Regeneron Earnings: Raising Our Fair Value on Near-Term Eylea Boost, Long-Term Dupixent Prospects

We’re raising our Regeneron REGN fair value estimate to $750 from $690 following solid second-quarter performance, particularly as we think Dupixent’s long-term prospects continue to improve and Eylea sales stay steadier than we anticipated, in the face of branded competition from Roche’s Vabysmo. Regeneron’s revenue grew 11% in the second quarter as continued stellar growth for immunology drug Dupixent (33%) drove collaboration revenue from partner Sanofi to grow by an even higher 39% as Dupixent’s profitability improves. This countered some weakness in ophthalmology drug Eylea due to price concessions in the face of the launch of Vabysmo. We assume that upcoming approvals for Dupixent will only add to the drug’s blockbuster sales, driving peak sales approaching $20 billion in 2029 (ahead of potential Medicare negotiation). We expect COPD approval in 2025, with potential approval of COPD antibody itepekimab in 2026 to complement Dupixent. Overall, we think Regeneron’s core antibody Dupixent as well as a growing oncology pipeline support a narrow moat, regardless of whether Eylea can continue to grow as the high-dose version launches later this year.

We still expect Vabysmo and high-dose Eylea to share the market relatively equally in the long run, with both drugs likely to generate at least $5 billion in annual sales. While Vabysmo has been taking share from Eylea and driving U.S. sales declines since the fourth quarter of 2022, Regeneron expects a potential third-quarter approval of high-dose Eylea, as its contract manufacturer Catalent is submitting additional information to the Food and Drug Administration in mid-August to address a complete response letter (tied to manufacturing) received in June. We note that the entire market for degenerative eye disease drugs like Eylea and Vabysmo has been growing at a double-digit level, evidence that the Vabysmo launch is expanding the market.