Maintaining Our $690 FVE for Regeneron Following Solid Q3; Oncology Data Is Building

Regeneron’s third-quarter revenue declined 15% year over year as sales of its COVID-19 antibody cocktail dried up. However, we’re maintaining our $690 fair value estimate for Regeneron as the fundamental business remains solid. Excluding the COVID-19 antibody cocktail, revenue grew 11%, driven by a 22% increase in Sanofi collaboration revenue (largely due to strong sales of immunology drug Dupixent) and 11% growth for U.S. sales of ophthalmology drug Eylea, despite a 9% decline in profit share from Bayer for international Eylea sales. While Regeneron gave preliminary 2023 operating expense guidance that was significantly above our prior projections, this is balanced in our model by pipeline progress and our decision to model potential revenue from the Intellia gene editing collaboration. We think Regeneron’s narrow moat is increasingly well-supported, with positive data in oncology pushing the firm closer to a wide moat.