Regeneron: A "Science-Driven" Approach

12/09/2020 5:00 am EST


Ingrid Hendershot

Founder and President, Hendershot Investments, Inc.

Founded and led for over 30 years by physician-scientists, Regeneron (RGEN) is a leading biotechnology company that invents life-transforming medicines for people with serious diseases, notes Ingrid Hendershot, a leading value-oriented money manager and editor of Hendershot Investments.

The firm’s science-driven approach has resulted in eight FDA-approved drugs and more than 20 product candidates in clinical development, including a COVID-19 antibody drug cocktail recently authorized by the FDA for emergency use.

Believing that scientific innovation and talent are the company’s greatest differentiators, Regeneron routinely reinvests 30% of revenues in R&D, compared to the industry average of about 20%.

Sales of Regeneron’s lead drug, EYLEA, approved to treat age-related macular degeneration and diabetic edema, have grown at double-digit rates for seven years without a single price increase. In 2019, EYLEA generated net product sales in the U.S. of $4.6 billion.

Global sales of Dupixent, a first-in-class treatment option for several Type 2 inflammatory diseases, jumped 151% to $2.3 billion in 2019 with numerous new indications for the drug on the horizon.

In 2019, the firm’s PD-1 inhibitor Libtayo, launched just a year earlier, became the standard of care for advanced cutaneous squamous cell carcinoma, generating global net product sales of $194 million.

Its COVID-19 antibody drug was authorized on Nov. 22 by the FDA to treat patients 12 years of age and older—including people over 65, who are not hospitalized but are at high risk of the disease increasing in severity.

Regeneron generated healthy growth during the past five years with revenues compounding at an 18% annual rate as net income and EPS grew at a high 35% annual pace. Its profitable operations consistently deliver double-digit net profit margins and returns on shareholder equity exceeding 20%.

Long-term investors seeking a profitable prescription should consider Regeneron, a high-quality innovator with profitable growth and a healthy balance sheet with nearly $6 billion in cash and marketable securities and $2 billion in long-term debt recently issued at historically low interest rates.

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