Regeneron (NASDAQ: REGN) is out of favor. The company reported earnings growing 92% and revenue jumping 14.6% but the stock fell below $300 a share in the days that followed the report. Why?
Revenue for all of Regeneron’s key products rose during the quarter. The blockbuster atopic dermatitis drug, Dupixent made $131 million in revenue, which could explain the investor disappointment. Even with EYLEA sales up 15.2 percent to 984 million and up 28.9% outside of the U.S. market, investors worried over the promotional costs, marketing efforts, and higher opex costs related to supporting higher sales.
The market is discounting any success of Dupixent as a potential drug for treating other allergy-related diseases. The studies will likely lead to drug approvals for treating peanut allergy, atopic dermatitis in children, and a slew of other diseases.
Yet the company must ramp up its promotional efforts in AD (atopic dermatitis), work diligently with dermatologists and insurance providers in getting the drug, affordably, in the hands of patients.
Regeneron faces headwinds in higher costs and low to flat profitability growth in the near-term. At its current valuation, the stock represents deep value for investors looking for companies selling breakthrough drug therapies.
