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Regeneron (REGN) Q2 Earnings Beat on Strong Dupixent Sales

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Regeneron Pharmaceuticals, Inc. (REGN - Free Report) reported better-than-expected results for the second quarter of 2018, wherein both earnings and sales topped estimates.

The strong results should boost investors’ sentiments. Shares are up in the pre-market trading. Regeneron’s stock has lost 1.3% in the year so far compared with the industry’s 3.7% decline.

The company reported earnings of $5.45 per share in the second quarter, comfortably beating the Zacks Consensus Estimate of $4.74 and up from $4.17 recorded in the year-ago quarter.

Total revenues in the quarter increased 9% year over year to $1.61 billion, driven by strong sales of Dupixent. Revenues also surpassed the Zacks Consensus Estimate of $1.58 billion.

Regeneron has co-developed Eylea with the HealthCare unit of Bayer AG (BAYRY - Free Report) . The company is solely responsible for the sales of this eye drug and is entitled to profits in the United States. However, it shares profits and losses equally with Bayer from ex-U.S. Eylea sales, except in Japan, where the company receives a royalty on net sales.

Quarterly Highlights

Net product sales increased to $996 million in the quarter, up 8% year over year. The majority of sales came from Eylea in the United States ($992 million, up 8%).

Total revenues also included the Sanofi (SNY - Free Report) and Bayer collaboration revenues of $501 million compared with $432 million recorded in the year-ago quarter.  Collaboration revenues from Sanofi increased primarily due to Regeneron’s share of higher net sales of Dupixent and an increase in reimbursable expenses in connection with late-stage clinical development activities for cemiplimab.  Bayer collaboration revenues grew due to an increase in share of net profits in connection with higher sales of Eylea outside the United States.

Praluent recorded global net sales of $74 million in the quarter, up from $46 million in the year-ago quarter. Praluent has been developed in collaboration with Sanofi. Product sales for Praluent, Dupixent, and Kevzara are recorded by Sanofi, while Regeneron shares profits or losses from the commercialization of the drug.

Dupixent’s sales came in at $209 million. The drug was approved in 2017 for the treatment of adults with moderate-to-severe atopic dermatitis. Kevzara recorded sales of $24 million.

R&D expenses increased 3.7%, while selling, general and administrative (SG&A) expenses increased 18.9% during the quarter. The surge in R&D expenses were primarily due to an increase in cemiplimab and fasinumab clinical trial costs and higher R&D headcount and facilities-related costs. SG&A expenses increased due to higher headcount and headcount-related costs, and an increase in commercialization-related expenses of Eylea and Dupixent.

2018 Outlook Updated

Collaboration revenues from Sanofi are now projected around $455-$485 million compared to the previous guidance of $450-$485 million. The company now expects adjusted unreimbursed R&D expenses in the range of $1.21-$1.26 billion compared to the previous projection of $1.23-$1.31 billion. Adjusted unreimbursed SG&A expenses are now projected around $1.34-$1.39 billion compared to the earlier estimate of $1.32-$1.39 billion.

Pipeline Update

During the second quarter, Regeneron submitted a supplemental Biologics License Application (sBLA) for Eylea in a pre-filled syringe.  The FDA earlier accepted the company's sBLA for the label expansion of Eylea Injection. The company is seeking approval for a 12-week dosing interval of Eylea Injection, in patients with wet age-related macular degeneration (wet AMD), based on physician's assessment. The action date set by the FDA is Aug 11, 2018. Regeneron recently submitted a supplemental Biologics License Application (sBLA) for Eylea for the treatment of diabetic retinopathy.

Meanwhile, Regeneron is also working to expand Dupixent’s label.  Dupixent is being studied in asthma, adolescent and pediatric atopic dermatitis, nasal polyps, eosinophilic esophagitis (EoE), and grass immunotherapy, with additional studies planned in 2018. Regeneron and partner Sanofi reported that a phase III trial, evaluating Dupixent to treat moderate-to-severe atopic dermatitis in adolescents (12-17 years of age), met its primary and key secondary endpoints. A phase II study on Dupixent was initiated in grass immunotherapy in the second quarter.

Moreover, Sanofi and Regeneron have decided to lower the net price of Praluent, in exchange for straightforward and more affordable patient access from Express Scripts (ESRX - Free Report) . Consequently, Praluent has been chosen as the exclusive PCSK9 inhibitor therapy on the Express Scripts national formulary. The agreement took effect on Jul 1, 2018. An sBLA and a Marketing Authorization Application (MAA) for Praluent for cardiovascular risk reduction have been recently submitted to respective global health authorities. In addition, an sBLA for first-line treatment of hyperlipidemia has also been recently submitted. A phase III pediatric study in heterozygous familial hypercholesterolemia (HeFH) was initiated in the second quarter of 2018.

In April 2018, the FDA accepted for priority review the BLA for cemiplimab, for the treatment of patients with metastatic cutaneous squamous cell carcinoma (CSCC) or patients with locally advanced CSCC who are not candidates for surgery. The target action date is Oct 28, 2018. The European Medicines Agency (EMA) also accepted the same. Regeneron and Sanofi also announced positive interim results from a phase I study, evaluating cemiplimab as a potential treatment for advanced non-small cell lung cancer (NSCLC).

Our Take

Regeneron’s second-quarter results were impressive as the company comfortably beat both earnings and sales estimates on the back of growth in Dupixent’s sales.

Regeneron Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

Regeneron Pharmaceuticals, Inc. Price, Consensus and EPS Surprise | Regeneron Pharmaceuticals, Inc. Quote

Regeneron’s efforts to expand the label of its approved drugs and concurrently develop its pipeline are encouraging as well. The potential label expansion of Eylea in patients with wet age-related macular degeneration will further boost sales. The company is also working to expand Dupixent’s label, which should diversify the company’s revenue base and reduce dependence on Eylea. Cemiplimab’s progress looks promising as well.

Zacks Rank

Regeneron currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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