I’ve long been a fan of Regeneron (REGN), and have recommended it in recent years to my own investment newsletter subscribers. The company’s shares have risen by roughly 70% in the past year, besting the market and pacing the 66% rise in 2013 for the biotech sector. At a recent $290 a share, REGN should outperform the market in the near term, rising double digits to the mid $300 level.
Key to the company’s near term success is the continued growth of its signature Eylea, a drug used to treat two eye diseases: “wet” age-related macular degeneration and a form of macular edema. At about two thirds of the company’s revenues, Eylea has been growing at more than 60% annually. Earlier this month, Regeneron said Eylea, which was co-developed with drug industry behemoth Bayer, logged fourth quarter sales of about $400 million, better than consensus estimates. Regeneron and Bayer also said in mid-January that they are working together on a new macular degeneration treatment that will be used in tandem with Eylea. Bayer will pay REGN $25 million upfront, with another $40 million coming upon certain milestones, and the companies will share development costs.
In addition to Eylea, the company has been actively developing human antibodies, which includes alirocumab, designed to combat “bad” cholesterol, and which has shown efficacy in Phase III trials. That efficacy shows the Regeneron drug is better than statins and alternatives (including the giant in the space, Lipitor) at blocking cholesterol formation. That’s a pretty impressive $6 billion market opportunity, and an FDA decision is likely early next year after clinical trial results will be hitting the headlines through 2014. Looking out beyond 2014 the company could earn as much as $10 a share in a few years and shares could touch into the mid $300 range.