There’s a lot of competition right now between major biotech and pharmaceutical companies as they race to find treatments for COVID-19. This has caused many of the stock prices of these companies to go dramatically higher as investors place their bets on which company will find success against the global pandemic. With so many different businesses working on treatments, adding shares of companies that will provide strong growth regardless of whether or not their COVID-19 efforts are fruitful makes the most sense at this time.
One S&P 500 pharmaceutical company has developed an experimental COVID-19 treatment that was administered to President Donald Trump recently and could be an intriguing investment prospect. Regeneron Pharmaceuticals (NASDAQ:REGN) stock is up over 60% year-to-date and is worth a look for investors that are interested in gaining exposure to one of the best biotech companies in the industry. Let’s take a deeper look at Regeneron below and discuss a few reasons why it could be a smart buy.
Discovering and Developing Groundbreaking Therapeutics
Regeneron Pharmaceuticals has been on a lot of investors watch lists this year thanks to the company’s efforts in developing a COVID-19 treatment, but the truth is that this company has been discovering groundbreaking medicines that treat serious medical conditions for decades. It has produced seven FDA-approved medicines at this time that help to improve the health of millions. The company’s core strategy is to use its scientific research capacities and cutting edge technology to continuously develop new options for preventing and treating human illnesses. Regeneron has created or is working on developing medication for ailments like eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, infectious diseases, and more.
The company’s best-selling commercial drug is called Eylea and is used to treat age-related macular degeneration, a problem that impacts many people’s vision as they get older. The drug contributed roughly 69% of total revenue for the company in Q2 2020 and accounted for 59% of Regeneron’s total revenue in 2019. What’s great about Eyelea is that it has strong competitive positioning thanks to the fact that lower doses are needed for treatment. When you are evaluating a biotech company like Regeneron, you want to see a blockbuster drug with strong sales like Eyelea as well as a strong pipeline of new products coming to market. This is another reason why Regeneron is worth a look, as the company’s recent products Dupixent and Libtayo both look promising and there are currently more than 20 additional product candidates in clinical development.
COVID-19 Antibody Cocktail
As we mentioned earlier, Regeneron made headlines last week after President Donald Trump elected to use the company’s COVID-19 antibody cocktail to help with his symptoms after testing positive for the virus. The treatment is called REGN-COV2 and is currently going through the Phase 2/3 portion of clinical trials. There’s the possibility that it will be effective for both preventing and treating COVID-19, which would be a huge win for both Regeneron and humanity. The FDA may grant emergency use authorization during the fall which would allow Regeneron to begin selling its treatment immediately.
The company already has a U.S. government contract worth $450 million, and additional sales outside of the contract could be a strong driver of the company’s revenue growth. It’s interesting to note that the REGN-COV2 was developed by using the same science that created an experimental treatment for the Ebola virus that significantly reduced the risk of death for patients who had contracted the virus. Keep an eye out for more updates from the FDA regarding this experimental COVID-19 treatment, as it could be a strong bullish catalyst for the stock.
Q2 Earnings Strength
Investors will be pleased to learn that Regeneron has beat analyst earnings estimates for four consecutive quarters and reported strong Q2 earnings back in August. Q2 revenue increased by 24% year-over-year to $1.95 billion while Q2 Non-GAAP Net Income increased by 24% year-over-year to $854 million. It’s always nice to see double-digit top-line and bottom-line growth from a massive company like Regeneron. These earnings results tell us that Regeneron is a well-run company that continues to generate strong sales quarter after quarter.
Looking back at 2019, the company grew its revenue by 17.2% year-over-year to $7.86 billion, which is a five-year compound annual growth rate of 22.8%. The bottom line here is that Regeneron is steadily growing, has a strong balance sheet, and continues to report strong earnings. There are plenty of reasons for optimism going forward.
This is without a doubt one of the best biotech stocks to own for the long-term, although shares are not cheap thanks to the recent headline-driven rally. Investors that are interested in adding shares of Regeneron should probably wait for the stock to pull back in the coming weeks.
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