Regeneron Pharmaceuticals: Earnings Momentum and Long-Term Growth in a Turbulent Biotech Landscape

Regeneron Pharmaceuticals (NASDAQ: REGN) has long been a bellwether for innovation in the biotech sector, but its recent performance underscores both the opportunities and risks inherent in its business model. In Q3 2025, the company reported revenue of $3.75 billion, a 1% year-over-year increase, with non-GAAP earnings per share (EPS) of $11.83-well above the $9.64 forecast-reflecting robust demand for its flagship products, Dupixent and Libtayo. While these results suggest short-term resilience, investors must scrutinize whether Regeneron's earnings momentum and product pipeline can offset mounting challenges, including pricing pressures, regulatory hurdles, and intensifying competition.

Earnings Momentum: A Tale of Two Franchises

Regeneron's Q3 performance was driven by its immunology and oncology divisions. Dupixent, the company's top-selling drug, saw global net sales surge 27% to $4.86 billion, fueled by new FDA approvals for bullous pemphigoid and chronic spontaneous urticaria. Meanwhile, Libtayo's global sales rose 26% to $365 million, bolstered by its first-in-class approval for adjuvant cutaneous squamous cell carcinoma (CSCC) and positive Phase 3 data in rare diseases. These successes highlight Regeneron's ability to innovate and expand indications, a critical strength in a sector where blockbuster drugs often face declining growth over time.

However, the EYLEA franchise-once a cash cow-remains a liability. Total EYLEA and EYLEA HD U.S. net sales fell 28% to $1.11 billion in Q3 2025, despite a 10% increase in EYLEA HD sales to $431 million. Regulatory delays at the Catalent Indiana LLC manufacturing site have stymied the rollout of EYLEA HD, a high-dose formulation intended to compete with Roche's Vabysmo, which offers extended dosing intervals and has already captured market share. According to reports, the EYLEA decline is compounded by the looming threat of biosimilars, including AVT06, which is expected to enter the U.S. market by late 2026.

Pipeline Progress: A Shield Against Erosion?

Regeneron's long-term growth hinges on its ability to offset EYLEA's erosion with new product launches. The company's pipeline includes promising candidates in oncology and rare diseases. Libtayo's five-year follow-up data in non-small cell lung cancer and its expansion into generalized myasthenia gravis and fibrodysplasia ossificans progressiva (FOP) position it as a potential blockbuster in oncology. Additionally, Dupixent's foray into chronic obstructive pulmonary disease (COPD) and other inflammatory conditions could extend its dominance in immunology.

Yet, the pipeline's potential is not without risks. Regeneron's R&D spending is projected to rise by mid-teens percentages in 2026, reflecting its commitment to innovation. However, the biotech sector's high attrition rates and regulatory uncertainties mean that even promising candidates may fail to deliver. For instance, the company's bispecific antibodies and next-generation immunotherapies remain unproven in late-stage trials. Investors must also consider whether Regeneron's financial strength-operating margins of ~36% and $10 billion in cash reserves-is sufficient to fund both R&D and shareholder returns, particularly as pricing pressures intensify.

Competitive Threats: A Crowded Arena

Regeneron's dominance in immunology and oncology is increasingly contested. In ophthalmology, Roche's Vabysmo and Alvotech's AVT06 biosimilar are eroding EYLEA's market share, while in oncology, competitors like Merck and Bristol-Myers Squibb are advancing their own immunotherapies. Even in Dupixent's core markets, biosimilars and novel therapies from Sanofi (its co-developer) could fragment growth.

The company's strategic response-diversifying its portfolio and leveraging partnerships-has been effective to date. Dupixent's collaboration with Sanofi, for example, has generated $4.86 billion in global net sales in Q3 2025. However, reliance on partnerships introduces execution risks, as seen in the EYLEA HD manufacturing delays. Regeneron must also navigate pricing pressures in the U.S., where Medicare's new drug price negotiations and private insurers' cost-containment strategies could compress margins.

Investment Implications: Optimism vs. Caution

Regeneron's Q3 results and pipeline advancements justify optimism, but the company's long-term prospects depend on mitigating its vulnerabilities. The EYLEA franchise's decline and biosimilar threats represent a significant drag on revenue, while regulatory and competitive risks in oncology and immunology could delay or derail growth.

For investors, the key question is whether Regeneron's financial strength and innovation pipeline can offset these headwinds. The company's strong balance sheet and history of successful product launches suggest it is well-positioned to adapt. However, the biotech sector's volatility and the high stakes of drug development mean that patience is warranted. Immediate investment action may be justified for those comfortable with the risks, but a cautious approach-monitoring EYLEA's stabilization, Libtayo's commercial performance, and Dupixent's expansion into new indications-is advisable.