Is Regeneron Stock a Bargain Below $800?

Regeneron Pharmaceuticals' (NASDAQ: REGN) shares climbed well above $1,000 two years ago, reaching all-time highs. However, they have dropped significantly from those levels over the past 24 months and now sit slightly below $800 apiece. What has happened to Regeneron? Is the stock a great buy at current levels? Let's find out.

Recent financial results

In the second quarter, Regeneron's revenue increased by 17% year over year to $4.3 billion. That was a strong performance for the biotech, largely driven by its biggest growth driver, Dupixent, a medicine it co-markets with Sanofi (NASDAQ: SNY). Dupixent's global net sales (recorded by Sanofi) jumped 38% year over year to $6 billion.

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Dupixent is one of the leading medicines in the eczema market, but newer indications, including in COPD, are contributing as well. Dupixent should remain Regeneron's most important growth driver until the early 2030s, when it could potentially lose patent exclusivity. However, Regeneron and Sanofi have a plan to defend their empire, notably by developing a newer, higher-dose (HD) formulation of Dupixent that could earn approval in some of Dupixent's existing indications and retain many of its patients.

Can this strategy work? It's worth noting that Regeneron took the same approach with its other growth driver, Eylea, which treats several eye-related disorders. Eylea started facing biosimilar competition in late 2024. Even before that, it faced a more competitive landscape, especially since Roche's (OTC: RHHBY) Vabysmo was approved in January 2022. But the launch of HD Eylea, which earned approval in 2023, is helping mitigate the losses from the original version.

In the second quarter, combined U.S. sales of Eylea and Eylea HD were about $1 billion, down 12% year over year. U.S. revenue from Eylea HD came in at $596 million, up 52% year over year, while sales of the original version in the country declined 45% year over year. Eylea HD will likely continue to gain traction, thanks to its friendlier dosing schedule. And as the impact of declining Eylea sales on Regeneron's financial results weakens, the company could maintain robust top-line growth.

New products could contribute, too

Eventually, Regeneron will have to develop new blockbuster products. The company has several interesting candidates, including an investigational weight loss medicine called olatorepatide. This therapy mimics the actions of the gut hormones GLP-1 and GIP, just like the current market leader, Zepbound. That doesn't guarantee approval, not by a long shot, but there is another important fact to know: Regeneron licensed olatorepatide from a China-based biotech, and the anti-obesity treatment has already posted strong phase 3 study results in China. In a late-stage trial enrolling 604 patients, the medicine led to a weight loss of up to 19% over 48 weeks. Zepbound recorded an average weight loss of 20.2% in one 72-week clinical trial.

Does that mean olatorepatide is the superior medicine? Not necessarily. There are several caveats to keep in mind, including the difficulty of comparing across clinical trials and the fact that the olatorepatide study was in China. Still, the medicine looks highly promising and could become a notable player in the already large and fast-growing weight-loss market. Of note, Regeneron is also developing a medicine that could be administered alongside GLP-1s to help patients maintain muscle mass as they lose weight.

And beyond this promising therapeutic area, Regeneron is working on products in other fields, including oncology, immunology, and more.

The company could have a much stronger lineup of approved drugs by the end of the decade.

Is the stock a buy?

Regeneron's shares have lagged broader equities over the past two years, largely due to its Eylea-related problems. But the company's financial results have improved significantly in recent quarters; Eylea HD continues to gain steam; it has a long-term plan to keep its Dupixent empire mostly intact; and it is developing several promising pipeline candidates, such as olatorepatide. Even with the very real possibility of clinical and regulatory setbacks, my view is that Regeneron's shares look very attractive at current levels -- with its shares trading below $800 apiece -- especially once we factor in its dividend and share buyback programs.

Prosper Junior Bakiny 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.