Stocks were trending south for most of the year. And after a strong performance at the start of the pandemic, the biotech industry is lagging behind the struggling global stock market.
But some biotechnologies are doing well. The list includes Regeneron Pharmaceuticals (REGN 0.68%) and biogenic (IBIB -0.98%). These two drugmakers are comfortably in the green year so far and could continue this momentum into 2023. But will they repeat this performance next year?
REGN data by YCharts.
1. Regeneration
Regeneron had an unimpressive year in the stock market until its shares soared double-digit percentages in a single day in September. As is often the case with biotechs, Regeneron owes this evolution to positive clinical developments.
Eylea, which he developed with Bayer to treat a rare eye condition, proven effective in a phase 3 clinical trial, justifying a higher dosage of the drug. Why is this important?
Along with Dupixent atopic dermatitis treatment, Eylea is one of Regeneron’s most important products. The drug’s composition of matter patent is due to expire in the United States next year. If Eylea gains approval at a higher dosage, it could help extend its patent exclusivity, which is obviously good news for Regeneron and its shareholders. But there are other reasons why the drugmaker is looking good ahead of next year.
Revenues have fallen in recent quarters as health regulators in the United States restricted the use of its coronavirus treatment REGEN-COV. The company has faced tough year-over-year comparisons in this area, but that won’t be the case in 2023, so revenue growth is expected to pick up significantly. Its revenue fell 15% year-over-year in the third quarter to $2.94 billion.
Excluding REGEN-COV sales, revenue was up a respectable 11% year-over-year. With Eylea and Dupixent still performing well, the company will be able to deliver strong financial results. And he has plenty of other pipeline candidates. It is currently conducting around 40 clinical trials, a quarter of which are phase 3 studies.
Regeneron may expand its line with new products and label extensions to existing ones. The biotech plans to submit an application for higher-dose Eylea by the end of the year. With this decision and other potential regulatory decisions next year, not to mention stronger increases in revenue, biotech should once again deliver strong returns in 2023. Even if not, Regeneron has the tools a drugmaker needs for long-term success.
That’s why investors should stick with this market-beating biotech stock.
2. Biogenic
Biogen’s year on the stock exchange resembles Regeneron’s: unimpressive at first until some major news on the clinical front sent biotech stocks shaking. Biogen and its partner Isai announced the first positive results of an ongoing phase 3 clinical trial of lecanemab, a potential treatment for Alzheimer’s disease (AD). Positive clinical news related to Alzheimer’s disease does not arrive every day.
Biogen itself has had serious difficulties in this area. The biotech-approved AD treatment, Aduhelm, has been a serious disappointment in the market, in part because doctors aren’t convinced it actually works. Lecanemab represents one more chance to make serious waves in this therapeutic area, which includes approximately 6.5 million patients in the United States alone.
Biogen really needs this project to go smoothly because it’s not getting much help from the rest of its line. Some of the company’s best-selling products are seeing their sales decline due to patent cliffs or fierce market competition.
What are the next steps for lecanemab? Biogen and Esai have already applied for expedited approval and are expected to receive a response from the Food and Drug Administration by Jan. 6.
Drugs that get the green light through the fast-track approval pathway must go through a confirmatory study. The ongoing late-stage trial of Lecanemab would serve this purpose. Both partners plan to go after regular approval by submitting the appropriate paperwork to regulators in the United States by March 31. Biogen and Esai will also seek to apply for marketing authorization in Europe and Japan on the same date.
Developments related to lecanemab will likely be the main driver of Biogen’s performance next year. Good news on the regulatory front – in the form of accelerated approval in the United States and proper submissions in various countries for regulatory approval without delays or setbacks – should do wonders for the stock. But a major obstacle to this program could sink Biogen’s shares.
In my opinion, investors should not rush to buy stocks just yet. The outlook for Biogen will be very promising if lecanemab gains steady approval. But until then, a lot can go wrong for the company.
