Despite their profitability and potential, they continue to trade below their long-term value in my opinion, with Regeneron trading at just over 16x earnings and Vertex trading at just over 23x earnings. I believe these numbers understate some of the potentially successful therapies they have in the pipeline. An investment in both is a solid choice for long-term investors. These companies have already demonstrated consistent revenue and EPS growth over the past three years and have the products that will enable these metrics to continue to grow.
VRTX Revenue Data (Quarterly) from Y Graphics
Regeneron's pipeline is growing
Regeneron reported fourth-quarter and full-year figures on February 3. While full-year sales fell 24% to US$12.17B, excluding COVID-19 therapies REGEN-COV and Ronapreve, the company's revenues rose 17%.
The main reason for the company's growth in non-COVID therapies is its anti-inflammatory drug Dupixent (dupilumab). Regeneron shares drug sales with partner SanofiDupixent is approved to treat eczema and asthma, long-term sinus inflammation in adults, eosinophilic esophagitis (an allergic condition of the esophagus), and prurigo nodularis, a skin condition associated with itchy bumps. The drug is also in a Phase 3 trial for atopic dermatitis, chronic spontaneous urticaria (a type of chronic hives), and chronic obstructive pulmonary disease (COPD).
Dupixent's 2022 global sales (reported by Sanofi) increased 40% to US$$ 8.68 billion. Annual revenue from Sanofi's Regeneron partnership for Dupixent was US$$ 2.85 billion, an increase of 50% compared to 2021.
Regeneron also reported $1,400,000 in 2022 sales of its eye drug Eylea (aflibercept), an increase of $1,300,000 from 2021. The therapy is approved to treat several retinal diseases. The company is testing a stronger, longer-acting dose of Eylea and could launch it as early as this summer, helping to fend off competition from Vabysmo, manufactured by Roche Ag.
Regeneron has a sizable pipeline, with 40 candidates, including 10 in Phase 3 trials.
The most promising drug in Regeneron's pipeline may be the immuno-oncology therapy Libtayo. The U.S. Food and Drug Administration (FDA) approved the drug in November 2022 as a combination therapy with chemotherapy as a first-line treatment for adults with advanced non-small cell lung cancer. The European Commission also approved the drug in November as a monotherapy for the treatment of recurrent or metastatic cervical cancer. In December 2022, Japan approved Libtayo for the treatment of advanced or recurrent cervical cancer.
Regeneron hasn't yet evaluated the drug's potential, but sees many potential applications for it, both as a standalone therapy and as a combination therapy, suggesting it could be a blockbuster drug. The company sees opportunities for Libtayo to treat melanoma, prostate cancer, ovarian cancer, and solid tumors.
I see Regeneron as the kind of company that can help create a lifelong investor. It's already profitable, has a huge and diverse pipeline, and a particular strength in lucrative immuno-oncology drugs that could be approved for multiple diseases, expanding its patent and customer reach.
Vertex has the stability to expand
Vertex, once known only as a biotech focused on cystic fibrosis (CF) therapies, has moved into cell and gene therapies, thanks in part to its partnership with Therapeutic CRISPR.
Vertex has six late-stage therapies in its 19-program pipeline. This includes exa-cel, which is being developed with CRISPR as a therapy for transfusion-dependent beta-thalassemia and sickle cell disease, both rare blood disorders caused by inherited genetics.
Vertex and CRISPR have initiated the ongoing biologics license application (BLA) process for exa-cel with the FDA, which could be completed this quarter, the company said. The drug has the potential to eliminate the need for transfusions for people with the disease, which affects 32,000 people in the United States and Europe.
Vertex is also developing VX-548 as a non-opioid alternative for the treatment of acute pain, is investigating Inaxaplin as a treatment for APOL1-mediated kidney disease, and has a next-generation CF therapy in triple Vanzacaftor.
The company's financials are still led by the lead therapy Trikafta, which raised US$1,000,000 in 2022, a US$1,81,300 increase year-over-year. The drug's continued growth helped fund the company's research and development, which in turn expanded its pipeline. Vertex reported full-year 2022 revenue of US$1,0 ...
Vertex has a stable portfolio of profitable CF therapies and a growing pipeline. If even a few of its trial therapies are approved, the company should continue to grow its revenue and share price, making it a good long-term choice and potentially helping to create lifelong investors.
Jim Halley holds positions in CRISPR Therapeutics. The Motley Fool holds positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool recommends Roche Ag. The Motley Fool has a disclosure policy.
