Key takeaways
View moreDespite near-term challenges with the EYLEA franchise and regulatory hurdles, Regeneron's strong pipeline, Dupixent growth trajectory, and manufacturing expansion plans suggest significant unrealized value. The company's current valuation metrics (EV/EBITDA of 14.56x vs industry 67.41x) indicate the market is not fully pricing in the potential of its pipeline and growth initiatives, while maintaining strong fundamentals with healthy margins and robust liquidity.
- Regeneron's revenue and profitability are declining, with sales decreasing to $3.029 billion in Q1 2025, and net profit margin dropping to 26.70%.
- The EYLEA franchise faces significant headwinds, with U.S. net sales down 39% year-over-year to $736 million, due to increased competition and patient assistance program issues.
- Dupixent remains a key growth driver, with global net sales growing 20% year-over-year to $3.7 billion, highlighting its importance to Regeneron's revenue.
- Regulatory hurdles pose risks, as evidenced by the FDA's complete response letter for the EYLEA HD pre-filled syringe, impacting potential revenue streams.
- Regeneron is investing heavily in R&D and manufacturing, with R&D expenses at $1.2 billion in Q1 2025 and a $3 billion investment planned with FUJIFILM Diosynth Biotechnologies to expand manufacturing capacity.
- Compared to peers like Vertex and Amgen, Regeneron has underperformed in terms of stock performance, with a maximum drawdown of -56.03% on 05/09/2025.
- The company maintains a strong liquidity position, with a current ratio of 4.93, but working capital has decreased from $15.573 billion in Q2 2024 to $14.005 billion in Q1 2025.
- Management anticipates U.S. regulatory approvals for several products, including linvoseltamab and Dupixent, which are crucial for future growth.
- The company's Enterprise Value to EBITDA of 14.56 and Enterprise Value to Sales of 4.61 are lower than industry averages, suggesting a relatively low valuation.
- The recent news and developments indicate a cautious market sentiment, emphasizing the need for Regeneron to address its challenges and capitalize on its growth opportunities.
Evaluation summary
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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, Libtayo, Praluent, Evkeeza, and Kevzara.
- The company's revenue is primarily driven by net product sales of EYLEA HD, EYLEA, and Dupixent. Regeneron collaborates with Sanofi and Bayer to develop and commercialize certain products globally.
- Benchmarks used for comparative analysis include the Health Care Select Sector SPDR Fund (XLV), while industry peers include Vertex Pharmaceuticals, Inc. (VRTX) and Amgen, Inc. (AMGN).
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Financial Performance:
- Recent quarterly financial statements show a decreasing trend in revenue. Sales/Revenue decreased from $3.789 billion in Q4 2024 to $3.029 billion in Q1 2025. Net income also decreased from $1.432 billion in Q2 2024 to $808.7 million in Q1 2025.
- Gross profit margin has declined from 83.06% in Q2 2024 to 80.48% in Q1 2025. Net profit margin has also decreased from 40.38% to 26.70% over the same period.
- Return on Assets (ROA) is 12.51%, Return on Equity (ROE) is 15.96%, and Return on Invested Capital (ROIC) is 14.56%. These metrics are above the industry averages, which are -64.33%, -484.78%, and -130.00% respectively, but the trend is downwards.
- Compared to the industry average, Regeneron's gross profit margin of 80.48% is significantly higher than the industry average of -821.89%. Similarly, its net profit margin of 26.70% is substantially better than the industry average of -458991.11%.
- The earnings call highlighted that U.S. net sales for EYLEA were down 39% year-over-year to $736 million, while EYLEA HD sales were up 54% to $307 million. Dupixent global net sales grew 20% year-over-year on a constant currency basis to $3.7 billion.
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Operational Efficiency:
- Total current assets decreased from $19.082 billion in Q2 2024 to $17.572 billion in Q1 2025. Total current liabilities slightly increased from $3.509 billion to $3.567 billion over the same period.
- Working capital decreased from $15.573 billion in Q2 2024 to $14.005 billion in Q1 2025.
- Net operating cash flow decreased from $1.291 billion in Q3 2024 to $1.045 billion in Q1 2025. Net investing cash flow was $647.5 million in Q1 2025. Net financing cash flow was -$1.089 billion in Q1 2025, primarily due to changes in capital stock (-$980.8 million).
- Free cash flow to equity was $815.8 million in Q1 2025. Free cash flow margin was 0.26 in Q1 2025.
- Total capital expenditure increased from $210.9 million in Q2 2024 to $271.5 million in Q1 2025. Depreciation, depletion, and amortization were $126.9 million in Q1 2025.
- Cash dividends paid were $93.8 million in Q1 2025. The company also engages in share repurchases, as indicated by the change in capital stock of -$980.8 million in Q1 2025.
- The current ratio is 4.93, and the quick ratio is 4.03, both indicating strong liquidity. However, the current ratio has decreased from 5.44 in Q2 2024.
- The debt-to-equity ratio is 9.20, and the debt/EBITDA ratio is 0.61, indicating low leverage.
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Growth Opportunities:
- Regeneron is focused on expanding the indications and geographic reach of Dupixent. The company is also investing in the development of new therapies for diseases such as bullous pemphigoid and COPD.
- The company has a robust R&D pipeline with approximately 45 product candidates in clinical development. R&D expense was $1.2 billion in Q1 2025.
- Regeneron is expanding its manufacturing capacity in the U.S. to meet future demand for its products.
- The company is strategically focused on advancing its Factor XI program and exploring opportunities in the obesity market.
- The earnings call mentioned anticipated U.S. regulatory approvals for linvoseltamab, odronextamab, Libtayo, Dupixent, and differentiated enhancements to the EYLEA HD U.S. label.
- The company announced a new agreement with FUJIFILM Diosynth Biotechnologies to invest over $3 billion to nearly double U.S. large-scale manufacturing capacity.
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Recent Developments and Market Sentiment:
- The EYLEA franchise is facing challenges due to increased competition from lower-cost alternatives and funding gaps in patient assistance programs.
- A complete response letter (CRL) was received from the FDA for the EYLEA HD pre-filled syringe, related to a third-party component supplier.
- Dupixent continues to be a key growth driver, with expansion opportunities in new indications like bullous pemphigoid and COPD.
- Regeneron is investing heavily in expanding U.S. manufacturing capacity.
- The company is seeking innovative solutions to address patient access issues, potentially through alternative funding mechanisms or policy changes.
- The overall market sentiment appears cautious due to regulatory hurdles and competitive pressures, but optimistic regarding the potential of Dupixent and the company's pipeline.
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Risks and Threats:
- Dependence on key products like EYLEA and Dupixent poses a risk if sales decline due to competition or other factors.
- Regulatory hurdles and manufacturing issues could delay product approvals and impact revenue. The recent CRL for the EYLEA HD pre-filled syringe exemplifies this risk.
- Pricing and reimbursement pressures from government and private payors could negatively impact sales and margins.
- Ongoing legal proceedings and government investigations pose financial and reputational risks.
- Intense competition from branded and biosimilar products is a significant threat.
- Reliance on collaborations with Sanofi and Bayer for commercialization creates risks if those partnerships are disrupted.
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Valuation Analysis:
- Enterprise Value to EBITDA is 14.56, and Enterprise Value to Sales is 4.61. These ratios are lower than the industry averages of 67.41 and 8748.43, respectively, indicating a relatively low valuation.
- The company's valuation may be affected by the challenges facing the EYLEA franchise and regulatory delays.
- Potential catalysts include successful product launches, positive clinical trial results, and favorable regulatory decisions.
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Price Performance:
- The stock price has fluctuated between $527.00 and $624.68 in the period from April 1, 2025, to May 29, 2025.
- Regeneron Pharmaceuticals, Inc. (REGN) has generally underperformed the Health Care Select Sector SPDR Fund (XLV) and its peers, Vertex Pharmaceuticals, Inc. (VRTX) and Amgen, Inc. (AMGN), over the past three years.
- The maximum drawdown for REGN was -56.03% on 05/09/2025, which is substantially larger than the maximum drawdowns for VRTX and AMGN.
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Future Outlook:
- Management expects U.S. regulatory approvals for linvoseltamab, odronextamab, Libtayo, Dupixent, and differentiated enhancements to the EYLEA HD U.S. label.
- Pivotal or proof-of-concept data is expected across programs in immunology, oncology, hematology, internal medicine, and rare diseases.
- The company updated its 2025 gross margin guidance to 86%-87% due to higher-than-expected inventory write-offs.
- The company's future performance will depend on its ability to successfully launch new products, expand into new markets, and manage its expenses effectively.
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Summary:
- Regeneron Pharmaceuticals faces challenges with its EYLEA franchise but has growth opportunities with Dupixent and its pipeline. The company maintains a strong liquidity position but needs to improve operational efficiency.
- Strengths: Strong R&D pipeline, solid liquidity, and low leverage.
- Weaknesses: Declining revenue and profitability, dependence on key products, and regulatory hurdles.
- Opportunities: Expansion of Dupixent, new product launches, and strategic investments in manufacturing.
- Threats: Competition, regulatory delays, pricing pressures, and legal risks.
- Overall, Regeneron's financial health is stable, but its future performance depends on addressing its weaknesses and capitalizing on its growth opportunities. Investors should monitor the company's progress in launching new products, managing expenses, and navigating the competitive landscape. The company's higher risk profile and recent underperformance may not align with risk-averse investment strategies.
Price history
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Fundamentals
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Insights
- Regeneron's revenue and profitability are showing signs of weakening, with decreasing sales, net income, and profitability margins.
- The company's reliance on key products like EYLEA and Dupixent creates a concentration risk, and increased competition in the retinal disease market poses a significant challenge.
- Despite recent declines, Regeneron maintains a strong liquidity position and low financial leverage, providing financial flexibility for future investments.
- Strategic investments in R&D and manufacturing capacity expansion are crucial for driving future growth, but regulatory hurdles and manufacturing issues could pose risks.
- Effective expense management and successful new product launches are essential for improving profitability and sustaining long-term growth.
Analysis
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Revenue - Revenue has been decreasing recently, with sales down in the most recent quarter. - The growth trend for sales/revenue is decreasing, suggesting that the growth in this area may not be sustainable. - The 3-year CAGR is lower than the 5-year CAGR, indicating decelerating growth. - The company faces challenges with its EYLEA franchise due to increased competition, as highlighted in the earnings call.
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Profitability
- Profitability margins, including gross profit margin, net profit margin, and EBITDA margin, have been decreasing.
- Unusual expenses have impacted profitability.
- Despite recent declines, profitability metrics remain above industry averages.
- The company is focused on transitioning patients to EYLEA HD to mitigate the impact of competition on the EYLEA franchise.
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Liquidity
- The company maintains a strong liquidity position with a current ratio of 4.93, although it is lower than the industry average.
- The current ratio has been decreasing, which could indicate a weakening liquidity position.
- Cash and short-term investments have been decreasing, while accounts receivable and inventories have been increasing, indicating a shift from liquid assets to less liquid assets.
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Solvency
- The company has a low level of financial leverage with a total debt to total equity ratio of 9.2, which is significantly lower than the industry average.
- The debt / EBITDA is 0.61, indicating a strong capacity to service debt.
- Long-term debt has been relatively stable.
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Operational Efficiency
- The company's enterprise value to EBITDA and enterprise value to sales are lower than the industry average, indicating a relatively low valuation.
- Increasing levels of accounts receivable and inventories could indicate a need for better asset utilization efficiency.
- The company is investing heavily in R&D and expanding manufacturing capacity, which could improve operational efficiency in the long term.
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Cash Flow Analysis - Net operating cash flow has been decreasing, which could impact the company's ability to fund future investments. - Total capital expenditure has been increasing, indicating a focus on long-term growth and strategic investments. - The company has recently started paying cash dividends, which could be a positive sign for shareholders. - The company's free cash flow margin is 0.26, which is relatively healthy.
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Risk Factors
- Dependence on key products like EYLEA and Dupixent poses a risk if sales decline due to competition or other factors.
- Regulatory hurdles and manufacturing issues could delay product approvals and impact revenue.
- Pricing and reimbursement pressures from government and private payors could negatively impact sales and margins.
- Ongoing legal proceedings and government investigations pose financial and reputational risks.
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Future Outlook
- The company's future income statement is projected to weaken, based on historical trends, management guidance, and industry outlook.
- The company is investing heavily in R&D and expanding manufacturing capacity, which could drive future growth.
- Key metrics to monitor in upcoming quarters include sales/revenue, gross profit margin, operating expenses, EBIT, net income, cash and short-term investments, accounts receivable, inventories, and total debt.
- The company's success depends on its ability to successfully launch new products, expand into new markets, and manage its expenses effectively.
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Financial statements
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Public filings
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- Regeneron is heavily dependent on the commercial success of its key products EYLEA, EYLEA HD, and Dupixent, which together account for a substantial portion of its revenues and profitability.
- The company faces intense competition from branded and biosimilar products, as well as pricing and reimbursement pressures, which could negatively impact sales and margins.
- Regeneron's reliance on collaborations with Sanofi and Bayer for commercialization of certain products outside the U.S. creates risks if those partnerships are disrupted.
- Regulatory and manufacturing challenges have led to delays in approvals for some of Regeneron's product candidates, highlighting the inherent uncertainty in the drug development process.
- Ongoing legal proceedings, including patent litigation and government investigations, pose significant legal and financial risks that could adversely affect the company's operations and financial condition.
- Regeneron is actively investing in expanding its manufacturing capabilities and pipeline through strategic acquisitions, but execution risks remain.
- The company's strong liquidity position and share repurchase programs provide financial flexibility, but its stock price volatility reflects the inherent risks in the biotechnology industry.
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 marketed products include EYLEA, EYLEA HD, Dupixent, Libtayo, Praluent, Evkeeza, and Kevzara
- Collaborates with partners like Sanofi and Bayer to develop and commercialize certain products globally
- Faces significant competition from other biotechnology and pharmaceutical companies
Industry and Market Trends:
- Biopharmaceutical industry is highly competitive, with companies vying for market share and regulatory approvals
- Pricing and reimbursement pressures from government and private payors are an ongoing challenge
- Regulatory environment is complex, with lengthy and uncertain approval processes for new drugs and indications
- Intellectual property protection and biosimilar competition are key risks for marketed products
Recent Events:
- Received FDA approval for EYLEA HD in August 2023 for treatment of wAMD, DME, and DR
- Acquired Decibel Therapeutics in September 2023 to expand hearing loss pipeline
- Acquired full rights to 2seventy bio's oncology and autoimmune cell therapy pipeline in April 2024
- Faced delays in FDA approvals for linvoseltamab and Dupixent due to manufacturing and inspection issues
Risk Factors:
- Substantial dependence on success of EYLEA, EYLEA HD, and Dupixent
- Exposure to pricing and reimbursement pressures from payors
- Intense competition from branded and biosimilar products
- Reliance on collaborations with Sanofi and Bayer for commercialization
- Risks associated with drug development, manufacturing, and regulatory approvals
- Intellectual property challenges and potential loss of market exclusivity
- Legal and government investigations related to business practices
Legal Matters:
- Ongoing patent litigation related to EYLEA and other products
- Civil proceedings initiated by U.S. Department of Justice and U.S. Attorney's Office regarding business practices
- Various lawsuits from payors and whistleblowers related to alleged improper business conduct
Management's Discussion and Analysis:
- Revenues driven primarily by net product sales of EYLEA HD, EYLEA, and Dupixent
- Profitability impacted by R&D expenses, manufacturing costs, and legal/regulatory matters
- Liquidity supported by cash, cash equivalents, and marketable securities, as well as access to credit facility
- Capital expenditures focused on expanding manufacturing capacity and capabilities
- Share repurchase programs utilized to return capital to shareholders
Earnings calls
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Earnings Report 2025Q1 (2025-04-29)
Key takeaways
- EYLEA Franchise Faces Challenges: The EYLEA franchise is facing significant headwinds due to increased competition from lower-cost alternatives and funding gaps in patient assistance programs, necessitating a strong focus on transitioning patients to EYLEA HD.
- Dupixent Remains a Key Growth Driver: Dupixent's continued growth across multiple indications and geographies underscores its importance as a key revenue driver for Regeneron, with further expansion opportunities in new indications like bullous pemphigoid and COPD.
- Regulatory Hurdles Present Risks: Recent CRLs and regulatory delays highlight potential risks associated with Regeneron's pipeline development and regulatory submissions, particularly concerning third-party manufacturing issues.
- Strategic Investments in Manufacturing Capacity: Regeneron's significant investments in expanding U.S. manufacturing capacity demonstrate a commitment to long-term growth and the ability to meet future demand for its products.
- Patient Assistance Program Requires Innovative Solutions: The challenges with the current patient assistance program necessitate innovative solutions to ensure that patients have access to the medications they need, potentially through alternative funding mechanisms or policy changes.
Focus of management’s prepared remarks
- EYLEA and EYLEA HD Performance: Discussed the contraction of the branded anti-VEGF category due to increased use of off-label Avastin. Highlighted EYLEA's sales decline and EYLEA HD's growth, emphasizing EYLEA HD's potential to become the new standard of care.
- EYLEA HD Pre-filled Syringe CRL: Addressed the FDA's complete response letter for the EYLEA HD pre-filled syringe, stating the key issue relates to a question posed to a third-party component supplier and that the CRL did not identify any safety or efficacy issues.
- Dupixent Growth: Emphasized Dupixent's strong global growth across all approved indications and age groups, highlighting its leadership in new-to-brand and total prescription share. Noted the momentum of the COPD launch and favorable payer coverage decisions.
- Libtayo Performance: Highlighted Libtayo's growth in the U.S. and its position as a cornerstone therapy for advanced non-melanoma skin cancer, as well as its increasing share in the lung cancer market.
- Pipeline Advancements: Mentioned the robust pipeline of approximately 45 product candidates in clinical development, including four regulatory approvals and nine regulatory submissions. Anticipated U.S. regulatory approvals for several programs and pivotal data readouts across various therapeutic areas.
- Factor XI Program: Noted the rapid advancement of the Factor XI program, investigating two different antibodies to create a tailored approach to anticoagulation.
- Obesity Efforts: Highlighted Regeneron's expertise in muscle biology and growth factor signaling pathways, positioning the company as a key player in the obesity market by investigating agents that enhance GLP-1 weight loss by maintaining muscle mass.
- Financial Strength and Capital Allocation: Emphasized Regeneron's strong financial position, enabling heavy investment in R&D, maximizing growth opportunities, launching new products, and returning capital to shareholders through dividends and share repurchases.
Focus of the analyst Q&A
- EYLEA HD Pre-filled Syringe CRL:
- Specifics of the FDA's questions to the third-party supplier.
- Comparison to the previous EYLEA HD CRL and potential timeline for resolution.
- Factor XI Antibody Program:
- Prioritization of indications for the Factor XI antibody.
- Timing of potential launches and discussions with regulatory authorities on trial design.
- EYLEA and Foundation Funding:
- Timeline for the reopening of the patient assistance foundation.
- Speed at which volumes might shift back from generic Avastin to branded agents.
- EYLEA HD Pre-filled Syringe (Europe vs. US):
- Confirmation that the component in question is the same as the one approved in Europe.
- Understanding the novelty of the component and reasons for the FDA's concerns.
- Patient Assistance Program:
- Percentage of U.S. patients receiving funding in 2024.
- Percentage of patients with dual coverage or supplemental insurance.
- Contingency plans if other players do not participate in the matching program.
- Regulatory Performance:
- Acknowledgment of recent CRLs and delays.
- Steps taken to improve regulatory performance.
- Itepekimab:
- Further understanding of IL-33 as a therapeutic target.
- Mechanistic rationale behind itepekimab's benefit in former smokers.
- How COPD results will guide further expansion of itepekimab development.
- EYLEA HD Monthly Dosing Submission:
- Percentage of total enrollment included in the submission.
- Alignment with the FDA on the sufficiency of the data.
- Overall confidence level in the submission.
- Patient Assistance Program (Alternative Structures):
- Hypothetical redesign of patient assistance without charities.
- Alternative structures for Medicare co-payments.
- Capital Expenditure Guidance:
- Context of tightened capital expenditure guidance.
- Cadence for forward spending in light of recent manufacturing announcements.
- Government Risks and Engagement:
- Actions harming biopharma innovation.
- Engagement with Washington leadership to improve the political agenda.
Summary
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Financial Performance
Regeneron's first quarter 2025 performance was mixed. U.S. net sales for EYLEA were down 39% year-over-year to $736 million, while EYLEA HD sales were up 54% to $307 million. Dupixent global net sales grew 20% year-over-year on a constant currency basis to $3.7 billion. Libtayo U.S. sales grew 21% to $193 million. Total revenues were $3 billion, including higher Sanofi collaboration revenue. Diluted net income per share was $8.22 on net income of $928 million. Free cash flow was $816 million.
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Revenue Drivers
Dupixent was a significant revenue driver, with growth across all approved indications and geographic regions. EYLEA HD growth partially offset the decline in EYLEA sales. Libtayo's growth was driven by increased demand in non-melanoma skin cancer and lung cancer. The decline in EYLEA sales was attributed to increased use of low-cost off-label Avastin due to patient affordability issues and a funding gap at copay assistance foundations.
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Profit Margins and Cost Management
Gross margin on net product sales was 85%, lower than the prior year due to higher inventory write-offs and a changing product mix. R&D expense was $1.2 billion, driven by investments in the pipeline. SG&A was $537 million, down 8% from the prior year. The company updated its 2025 gross margin guidance to 86%-87% due to higher-than-expected inventory write-offs.
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Guidance and Outlook
The company anticipates U.S. regulatory approvals for linvoseltamab, odronextamab, Libtayo, Dupixent, and differentiated enhancements to the EYLEA HD U.S. label. Pivotal or proof-of-concept data is expected across programs in immunology, oncology, hematology, internal medicine, and rare diseases. The company updated its 2025 gross margin guidance to 86%-87%.
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Strategic Initiatives
Regeneron is investing heavily in R&D and expanding manufacturing capacity in the U.S. The company announced a new agreement with FUJIFILM Diosynth Biotechnologies to invest over $3 billion to nearly double U.S. large-scale manufacturing capacity. The company is returning capital to shareholders through share repurchases and dividends.
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Management Commentary
Management expressed disappointment with the FDA's complete response letter for the EYLEA HD pre-filled syringe but believes the issue is resolvable. They highlighted the potential of Dupixent, EYLEA HD, and Libtayo to deliver significant growth. Management emphasized the company's strong financial position and commitment to investing in R&D. The overall tone was optimistic regarding the pipeline and future growth opportunities.
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Industry and Market Conditions
The branded anti-VEGF category contracted due to increased usage of low-cost off-label Avastin. The company noted competitive pressures in the retinal disease market. They also acknowledged the impact of the annual reset of commercial insurance deductibles and the implementation of Medicare Part D redesign on Dupixent's U.S. net price.
Comparative analysis
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Benchmarks (as of 2025-05-29)
Health Care Select Sector SPDR Fund (XLV)
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Performance Comparison:
- Regeneron Pharmaceuticals, Inc. (REGN) has generally underperformed the Health Care Select Sector SPDR Fund (XLV) across most time periods. For instance, over the past year, REGN's return was -38.06% compared to XLV's -6.41%. However, REGN has shown some short-term overperformance, such as in the past month, with a return of 1.26% compared to XLV's -5.77%. Over longer periods, such as 2 and 3 years, REGN has also underperformed, with returns of -17.47% and -8.68%, respectively, compared to XLV's 6.94% and 5.07%.
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Risk and Return Analysis:
- The annualized returns indicate that REGN has provided lower returns compared to XLV. Over the past year, REGN's annualized return was -38.06%, while XLV's was -6.41%. Over 2 and 3 years, REGN's annualized returns were -9.15% and -2.98%, respectively, compared to XLV's 3.41% and 1.66%.
- REGN has generally been more volatile than XLV. For example, in Q3 2022, REGN's volatility peaked at 64.15%, while XLV's was 23.63%. More recently, in Q3 2024, REGN's volatility ranged from 20.07% to 34.88%, while XLV's ranged from 7.99% to 15.66%.
- REGN's maximum drawdown was -56.03% on 05/09/2025, significantly larger than XLV's maximum drawdown of -17.11% on 05/14/2025. This indicates that REGN has a higher risk profile, with the potential for more substantial declines from peak values.
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Risk-Adjusted Performance:
- The Sharpe Ratio for REGN has generally been lower and more volatile than that of XLV, indicating that REGN has not offered as favorable risk-adjusted returns. In Q2 2025, REGN's Sharpe Ratio was -1.28, while XLV's was -0.25, further highlighting REGN's recent underperformance on a risk-adjusted basis.
- REGN's beta values have generally been below 1, indicating that it is less volatile than the overall market. However, REGN's beta has shown more fluctuation compared to XLV, suggesting that its sensitivity to market movements varies over time. As of Q2 2025, REGN's beta was 0.66, while XLV's was 0.47.
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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 has also exhibited higher volatility and larger drawdowns compared to XLV, indicating a higher risk profile. While REGN's beta values suggest it is less sensitive to overall market movements, its fluctuating beta and lower Sharpe ratios indicate that it has not provided as stable or favorable risk-adjusted returns as XLV.
- A significant trend is REGN's higher volatility and larger drawdowns compared to XLV, suggesting that it may be more suitable for investors with a higher risk tolerance. The recent underperformance in Q2 2025, with a Sharpe Ratio of -1.28 and a maximum drawdown of -56.03%, warrants caution.
Peers Price History(as of 2025-05-29)
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Performance Comparison:
- Regeneron Pharmaceuticals, Inc. (REGN) has generally underperformed Vertex Pharmaceuticals, Inc. (VRTX) and Amgen, Inc. (AMGN) over the past three years. While REGN showed some periods of outperformance in the short term (e.g., 1 month), its longer-term performance (1, 2, and 3 years) has been significantly lower than its peers. For instance, the 3-year annualized return for REGN is -2.98%, compared to 18.5% for VRTX and 6.7% for AMGN.
- The consistency of REGN's performance has been variable, with periods of high volatility and significant drawdowns. In contrast, VRTX has demonstrated more consistent and positive performance over the same period.
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Risk and Return Analysis:
- The annualized returns for REGN have been lower than its peer companies. Over the past year, REGN's annualized return was -38.06%, significantly underperforming VRTX (-1.81%) and AMGN (-4.3%).
- REGN's annualized volatility has been high, particularly in Q3 and Q4 of 2022 and Q2 of 2025. For example, in September 2022, REGN's volatility reached 64.15%, compared to 33.04% for VRTX and 23.21% for AMGN. This indicates that REGN is a riskier investment compared to its peers.
- The maximum drawdown for REGN was -56.03% on 05/09/2025, which is substantially larger than the maximum drawdowns for VRTX (-23.24% on 12/19/2024) and AMGN (-24.86% on 06/01/2023). This suggests that REGN carries a higher risk of significant losses from previous peaks.
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Risk-Adjusted Performance:
- The Sharpe Ratio for REGN has generally been lower than its peer companies, indicating that it offers a less favorable risk-adjusted return. Recently, REGN's Sharpe Ratio has been negative, with a value of -1.28 as of May 29, 2025. In contrast, VRTX had a positive Sharpe Ratio of 0.19, and AMGN had a Sharpe Ratio of 0.08.
- The beta value for REGN has generally remained below 1, suggesting that it is less sensitive to market movements compared to the overall market. However, REGN's beta has been slightly higher than its peers in the most recent period, indicating a potentially increased sensitivity to market fluctuations.
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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 exhibits higher volatility and larger drawdowns, indicating a riskier investment profile compared to its peers.
- A significant trend is the recent underperformance of REGN, with a negative Sharpe Ratio and a substantial drawdown in 2025. This suggests potential challenges or company-specific factors affecting REGN's performance.
- Investors should be cautious when considering REGN, as its higher risk profile and recent underperformance may not align with risk-averse investment strategies. Further investigation into the underlying causes of REGN's challenges is warranted.
Peers Fundamentals(as of 2025-03-31)
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Market Position and Size:
- Regeneron Pharmaceuticals, Inc. (REGN) has a market capitalization of $65,361 million, which is smaller than Vertex Pharmaceuticals, Inc. (VRTX) at $114,811 million and Amgen, Inc. (AMGN) at $152,461 million.
- While REGN's revenue of $14,086 million is greater than VRTX's $11,043 million, it is significantly less than AMGN's $33,929 million. REGN's EBITDA of $4,456 million is significantly greater than VRTX's -$130 million, but much less than AMGN's $14,489 million. REGN's net income of $4,499 million is significantly greater than VRTX's -$989 million, but less than AMGN's $5,933 million.
- REGN is the smallest company by market cap in this peer group. While it generates more revenue than Vertex, its overall market position, as indicated by market capitalization, is smaller than both Vertex and Amgen.
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Profitability and Efficiency:
- Regeneron's Gross Profit Margin is 82.28%, which is less than Vertex's 85.96% but greater than Amgen's 67.43%. Compared to the industry average of -821.89%, all three companies are significantly outperforming.
- REGN's EBITDA Margin is 31.63%, which is significantly greater than Vertex's -1.17% but less than Amgen's 42.7%. Compared to the industry average of -491588.89%, all three companies are significantly outperforming.
- Regeneron's Net Profit Margin is 31.94%, which is significantly greater than Vertex's -8.95% and Amgen's 17.49%. Compared to the industry average of -458991.11%, all three companies are significantly outperforming.
- Considering its market cap and revenue, REGN demonstrates strong profitability, outperforming both peers and the industry average in net profit margin.
- Regeneron's Return on Average Assets is 12.51%, which is significantly greater than Vertex's -4.23% and greater than Amgen's 6.51%. Compared to the industry average of -64.33%, all three companies are significantly outperforming.
- Regeneron's Return on Average Total Equity is 15.96%, which is significantly greater than Vertex's -5.64% but less than Amgen's 105.67%. Compared to the industry average of -484.78%, all three companies are significantly outperforming.
- Regeneron's Return on Average Total Capital is 12.82%, which is significantly greater than Vertex's -1.77% but less than Amgen's 13.43%. Compared to the industry average of -135.82%, all three companies are significantly outperforming.
- Regeneron's Return On Average Invested Capital is 14.56%, which is significantly greater than Vertex's -5.29% and greater than Amgen's 9.47%. Compared to the industry average of -130.0%, all three companies are significantly outperforming.
- REGN demonstrates strong efficiency in generating returns, particularly compared to Vertex and the industry average.
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Financial Health and Stability:
- Regeneron's Current Ratio is 4.93, which is greater than Vertex's 2.65 and Amgen's 1.17. However, it is less than the industry average of 6.8.
- Regeneron's Quick Ratio is 4.03, which is greater than Vertex's 2.29 and Amgen's 0.88. However, it is less than the industry average of 6.64.
- Regeneron's Total Debt to Total Equity Ratio is 9.2, which is less than Vertex's 10.0 and significantly less than Amgen's 924.46. It is also less than the industry average of 115.91.
- Regeneron's Debt / EBITDA is 0.61, which is less than Amgen's 3.96 and the industry average of 6.3.
- REGN exhibits strong liquidity and a conservative debt position compared to Amgen and the industry average.
- Compared to Amgen, REGN has a significantly lower Total Debt to Total Equity Ratio (9.2 vs 924.46), indicating a more conservative balance sheet. REGN's current and quick ratios are also much higher than Amgen's, suggesting greater liquidity.
- Compared to Vertex, REGN has a similar Total Debt to Total Equity Ratio (9.2 vs 10.0), but REGN's current and quick ratios are higher, indicating greater liquidity.
- REGN's balance sheet appears more conservatively structured with lower debt and higher liquidity compared to Amgen.
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Valuation and Market Perception:
- Regeneron's Enterprise Value To Sales is 4.61, which is less than Vertex's 10.98 and Amgen's 6.4. It is also significantly less than the industry average of 8748.43.
- Regeneron's Enterprise Value To EBITDA is 14.56, which is less than Amgen's 14.99 and the industry average of 67.41.
- Regeneron's Price To Earnings is 15.41, which is less than Amgen's 25.88 and the industry average of 136.15.
- Regeneron's Price to Book Ratio is 2.23, which is less than Vertex's 6.96, Amgen's 24.56 and the industry average of 6.82.
- Regeneron's Price To Sales Ratio is 4.78, which is less than Vertex's 10.51 and greater than Amgen's 4.52. It is also significantly less than the industry average of 11918.38.
- REGN appears undervalued compared to its peers and the industry average based on several valuation metrics.
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Cash Flow and Capital Management:
- Regeneron's Net Operating Cash Flow is $3,953 million, which is significantly greater than Vertex's -$980 million but less than Amgen's $12,192 million.
- Regeneron's Total Capital Expenditure is $991 million, which is significantly greater than Vertex's $278 million but less than Amgen's $1,277 million.
- Regeneron's Free Cash Flow is $2,962 million, which is significantly greater than Vertex's -$1,258 million but less than Amgen's $10,915 million.
- REGN demonstrates strong cash flow generation, particularly compared to Vertex, but less than Amgen.
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Growth and Future Prospect:
- REGN shows consistently higher growth in Net Income, Basic Earnings per Share, Free Cash Flow, and Free Cash Flow Margin compared to the peer group average over the past five years. However, in the most recent year, Sales/Revenue, EBITDA, and EBIT Margin growth have underperformed the peer average.
- REGN's year-to-year growth rates exhibit significant fluctuations, as indicated by the standard deviations. For example, Sales/Revenue growth has a standard deviation of 38.37%, EBITDA growth has a standard deviation of 66.55%, and Free Cash Flow growth has a standard deviation of 140.17%. These high standard deviations suggest that REGN's growth is not consistent and can be highly variable from year to year.
- REGN's 3-year CAGR is significantly lower than its 5-year CAGR for Sales/Revenue, EBITDA, Net Income, Basic Earnings per Share, and Free Cash Flow. This suggests that REGN's growth has slowed down in recent years compared to its longer-term growth trends. The difference between the 3-year and 5-year CAGR is particularly pronounced for EBITDA (-33.06%), Net Income (-31.8%), Basic Earnings per Share (-32.65%), and Free Cash Flow (-39.67%), indicating a substantial deceleration in growth for these metrics.
- REGN's competitive position and future prospects appear mixed. While the company has demonstrated strong growth in certain areas over the past five years, its recent performance has been weaker, and its growth rates have slowed down.
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Potential for Investment:
- From an investment perspective, Regeneron Pharmaceuticals, Inc. (REGN) presents a compelling case due to its high profitability, strong returns, and conservative balance sheet. Its smaller market capitalization and lower valuation multiples suggest that it may be undervalued compared to its peers, offering potential upside for investors. However, its weaker revenue growth and decelerating growth rates raise concerns about its future prospects. Overall, REGN appears to be a potentially attractive investment, but investors should carefully consider its growth prospects and valuation before making a decision.
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Key Risks and Considerations:
- Slower Revenue Growth: REGN's recent revenue growth has been weaker than its peers, which could limit its ability to compete in certain markets.
- Decelerating Growth Rates: REGN's growth rates have slowed down in recent years, which raises concerns about its future prospects.
- Smaller Market Cap: REGN has a smaller market capitalization compared to its peers, which may limit its access to capital and its ability to compete in certain markets.
- Valuation Risks: While REGN appears undervalued based on certain metrics, there is no guarantee that the market will recognize its potential, and its valuation could remain depressed.
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Overall Assessment:
- Regeneron Pharmaceuticals, Inc. (REGN) demonstrates strong financial health characterized by high profitability, strong returns on assets and invested capital, and a conservative balance sheet. While its market capitalization is smaller than its peers, its earnings are robust, and its valuation metrics suggest it may be undervalued. However, its recent revenue growth has been weaker than its peers, and its growth rates have slowed down in recent years. Overall, REGN appears to be a financially sound company with strong fundamentals, but its growth prospects may be a concern.
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