Back in the early 2000s, I remember a dinner with a hedge fund friend who swore Regeneron (REGN) would never be more than a one-trick pony with a laser pointer.
That same pony is now gearing up to run a very different race.
Regeneron is now dipping its toe into the trillion-calorie battlefield that is the weight loss drug market.
For a company that made its name shooting lasers at wet age-related macular degeneration and constructing antibodies like they were LEGO sets, this move into metabolic medicine might seem like a left turn.
But if you squint, it’s a rather elegant pivot.
Their new contender, trevogrumab, is still wading through Phase 2, but it might just do what Novo Nordisk’s (NVO) Ozempic and Eli Lilly’s (LLY) Mounjaro can’t: help you shed the weight without turning your biceps into jelly.
Here’s the pitch: trevogrumab blocks myostatin, the protein equivalent of a gym hater. Myostatin stops muscle from growing. Block it, and you potentially keep muscle mass even while losing fat.
Given the current crop of GLP-1-based blockbusters tends to cannibalize lean muscle right along with fat, trevogrumab could be the bodybuilder’s favorite way to get beach-ready without buying smaller dumbbells.
If that pans out in trials, Regeneron won’t just be joining the party. They might end up changing the music completely.
Financially, Regeneron has the ammo.
Revenue clocked in north of $14 billion in 2024, with EYLEA still their golden goose and a Sanofi-partnered (SNY) antibody line bringing in collaboration cash like clockwork.
R&D guzzles about half of OpEx, as it should in a science-forward firm, and adjusted free cash flow has averaged $3.8 billion over the past five years. I say that’s enough cushion to take a moonshot without losing sleep.
As for their balance sheet, they have $3 billion in cash against $2 billion in long-term debt. A fortress, if you ask me.
Of course, Wall Street loves a narrative more than a balance sheet, and Regeneron hasn’t yet convinced the crowd that trevogrumab is more than a science fair project.
At around $522 a share, REGN is trading at a modest multiple, reflecting its legacy pipeline and a healthy dose of wait-and-see. The market hasn’t priced in a potential blockbuster; it’s pricing in “not embarrassing.”
But let’s suppose trevogrumab doesn’t flop. Let’s say Phase 2 data sings, and we get a weight loss drug that maintains muscle tone and maybe, just maybe, lets users swap fat for lean.
The semaglutide market is already above $20 billion and galloping toward $36 billion by 2028. If Regeneron can carve out even a modest slice, you’re looking at serious revenue acceleration.
Double free cash flow and apply a conservative 10x multiple, and you’ve got a market cap pushing $115 billion. That’s more than double today’s.
Now, before you mortgage your beach house in Tahoe to back up the truck, remember that this is biotech. The graveyard of could-have-beens is littered with promising molecules that ran into a regulatory buzzsaw or fizzled in Phase 3.
As of now, trevogrumab is an idea backed by some early muscle-biology fairy dust and a lot of hope. And Regeneron isn’t betting the farm.
They’re distributing dividends now — a humble yield under 1% — and still chewing through shares with buybacks. This is an established company with consistent earnings growth, not a high-risk startup chasing unproven gains.
The current risk-reward says Hold if you’re conservative, Buy if you’re speculative, and Watch Like a Hawk if you’re me. There’s no rush.
Clinical results are expected later this year. Until then, REGN gives you a blue-chip biotech with a lottery ticket quietly nestled in its pipeline.
If trevogrumab works, this stock won’t just climb. It’ll sprint.
And if it doesn’t, you still own a company that prints money with retinal drugs and monoclonal antibodies.
In my book, that’s not a bad place to sit. Not yet time to shoot the moon, but you might want to start calculating the trajectory.
