Is Regeneron (REGN) a Blue Chip Bargain or a Risky Bet?

Regeneron Pharmaceuticals (NASDAQ: REGN), a leader in biotechnology and pharmaceuticals, has faced mixed performance in early 2025 amid headwinds in its flagship product, EYLEA, and regulatory uncertainties. But does this make it the "worst blue chip" to buy—or a hidden gem? Let’s dissect the data.

Financial Performance: A Mixed Bag

Regeneron’s Q1 2025 results showed total revenues of $3.0 billion, a 4% year-over-year decline, driven by a sharp drop in U.S. sales of its top-selling product, EYLEA. The drug’s U.S. sales fell 39% to $736 million, pressured by biosimilar competition and patient transitions to its newer formulation, EYLEA HD. Meanwhile, EYLEA HD sales rose 54% to $307 million, but combined U.S. sales for both formulations still declined 26%.

The bright spot? Dupixent, Regeneron’s blockbuster drug for eczema, asthma, and other conditions, saw global sales jump 19% to $3.67 billion. This growth, paired with a 30% increase in Sanofi collaboration revenue, highlights Dupixent’s dominance.

However, non-GAAP diluted EPS fell 14% to $8.22, due to higher R&D spending ($1.3 billion, up 6%) and inventory-related costs. The company also faces margin pressure: GAAP gross margins dropped to 81%, down from 86% a year ago, largely due to write-offs.

Key Risks and Challenges

1. EYLEA’s Decline: Competitors like compounded bevacizumab and biosimilars are eroding EYLEA’s market share. While the Biocon biosimilar won’t hit until late 2026, Regeneron’s U.S. sales of EYLEA have already cratered, and the FDA’s Complete Response Letter (CRL) for EYLEA HD’s pre-filled syringe could delay its expanded use.

2. Regulatory Hurdles: The CRL for EYLEA HD’s syringe (citing third-party component issues) adds uncertainty. Meanwhile, pending decisions for Dupixent’s use in bullous pemphigoid (FDA target: June 20, 2025) and EYLEA HD’s expanded label for retinal vein occlusion (FDA target: August 19, 2025) could swing sales momentum.

3. Litigation: Ongoing DOJ litigation remains unresolved, though Regeneron has not quantified its impact. The company’s settlement with Biocon delayed biosimilar competition, but broader legal risks linger.

Strategic Moves to Watch

• Manufacturing Investments: A $7 billion infrastructure plan in New York and North Carolina aims to secure long-term supply chain resilience.
• Dividend and Buybacks: Regeneron initiated its first dividend ($0.88/share) and repurchased $1.05 billion of stock in Q1, signaling confidence in its balance sheet.
• Pipeline Strength: With 45 clinical-stage programs, including promising data for gene therapy (e.g., DB-OTO for hearing loss), Regeneron’s R&D engine is robust.

Comparison to Peers

While Regeneron’s revenue decline mirrors broader sector struggles (e.g., Pfizer’s (PFE) reliance on inflation-driven drug pricing, Amgen’s (AMGN) biosimilar pressures), its Dupixent-driven growth offers a unique advantage. Unlike peers focused on single-product dominance, Regeneron’s pipeline spans dermatology, oncology, and rare diseases, reducing reliance on any single therapy.

Conclusion: A Calculated Gamble

Regeneron is not the "worst" blue chip stock, but it’s far from a sure bet. Its near-term risks—EYLEA’s decline, regulatory hurdles, and litigation—are significant. However, its long-term strengths—Dupixent’s global potential, R&D firepower, and strategic capital allocation—position it to rebound if key milestones are met.

Buy Signal:
- For long-term investors: The stock’s proximity to its 52-week low ($629.02 vs. current ~$634) and dividend initiation suggest value. If Dupixent gains new approvals and EYLEA HD’s regulatory issues resolve, REGN could outperform.

Hold/Sell Signal:
- Near-term volatility: EYLEA’s sales slump and regulatory delays could keep pressure on the stock until 2026. Investors with shorter horizons may prefer safer peers like Merck (MRK) or Roche (RHHBY).

In short, Regeneron is a stock for those willing to bet on R&D success over near-term headwinds. The jury remains out, but the data leans toward cautious optimism—if you can stomach the risks.