Regeneron ($REGN) burst on the national scene when Donald Trump was treated with it’s experimental monoclonal antibody cocktail. But what are monoclonal antibodies anyway? What kind of company is Regeneron? And, most importantly, is $REGN a good investment?
Analyst John Coughlin investigates….
The President and Covid-19
On October 2nd, roughly two weeks ago, the President of the United States, Donald Trump, tested positive for Covid-19. The news sent the stock market tumbling over 3% and left many unanswered questions for the future of the United States’ politics. The following day, President Trump was flown to the Walter Reed Medical Center for precautionary measures, where he was under his doctors’ surveillance. Seemingly, in two days, President Trump tweeted, “I will be leaving the great Walter Reed Medical Center,” and I feel better than I did 20 years ago!” On October 12th, CNN reported the “White House physician Sean Conley said Monday President Donald Trump has tested negative for Covid-19 on consecutive days.” So how can the President of the United States, nine days after being flown to a hospital for Covid-19, test negative and “feel better than he did twenty years ago.” The answer to this question may lie in the Covid-19 antibody treatments President Trump was given, including Regneron’s monoclonal antibody therapy.
Treatments, including REGN-COV2
During his stay at the Walter Reed Medical Center, CNN reported that President Trump was given “several different treatments — including investigational drugs — in the hope of relieving his Covid-19 symptoms and possibly shorten his course of illness.” Along with treatments like supplemental oxygen, Dexamethasone, and Remdesivir, President Trump was also given an “investigational cocktail, known by its investigational name REGN-COV2, manufactured by the well-known biotechnology company, Regeneron (CNN).
Overview of Regeneron and REGN-COV2
Founded in 1988, Regeneron is “a leading biotechnology company that invents life-transforming medicines for people with serious diseases.” The company is best known for its antibody treatments, which has allowed them to grow into one of the largest biotech companies in just thirty years. One of their technologies, VelociGene®, “enables rapid, automated, and high-scale manipulation of mouse DNA, with almost no limitations on the size and sophistication of modifications.” This technology and similar technology enables Regeneron with “speed and capacity” to test their antibody cocktails.
For those unfamiliar with Regneron’s antibody cocktail, REGN-COV2 is targeted to “both to treat people with COVID-19 and to prevent SARS-CoV-2 infection.” According to Regeneron, the antibody cocktail is made up of two separate antibodies, REGN10933 and REGN10987, “that form REGN-COV2 antibody therapy into cell production lines for large-scale manufacturing purposes and begun clinical trials” In recent weeks, REGN-COV2 has seen promising results from trials that test the cocktail’s effectiveness. In a report published on September 29th, 2020, Regeneron reported that the “…antibody cocktail reduced viral levels and improved symptoms in non-hospitalized Covid-19 patients.” Within the trial, patients who “were less likely to clear the virus on their own, and were at greater risk for prolonged symptoms,” also called seronegative, saw the greatest improvement from REGN-COV2. In the conclusion of their data, Regeneron reported that there were only four infusion reactions, three serious “adverse events,” and no deaths. This data, both from a treatment and safety perspective, solidify the success of REGN-COV2.
Highlighted in their quarter-two 2020 Financial Results, Regeneron highlighted the success REGN-COV2 has achieved. Among these achievements stands “a $450 million contract to manufacture and supply filled and finished REGN-COV2 to the U.S. Government. This contract shows potential confidence in the antibody cocktail, as seen in this contract, and its use on the President of the United States.
How REGN-COV2 is Administered
According to PrecissionVaccinations.com, Regeneron’s REGN-COV2 is administered through injections and “must be re-administered to remain effective over time.” Although injections may be the most effective way of treating a patient, since the cocktails enter the bloodstream immediately, the scalability of this method may be difficult. In the hospital setting, REGN-COV2 can easily be administered, as seen with President Trump and his stay at the Walter Reed Medical Center. Although, to the regular citizen of the United States, it would be impractical. Along with the step of injection, REGN-COV2 “must be re-administered to remain effective over time.”
What is an antibody, and how does REGN-COV2 Work?
According to ScienceAlert.com, “An antibody is a class of protein called an immunoglobulin, which is made by specialized white blood cells to identify and neutralize material foreign to an immune system. In this case, the “material foreign to an immune system” is the COVID-19 virus. The shape of an antibody, according to ScienceAlert, is a Y, “which allows the immune system to tailor its response to a countless range of threats.” Although antibodies are effective against foreign bodies, such as COVID-19, there is a limit to their capability, along with their presence. In the case of REGN-COV2, Regeneron is basically taking a modified antibody and injecting it into the patient who has the virus. This “modified antibody,” also known as a monoclonal antibody, can “serve as substitute antibodies that can restore, enhance, or mimic the immune system’s attack on cancer cells” (MayoClinic). Monoclonal antibodies are widely popular in the cancer treatment field.
Highlighted by PrecissionVaccinations.com, the two antibodies within REGN-COV2, REGN10933, and REGN10987, “…bind non-competitively to the critical receptor binding domain of the virus’s spike protein.” This method “diminishes the ability of mutant viruses to escape treatment and protects against spike variants.”
The Future of Regeneron and its REGN-COV2
Equipped with their technology like VelociGene®, Regeneron is well on their way to create more successful cocktails like REGN-COV2. After thirty years, the company has evolved into a multi-billion dollar company and continues to grow.
Although REGN-COV2 is still in trials, due to its effectiveness, overall safety, and being used on the President of the United States, the treatment has gained legitimacy. If the cocktail can supposedly make Trump feel “feel better than he did twenty years ago,” then REGN-COV2 may be an answer to treating COVID-19. Although, the main problem that REGN-COV2 faces is its practicality and distribution to the overall public. Individuals like the President will be able to access the cocktail, but under extreme demand, REGN-COV2 may be an alternative to just extreme cases. If the cocktail can be administered to the masses, REGN-COV2 can become a practical way of treating COVID-19.
Currently, Regeneron sits at a price per share of $600. YTD, the stock is up 60% and continues to make all-time highs. The company has been solidly profitable for years, and carries little debt. $REGN has no less than 8 products in phase three trials for a wide variety of stubborn disease states. By many measures, the company is a future Big Pharma powerhouse just coming into it’s prime.
For a short-term investor, Regeneron may lack the exciting volatility that a mid-cap biotech would provide. However, for a long-term investor, Regeneron is a strong buy and a long hold.
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