Is Regeneron a Buy After the FDA Approved its Gene Therapy to Restore Hearing?

Shares of Regeneron Pharmaceuticals (NASDAQ: REGN) are down more than 11% this year, and fell 5% on April 29, a day after the biotech company announced better-than-expected first-quarter earnings.

Investors may be concerned about declining sales of eye therapy Eylea, one of its top-selling drugs, thanks to competition from Vabysmo, developed by Roche. Total Eylea sales fell 10% to $941 million, including Eylea HD sales, which rose 52% to $468 million. The earnings report came just days after the FDA granted accelerated approval for Otarmeni, a gene therapy for patients with hearing loss.

Here are three reasons why this might be a good time to buy Regeneron stock:

Image source: Getty Images.

The earnings were actually pretty good

First-quarter revenue was reported as $3.6 billion, up 19% year over year, and up from analysts' estimates of $3.48 billion. Earnings per share (EPS) were $6.75, down 7% over the same period a year ago, while adjusted EPS, stripping out costs of in-process research and development (R&D), was $9.47, up 15% year over year.

While Eylea's revenue was down, cancer therapy Libtayo saw sales jump 54% year over year to $438 million. Hidden in the company's report is Dupixent's sales growth, which Regeneron shares with Sanofi. Dupixent is approved to treat nine different diseases connected to type 2 inflammation, and first-quarter sales were $1.6 billion, up 36% over the first quarter of 2025. With new approvals in areas like COPD and chronic spontaneous urticaria, the runway for Dupixent remains long.

Earnings were good enough that the company felt comfortable authorizing a new $3 billion share repurchase program, following through on an $803 million buyback in the first quarter.

The company has a huge pipeline

Regeneron has more than 50 therapies in its pipeline, including 34 in late-stage trials (phase 2 or phase 3). Besides the growing number of approvals for Dupixent and Libtayo, the company is on track to report phase 3 results for fianlimab in combination with cemiplimab versus pembrolizumab in first-line metastatic melanoma in the second quarter of 2026. The company also has a couple of GLP-1 weight loss therapies in late-stage trials.

On April 23, the Food and Drug Administration (FDA) approved Otarmeni as the first gene therapy under its Commissioner's National Priority Voucher program. Otarmeni is an adeno-associated virus vector-based gene therapy used to treat patients with profound hearing loss due to variants in the OTOF gene. It will be made available for free in the U.S.

That move may seem counterintuitive to business, but there's a method to Regeneron's madness. First, the company will still be able to charge traditional prices for the therapy outside the U.S. Second, offering Otarmeni for free was part of a package deal to secure favorable terms for the rest of their portfolio. Regeneron agreed to lower Medicaid prices to match Most Favored Nation (MFN) levels (prices paid by other developed countries). In exchange, it is not subject to future pricing mandates or additional government-led price negotiations for a set period.

Conservative management of capital

Despite the company's growth, the stock trades at a price-to-earnings (P/E) ratio of approximately 16.5 at its current share price. For a company delivering 19% year-over-year revenue growth and 15% non-GAAP (adjusted) EPS growth, this valuation is considered modest compared to its historical averages and peers in the high-growth biotech space.

Like many biotechs, Regeneron spends heavily on research and development and said it expects to spend $6 billion on R&D in 2026. It can do that because it had a 76% gross margin in the first quarter. While the decline in its Eylea sales is concerning, Eylea HD is beginning to make inroads, and the company's other drugs are more than making up for the drop in Eylea sales.

I think the recent fall in the stock's price is an overreaction to something that wasn't totally unexpected. The company already has plenty of growth elsewhere, so the stock seems like a buy at its current price.

James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Regeneron Pharmaceuticals. The Motley Fool recommends Roche Holding AG. The Motley Fool has a disclosure policy.