Regeneron Pharmaceuticals Inc. (REGN, Financial) didn’t just get past hump day, the company soared over it. Shares of the Tarrytown, New York-based drug company traded as high as $623 Wednesday before closing at $608.77, a gain just short of 6%.
The stock was boosted by two major developments: huge second-quarter sales increases for its eye disease treatment Eylea and the inflammatory drug Dupixent, as well as study results showing Regeneron may be close to having an answer for an evasive nonalcoholic fatty liver disease, NASH.
Although the company reported a 44% drop in revenue for the second quarter of 2022 compared to the same period in 2021, the decline wasn’t a surprise given its antibody cocktail against Covid-19, REGEN-COV, was banned in the U.S. in January because it wasn’t effective against the Omicron variants, reported BioSpace.
Absent REGEN-COV, Regeneron posted a revenue gain of 20% in the quarter, paced by record sales for Eylea, Dupixent and the skin cancer treatment Libtayo, as well as multiple regulatory achievements for Dupixent, including U.S. approvals for atopic dermatitis among very young patients and for eosinophilic esophagitis in adults.
Regeneron plans to pair Libtayo with other cancer-fighting therapies. One prospect is being held up due to "an FDA travel complication relating to scheduling a routine clinical trial site inspection in Eastern Europe." The company’s Libtayo-chemotherapy combo in advanced squamous or nonsquamous non-small cell lung cancer is unlikely to clinch approval until after its Food and Drug Administration action date next month, Regeneron’s CEO said on a call with investors Wednesday.
BioSpace reported that, in a note to investors, Wells Fargo (WFC, Financial) analyst Mohit Bansal wrote, “We see 2Q22 results as representing a strong beat, with Eylea results showing a strong front against competition from Roche’s (RHHBY, Financial) Vabysmo and continued momentum from Dupixent."
Full disclosure: I bought Regeneron after researching the company for a GuruFocus article and have held it for two years, never wavering, even in the face of a 200-point drop between April and June this year. What makes the stock particularly attractive to me is its relatively low multiple, outstanding product line and solid management team.
Regeneron may be on the cusp of a breakthrough in treating NASH. Its scientists have shown a possible link between loss-of-function mutations in the gene and protection from disease development, including NASH. According to the American Liver Foundation, roughly 5% of the adult U.S. population suffers from NASH, which can cause Inflammation, liver cell damage and swelling of the liver. None of several potential treatments have earned FDA approval.
Regeneron and partner Alnylam Pharmaceuticals Inc. (ALNY, Financial) have developed a treatment for the CIDEB gene that is linked to liver disease; it is expected to enter clinical trials next year. The companies have also developed two other gene silencing medications for NASH.
