2 Beaten-Down Stocks to Buy and Hold for a Decade

Key Points

• Significant pipeline progress in the next five years could jolt Moderna's stock higher.

• Regeneron is gradually overcoming challenges from one of its former growth drivers.

• 10 stocks we like better than Moderna ›

Over the past couple of years, Moderna (NASDAQ: MRNA) and Regeneron Pharmaceuticals (NASDAQ: REGN) have encountered company-specific headwinds that have sunk their stock prices. The former is down by 75% over this period, while the latter has dropped 32%.

Should you avoid Moderna and Regeneron? Not in my view. Though both biotechs have faced challenges, they could be solid stocks to own through the next 10 years. Let me explain.

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1. Moderna

Moderna made a fortune thanks to its success in the coronavirus vaccine market. Although the worst of the pandemic is behind us, the biotech company should continue to benefit from its work in this area for some time. Moderna is still generating decent sales from its coronavirus vaccine franchise. It expects revenue of between $1.5 billion and $2.2 billion this year, mostly from its products in this area.

Image source: Getty Images.

COVID-19 may no longer be a severe global health emergency, but the disease is here to stay, and people, particularly those at high risk of severe disease, will continue to seek vaccination against it. And Moderna should remain a leader in the field.

Moderna also improved its pipeline over the past three years, in efforts that should lead to brand-new approvals. The biotech has already launched mResvia, a vaccine for respiratory syncytial virus (RSV). It has other exciting candidates in late-stage trials, including a vaccine for cytomegalovirus (CMV).

The company's investigational influenza vaccine, mRNA-1010, performed well in clinical studies. Though there are plenty of options in that area, their efficacy tends to be unimpressive. In a phase 3 clinical trial, mRNA-1010 conferred greater protection against the flu than an approved vaccine.

Perhaps its most promising candidate is a personalized cancer vaccine called mRNA-4157, which Moderna is developing in collaboration with Merck; in combination with Merck's cancer therapy Keytruda, it helped decrease the risk of recurrence or death in patients with melanoma, compared to treatment with Keytruda alone. It's also being tested across several other forms of cancer.

Moderna has several other candidates in phase 1 and phase 2 studies; it should record significant pipeline progress over the next couple of years, enhance its lineup, and generate strong financial results into the next decade. The stock is down significantly, but there's plenty of upside left for patient investors.

2. Regeneron Pharmaceuticals

Regeneron's struggles over the past few years may have started with the 2022 approval of Vabysmo, a competitor (produced by Genentech, a division of Roche Holding) for its treatment for wet age-related macular degeneration, Eylea. The company then had to contend with biosimilar competition for the medicine.

Thankfully, Regeneron is slowly moving beyond these issues. Its newer, high-dose formulation of Eylea comes with a less stringent dosing schedule. It's now better able to compete with Vabysmo (one of Vabysmo's selling points was its friendlier dosing schedule), while many patients on the original Eylea are also switching to the newer version.

Regeneron's revenue in the second quarter increased by 4% year over year to $3.68 billion. That's not phenomenal top-line growth, but it's pretty strong considering Eylea's challenges. Furthermore, Dupixent, Regeneron's current biggest growth driver, is performing very well and will maintain its momentum for some time.

Regeneron has also earned brand-new approvals, and there should be more on the way. Its cancer medicine Lynozyfic received approval earlier this year. And the company reported positive phase 3 results for cemdisiran as a potential treatment for myasthenia gravis, a disease that causes muscle weakness; Regeneron should submit regulatory applications for it sometime next year.

The pipeline features many more products, including in the hottest area in the pharmaceutical industry: weight management. Regeneron should continue to enhance its pipeline while relying on Dupixent to drive excellent financial results in the meantime. The stock remains a solid choice for investors to buy and hold for the long term.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck and Regeneron Pharmaceuticals. The Motley Fool recommends Moderna and Roche Holding AG. The Motley Fool has a disclosure policy.