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Regeneron Pharmaceuticals: The Stock That Only Goes Up?

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Shares of Regeneron Pharmaceuticals (NASDAQ: REGN) were trading at new all-time high levels on Wednesday afternoon on concerns that rival Allergan (NYSE: AGN) may have problems moving its unnamed vision-loss drug into late-stage trials.

The speculation is that Allergan believes it may have trouble getting its drug to market, which would be a benefit for Regeneron's EYLEA treatment. Heading into the final hour of trade, Regeneron shares were up more than 13 percent to $243.28 and closed up over 10 percent at $237.29.

The stock has been a tremendous winner in the biotech space in recent years, making early investors a fortune. Over the last 5 years, REGN has surged over 1,000 percent and the stock has continued to rise sharply in 2013. Over the last 52-weeks, REGN has jumped 83 percent and year-to-date, the stock is up better than 43 percent.

The run-up in the share price came ahead of a big jump in revenue for fiscal 2012 after Regeneron's EYLEA treatment won approval for wet form age-related macular degeneration in late November 2011. The injection was also approved for the treatment of Macular Edema following Central Retinal Vein Occlusion (CRVO) in September 2012.

Prior to FDA approval for EYLEA, Regeneron was a long-struggling biotech concern that had racked up around $1.2 billion in cumulative losses in its 24 years of existence. Last year, however, Regeneron totaled nearly $1.4 billion in revenue and over $750 million in net income. In addition to EYLEA, the company also has two other marketed products, ARCALYST and ZALTRAP.

The ARCALYST injection was approved by the FDA for Subcutaneous Use for the treatment of Cryopyrin-Associated Periodic Syndromes (CAPS) in 2008. ZALTRAP is indicated for patients with metastatic colorectal cancer that is resistant to or has progressed following an oxaliplatin-containing regimen.

In addition to its successful products, Regeneron has a very robust pipeline of diverse drugs and treatments. Investors are betting that the company's recent string of approvals and successfully marketed products will continue, as the market is currently valuing Regeneron at nearly $24 billion. Although the stock is pricey at around 39 times forward earnings estimates, Regeneron has been biotech gold in recent years.

Whereas this was once a very speculative stock, the company should now be viewed as an established player in biotechnology with dependable and diverse lines of revenue. Nevertheless, the shares may still be overvalued at current lofty prices.

Investors should also take into account, however, that Regeneron could be the subject of a takeover as it has brought three drugs to market. There has been some speculation that Regeneron could be an attractive takeover target for Sanofi (NYSE: SNY), a $140 billion diversified French healthcare company that has established a partnership with Regeneron. Any deal would likely come at a premium, thereby rewarding investors who buy in at today's prices.

Posted-In: Central Retinal Vein Occlusion Cryopyrin-Associated Periodic SyndromesLong Ideas News FDA Intraday Update Movers Trading Ideas Best of Benzinga

 

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