Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Is Regeneron (NASDAQ: REGN) making money?

Fate gave Regeneron (NASDAQ: REGN) an unexpected boost when doctors treated the president with one of its drugs.

To explain, the White House claims President Donald J. Trump (R-Florida) received an eight gram dose of Regeneron’s poyclonial antibody cocktail to treat coronavirus.* The REGN-COV2 cocktail mimics a powerful immune response that can rid the body of coronavirus, the MIT Technology Review reports.

The antibodies in the cocktail resemble the antibodies found in coronavirus survivors’ blood, the MIT Technology Review claims. Trump’s physicians hope Regeneron’s cocktail could reprogram the president’s immune system to destroy coronavirus.

Does Regeneron have a Coronavirus Treatment?

The president’s tragedy is boosting Regeneron’s share price. Mr. Market paid $564.80 for Regeneron (REGN) on2 October 2020 and $610.70 for REGN on 5 October 2020. Regeneron’s share price fell to $581.64 on 6 October 2020.

Trump went to the Walter Reed Military Medical Center for Coronavirus treatment on 2 October 2020. October 5 was the first day of stock trading after Trump’s hospitalization.

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) has had a great year. Mr. Market paid $373.35 for Regeneron on 2 January 2020 and $607 on 5 October 2020. Regeneron’s share price fell to $336.18 on 30 January 2020.

Interestingly, USA Today claims Trump listed a $50,001 to $100,000 capital gain from Regeneron stock on a 2017 financial disclosure form. Thus, Trump could have owned Regeneron stock in 2016.

Additionally, Regeneron won a $450 million federal contract to manufacture and distribute REGN-COV2 as part of Operation Warp Speed, USA Today claims. Operation Warp Speed is the US government’s effort to develop coronavirus treatments and vaccines.

However, the US Food & Drug Administration (FDA) has not approved REGN-COV2 for general use. THE FDA gave Trump’s physicians a special clearance to treat the President with the cocktail.

 Does Regeneron (REGN) make money?

Unlike some health stocks coronavirus boosts, Regeneron Pharmaceuticals (REGN) makes money.

For instance, Regeneron reported a $656.40 million quarterly income and a $1.677 billion quarterly gross profit on 30 June 2020. Additionally, Regeneron reported a quarterly common net income of $897 million on 30 June 2020.

Regeneron is making more money. For example, Regeneron’s quarterly gross profit grew from $1.611 billion on 31 March 2020. However, the quarterly gross profit fell from $2.627 billion on 31 December 2019.

In contrast, the quarterly operating income fell from $700.10 million on 31 March 2020 and $675.10 million on 31 December 2019. On the other hand, Regeneron’s quarterly operating income rose from $315.6 million on 30 June 2019.

How Much Cash Does Regeneron (REGN) generate

Regeneron also generates cash. For instance, Regeneron (REGN) reported a quarterly operating cash flow of $943.40 million on 30 June 2020.

Regeneron’s quarterly operating cash flow grew from $188 million on 30 June 2019, $787.40 million on 31 December 2019, and $698 million on 31 March 2020. However, Regeneron reported a negative quarterly ending cash flow of -$216 million on 30 June 2020.

Interestingly, the quarterly ending cash flow fell from $2.221 billion on 31 March 2020. The quarterly ending cash flow grew from $233 million on 31 December 2020 and -$663 million on 30 June 2019.

Regeneron Generates Cash

Plus, Regeneron reported a quarterly investing cash flow of $1.453 billion on 30 June 2020. The quarterly investing cash flow grew form -$443.2 million on 31 March 2020 and -$836 million on 30 June 2019.

Thus, Regeneron can generate enormous amounts of cash. In addition, Regeneron reported a -$2.613 billion quarterly financing cash flow on 30 June 2020. To elaborate, I think Regeneron could have paid $2.613 billion in debt on the quarter ending on 30 June 2020.

As a result, Regeneron had $3.144 billion in cash and short-term investments on 30 June 2020. That number fell from $4.003 billion on 31 March 2020 and $2.67 billion on 30 June 2019. Thus Regeneron generates enormous amounts of cash.

What Value Does Regeneron (REGN) have?

Regeneron (NYSE: REGN) had $14.429 billion in total assets on 30 June 2020. Thus, Regeneron has some value, however, I think Mr. Market overpriced Regeneron at $607 on 5 October 2020 and $581.64 on 6 October 2020.

I think Mr. Market overprices Regeneration because it pays no dividend. However, Regeneron has some interesting drugs in its pipeline. Trump’s treatment demonstrates there could be some demand for those drugs.

Potentially valuable drugs at Regeneron include REGN-COV2 which is in four late state clinical trials and two Phase 2/3 trials for treatment of hospitalized coronavirus treatments. In addition, National Health Service (NHS) is holding an open-label phase three recovery trial of REGN-COV2 on coronavirus patients in the UK.

Demand for REGN-COV2 grows

If it works, demand for REGN-COV2 could be huge because coronavirus infections are common. For example, Worldometer estimates there had been 35.631 million coronavirus infections and 1.045 million coronavirus deaths worldwide as of 5 October 2020.

Moreover, Coronavirus is out of control in some countries, including the United States. In fact, Worldometer estimates US authorities detected 30,905 new coronavirus cases on 5 October 2020. In addition, Worldometer estimates coronavirus had infected 7.668 million Americans and killed 214,884 Americans before 5 October 2020.

Thus there could be tens of thousands new customers for REGN-COV2 soon. Moreover, governments and insurance companies will pay for most of those people’s treatments.

Regeneron is more than Coronavirus

Beyond Coronavirus, doctors could use REGN-COV2 or a similar cocktail to treat other new infections. Regeneron could develop antibody cocktails to treat people with new strains of influenza, and tropical diseases such as Ebola and Zika Fever, for example.

In addition, Regeneron manufactures several drugs including ARCALYST® (rilonacept)Atopic Dermatitis: DUPIXENT, and PRALUENT® (alirocumab). Moreover, it appears Regeneron is making money from those drugs.

Despite that, I recommend investors avoid Regeneron because Mr. Market overprices it. I advise investors to watch Regeneron (REGN) and buy the stock then if it drops below $100.