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Regeneron: Fantastic Buying Opportunity On The Sell-Off

Summary

Regeneron is looking to diversify its drug portfolio by investing in R&D.

Praluent will drive revenue growth going forward.

Eylea's revenue has not peaked yet.

Shares are trading at a discount to intrinsic value.

Regeneron Pharmaceuticals (NASDAQ:REGN) had a rough year, as the stock plummeted -35% from its November 2015 high. A majority of the firm's revenue is generated from three drugs Eylea, Praluent and Arcalyst. Eylea is a drug that treats eye diseases and accounted for around 68% of Regeneron's revenue during the last quarter. Regeneron realizes that its revenue stream is not diversified as its peers in the space such as Celgene (NASDAQ:CELG) have a big list of many drugs which contribute to its top-line and not one drug accounting for nearly three quarters of reported revenues. As we move forward, Regeneron looks to address the issue through its heavy investment in R&D, as many drugs are moving down the pipeline. If some of these drugs show promise, then we may see a huge boost to top and bottom-lines, as well as a more diversified portfolio of life saving drugs.

Regeneron is looking to diversify its drug portfolio by investing in R&D

There is no question that Regeneron is not well diversified at all compared to its peers in the biotech space. A negative change in Eylea's eye health market could send Regeneron's stock tumbling into the abyss, as its profit margins are highly sensitive to this niche. Regeneron plans to expand and diversify its revenue stream, as new drugs are under development in different areas such as cancer treatment, allergies, inflammation and cardiovascular diseases. Most of the drugs in its pipeline are in clinical trials and it is very difficult to determine whether or not these drugs will...


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