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Regeneron (REGN) Down 2.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Regeneron (REGN - Free Report) . Shares have lost about 2.3% in that time frame, outperforming 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 catalysts.

Regeneron Q2 Earnings & Sales Beat on Eylea, Dupixent

Regeneron posted better-than-expected second-quarter 2022 results, beating on both earnings and sales driven by strong growth in Eylea and Dupixent.  However, as expected, the company did not record any sales from REGEN-COV.

Regeneron reported second-quarter earnings of $9.77 per share, comfortably beating the Zacks Consensus Estimate of $8.53. The year-ago quarter recorded earnings per share of $25.80 due to higher sales.

Total revenues in the reported quarter were down 44% year over year to $2.8 billion but beat the Zacks Consensus Estimate of $2.7 billion. Excluding REGEN-COV (a cocktail of two monoclonal antibodies — casirivimab and imdevimab) for COVID-19, sales increased 20%.

In January 2022, the FDA revised the authorizations for a few monoclonal antibody treatments, including Regeneron’s REGEN-COV (casirivimab and imdevimab), as data indicated that these treatments are highly unlikely to be active against the Omicron variant.  Therefore, REGEN-COV is not currently authorized for use in any U.S. states, territories or jurisdictions.

Quarterly Highlights

Lead drug Eylea’s sales in the United States were $1.6 billion compared with $1.4 billion in the year-ago quarter. Please note that Regeneron co-developed Eylea with the HealthCare unit of Bayer AG.

Regeneron records net product sales of Eylea in the United States. Bayer records net product sales of Eylea outside the United States. Regeneron records its share of profits/losses in connection with sales of Eylea outside the United States.

Total revenues also included collaboration revenues of $1.0 billion from Sanofi, Bayer and Roche , up from $954.7 million in the year-ago quarter. Sanofi’s collaboration revenues amounted to $678 million, up from $438 million. Bayer’s collaboration revenues came in at $358 million, up from $349 million. Roche’s collaboration revenues totaled $8 million compared with $168 million in the year-ago quarter due to lower sales of Ronapreve.

We note that Sanofi records global net product sales of Dupixent and Kevzara while Regeneron records its share of profits/losses in connection with global sales of both these drugs. Regeneron records net product sales of Praluent in the United States and Sanofi records net product sales of Praluent outside the United States and pays the company a royalty on such sales.  Regeneron records net product sales of REGEN-COV in connection with its agreements with the U.S. government, while partner Roche records net product sales of the antibody cocktail outside the United States. The companies share gross profits from global sales based on a pre-specified formula.

REGN records net product sales of Libtayo in the United States and Sanofi records the same outside the country. However, effective Jul 1, 2022, Regeneron will record global net product sales of Libtayo and pay Sanofi royalty on such sales.

Dupixent’s sales surged to $2.1 billion from $1.5 billion in the year-ago quarter. Libtayo sales in the United States came in at $90.9 million, up from $78 million.  Kevzara recorded sales of $82.3 million, up from $66.7 million.

Praluent’s global net sales totaled $108.9 million in the reported quarter, up from $99.4 million in the prior-year quarter.

REGEN-COV, its antibody cocktail for COVID-19, generated total sales of $22.8 million in the quarter outside of the United States. 

R&D expenses increased to $690 million from $643.3 million while SG&A expenses jumped to $417.7 million from $365.1 million in the year-ago quarter.

Pipeline and Regulatory Update

Effective Jul 1, 2022, Regeneron obtained the exclusive right to develop, commercialize and manufacture Libtayo worldwide under an agreement with Sanofi. Per the terms, REGN made a $900 million up-front payment, and Sanofi is eligible to receive a $100 million regulatory milestone and up to an aggregate of $100 million in sales-based milestones upon achieving certain amounts of worldwide net product sales of Libtayo through 2023. Regeneron will also pay Sanofi a royalty on net product sales of Libtayo.

The FDA accepted for review the supplemental biologics license application (sBLA) for Eylea for an every-16-weeks dosing regimen in patients with diabetic retinopathy (DR), with a target action date of Feb 28, 2023.

During the second quarter, the FDA approved Dupixent as the first biologic medicine for children aged six months to five years with moderate-to-severe atopic dermatitis and for adults and adolescents aged 12 years and older with eosinophilic esophagitis. The European Commission approved Dupixent for treating severe asthma in children aged six to 11 years.


 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -14.26% due to these changes.

VGM Scores

Currently, Regeneron has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Regeneron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Regeneron is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Blueprint Medicines (BPMC - Free Report) , a stock from the same industry, has gained 14.1%. The company reported its results for the quarter ended June 2022 more than a month ago.

Blueprint Medicines reported revenues of $36.55 million in the last reported quarter, representing a year-over-year change of +33.9%. EPS of -$2.68 for the same period compares with -$1.86 a year ago.

For the current quarter, Blueprint Medicines is expected to post a loss of $2.43 per share, indicating a change of -21.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.8% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Blueprint Medicines. Also, the stock has a VGM Score of D.


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