Regeneron Pharmaceuticals Inc (NASDAQ:REGN) announced financial results for the second quarter of 2015 and provided an update on development programs.
“With the recent approval of Praluent for hypercholesterolemia patients, a new collaboration with Sanofi in immuno-oncology, and increased U.S. demand for EYLEA, Regeneron has made critical, transformative advances in 2015,” said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. “We have discovered and developed four approved therapies for patients with serious diseases, and are actively advancing late-stage programs for patients with rheumatoid arthritis, asthma, atopic dermatitis, pain and respiratory syncytial virus. Our team is focused on delivering on all of these important near and mid-term opportunities, while continuing to advance the scientific innovation that will drive our long-term success.”
($ in millions, except per share data)
Three Months Ended
EYLEA U.S. net product sales
Non-GAAP net income (2)
Non-GAAP net income per share – diluted (2)
GAAP net income
GAAP net income per share – diluted
* See note (4) below for an explanation of revisions made to certain amounts previously reported for the three months ended June 30, 2014.
EYLEA® (aflibercept) Injection for Intravitreal Injection
- In the second quarter of 2015, net sales of EYLEA in the United States increased 58% to $655 million from $415 million in the second quarter of 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 second quarter of 2015, net sales of EYLEA outside of the United States(1) were $338 million, compared to $247 million in the second quarter of 2014. In the second quarter of 2015, Regeneron recognized $107 million from its share of net profit from EYLEA sales outside the United States, compared to $67 million in the second quarter of 2014.
- In June 2015, the Ministry of Health, Labour and Welfare (MHLW) in Japan approved EYLEA for the treatment of patients with macular edema secondary to retinal vein occlusion (RVO), which includes macular edema secondary to branch retinal vein occlusion (BRVO) in addition to the previously-approved indication of macular edema secondary to central retinal vein occlusion (CRVO).
Praluent® (alirocumab) Injection for the Treatment of High Low-Density Lipoprotein (LDL) Cholesterol
- In July 2015, following the U.S. Food and Drug Administration (FDA) approval of Praluent for the treatment of adults with heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease (ASCVD), who require additional lowering of LDL cholesterol, the Company and Sanofi commenced their launch of Praluent.
- In July 2015, the European Medicines Agency’s (EMA’s) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for the marketing authorization of Praluent, recommending its approval for use in certain adult patients with hypercholesterolemia.
- In July 2015, the Company and Sanofi reported that the Phase 3 ODYSSEY JAPAN trial met its primary endpoint. At week 24, Japanese patients treated with Praluent experienced an average 64% greater reduction from baseline in LDL-C when added to current standard of care including statins, compared to standard of care alone.
- The Phase 3 ODYSSEY program remains ongoing.
Regeneron has fifteen fully human monoclonal antibodies generated using the Company’s VelocImmune® technology in clinical development, including five in collaboration with Sanofi(5). In addition to Praluent, highlights from the antibody pipeline include:
Sarilumab, the Company’s antibody targeting IL-6R for rheumatoid arthritis, is currently being studied in the global Phase 3 SARIL-RA program. The Company and Sanofi plan to submit a Biologics License Application (BLA) in the United States by the end of 2015.
Dupilumab, the Company’s antibody that blocks signaling of IL-4 and IL-13, is currently being studied in atopic dermatitis, asthma, nasal polyps in patients with chronic sinusitis, 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.
- The second pivotal study of dupilumab in patients with uncontrolled persistent asthma was initiated in the second quarter of 2015.
Fasinumab, an antibody targeting Nerve Growth Factor (NGF), entered Phase 2b/3 clinical development (sixteen-week study) for pain due to osteoarthritis in the second quarter of 2015.
REGN2222, an antibody targeting the respiratory syncytial virus (RSV), recently entered Phase 3 clinical development(5).
REGN2176-3, a combination product comprised of an antibody to PDGFR-beta co-formulated with EYLEA, entered Phase 2 clinical development for the treatment of neovascular age-related macular degeneration (wet AMD) in the second quarter of 2015.
Second Quarter 2015 Financial Results
Product Revenues: Net product sales were $658 million in the second quarter of 2015, compared to $418 million in the second quarter of 2014. EYLEA net product sales in the United States were $655 million in the second quarter of 2015, compared to $415 million in the second quarter of 2014.
Total Revenues: Total revenues, which include product revenues described above, increased by 50% to $999 million in the second quarter of 2015, compared to $666 million in the second quarter of 2014. Total revenues also include collaboration revenues of $329 million in the second quarter of 2015, compared to $240 million in the second quarter of 2014. Collaboration revenues in the second quarter of 2015 increased primarily due to higher reimbursement of the Company’s research and development expenses under its antibody collaboration with Sanofi and an increase in the Company’s net profit from commercialization of EYLEA outside the United States. Refer to Table 4 for a summary of collaboration revenue.
Research and Development (R&D) Expenses: GAAP R&D expenses were $390 million in the second quarter of 2015, compared to $295 million in the second quarter of 2014. The higher R&D expenses in the second quarter of 2015 were principally due to higher development costs related to dupilumab and higher headcount to support the Company’s increased R&D activities. In addition, in the second quarter of 2015, R&D-related non-cash share-based compensation expense was $60 million, compared to $44 million in the second quarter of 2014.
Selling, General, and Administrative (SG&A) Expenses: GAAP SG&A expenses were $175 million in the second quarter of 2015, compared to $97 million in the second quarter of 2014. The increase was primarily due to higher headcount and headcount-related costs, higher commercialization expenses related to Praluent, sarilumab, and EYLEA, and higher costs associated with the Branded Prescription Drug Fee. In addition, in the second quarter of 2015, SG&A-related non-cash share-based compensation expense was $32 million, compared to $20 million in the second quarter of 2014.
Cost of Goods Sold (COGS): GAAP COGS was $61 million in the second quarter of 2015, compared to $30 million in the second quarter of 2014. COGS, which primarily consists of royalties as well as costs in connection with producing EYLEA commercial supplies, increased principally due to the increase in U.S. EYLEA net product sales.
Income Tax Expense: GAAP income tax expense was $133 million in the second quarter of 2015, compared to $112 million in the second quarter of 2014. The effective tax rate was 40.7% for the second quarter of 2015, compared to 53.9% for the second quarter of 2014.
Non-GAAP and GAAP Net Income: The Company reported non-GAAP net income of $338 million, or $3.29 per basic share and $2.89 per diluted share, in the second quarter of 2015, compared to non-GAAP net income of $289 million, or $2.88 per basic share and $2.47 per diluted share, in the second quarter of 2014.
The Company reported GAAP net income of $195 million, or $1.89 per basic share and $1.69 per diluted share, in the second quarter of 2015, compared to GAAP net income of $96 million, or $0.96 per basic share and $0.85 per diluted share, in the second quarter of 2014.
A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.
2015 Financial Guidance(3)
The Company’s updated full year 2015 financial guidance consists of the following components:
EYLEA U.S. net product sales
45% – 50% growth over 2014
(previously 30% – 35% growth over 2014)
Non-GAAP unreimbursed R&D (2)
$510 million – $550 million
(previously $525 million – $575 million)
Non-GAAP SG&A (2)
$610 million – $650 million
(previously $650 million – $725 million)
Cash tax as a % of non-GAAP pre-tax income (2)
15% – 22%
(previously 10% – 20%)
$675 million – $750 million
(previously $650 million – $750 million)
Shares of Regeneron Pharmaceuticals closed yesterday at $554.27. REGN has a 1-year high of $569.91 and a 1-year low of $314. The stock’s 50-day moving average is $530.43 and its 200-day moving average is $474.16.
On the ratings front, Regeneronhas been the subject of a number of recent research reports. In a report released yesterday, Leerink Swann analyst Joseph Schwartz reiterated a Buy rating on REGN, with a price target of $630, which implies an upside of 13.7% from current levels. Separately, on July 27, Brean Murray Carret’s Jonathan Aschoff maintained a Buy rating on the stock and has a price target of $525.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Joseph Schwartz and Jonathan Aschoff have a total average return of 36.0% and 12.8% respectively. Schwartz has a success rate of 67.1% and is ranked #33 out of 3724 analysts, while Aschoff has a success rate of 55.5% and is ranked #157.
The street is mostly Bullish on REGN stock. Out of 10 analysts who cover the stock, 7 suggest a Buy rating and 3 recommend to Hold the stock. The 12-month average price target assigned to the stock is $532.00, which represents a slight downside potential from current levels.
Regeneron Pharmaceuticals Inc is a fully integrated biopharmaceutical company. It discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions.