Summary
- REGN reported a strong Q3, with Eylea beating expectations, helped at least a little by spot shortages of re-compounded Avastin.
- The stock has reacted well, rejoining the bull market.
- I remain hopeful that REGN is focusing its efforts on its most promising pipeline opportunities (I-O) as well as sustaining and expanding Eylea's franchise for years to come.
- But the REGN bull case, while very plausible, has a lot of 'maybes.'
- Additional clarity on REGN's life-cycle management plans for Eylea would add to REGN's movement toward greater investor friendliness.
Background - REGN as a trading stock
Regeneron (REGN) overpriced Praluent in its 2015 launch (along with its partner Sanofi (SNY), and then had further problems in 2016. I then became basically a value-oriented, price-sensitive trader in REGN.
Here is some documentation of this thinking, which may help some readers get a sense of my thoughts on REGN at different price points last year and this year.
1. Cautious to bearish
When Libtayo gained FDA approval a little over a year ago for a form of skin cancer, I commented that at a stock price that had rebounded to nearly $410, Regneron's shares looked fully-priced (note, they ran to $442):
So the risks are high, and the Street may stay cautious on both Dupi [Dupixent] and the I-O program given the diversity and intensity of competition from many directions... the company is not "there" yet.
I traded accordingly.
But when the stock had been down, I emphasized different points:
2. Bullish after a large sell-off
Just 5 months previously, on May 4, 2018, REGN had been way down, at $292. Then, I ended the article this way:
Carefully, understanding there is no guarantee if and when biotech will return to favor, and understanding that Fed tightening cycles provide headwinds to equity valuations, I'm in the mood to continue to dip into cash reserves to vote for REGN here against the Street, and against the shorts.
Then came the sudden collapse again beginning this past March. Again, I put cash to work:
3. Bullish on another large sell-off
With REGN just below $313 this past may, I was tactically bullish. Here are the summary bullet points in a May 2019 article, How Regeneron Can Take Its Sad Song And Make It (Much) Better:
