TipRanks Smart Value #12: Biotech Vanguard
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Dear Investors,
Dear Investors,
Welcome to the twelfth edition of our recently launched TipRanks Smart Value Newsletter!
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This Week’s Top Value Pick: Regeneron (REGN)
Regeneron (REGN), is a U.S.-based biotechnology company specializing in the discovery, development, and commercialization of innovative medicines. Focused on addressing serious medical conditions, its portfolio includes therapies for eye diseases, allergic and inflammatory conditions, cancer, neurological disorders, and infectious diseases. Regeneron’s proprietary technologies, like its VelociSuite platform, drive rapid drug development, with key products like EYLEA and Dupixent serving patients globally. With a strong commitment to scientific innovation, Regeneron operates cutting-edge research and manufacturing facilities.
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Biotech Evolution
Founded in 1988 by Dr. Leonard Schleifer, Regeneron Pharmaceuticals began as a small biotechnology research venture focused on addressing unmet medical needs. Early efforts centered on neurotrophic factors (i.e. issues related to the growth, development, or survival of nervous tissue), but the company’s trajectory shifted with the development of its proprietary VelociSuite platform. This suite of technologies enabled accelerated antibody discovery and became foundational to Regeneron’s success, powering the development of multiple blockbuster drugs.
Regeneron went public in 1991, using the proceeds to fuel its R&D pipeline. Its first major commercial breakthrough came in 2011 with the FDA approval of EYLEA for age-related macular degeneration. EYLEA’s strong efficacy and growing global demand transformed it into a multi-billion-dollar product and established Regeneron as a leader in ophthalmology. A strategic partnership with Bayer for ex-U.S. commercialization expanded its international reach and contributed significantly to earnings.
In 2017, Regeneron achieved another major milestone with the approval of Dupixent, co-developed with Sanofi. Initially approved for atopic dermatitis, Dupixent’s label quickly expanded to cover asthma, nasal polyps, and other inflammatory diseases. By 2023, it had surpassed $11.6 billion in annual global sales, becoming a key driver of Regeneron’s growth.
During the COVID-19 pandemic, Regeneron demonstrated its scientific agility with REGEN-COV, a monoclonal antibody therapy authorized in 2020. The treatment generated significant revenue and reinforced the company’s capacity to provide rapid responses to address pressing needs.
Regeneron has also broadened its scope through investments in genetic research via the Regeneron Genetics Center, which has sequenced over 2 million exomes, and expanded into oncology with therapies like LIBTAYO.
Today, with a market capitalization of nearly $64 billion and annual revenues of $14.1 billion, Regeneron has evolved into one of the most prominent biotech firms globally, powered by innovation, strategic partnerships, and a deep commitment to transformative science.
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Pipeline Expansion
Over the past decade, Regeneron has strategically leveraged acquisitions to enhance its scientific capabilities, broaden its therapeutic scope, and accelerate revenue growth. Focused on building a future-ready pipeline, the company has targeted areas like immuno-oncology, gene therapy, and genetics-driven drug discovery, aligning with its core strengths and long-term vision.
In 2022, Regeneron took a major step in expanding its oncology footprint by acquiring Checkmate Pharmaceuticals for approximately $250 million. This deal added vidutolimod, an investigational immune activator targeting multiple tumor types, to Regeneron’s oncology pipeline. Vidutolimod complements existing assets such as LIBTAYO, reinforcing the company’s commitment to advancing innovative therapies in immuno-oncology and addressing high unmet needs in cancer treatment.
Continuing its focus on genetic medicine, Regeneron acquired Decibel Therapeutics in 2023 for $109 million, with contingent payments of up to $100 million. This acquisition broadened Regeneron’s reach into gene therapy and auditory disorders, areas that align closely with the capabilities of the Regeneron Genetics Center. Decibel’s pipeline and research expertise offer a foundation for developing treatments for hearing loss, expanding Regeneron’s presence in sensory-related conditions.
Also in 2023, Regeneron entered into a strategic partnership with 2seventy bio, acquiring its preclinical and clinical-stage cell therapy pipeline and forming Regeneron Cell Medicines. This initiative focuses on advancing next-generation cell therapies, particularly oncology. The partnership adds a new dimension to Regeneron’s treatment modalities, enabling it to explore complex cell-based approaches alongside its antibody and gene therapy platforms.
In May 2025, Regeneron made a pivotal move by announcing that it had entered into a definitive agreement to acquire substantially all of 23andMe’s assets for $256 million through a bankruptcy auction. The deal includes 23andMe’s Personal Genome Service, Total Health and Research Services, and a biobank containing genetic data from over 15 million users, strengthening Regeneron’s precision medicine and genetics-driven drug discovery capabilities. Importantly, the acquisition excludes 23andMe’s telehealth service, Lemonaid Health, minimizing earnings dilution. Expected to close in Q3 2025, the transaction enhances Regeneron’s position in personalized therapies. As Regeneron integrates this genetic data into its R&D engine, effectively managing these risks will be essential to sustaining its innovation momentum and long-term growth trajectory.
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Biotech Powerhouse
Regeneron is a fully integrated biotechnology company focused on developing and commercializing treatments for serious diseases, including eye, allergic, inflammatory, cancer, cardiovascular, neurological, hematologic, infectious, and rare conditions. Its revenue streams stem primarily from product sales, collaborations, and licensing agreements. Strategic partnerships with Sanofi and Bayer bolster its pipeline and commercialization efforts. Under the Sanofi alliance, Regeneron co-develops Dupixent, Kevzara, and itepekimab, with Sanofi funding 80–100% of agreed-upon development costs. The Bayer collaboration covers Eylea 8 mg and ex-U.S. Eylea markets, with shared development costs and profits.
In Q1 2025, combined U.S. net sales of EYLEA and EYLEA HD reached $1.04 billion, down 26% year over year. The franchise is facing growing headwinds, including a 2027 patent cliff and intensifying biosimilar pressure, with as many as eight competitors expected to enter the U.S. market this year. Additional pressure came from funding shortfalls at copay foundations in 2024, reducing patient access, especially those on Medicare, to branded anti-Vascular Endothelial Growth Factor therapies for retinal diseases. Many physicians instead prescribed Roche’s lower-cost, off-label alternative, Avastin, even though it lacks FDA approval for retinal use. Regeneron responded by contributing approximately $400 million to support copay assistance and has called for competitors to share the burden to ensure patient access to FDA-approved treatments. Copay assistance foundations are independent charities that help patients, especially those on Medicare or with high out-of-pocket costs, afford expensive prescription drugs like EYLEA.
Further complicating matters, the FDA issued a Complete Response Letter in April 2025 for EYLEA HD’s prefilled syringe, citing issues with a third-party component supplier, though safety, efficacy, and labeling were not in question. Regeneron is working closely with the FDA to resolve the issue quickly, similar to a past CRL resolved in 2.5 months.
Despite short-term challenges, Regeneron’s long-term outlook remains strong, underpinned by robust growth from Dupixent and a deep, innovative pipeline. Dupixent, co-developed with Sanofi, delivered $3.7 billion in Q1 2025 global sales, up 19% year-over-year, with continued expansion into indications like asthma, atopic dermatitis, and COPD. Collaboration revenues—$1.2 billion from Sanofi and $344 million from Bayer—add to earnings through profit-sharing and royalties. LIBTAYO’s 8% growth to $285 million strengthens Regeneron’s oncology portfolio.
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Pipeline Power
Regeneron continues to advance its science-led strategy through cutting-edge platforms and a deep pipeline, reinforcing its position as a leading innovator in biotechnology. The company’s proprietary VelociSuite platform enables rapid antibody discovery and development, supporting a diverse portfolio targeting oncology, infectious diseases, and rare disorders. Complementing this is the Regeneron Genetics Center, which leverages large-scale genomic data to identify novel drug targets and advance precision medicine.
With 45 clinical candidates in development, Regeneron is steadily moving several high-potential therapies toward commercialization. Two of its most advanced oncology assets, linvoseltamab, for relapsed/refractory multiple myeloma, and odronextamab, for relapsed/refractory follicular lymphoma, are currently under FDA review, with regulatory decisions expected in July. These therapies represent potential breakthroughs in hematologic cancers and could significantly bolster Regeneron’s oncology footprint.
In ophthalmology, the company is seeking to expand its market share with EYLEA HD. A supplemental Biologics License Application was submitted to the FDA to gain approval for greater dosing flexibility and an additional indication for macular edema following retinal vein occlusion. A decision is anticipated by mid-August. This move aims to strengthen EYLEA HD’s competitive positioning against rivals such as Roche’s Vabysmo.
Regeneron is also progressing its Factor XI program, a major R&D initiative aimed at improving anticoagulation therapies. Two antibodies, REGN7508 and REGN9933, have entered Phase 3 trials, targeting the $20 billion atrial fibrillation market. These therapies aim to deliver effective blood clot prevention with a lower risk of bleeding, potentially improving outcomes for millions of patients.
Additionally, itepekimab , supported by strong IL-33 genetic evidence, shows promise as a first-in-class COPD therapy based on encouraging Phase 2 and 3 results. IL-33 is a cytokine involved in inflammation and immune response in the lungs.
Recent strategic moves, like acquiring 23andMe’s genetic database, add to Regeneron’s consumer genetic capabilities and personalized medicine initiatives. While pharma tariff risks loom, Regeneron’s U.S.-focused investments and proactive engagement with policymakers reduce exposure and support long-term scalability and innovation.
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Financial Resilience
Regeneron has demonstrated resilient financial performance over the past five years, fueled by a diversified product portfolio, strong partnerships, and a robust R&D engine. The company has delivered a CAGR of 15% in revenue and 14.6% in earnings per share over the past five years, reflecting steady expansion across key therapies and strategic collaborations, most notably with Sanofi and Bayer. Flagship products like Dupixent, EYLEA HD, and LIBTAYO have driven this momentum.
However, Q1 FY25 marked a temporary pullback, with total revenue declining 4% year-over-year to $3.03 billion. The shortfall was largely attributed to a sharp sequential drop in U.S. EYLEA sales amid intensifying competition and shifting market dynamics. While combined U.S. net sales for EYLEA and EYLEA HD stood at $1.04 billion, this represented a 30% quarter-over-quarter decline. Nonetheless, EYLEA HD posted a 54% year-over-year increase to $307 million, underscoring growing adoption of the newer formulation. Bayer contributed $344 million in collaboration revenue, reflecting stable EYLEA performance outside the U.S.
Despite the top-line dip, profitability held firm. Regeneron reported adjusted EPS of $8.22, slightly below estimates, buoyed by high-margin drug sales and collaboration profits. Free cash flow totaled $816 million for the quarter, supported by disciplined cost management. R&D expenses rose by 6% year-over-year to $1.3 billion, while SG&A expenses fell 8% to $537 million. Gross margin on net product sales remained healthy at 85%, down slightly due to inventory write-offs and product mix shifts.
Looking ahead, Regeneron expects FY25 gross margins to range between 86% and 87%. The company has reduced its capital expenditure guidance by $25 million to $850–$950 million, compared to its prior forecast of $850–$975 million. The revised capex is due to timing delays rather than reduced investment, and the company remains committed to over $7 billion in U.S. manufacturing and infrastructure projects. These investments are aimed at scaling production capacity and supporting a deep pipeline of approximately 45 clinical candidates, positioning Regeneron for sustained innovation and long-term growth.
Regeneron’s balance sheet remains a strategic advantage. With $17.6 billion in cash and only $2.7 billion in debt at the end of Q1, the company maintains a debt-to-equity ratio of just 0.09, far below the biotechnology sector median. This conservative capital structure, reinforced by investment-grade credit ratings of “BBB+” from S&P and “Baa1” from Moody’s, gives Regeneron ample financial flexibility. Its return metrics, including ROE, ROA, and ROIC, rank among the top 10% in the biotechnology sector.
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Undervalued Potential
Regeneron has adopted a shareholder-friendly capital return strategy, initiating a quarterly dividend earlier this year and maintaining an active share repurchase program to enhance shareholder value while supporting its growth-focused R&D. Earlier this year, the company introduced a quarterly dividend of $0.88 per share, with the next quarterly payment scheduled for June 6, 2025. While the yield is modest at 0.15%, it reflects a conservative payout approach, distributing about 4% of adjusted earnings, allowing Regeneron to prioritize R&D while leveraging strong free cash flow.
Complementing its dividend policy, Regeneron has significantly ramped up its share repurchase efforts. Following an initial $3 billion buyback in January 2023, the company added another $3 billion in April 2024 and again in February 2025, raising the total authorization to $6 billion. In Q1 2025 alone, Regeneron repurchased $1.1 billion worth of its shares. As of March 31, $3.87 billion remained under the current authorization. Over the past 12 months, the company has repurchased $2.6 billion in stock, an increase of 16.5% year-over-year, helping to reduce outstanding shares and enhance earnings per share.
Despite these shareholder-friendly actions, Regeneron’s stock has faced pressure, declining by about 40% over the past year due to weaker-than-expected sales and earnings, coupled with broader market skepticism. However, analysts remain optimistic about the company’s prospects. Buoyed by a strong late-stage pipeline and encouraging clinical updates, Wall Street sees potential for a sharp rebound. Consensus estimates suggest a potential upside of 38% over the next 12 months, with some forecasts projecting gains of up to 66%.
REGN is currently trading at a price-to-earnings ratio of 13.3x, placing it below the biotech sector median and nearly 19% lower than its five-year average. This suggests a relatively modest valuation. Compared to industry peers such as Gilead Sciences, Regeneron also sits at the lower end of the P/E range, underscoring its potentially attractive pricing relative to its earnings. Discounted cash flow models further suggest the stock may be undervalued by as much as 68%, reinforcing the case for long-term value investors.
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Investing Takeaway
Regeneron Pharmaceuticals presents a compelling case for long-term investors seeking exposure to innovation-driven biotechnology. With a proven track record of developing blockbuster therapies like EYLEA and Dupixent, the company has consistently translated scientific excellence into commercial success. Despite near-term challenges, including intensifying competition in ophthalmology and regulatory setbacks, Regeneron’s robust pipeline and diversified portfolio position it well for sustained growth. Strategic acquisitions and partnerships continue to strengthen its capabilities in oncology, gene therapy, and precision medicine, enhancing its innovation engine. Moreover, its disciplined financial management, shareholder returns, and low debt levels provide a solid foundation to weather market volatility. For investors with a long-term horizon, Regeneron offers a unique blend of scientific leadership, financial resilience, and untapped value.
