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How Close is This Company to Solving Cancer?

health care Dec 21, 2022


Price Target: $855 (18% upside)

Current Price: $725

Target Date: Q4 2023

Stock: Regeneron ($REGN)

While the COVID-19 pandemic has taken a huge toll on our economy and healthcare infrastructure -- it has also catalyzed a lot of innovation in biotech and healthcare. 

Huge amounts of emergency funding and scientific attention advanced our understanding of antibody and mRNA treatments by what feels like decades. 

These advancements are absolutely not worth the price we paid on the civilization level, but they are a small silver lining to the thunderhead we were hit by over the last 2-and-a-half years. 

One company that's starting to show that progress is Regeneron ($REGN), a classic pharma play that has been riding high on cancer treatments for a while now.

When the pandemic hit, they were one of the first companies to master monoclonal antibodies for the treatment of COVID. And if you don't understand any of that--don't worry--nobody does. Just know it was a critical technology that helped doctors treat COVID before other antivirals hit the market. 

With COVID mutating faster than antibody producers can make new variant treatments, Regeneron has lost out on a lot of revenue from the past few years -- leading to a pretty rocky year for the stock. 

However, their team has utilized what they've learned from producing antibody treatments to shore up their key portfolio component: cancer treatments. 

And earlier this month we finally got some encouraging Phase II trial data that should set Regeneron up for 2023 when they start kicking cancer's ass even harder.  

Let's do one more pharma deep dive to close the year out👇 

Regeneron Overview: 

You probably know Regeneron best from their essential antibody treatment for COVID back in the day. Before that, they were one of the biggest standouts in oncology. 

Their blockbuster drug, Eylea, is an old-school treatment for colorectal cancer. It uses brilliant chemistry to block fast-growing tumors' ability to spread so oncologists have a fighting chance to treat/ remove the cancer before it totally destroys a person's colon and becomes malignant. 

While Eylea still has some patent life left in it, there have been some troubling developments for biosimilars to come in and block tumor growth in a similar way. 

So, what's really exciting about Regeneron is how they've used all the knowledge they gained producing antibodies for COVID to develop antibody treatments for other complex cancers.


Odronextamab and Linvoseltamab Look Promising:

Okay, alphabet soup aside -- Regeneron's two new entries into its cancer-fighting team both look awesome.

Odronextamab and Linvoseltamab are both antibody treatments for different types of cancer. And yes, those are real words.

Odronextamb treats Non-Hodgkin's Lymphoma while Linvoseltamab goes after a kind of blood/bone cancer called multiple myeloma. 

Antibody treatments for both essentially help your body fight its own cancer better. These are similar in action to Merck's Keytruda drug that we've talked about a lot before. 

And rather than bore you with the details, let's just say that both drugs had nearly a 50% positive response rate. These drugs don't fully cure cancer, but they help give the body a fighting chance. 

Linvoseltamab in particular had really quick efficacy in reducing myeloma in patients -- some of them seeing a form of response in less than a month. For complex, massive cancers like Myelomas, this is honestly wild. 

Phase II trial data is limited and comes from very small sample sizes, but with Phase III trials underway for both of these drugs, we're confident enough to initiate a position now. 

Both drugs are set to hit regulatory review in the second half of 2023, and any more positive data coming out of Regeneron will send the stock soaring.


Regeneron Outlook:

We like Regeneron because it's a classic company that's embraced the flux in pharma.

Rather than double down on trying to chase COVID variants into an ever-more virulent corner, they've managed to use the knowledge they've gained in antibodies to shore up their most important portfolio segment.

Antibody treatments and mRNA are going to absolutely revolutionize healthcare for complex disorders like cancer across the next 20 years. And it's really awesome to already see results from these technologies being utilized in different areas.

The rest of Regeneron's pipeline looks really solid and we're really excited to see where they take things from here.  

Rating: Overweight

Risk/Reward: Medium/Medium

P/E Ratio: 15x

Market Cap: $79B

Dividend Yield: 0%