Regeneron Pharmaceuticals, Inc.

REGN Details

Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) is a biotechnology company that discovers, invents, develops, manufactures, and commercializes medicines to treat eye diseases, cancer, cardiovascular and metabolic diseases, infectious diseases, and other rare diseases. The company's product pipeline includes EYLEA injection, Dupixent injection, Libtayo injection, Praluent injection, Kevzara solution for Subcutaneous injection, Evkeeza injection, Regen-COV injection, ARCALYST injection for Subcutaneous use, and ZALTRAP injection for Intravenous Infusion. As of August 25, 2021, the company's market capitalization stood at USD 71.65 billion.

Progress in Phase 2 Study for 8mg Dose of Aflibercept: On August 24, 2021, REGN reported that the ongoing Phase 2 proof-of-concept trial evaluation of 8 mg dose of aflibercept satisfied its primary safety target without any new safety signals when compared to the currently approved 2 mg dose of EYLEA (aflibercept) injection in patients with wet age-related macular degeneration (wet AMD). The study was conducted on 106 patients, and it was observed that a higher section of patients in the aflibercept 8 mg group had no retinal fluid compared to patients treated with EYLEA 2 mg at week 16.

Breakthrough Therapy for Treatment of COVID-19:  On August 20, 2021, UK's Medicines and Healthcare products Regulatory Agency (MHRA) granted Conditional Marketing Authorization (CMA) to REGN's Ronapreve, a casirivimab and imdevimab antibody cocktail, for the prevention and treatment of acute COVID-19 infection. In addition, MHRA has authorized the usage of antibody cocktail in England, Scotland, Whales, and Northern Ireland for emergency purposes.

REGN has also completed its first FDA Biologics License Application (BLA) for REGEN-COV, a casirivimab and imdevimab antibody cocktail. It distributed over 130,000 doses in the last week to combat COVID-19.

Q2FY21 Results: The company reported a surge of 163.24% in the revenue to USD 5.14 billion in Q2FY21 (ended June 30, 2021) compared to USD 1.95 billion in Q2FY20. Net product sales, which accounted for 80.53% of the revenues in Q2FY21, reported a sharp uptick of 2.37x. Net income for Q2FY21 grew 3.45x YoY and stood at USD 3.10 billion compared to USD 897.3 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents (including short-term investments) of USD 3.91 billion and total debt of USD 2.70 billion (including finance lease liabilities).

Key Risks: EYLEA net sales in the US represented 36% of REGN's total revenue in H1FY21. In addition, REGN is also dependent on its share of profits from the commercialization of Dupixent under its Antibody Collaboration with Sanofi. Therefore, if it fails to maintain current marketing approvals or cannot successfully commercialize EYLEA and Dupixent, its results of operations could be adversely impacted.

Outlook: In FY21, REGN expects to incur R&D expenses of USD 2.95 – 3.08 billion and USD 2.65 – 2.75 billion on a GAAP and non-GAAP basis, respectively. It also forecasts to incur capital expenditures to the tune of USD 590 - 640 million.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

REGN Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: REGN's stock price has increased 46.10% in the past six months and is currently trading close to the higher-end of its 52-week range of USD 441.00 to USD 674.07. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 77.37. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 564.88. Considering the uptick in the stock price, we believe the current price adequately reflects the business fundamentals and recommend a "Sell" rating on the stock at the current price of USD 670.00, up 0.01% as of August 25, 2021, 2:37 PM ET.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.