A month has gone by since the last earnings report for Regeneron (REGN Quick QuoteREGN - Free Report) . Shares have lost about 16.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Regeneron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Regeneron's Q3 Earnings & Sales Surpass Estimates

Regeneron reported earnings of $8.36 per share in the third quarter, comprehensively beating the Zacks Consensus Estimate of $7.23 and also increasing from $6.67 in the year-ago quarter.

Total revenues in the reported quarter surged 32% year over year to $2.29 billion. The top line also surpassed the Zacks Consensus Estimate of $2.14 billion. This year-over-year growth was particularly driven by strong Eylea and Dupixent sales.

Quarterly Highlights

Net product sales increased to $1.48 billion in the quarter under review, up from $1.23 billion in the year-ago quarter.  Lead drug Eylea’s sales in the United States were $1.32 billion compared with $1.19 billion in the year-ago quarter. Per the company, the inventory levels of Eylea in the United States were within the targeted range.

Regeneron co-developed Eylea with the HealthCare unit of Bayer AG. The company is solely responsible for the sales and profits of this promising eye drug in the United States. However, Regeneron shares profits/losses on Eylea sales equally with Bayer in the ex-U.S. markets except in Japan where the company receives a royalty on net sales.

Total revenues of $653 million also included Sanofi and Bayer’s collaboration revenues compared with $469 million in the year-earlier quarter. This increase was primarily owing to higher net product sales of Dupixent. Moreover, during this time, Regeneron earned a sales-based milestone fee of $50 million from Sanofi, triggered by the annual sales of antibodies in the ex-U.S. markets, exceeding $1 billion on a rolling twelve-month basis.

Notably, Regeneron records net product sales of Libtayo in the United States. Sanofi records net product sales of Libtayo outside the country and global net product sales of Dupixent, Kevzara and Zaltrap. Regeneron records its share of profits/losses in connection with the sales of Libtayo outside the United States, and global sales of Dupixent and Kevzara within collaboration revenues.

Dupixent’s sales summed $1.07 billion, up from $633.1 million in the year-ago quarter. Kevzara recorded sales of $70 million, up from $54.8 million in the year-earlier quarter.

Praluent’s global net sales totaled $91.5 million in the reported quarter, up from $69.7 million in the prior-year quarter.

Libtayo sales in the quarter totaled $96.1 million, up from $51.5 million in the prior-year quarter.

R&D expenses increased to $628.7 million from $466 million while SG&A expenses grew to $291 million during the quarter from $263.6 million in the year-ago period.

COVID-19 Update

In October 2020, Regeneron submitted a request to the FDA for an Emergency Use Authorization (EUA) for its experimental COVID-19 treatment REGN-COV2 in patients with mild-to-moderate COVID-19 who are at risk for poor outcomes.
REGN-COV2 is a combination of two monoclonal antibodies (REGN10933 and REGN10987).

During the same month, the company announced positive, prospective results from an ongoing phase II/III seamless study evaluating REGN-COV2 in the COVID-19 outpatient setting. The investigational antibody cocktail REGN-COV2 met the primary and key secondary endpoints. REGN-COV2 significantly reduced viral load and patient medical visits (hospitalizations, emergency room, urgent care visits and/or physician office/telemedicine visits).

Other Pipeline Updates

Notably, regulatory submissions for Dupixent as a treatment of moderate-to-severe asthma in children aged from six years to 11 years are expected to be filed by the first quarter of 2021, both in the United States and the EU. Dupixent has already been granted a Breakthrough Therapy designation by the FDA for treating eosinophilic esophagitis in patients aged 12 years and above.

Notably, Libtayo is under a priority review in the United States as a monotherapy to treat patients with first-line locally advanced or metastatic NSCLC with a decision from the FDA expected on Feb 28, 2021. The drug is also under a priority review for the treatment of patients with locally advanced or metastatic basal cell carcinoma (BCC) with a decision from the FDA expected on Mar 3, 2021.

Additionally, in October 2020, the FDA approved Regeneron’s triple antibody cocktail REGN-EB3 for the treatment of the infection caused by Zaire ebolavirus in adult and pediatric patients. The patient population includes newborns of mothers who tested positive for the infection. The drug was marketed under the brand name Inmazeb.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Regeneron has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Regeneron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.