Use options to profit on a catalyst-rich biotech poised to resume a recovery
The Trade: Buy the REGN June $700/$850 Bull Call Spread. Target entry around $78-$79 debit. Max gain is ~$71–72; max loss is the premium paid. Risk/reward of roughly 1:1 if the stock reaches the short strike by expiration. Regeneron’s (REGN) Dupixent, the approval of the oncology drug linvoseltamab, the anticipated approval of another oncology drug, odronxtamab and, maybe, the ongoing COURAGE obesity study, give the Tarrytown, New York-based biotech a catalyst-rich pipeline to offset competitive risks in other areas. After a strong break above the 150-day moving average in a bullish-to-bearish reversal, the stock needed to consolidate. It has been doing so since late 2025 and may now be poised to resume its recovery. At roughly $765 as I write this, consolidating a about a 60% run the past seven months but well below the 2025 highs above $1100, REGN may have caught its breath. There are two catalysts between now and the June options expiration. The first is earnings, which are expected on April 29. The company’s annual shareholder meeting is scheduled for early June. This is a pipeline-optionality story hiding inside a cash-flow machine. Fiscal year 2026 expected free-cash-flow yield is more than 6%. Dupixent reached $17.8 billion in global sales in 2025 and is now approved for eight indications, with its recent entry into the COPD market opening a new multi-billion-dollar growth opportunity. Meanwhile, EYLEA HD has been converting over some of the U.S. legacy Eylea franchise volume, which is otherwise threatened by Roche’s (RHHBY) Vabysmo. At the moment, Eylea retains nearly 60% share in the category. Arguably, the most important story in pharma at the moment is obesity drugs. Here, Regeneron is lagging Eli Lilly and Novo Nordisk . It is merely mid-stage (possibly five years away), but the downsides of the competitors’ GLP-1s may not yet be well understood or broadly publicized. One known drawback is muscle loss. Regeneron’s offering is intended to combine weight loss while sparing muscle. Skeptics on the stock aren’t wrong — but they may be overly focused on one issue. Legacy Eylea erosion from biosimilars is real, and estimates for that franchise in fiscal year 2026 have been significantly reduced. If recent trends persist, it appears likely that Roche’s offering may surpass Eylea in market share in 2027, according to Bloomberg. But the bearish thesis appears to be priced in. At roughly 16–17x forward earnings, Regeneron is trading well below its mid-2024 highs of over $1,100, even though the underlying business has grown and the pipeline has materially de-risked. FY2026 revenue estimates of $15.7 billion, if achieved, will represent a 9.5% year-over-year increase — a victory given the Eylea headwinds. Assuming the company hits Street estimates, it is trading at just over 17x FY2026 adjusted EPS estimates, and less than 15x FY2027 consensus of $52.50 per share. The June $700/$850 bull call spread illustrated below lets you participate in the profit and loss of 100 shares worth of REGN with defined risk. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.