Stock Update (NASDAQ:REGN): Regeneron Pharmaceuticals Inc Reports Fourth Quarter and Full Year 2015 Financial and Operating Results


Regeneron Pharmaceuticals Inc (NASDAQ:REGN) announced financial results for the fourth quarter and full year 2015 and provided an update on development programs.

“Regeneron had a successful 2015, with strong growth in EYLEA sales for retinal diseases, the approval of Praluent for hypercholesterolemia, and important advances across all stages of our pipeline,” said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron.  “In 2016, we look forward to driving increased physician education, patient access, and reimbursement for Praluent in the United States and to launching this important medicine in other countries around the world.  We also anticipate significant pipeline progress including the U.S. FDA action on the sarilumab application for rheumatoid arthritis, the Phase 3 results and potential U.S. regulatory submission for dupilumab in atopic dermatitis, and the continued progress of our development programs for retinal diseases, asthma, pain, infectious diseases, and cancer.  Realizing these important product and pipeline opportunities will require significant investments, which are essential to support our long-term growth and success.”

Business Highlights

EYLEA® (aflibercept) Injection for Intravitreal Injection

  • In the fourth quarter of 2015, net sales of EYLEA in the United States increased 44% to $746 million from $518 million in the fourth quarter of 2014.  For the full year of 2015, net sales of EYLEA in the United States increased 54% to $2.676 billion from $1.736 billion for the full year 2014.  Overall distributor inventory levels remained within the Company’s one- to two-week targeted range.
  • Bayer HealthCare commercializes EYLEA outside the United States.  In the fourth quarter of 2015, net sales of EYLEA outside of the United States(1) were $413 million, compared to $297 million in the fourth quarter of 2014.  In the fourth quarter of 2015, Regeneron recognized $140 million from its share of net profit from EYLEA sales outside the United States, compared to $88 million in the fourth quarter of 2014.  For the full year of 2015, net sales of EYLEA outside of the United States(1) were $1.413 billion, compared to $1.039 billion for the full year 2014.  For the full year of 2015, Regeneron recognized $467 million from its share of net profit from EYLEA sales outside the United States, compared to $301 million for the full year 2014.
  • In October 2015, the European Commission granted marketing authorization of EYLEA for the treatment of visual impairment due to myopic choroidal neovascularization.

Praluent® (alirocumab) Injection for the Treatment of High Low-Density Lipoprotein (LDL) Cholesterol

  • In the fourth quarter of 2015, net sales of Praluent were $7 million.  For the full year of 2015, net sales of Praluent were $11 million.  Product sales for Praluent are recorded by Sanofi, and the Company shares in any profits or losses from the commercialization of Praluent.  Praluent was launched in the United States in the third quarter of 2015 and in certain countries in the European Union in the fourth quarter of 2015.
  • The Phase 3 ODYSSEY OUTCOMES trial completed enrollment during the fourth quarter of 2015.

Pipeline Progress

Regeneron has thirteen product candidates in clinical development.  These consist of EYLEA and twelve fully human monoclonal antibodies generated using the Company’s VelocImmune® technology, including four in collaboration with Sanofi.  In addition to EYLEA and Praluent, highlights from the antibody pipeline include:

Sarilumab is the Company’s antibody targeting IL-6R for rheumatoid arthritis.  In December 2015, the U.S. Food and Drug Administration (FDA) accepted for review a Biologics License Application (BLA) for sarilumab, with a target action date of October 30, 2016. Sarilumab is currently being studied in the global Phase 3 SARIL-RA program

Dupilumab, the Company’s antibody that blocks signaling of IL-4 and IL-13, is currently being studied in atopic dermatitis, asthma, nasal polyps, and eosinophilic esophagitis.

  • Multiple Phase 3 studies of dupilumab in atopic dermatitis are currently underway.  Phase 3 pivotal trials in atopic dermatitis are fully enrolled.
  • A Phase 3 pivotal study of dupilumab in patients with uncontrolled persistent asthma continues to enroll patients.

Fasinumab is an antibody targeting Nerve Growth Factor (NGF).  A sixteen-week Phase 2b/3 clinical trial for pain due to osteoarthritis has completed enrollment.  The FDA has confirmed that the Company may proceed with studies of longer than sixteen-week duration.

REGN2222, an antibody targeting the respiratory syncytial virus (RSV), is in Phase 3 clinical development.  In October 2015, the FDA granted Fast Track designation to REGN2222 for the prevention of serious lower respiratory tract disease caused by RSV.

Select Upcoming 2016 Milestones

Clinical Programs

Milestones

EYLEA

Initiate Phase 3 study for the treatment of diabetic retinopathy in patients without diabetic macular edema (DME)

REGN2176-3 (PDGFR-beta
Antibody co-formulated with
aflibercept)

Report results from Phase 2 study

Nesvacumab/aflibercept
(Ang2 Antibody co-formulated
with aflibercept)

Initiate Phase 2 study

Praluent

Independent Data Monitoring Committee (IDMC) interim analyses of ODYSSEY OUTCOMES trial

Ongoing launch in the United States as well as in additional territories outside the United States

Sarilumab (IL-6R Antibody)

Regulatory decision in the United States

File for regulatory approvals outside the United States

Report results from Phase 3 SARIL-RA-MONARCH trial evaluating sarilumab versus adalimumab in monotherapy

Dupilumab (IL-4R Antibody)

Report results from Phase 3 atopic dermatitis pivotal trials

Complete rolling BLA submission for atopic dermatitis in the United States

Fasinumab (NGF Antibody)

Report results from Phase 2b/3 study in osteoarthritis

Initiate longer duration (greater than 16 weeks) Phase 3 trial

Immuno-oncology (PD-1 Antibody
and bi-specific antibody against CD20 and CD3)

Report data from Phase 1 studies in patients with cancer

Fourth Quarter and Full Year 2015 Financial Results

Product Revenues: Net product sales were $750 million in the fourth quarter and $2.689 billion for the full year 2015, compared to $522 million in the fourth quarter and $1.751 billion for the full year 2014.  EYLEA net product sales in the United States were $746 million in the fourth quarter and $2.676 billion for the full year 2015, compared to $518 million in the fourth quarter and $1.736 billion for the full year 2014.

Total Revenues: Total revenues, which include product revenues described above, increased by 37% to $1.098 billion in the fourth quarter of 2015, compared to $802 million in the fourth quarter of 2014.  Total revenues also include collaboration revenues of $330 million in the fourth quarter of 2015, compared to $272 million in the fourth quarter of 2014.  Full year 2015 total revenues increased by 46% to $4.104 billion, compared to $2.820 billion for the full year 2014, and included collaboration revenues of $1.339 billion for the full year 2015, compared to $1.037 billion for the full year 2014.  Collaboration revenues in the fourth quarter and full year 2015 increased primarily due to higher reimbursement of the Company’s research and development expenses under its antibody collaboration with Sanofi, an increase in the Company’s net profit from commercialization of EYLEA outsidethe United States, and reimbursement of the Company’s research and development expenses and amortization of up-front payments received in connection with the Company’s July 2015 immuno-oncology collaboration with Sanofi, partly offset by the Company’s share of higher collaboration losses primarily in connection with commercialization of Praluent.  Collaboration revenue for the full year 2015 and 2014 also included $15 million and$105 million, respectively, of sales milestone payments from Bayer HealthCare.

Refer to Table 4 for a summary of collaboration revenue.

Research and Development (R&D) Expenses: In 2015, GAAP R&D expenses were $461 million in the fourth quarter and $1.621 billion for the full year, compared to $352 million in the fourth quarter and $1.271 billion for full year 2014.  The higher 2015 R&D expenses in the fourth quarter and full year were principally due to higher development costs primarily related to dupilumab and higher headcount to support the Company’s increased R&D activities.  In 2014, GAAP R&D expenses also included the Company’s 50% share, or $34 million, of the cost of purchasing a FDA priority review voucher.  In addition, in 2015, R&D-related non-cash share-based compensation expense was $73 million for the fourth quarter and $256 million for the full year, compared to $51 million in the fourth quarter and $184 million for the full year 2014.

Selling, General, and Administrative (SG&A) Expenses: In 2015, GAAP SG&A expenses were $295 million in the fourth quarter and $839 million for the full year, compared to $175 million in the fourth quarter and $519 million for full year 2014.  The increases were primarily due to higher headcount and higher commercialization expenses related to EYLEA and Praluent.  These increases were partly offset by a 2014 incremental charge related to the Branded Prescription Drug Fee, based on final regulations issued by the Internal Revenue Service (IRS) in July 2014.  In 2015, SG&A-related non-cash share-based compensation expense was $82 million for the fourth quarter and $193 million for the full year, compared to $61 million in the fourth quarter and $135 million for the full year 2014.

Cost of Goods Sold (COGS): In 2015, GAAP COGS was $71 million in the fourth quarter and $242 million for the full year, compared to $38 million in the fourth quarter and $129 million for the full year 2014.  COGS primarily consists of royalties as well as costs in connection with producing U.S. EYLEA commercial supplies, and various start-up costs in connection with the Company’s Limerick, Ireland commercial manufacturing facility.  COGS increased principally due to the increase in U.S. EYLEA net product sales, as well as an increase in Limerick start-up costs.

Cost of Collaboration and Contract Manufacturing (COCM): In 2015, GAAP COCM was $40 million in the fourth quarter and $151 million for the full year, compared to $22 million in the fourth quarter and $76 million for the full year 2014.  COCM includes costs the Company incurs in connection with producing commercial drug supplies for Sanofi and Bayer HealthCare.  COCM increased primarily due to royalties payable to Genentech in connection with sales of EYLEA outside the United States, as well as the recognition of costs associated with commercial supplies of EYLEA manufactured forBayer HealthCare.

Other Income (Expense): In 2015 and 2014, GAAP other expense includes losses on extinguishment of debt related to conversions of a portion of the Company’s 1.875% convertible senior notes.  In addition, GAAP other expense includes interest expense on the Company’s convertible senior notes, which decreased due to conversions of a substantial portion of these notes in 2014 and 2015.

Income Tax Expense: In the fourth quarter of 2015, GAAP income tax expense was $72 million and the effective tax rate was 31.8%, compared to $100 million and 52.5% in the fourth quarter of 2014.  In 2015, GAAP income tax expense was $589 million and the effective tax rate was 48.1% for the full year, compared to $423 million and 55.6% for the full year 2014.  The effective tax rates for the full year of both 2015 and 2014 were negatively impacted, compared to the U.S. federal statutory rate, by losses incurred in foreign jurisdictions with rates lower than the federal statutory rate and the non-tax deductible Branded Prescription Drug Fee, partly offset by the federal tax credit for increased research activities and, in 2015, a higher domestic manufacturing deduction. In the fourth quarter of 2015, the 2015 federal tax credit for increased research activities was enacted retroactive to the beginning of the year.

Non-GAAP and GAAP Net Income: The Company reported non-GAAP net income of $327 million, or $3.15 per basic share and $2.83 per diluted share, in the fourth quarter of 2015, compared to non-GAAP net income of $328 million, or $3.23 per basic share and $2.79 per diluted share, in the fourth quarter of 2014.  The Company reported non-GAAP net income of $1.404 billion, or $13.62 per basic share and $12.07 per diluted share, for the full year 2015, compared to non-GAAP net income of $1.175 billion, or $11.68 per basic share and $10.00 per diluted share, for the full year 2014.

The Company reported GAAP net income of $155 million, or $1.49 per basic share and $1.34 per diluted share, in the fourth quarter of 2015, compared to GAAP net income of $90 million, or $0.89 per basic share and $0.78 per diluted share, in the fourth quarter of 2014.  The Company reported GAAP net income of $636 million, or $6.17 per basic share and $5.52 per diluted share, for the full year 2015, compared to GAAP net income of $338 million, or $3.36 per basic share and $2.98 per diluted share, for the full year 2014.

A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.

2016 Financial Guidance(3)

The Company’s full year 2016 financial guidance consists of the following components:

EYLEA U.S. net product sales

Approximately 20% growth over 2015

Non-GAAP unreimbursed R&D(2)

$875 million – $950 million

Non-GAAP SG&A(2)

$925 million – $1,000 million

Cash tax as a % of non-GAAP pre-tax income(2)

35% – 45%*

Capital expenditures

$580 million – $680 million

* – Includes a non-recurring tax payment of approximately $222 million related to the immuno-oncology upfront payment from Sanofi that the Company received in 2015.

(Original Source)

Shares of Regeneron Pharmaceuticals closed yesterday at $390.53 . REGN has a 1-year high of $605.93 and a 1-year low of $376.61. The stock’s 50-day moving average is $476.38 and its 200-day moving average is $524.80.

On the ratings front, Regeneron has been the subject of a number of recent research reports. In a report issued on February 5, Leerink Swann analyst Geoff Porges assigned a Buy rating on REGN, with a price target of $534, which represents a potential upside of 36.7% from where the stock is currently trading. Separately, on January 31, Chardan’s Gbola Amusa MD CFA maintained a Sell rating on the stock and has a price target of $400.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Geoff Porges and Gbola Amusa MD CFA have a total average return of -1.2% and -11.2% respectively. Porges has a success rate of 30.8% and is ranked #2021 out of 3556 analysts, while CFA has a success rate of 36.2% and is ranked #3384.

The street is mostly Neutral on REGN stock. Out of 8 analysts who cover the stock, 6 suggest a Hold rating , one suggests a Sell and one recommends to Buy the stock.

Regeneron Pharmaceuticals Inc is a fully integrated biopharmaceutical company. It discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions.