FDA Approval And Nippon Shinyaku Partnership Will Advance Pipeline

Key Takeaways

• Strategic partnerships and FDA approvals drive potential revenue growth through new market penetrations and milestone payments.
  
• Advancements in pivotal trials and robust financing options position the company for long-term revenue and market share expansion.
  
• Regulatory challenges, reliance on partnerships, financial risks, high R&D expenses, and competition in gene therapy may impact REGENXBIO's revenues and earnings.

Catalysts

A clinical-stage biotechnology company, provides gene therapies that deliver functional genes to cells with genetic defects in the United States.

• The anticipated FDA approval and commercial launch of RGX-121 for Hunter syndrome in late 2025, alongside strategic partnership with Nippon Shinyaku, could drive significant revenue growth from milestone payments and potential market penetration.
  
• Progression of the diabetic retinopathy program into a pivotal stage and planning with AbbVie for regulatory filings positions REGENXBIO to leverage large commercial opportunities, potentially enhancing future revenues and market share.
  
• Advancing RGX-202 for Duchenne muscular dystrophy into pivotal study, coupled with robust manufacturing capabilities, could lead to substantial revenue generation upon expected BLA filing by mid-2026 and subsequent commercialization.
  
• ABBV-RGX-314 for wet AMD and diabetic retinopathy, in collaboration with AbbVie, represents large global market potential with upcoming pivotal trial completions and potential additional milestone payments, enhancing long-term revenue streams.
  
• Strategic nondilutive financing options, including expected milestone payments, royalty streams, and potential priority review voucher monetization, could significantly extend cash runway beyond 2026, aiding in sustainable profitability and earnings growth.

REGENXBIO Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming REGENXBIO's revenue will grow by 51.7% annually over the next 3 years.
• Analysts are not forecasting that REGENXBIO will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate REGENXBIO's profit margin will increase from -272.5% to the average US Biotechs industry of 15.9% in 3 years.
• If REGENXBIO's profit margin were to converge on the industry average, you could expect earnings to reach $46.2 million (and earnings per share of $0.89) by about May 2028, up from $-227.1 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 44.7x on those 2028 earnings, up from -2.1x today. This future PE is greater than the current PE for the US Biotechs industry at 20.4x.
• Analysts expect the number of shares outstanding to grow by 1.69% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.94%, as per the Simply Wall St company report.

REGENXBIO Future Earnings Per Share Growth

Risks

• There are significant regulatory risks and uncertainties related to the forward-looking statements about product approvals, which could impact revenue forecasts if unexpected regulatory challenges or delays occur.
  
• The dependence on partnerships, like that with Nippon Shinyaku and AbbVie, introduces reliance on third parties for commercialization activities, which may affect revenues and profit margins if collaborations don't meet expectations.
  
• The cash burn and need for additional nondilutive financing may pose financial risks; if anticipated milestones or options are delayed or not achieved, it could lead to challenges in extending the cash runway, impacting net margins.
  
• High R&D expenses and the reliance on successful commercialization of pipeline therapies suggest operational risks; if pipeline therapies like RGX-202 or ABBV-RGX-314 fail to achieve anticipated clinical milestones or market demand, it may negatively affect earnings.
  
• The competitive landscape, particularly within the gene therapy and rare disease markets, poses risks; increased competition could impact market share and future revenues if competitors' products achieve faster approvals or greater adoption.

Valuation

• The analysts have a consensus price target of $32.5 for REGENXBIO based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $52.0, and the most bearish reporting a price target of just $12.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $291.1 million, earnings will come to $46.2 million, and it would be trading on a PE ratio of 44.7x, assuming you use a discount rate of 6.9%.
• Given the current share price of $9.41, the analyst price target of $32.5 is 71.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.