Regeneron Has $16 Billion in Net Cash and Trades Near 20 Times Earnings. Is It the Cheapest Big Biotech?

Commercial-stage biotech companies make great investments for those of us looking for both safety and growth. Their portfolios of commercialized products offer a certain degree of revenue stability since patients always need their medicines, regardless of the economic situation. And biotech companies' focus on innovation provides us with the potential for significant growth.

Regeneron Pharmaceuticals (REGN +0.45%) is one of these players, and shareholders have reaped the rewards over the past year: The stock climbed more than 40%. The company has 16 approved or authorized products in the U.S. and other countries, and these include treatments in immunology, ophthalmology, and oncology.

Regeneron's earnings have climbed thanks to this portfolio, and the company also has a solid pipeline to support future earnings growth. Today, with $16 billion in cash and trading around 20x earnings, is Regeneron the cheapest big biotech? Let's find out.

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Regeneron's earnings gains

Regeneron has been around for nearly 40 years, and since that time has innovated across many treatment areas. Its products have helped revenue and net income advance over time; earnings reached a peak a few years ago as sales of Regeneron's coronavirus antibody cocktail soared and as other leading products generated growth.

REGN Revenue (Annual) data by YCharts

In more recent times, Regeneron's top-selling eye drug Eylea has seen sales decrease due to competition -- but there's a silver lining in this dark cloud. The company's Eylea HD, an updated, higher-dose formula, is taking some of that market share and represents a fresh growth driver. Meanwhile, immunology drug Dupixent -- sold in partnership with Sanofi -- and cancer drug Libtayo are also driving gains.

And in the most recent quarter, Regeneron's earnings figures and news suggest a shift into a new wave of growth. The big biotech reported record sales for Libtayo and Eyelea HD, increasing 51% to $550 million and 62% to $699 million, respectively. Sanofi records Dupixent sales, and Regeneron is now bringing in its full share of collaboration profits since it paid off its development balance. Dupixent also delivered record revenue in the quarter.

Speaking of Sanofi, Regeneron and the French pharma company expanded their alliance, with the addition of several Regeneron antibodies to the deal. Regeneron gained an upfront payment of $1 billion and may win as much as $7 billion on the achievement of milestones. Regeneron also shares in the profits from any future products resulting from the collaboration. This should support growth in the coming quarters and further down the road.

50 candidates in the pipeline

Meanwhile, the company's pipeline, with about 50 candidates, represents another source of revenue moving forward. The company has ongoing phase 3 programs in multiple myeloma, lymphoma, anticoagulation, and obesity. Regeneron recently won approval for Pasatru, a treatment for fibrodysplasia ossificans progressiva, a rare connective tissue disorder. If even a handful of Regeneron's current candidates make it to the finish line, the company could deliver earnings growth well into the future.

Now, let's consider whether Regeneron is the cheapest big biotech. Here's a look at valuation compared to others.

REGN PE Ratio data by YCharts

Regeneron, trading at about 21x trailing 12-month earnings, is the cheapest by that measure among biotech giants. I also like the fact that Regeneron's revenue is climbing right now thanks to strong products; in the third quarter, total revenue rose 36% to more than $5 billion. And the company has a full pipeline that should keep earnings marching higher in the years to come. On top of this, with cash and marketable securities of more than $16 billion at the end of the recent quarter, Regeneron has the resources to support pipeline development.

Regeneron has also offered us a sign that it's confident in its business and the future. In the recent quarterly report, the company said it has made $2.3 billion in share repurchases so far this year and maintains a full-year target of $3 billion.

All of this makes this cheap big biotech an excellent buy right now.