Over the past year, the stock prices of Vertex Pharmaceuticals (VRTX 1.99%) and Regeneron Pharmaceuticals (REGN 1.72%) have each increased by around 20%. Over the past three years, the sales and profits per share (EPS) of the biotech businesses have grown, and they have blooming pipelines that should continue to fuel development.
Despite their profitability and promise, they continue to trade, in my opinion, below their long-term worth, with Vertex trading for slightly more than 23 times earnings than Regeneron trades for just over 16 times earnings.
The pipeline at Regeneron is expanding
When you don’t include the company’s COVID-19 treatments, REGEN-COV, and Ronapreve, sales for the year were down 24% to $12.17 billion, while revenues were up 17%.
The company’s anti-inflammation medicine Dupixent is the primary driver of its expansion into non-COVID therapy (dupilumab). Asthma and long-term sinus inflammation in adults, eosinophilic esophagitis (an inflammatory disorder of the esophagus), and prurigo nodularis, a skin ailment marked by itching bumps, are among the conditions that Dupixent has been licensed to treat. Atopic dermatitis, chronic spontaneous urticaria (a kind of persistent hives), and chronic obstructive pulmonary disease are also being studied with the medication in phase 3 studies (COPD).
Global sales for Dupixent in 2022 (as reported by Sanofi) increased 40% to $8.68 billion. Revenue from the Sanofi partnership with Regeneron for Dupixent was $2.85 billion annually, an increase of 50% from 2021.
Eylea (aflibercept), an eye medication, generated $6.26 billion in revenue for Regeneron in 2022, an 8% increase over 2021. In order to compete with Roche Ag’s Vabysmo, the business is evaluating a stronger, longer-acting dosage of Eylea that might be on sale as early as this summer.
A significant pipeline of 40 candidates, including 10 in phase 3 studies, is available from Regeneron.
The immuno-oncology medicine Libtayo may be the most effective medication in Regeneron’s pipeline. In November 2022, the medication received FDA approval for use as a first-line treatment for patients with advanced non-small cell lung cancer in conjunction with chemotherapy. Japan granted Libtayo approval in December 2022 to treat advanced or recurring cervical cancer.
Regeneron hasn’t yet assigned a monetary value to the drug’s potential, but it envisions a wide range of stand-alone and combination treatment uses for the therapy, suggesting that it might be a blockbuster medication. The business believes that Libtayo may be used to treat diseases such as melanoma, prostate cancer, ovarian cancer, and solid tumors.
It is currently profitable, has a sizable, diverse pipeline, and specializes in making money-making immuno-oncology treatments that can be authorized for a variety of diseases, increasing both their patent and client base.
Vertex is stable enough to grow
Vertex, hitherto exclusively recognized as a biotech company that specialized in cystic fibrosis (CF) treatments, has expanded into the field of cell and genetic therapies, in part because of its collaboration with CRISPR Therapeutics.
Included in this is exa-cel, a CRISPR-based medicine being developed to treat the uncommon blood illnesses transfusion-dependent beta thalassemia and sickle cell disease.
According to the business, Vertex and CRISPR have started the rolling biologics license application (BLA) process with the FDA for exa-cel, and it may be finished as soon as this quarter. The medication may prevent the disorders, which afflict 32,000 individuals in the U.S. and Europe, from requiring transfusions in patients.
Additionally, Vertex is working on VX-548, a non-opioid option to treat acute pain, is considering Inaxaplin as a treatment for APOL1-mediated kidney illness, and has Vanzacaftor triple, a next-generation CF medication.
Trikafta, a lead-based CF medication, continues to be the company’s main source of revenue, generating $8.9 billion in 2022—an increase of 18% year over year. The company’s ongoing research and development has been made possible by the drug’s sustained expansion, which has expanded its pipeline. Vertex announced fiscal year 2022 sales of $8.93 billion, up 18% from the prior year, and fiscal year 2022 net income of $3.3 billion, up 42% from the prior year.
Even if just a small portion of the cures it is studying are authorized, the firm should still see revenue and share price growth, making it a wise investment over the long term and maybe creating a nest egg for investors.