Regeneron’s Earnings Call: Growth Engines and Rising Costs

Regeneron Pharmaceuticals ((REGN)) has held its Q4 earnings call. Read on for the main highlights of the call.

Regeneron Earnings Call Strikes Confident Tone Despite Market Headwinds

Regeneron Pharmaceuticals’ latest earnings call projected a distinctly positive tone, underscored by strong commercial execution in its flagship products Dupixent, EYLEA HD and Libtayo, healthy profitability and cash generation, and an ambitious, well‑funded pipeline. While management acknowledged meaningful near‑term headwinds—from biosimilar competition and inventory timing to manufacturing risks and rising operating costs—the overall message was that Regeneron’s growth engines and late‑stage R&D portfolio more than offset these pressures.

Resilient Financial Performance and Cash Firepower

Regeneron delivered Q4 2025 total revenues of $3.9 billion, up 3% year over year, with diluted net income per share of $11.44 and net income of $1.2 billion. For full year 2025, free cash flow reached $4.1 billion, giving the company ample flexibility to invest and return capital. The balance sheet remains a key strategic asset, with $16.2 billion in cash and marketable securities net of debt, positioning Regeneron to fund its expanding pipeline, support manufacturing build‑out, and pursue share repurchases and dividends without straining financials.

Dupixent Continues to Power Growth

Dupixent once again stood out as Regeneron’s primary growth engine. Global net product sales reached $4.9 billion in Q4, up 32% year over year, and $17.8 billion for full‑year 2025. In the U.S., net sales surged 36% to $3.7 billion in Q4. More than 1.4 million patients have now been treated, and management emphasized that many of its roughly 80 approved indications remain underpenetrated. This combination of scale and room for further expansion keeps Dupixent at the center of Regeneron’s growth story, even as investors remain mindful of long‑term competitive and IP questions.

EYLEA HD Gains Momentum as Franchise Transforms

EYLEA HD is rapidly reshaping Regeneron’s anti‑VEGF portfolio. U.S. EYLEA HD net sales reached $506 million in Q4, up 66% year over year, contributing to $1.6 billion of net sales in 2025, a 36% annual increase. EYLEA HD now represents about half of the company’s anti‑VEGF franchise, with Q4 seeing 18% sequential growth and physician demand up 10% versus Q3. The robust uptake underscores physician enthusiasm for the higher‑dose formulation and suggests that, despite looming biosimilar competition for legacy EYLEA 2 mg, the overall franchise still has meaningful value.

Libtayo Builds Commercial Scale in Oncology

Libtayo continues to grow as a meaningful oncology asset. Global net sales were $425 million in Q4, up 13% year over year at constant currency, and $1.45 billion for 2025. U.S. sales reached $285 million, up 14% year over year. The recent launch in adjuvant cutaneous squamous cell carcinoma (CSCC) is off to a strong start and Libtayo’s inclusion as an NCCN category 1 preferred option in that setting should support further adoption. The product is gradually building scale across indications, adding diversification beyond Regeneron’s larger immunology and ophthalmology franchises.

High-Margin Collaboration and Royalty Streams

Regeneron’s collaboration with Sanofi and other partners is an important contributor to earnings quality. Sanofi collaboration revenues were approximately $1.6 billion in Q4, with Regeneron’s share of profits up 42% year over year, reflecting the strength of shared assets like Dupixent. Other revenue, which includes royalties, rose 33% to $239 million in Q4. Notably, Alaris net sales exceeded $1.5 billion in 2025, reaching the top royalty tier of 15%. These high‑margin royalty and collaboration streams provide a durable, capital‑efficient layer of profitability on top of the company’s own product sales.

Capital Returns Accelerate With Buybacks and Dividend

Regeneron is increasingly positioning itself as a shareholder‑friendly growth company. In 2025 it returned $3.8 billion to shareholders, including $3.4 billion of share repurchases, and still has $1.5 billion remaining under its buyback authorization. Importantly, the company has now initiated a regular cash dividend, with a quarterly payout of $0.94 per share (annualized at $3.76). Combined with robust free cash flow, this signals confidence in the sustainability of earnings and provides an additional draw for income‑oriented investors.

Deep Pipeline and Busy Near-Term Catalyst Calendar

Management emphasized a robust and rapidly advancing pipeline. The company expects at least four FDA approvals over the next 12 months, including three new molecular entities and the EYLEA HD prefilled syringe. Plans call for 18 additional Phase III studies with an aggregate target enrollment of around 35,000 patients, spanning oncology, ophthalmology, complement biology, hematology, and obesity. Multiple pivotal readouts are scheduled for 2026, giving Regeneron a dense catalyst calendar that could reshape its revenue mix over the medium term.

Standout Clinical Data Across Hematology, Gene Therapy and Rare Disease

The call highlighted several notable clinical programs. Lenazipic, a BCMA×CD3 bispecific, delivered high complete response rates and 100% MRD‑negativity in evaluable newly diagnosed and high‑risk smoldering multiple myeloma cohorts, underscoring its potential competitiveness in a crowded field. In neuromuscular disease, cendicia showed a placebo‑adjusted MG‑ADL improvement of 2.3 points at 24 weeks in generalized myasthenia gravis. In paroxysmal nocturnal hemoglobinuria, a combination regimen achieved 96% control in a pivotal cohort. Gene therapy for DV‑related hearing loss produced meaningful hearing gains in 11 of 12 children, and the FOP program demonstrated more than 99% reduction in abnormal bone formation at 56 weeks. Collectively, these data illustrate the breadth and potential impact of Regeneron’s R&D engine.

EYLEA 2 mg Faces Intensifying Biosimilar Pressure

While EYLEA HD is growing, the legacy EYLEA 2 mg product is under pressure. U.S. EYLEA 2 mg net sales fell 15% sequentially in Q4 to $577 million, and management is bracing for further erosion as multiple biosimilars are expected to enter the U.S. market in 2026. The company anticipates a double‑digit sequential decline in EYLEA demand in Q1 2026. Investors will be watching how quickly EYLEA HD and other ophthalmology assets can offset this decline and how pricing dynamics evolve as competition intensifies.

Inventory and Near-Term Demand Timing Create Q1 Drag

Near‑term results will also be affected by channel dynamics. Wholesaler inventory levels for both EYLEA HD and EYLEA were elevated by roughly $30 million at the end of Q4, which is expected to weigh on reported Q1 2026 net sales as that inventory is absorbed. Management still expects EYLEA HD demand to grow at a high single‑digit rate sequentially, but EYLEA demand is projected to decline double digits. These timing issues don’t change the underlying demand trends but could inject short‑term volatility into quarterly numbers.

Manufacturing and Regulatory Risk Around EYLEA HD Prefilled Syringe

A key convenience upgrade for the anti‑VEGF franchise—the EYLEA HD prefilled syringe—is progressing through FDA review, with a standard pre‑licensing inspection planned. However, Catalent, a backup manufacturer involved in the supply chain, is still working to resolve issues raised in prior FDA inspections. Management acknowledged the potential for timing risk around the prefilled syringe launch, which could temporarily blunt one lever for entrenching EYLEA HD’s market position, though no specific setback has been signaled yet.

Affordability Pressures and Policy Overhang in the U.S.

Regeneron is contending with broader U.S. drug pricing and patient affordability challenges, particularly in the branded anti‑VEGF category. Patient co‑pay burdens have dampened category growth, and the company is engaged in ongoing negotiations with government entities over drug cost policies. To mitigate access barriers, Regeneron has extended support programs, including commitments for matching donations up to $200 million. These efforts support patient access but add cost and underscore the policy uncertainty that remains an overhang for high‑priced biologics.

Rising Costs and Shifting Product Mix Pressure Margins

Guidance reflects the financial impact of a changing product mix and heavy investment in manufacturing capacity. For 2026, Regeneron expects gross margins on net product sales of 83%–84%, still strong but framed against rising operating expenses. R&D spend is projected at $5.9–$6.1 billion and SG&A at $2.5–$2.65 billion, both up versus the prior year. These increases reflect the cost of running large late‑stage programs and scaling commercial infrastructure across multiple therapeutic areas, suggesting near‑term margin pressure in service of long‑term growth.

Competitive and IP Uncertainty Lingers Around Key Franchises

Analysts probed the long‑run competitive and intellectual property runway for Dupixent and other core products, highlighting concerns about how long Regeneron can sustain its current growth profile amid intensifying competition. Management largely avoided detailed commentary on the long‑term IP horizon, leaving some uncertainty about the ultimate duration of Dupixent’s market exclusivity and the competitive landscape across major franchises. For investors, these unanswered questions temper an otherwise strong fundamental narrative.

Guidance Points to Continued Investment and Strong Collaboration Economics

Looking ahead to 2026, Regeneron guided to R&D expenses of $5.9–$6.1 billion and SG&A of $2.5–$2.65 billion, with gross margins on net product sales expected in the 83%–84% range. Capital expenditures are forecast between $1.1 and $1.3 billion, reflecting ongoing investment in manufacturing scale and infrastructure. The effective tax rate is projected at 13%–15%, slightly higher than 2025, which benefited from a roughly 1.2‑point tailwind from a favorable audit. Importantly, the company expects its Sanofi development balance—just under $600 million at year‑end and down about $300 million since Q3—to be fully reimbursed by mid‑2026. Once that happens, collaboration revenue will more cleanly reflect Regeneron’s full share of Dupixent and Kevzara profits, potentially boosting reported profitability. With $4.1 billion of free cash flow generated in 2025, $16.2 billion in net cash, and $3.8 billion returned to shareholders last year, management clearly sees room to fund both aggressive pipeline investment and ongoing capital returns.

Regeneron’s earnings call painted the picture of a company in investment mode but with substantial cushions—commercial, financial, and scientific. Dupixent and EYLEA HD are driving top‑line growth, Libtayo and royalties add diversified income streams, and the pipeline is stacked with potential future blockbusters. Against that, investors must weigh biosimilar erosion of EYLEA 2 mg, policy and affordability pressures, and unresolved questions about long‑term IP. For now, though, the balance tilts in Regeneron’s favor, with strong cash generation and a rich catalyst path supporting a constructive outlook for shareholders focused on medium‑ to long‑term value creation.