved blockbuster status in 2024 and is poised for further growth through market share expansion in existing indications and potential approval in adjuvant CSCC.

  • Robust Pipeline and Upcoming Milestones: Regeneron highlighted its extensive pipeline (approximately 40 product candidates) and anticipated regulatory approvals and data readouts for several key programs in 2025, including linvoseltamab, odronextamab, and Libtayo in adjuvant CSCC.

  • Capital Allocation Strategy: The company announced the initiation of a quarterly dividend and an additional $3 billion share repurchase authorization, reflecting confidence in future cash flows and a balanced approach to returning capital to shareholders.

  • Leadership in Big Data and Technology: Regeneron highlighted its leadership in high-throughput human DNA sequencing and proteomics, emphasizing the value of its large DNA sequence-linked healthcare database for drug discovery and development.

Focus of the analyst Q&A

  • EYLEA Franchise Sales Erosion: Analysts questioned the reasonableness of consensus expectations for significant annual sales erosion of the EYLEA franchise over the next few years, considering competitive pressures and the potential for EYLEA HD growth. Directionality on the future of EYLEA sales was sought.

  • Dividend Initiation Timing: Analysts inquired about the rationale for initiating the dividend now, rather than waiting until the Sanofi development balance is repaid, and whether future dividend increases are planned.

  • Adjuvant CSCC Libtayo Readout: Analysts sought clarification on the importance of overall survival data for the adjuvant CSCC Libtayo indication, in addition to the reported disease-free survival data, and the commercial opportunity relative to existing Libtayo indications.

  • EYLEA HD Inventory Impact and Pavblu Competition: Analysts asked about the magnitude of the EYLEA HD inventory impact in the fourth quarter and the market dynamics related to the Pavblu biosimilar, including the impact of recent legal victories.

  • Operating Expenses and Potential Partnerships: Analysts explored management's approach to balancing investments across the expanding pipeline and the potential for partnering any of the programs.

  • EYLEA Pricing Strategy: Analysts inquired about Regeneron's pricing strategy for EYLEA, particularly in light of price increases by competitors and the company's recent modest price increase.

  • EYLEA HD Sales Cadence: Analysts sought further detail on the expected cadence of EYLEA HD sales throughout 2025, particularly regarding the potential inflection point driven by the pre-filled syringe launch.

  • Complement Programs and Safety: Analysts discussed the safety profile of Regeneron's antibody-siRNA combination therapy for complement-mediated diseases, specifically the occurrence of Grade 5 adverse events, and how this might impact the treatment landscapes for myasthenia gravis and geographic atrophy. Questions were raised about the Phase 3 trial design for geographic atrophy to mitigate safety risks.

  • Obesity Program and Myostatin/Activin Blockade: Analysts explored the rationale for combining myostatin and Activin blockers in the obesity program and whether a myostatin-only approach could be pursued if the Activin blocker proves problematic.

  • LAG-3/PD-1 Combo in NSCLC: Analysts asked about the efficacy bar for the LAG-3 plus PD-1 combination therapy in non-small cell lung cancer that would trigger advancement to a pivotal program.

Summary

  1. Financial Performance: Regeneron reported strong fourth-quarter 2024 results, with 10% revenue growth year-over-year, reaching $3.8 billion. Diluted net income per share was $12.07. Full-year 2024 revenue was $14.2 billion (excluding Ronapreve), a 10% increase year-over-year, and EPS grew 4% to $45.62. Free cash flow for 2024 was approximately $3.7 billion. The company initiated a quarterly cash dividend program ($0.88 per share) and authorized an additional $3 billion share repurchase, increasing total buyback capacity to $4.5 billion.

  2. Revenue Drivers: Key revenue drivers included strong performance from Dupixent, Libtayo, and EYLEA/EYLEA HD. Dupixent continued its strong growth across approved indications, with over 1 million patients on treatment globally. Libtayo achieved blockbuster status in 2024. EYLEA HD sales reached $1.2 billion for the full year, though Q4 was impacted by elevated Q3 wholesaler inventory levels. EYLEA sales were impacted by increased competition and elevated Q4 inventory levels. The launch of Dupixent in COPD also contributed to revenue growth.

  3. Profit Margins and Cost Management: Fourth-quarter gross margin on net product sales was 86%, slightly up from the prior year. R&D expenses increased due to investments in the clinical pipeline. SG&A expenses also increased, reflecting investments in EYLEA HD launch and international expansion. 2025 guidance anticipates R&D spending of $5 billion to $5.2 billion and SG&A of $2.55 billion to $2.7 billion. Gross margin on net product sales is projected to be 87% to 88% in 2025, reflecting a changing product mix and start-up costs for a new facility.

  4. Guidance and Outlook: Regeneron expects continued competitive pressure on EYLEA, but anticipates acceleration in EYLEA HD uptake in the second half of 2025 due to anticipated label enhancements (pre-filled syringe, RVO indication, increased dosing flexibility). The company expects regulatory approvals for linvoseltamab, odronextamab, and a new Libtayo indication in 2025. Several pivotal or proof-of-concept data readouts are anticipated in 2025 across various therapeutic areas. The Sanofi development balance is expected to be fully reimbursed by the end of 2026.

  5. Strategic Initiatives: Key strategic initiatives include maximizing growth opportunities from existing brands, investing heavily in R&D, initiating a quarterly dividend, and significantly increasing share repurchase capacity. The company is pursuing a differentiated approach in earlier lines of therapy for its CD3 bispecifics. A two-pronged approach to anticoagulation with Factor XI antibodies is being advanced. Regeneron is also expanding its leadership in big data through collaborations.

  6. Management Commentary: Management expressed strong confidence in Regeneron's future, highlighting its scientific advancements, commercial performance, and robust pipeline. They emphasized the potential of several pipeline candidates to address significant unmet medical needs and generate substantial revenue. The initiation of a dividend was framed as a reflection of confidence in future cash flows and a balanced approach to capital allocation.

  7. Industry and Market Conditions: Regeneron acknowledges increasing competition in the anti-VEGF market with the launch of biosimilars. However, management believes EYLEA HD is well-positioned to become the new standard of care due to its clinical profile and anticipated label enhancements. The company also highlighted the potential for significant growth in other therapeutic areas, such as COPD and oncology.

Comparative analysis
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Benchmarks (as of 2025-03-13)
Health Care Select Sector SPDR Fund (XLV)
  • Performance Comparison:
    • Regeneron Pharmaceuticals, Inc. (REGN) has generally underperformed the Health Care Select Sector SPDR Fund (XLV) across most of the analyzed periods. Over the past three years, REGN's return was 3.82% compared to XLV's 16.18%. More recently, REGN has significantly underperformed, with a 6-month return of -40.9% compared to XLV's -7.77%, and a 1-year return of -28.94% compared to XLV's 0.12%. There was a brief period of outperformance in the last month, where REGN returned 1.17% compared to XLV's -0.67%.
  • Risk and Return Analysis:
    • The annualized returns show that REGN has provided lower returns compared to XLV over the 1, 2, and 3-year periods. The 3-year annualized return for REGN is 1.26%, while for XLV it is 5.13%.
    • REGN has been more volatile than XLV, as indicated by the annualized volatility data. For example, in Q3 2022, REGN's volatility reached as high as 64.15%, while XLV's peaked at 23.63%.
    • REGN's maximum drawdown was -44.76% on 02/12/2025, significantly larger than XLV's maximum drawdown of -16.06% on 06/17/2022. This indicates a higher risk profile for REGN.
  • Risk-Adjusted Performance:
    • The Sharpe Ratio analysis indicates that XLV has generally offered better risk-adjusted returns compared to REGN, especially in recent periods. REGN's Sharpe ratio turned negative in Q4 2024 and remained negative in Q1 2025, while XLV maintained positive Sharpe ratios.
    • REGN's beta values are generally below 1, indicating that it is less volatile than the market. However, REGN's beta values are closer to 1 compared to XLV, suggesting that REGN is slightly more sensitive to market movements.
  • Overall Assessment:
    • Based on the analysis, Regeneron Pharmaceuticals, Inc. (REGN) has underperformed Health Care Select Sector SPDR Fund (XLV) in terms of historical performance, annualized returns, and risk-adjusted returns. REGN exhibits higher volatility and larger drawdowns compared to XLV, indicating a higher risk profile. The recent trends show a significant underperformance of REGN, with negative Sharpe ratios and increasing beta values.
Peers Price History(as of 2025-03-13)
Vertex Pharmaceuticals, Inc. (VRTX)Amgen, Inc. (AMGN)
  • Performance Comparison:
    • Regeneron Pharmaceuticals, Inc. (REGN) has significantly underperformed Vertex Pharmaceuticals, Inc. (VRTX) and Amgen, Inc. (AMGN) across all measured time periods. For example, over the past year, REGN's return was -28.94%, compared to 23.03% for VRTX and 18.65% for AMGN. This trend of underperformance extends to the past two and three years as well, with REGN showing annualized returns of -5.73% and 1.26% respectively, while VRTX and AMGN have significantly higher annualized returns.
  • Risk and Return Analysis:
    • REGN has provided lower returns compared to VRTX and AMGN. The annualized returns for REGN over the past one, two, and three years are consistently lower than those of its peer companies.
    • REGN's annualized volatility has fluctuated, with a range of 11.36% to 64.15%. While there have been periods where REGN's volatility was comparable to or lower than VRTX's, it has generally been more volatile than AMGN.
    • The maximum drawdown for REGN was -44.76% on 2025-02-12, which is significantly larger than the maximum drawdowns for VRTX (-23.24% on 2024-12-19) and AMGN (-24.86% on 2023-06-01). This indicates a higher risk profile for REGN compared to its peers.
  • Risk-Adjusted Performance:
    • The Sharpe Ratio of REGN has generally been lower than that of VRTX and AMGN, indicating that REGN has not offered as favorable a risk-adjusted return as its peers. As of Q1 2025, REGN has a negative Sharpe ratio, suggesting poor risk-adjusted returns.
    • The Beta value of REGN has generally remained below 1, indicating lower volatility compared to the market. However, REGN's Beta has been comparable to VRTX's, while AMGN has consistently shown lower Beta values, suggesting a more stable and less market-sensitive investment.
  • Overall Assessment:
    • Based on the analysis, Regeneron Pharmaceuticals, Inc. (REGN) has underperformed Vertex Pharmaceuticals, Inc. (VRTX) and Amgen, Inc. (AMGN) in terms of historical performance, annualized returns, and risk-adjusted returns. REGN's higher volatility and larger maximum drawdown indicate a higher risk profile compared to its peers. While REGN's Beta value suggests lower market sensitivity, its overall risk-adjusted performance has been less favorable.
    • A significant trend is REGN's consistent underperformance over the past one, two, and three years, coupled with a higher risk profile as indicated by its maximum drawdown. This suggests that investors may need to carefully consider the potential risks and returns associated with REGN compared to its peer companies.
Peers Fundamentals(as of 2024-12-31)
Vertex Pharmaceuticals, Inc. (VRTX)Amgen, Inc. (AMGN)

  1. Market Position and Size:

    • Regeneron Pharmaceuticals (REGN) has a market capitalization of $74,407.79 million, positioning it as smaller than Vertex Pharmaceuticals (VRTX) at $129,144.83 million and Amgen (AMGN) at $167,951.77 million.
    • In terms of revenue for the most recent quarter, REGN generated $14,202 million, which is greater than VRTX's $10,984.4 million but less than AMGN's $33,232 million.
    • REGN's EBITDA for the same period was $4,597.2 million, significantly greater than VRTX's $24.2 million but less than AMGN's $14,319 million.
    • REGN's net income of $4,412.6 million surpasses both VRTX's -$535.6 million and AMGN's $4,090 million.
    • Overall, REGN occupies a mid-tier position in the peer group, with a smaller market cap but competitive revenue and superior net income.

  2. Profitability and Efficiency:

    • REGN's Gross Profit Margin is 82.73%, which is less than VRTX's 86.07% but greater than AMGN's 66.05%. All three companies are significantly above the industry average of -817.71%.
    • The EBITDA Margin for REGN is 32.37%, greater than VRTX's 0.22% but less than AMGN's 43.09%. All three companies are significantly above the industry average of -478230.48%.
    • REGN's Net Profit Margin is 31.07%, significantly greater than VRTX's -4.88% and AMGN's 12.31%. All three companies are significantly above the industry average of -445453.37%.
    • REGN demonstrates strong profitability, particularly in net profit margin, indicating efficient cost management and strong earnings relative to revenue.

  3. Financial Health and Stability:

    • REGN's Current Ratio is 4.73, greater than VRTX's 2.69 and AMGN's 1.26, but less than the industry average of 6.92.
    • The Quick Ratio for REGN is 3.95, greater than VRTX's 2.35 and AMGN's 0.95, but less than the industry average of 6.76.
    • REGN's Total Debt to Total Equity Ratio is 10.01, significantly less than VRTX's 10.66 and AMGN's 1035.89, and also less than the industry average of 131.92.
    • The Debt / EBITDA ratio for REGN is 0.59, significantly less than VRTX's 4.88 and AMGN's 4.2, and also less than the industry average of 6.24.
    • REGN exhibits strong liquidity and solvency, with a low Debt/EBITDA ratio and a manageable debt-to-equity ratio, indicating a conservative approach to financial leverage.

  4. Valuation and Market Perception:

    • REGN's Enterprise Value To Sales is 5.28, less than VRTX's 9.15 and AMGN's 5.72, and also less than the industry average of 8980.97.
    • The Enterprise Value To EBITDA for REGN is 16.26, significantly less than VRTX's 4086.89 and slightly greater than AMGN's 13.23, but less than the industry average of 49.38.
    • REGN's Price To Earnings is 17.75, less than Amgen's 41.35 and the industry average of 171.51.
    • The Price to Book Ratio for REGN is 2.54, significantly less than VRTX's 7.87 and AMGN's 28.56, and also less than the industry average of 8.08.
    • REGN's Price To Sales Ratio is 5.52, less than VRTX's 11.81 and slightly greater than AMGN's 5.09, but significantly less than the industry average of 12342.61.
    • REGN's valuation metrics suggest it may be undervalued compared to its peers, particularly Vertex, and the industry average. Its low Price to Book Ratio and Price to Earnings Ratio indicate that the market may not be fully recognizing its earnings potential.

  5. Cash Flow and Capital Management:

    • REGN's Net Operating Cash Flow is $4,420.5 million, significantly greater than VRTX's -$492.6 million but less than AMGN's $11,490 million.
    • The Total Capital Expenditure for REGN is $881.6 million, greater than VRTX's $485.4 million but less than AMGN's $1,096 million.
    • REGN's Free Cash Flow is $3,538.9 million, significantly greater than VRTX's -$978 million but less than AMGN's $10,394 million.
    • REGN demonstrates strong cash flow generation, with a substantial Free Cash Flow, highlighting its efficiency in converting revenue into cash.

  6. Growth and Future Prospects:

    • REGN shows consistently lower growth in Sales/Revenue, EBITDA, Free Cash Flow, Free Cash Flow Margin, and EBIT Margin compared to the peer group average.
    • REGN shows consistently higher growth in Net Income and Basic Earnings per Share compared to the peer group average.
    • REGN's 3-year CAGR is less than its 5-year CAGR for all metrics, indicating a deceleration in growth over the most recent three years compared to the longer-term trend.
    • REGN's competitive position may be weakening due to its decelerating growth rates compared to peers. The negative CAGR differentials suggest that REGN is losing market share in key areas.

  7. Potential for Investment:

    • Regeneron Pharmaceuticals presents an attractive investment opportunity due to its high profitability, strong liquidity, and superior earnings per share.
    • Its relatively lower valuation metrics compared to peers and the industry average suggest that it may be undervalued, offering potential for capital appreciation.
    • Investors should be mindful of its decelerating revenue growth and lower market capitalization, which could pose challenges in the long term.

  8. Key Risks and Considerations:

    • Decelerating revenue growth compared to peers could impact future profitability and market share.
    • Lower market capitalization may limit its influence and access to capital compared to larger competitors.
    • Potential undervaluation suggests that the market may not be fully recognizing its earnings potential, which could limit short-term gains.

  9. Overall Assessment:

    • Regeneron Pharmaceuticals exhibits strong financial health, characterized by high profitability, robust liquidity, and a conservative balance sheet.
    • Its competitive position is solid, driven by superior earnings per share and efficient asset utilization.
    • While its decelerating revenue growth and lower market capitalization are areas that require attention, Regeneron's overall financial position is sound, reflecting efficient management and strong earnings potential.
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