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Regeneron (REGN) to Report Q3 Earnings: Is a Beat in Store?

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Regeneron Pharmaceuticals, Inc. (REGN - Free Report) is scheduled to release third-quarter 2018 results on Nov 6, before the opening bell.

Regeneron Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

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

In the last reported quarter, Regeneron beat earnings expectations by 14.9%. The company’s track record is excellent. In the last four quarters, it surpassed earnings estimates on all occasions, with average beat of 8.2%. Let’s see how things are shaping up for the to-be-reported quarter.

Why a Likely Positive Surprise?

Our proven model indicates that Regeneron is likely to beat earnings estimates this quarter because it has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.65%. This is because the Most Accurate estimate is $5.45, while the Zacks Consensus Estimate is $5.21. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Zacks Rank: Regeneron currently carries a Zacks Rank #3 which increases the possibility of a beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing This Quarter

Regeneron’s key growth driver, Eylea, is likely to continue contributing to the company’s top-line growth. Eylea is approved in the United States, EU, Japan and other countries for the treatment of neovascular age-related macular degeneration (wet AMD), diabetic macular edema (DME), and macular edema following retinal vein occlusion, which includes macular edema following central retinal vein occlusion and macular edema following branch retinal vein occlusion.

We note that Regeneron has a global development and commercialization agreement with Bayer AG (BAYRY - Free Report) , outside the United States, for Eylea. Product revenues from ex-U.S. Eylea sales are recorded by Bayer.

Meanwhile, Regeneron is working on expanding Eylea label into additional indications, which should further boost sales.  In August 2018, the FDA approved a 12-week dosing interval of Eylea Injection in patients with wet age-related macular degeneration (wet AMD) based on physician's assessment. A supplemental Biologics License Application (sBLA) has been submitted to the FDA for diabetic retinopathy population. 

The phase III trial, PANORAMA, evaluating Eylea injection in patients suffering from moderately severe and severe non-proliferative diabetic retinopathy met its one-year (52-week) primary endpoint and key secondary endpoints. The supplemental application for Eylea for the treatment of diabetic retinopathy, based on previously announced 24-week results, is currently under FDA review with an action date of May 13, 2019.

Apart from Eylea’s performance and label expansion efforts, investors will be focussing on the uptake of Dupixent and Kevzara.

Strong Dupixent sales drove Regeneron’s impressive second-quarter results and we expect the momentum to continue in the third quarter as well. Dupixent is already approved for the treatment of adult patients with moderate-to-severe atopic dermatitis. The company and partner Sanofi (SNY - Free Report) are also working to expand Dupixent’s label. The FDA recently approved Dupixent as an add-on maintenance therapy for patients suffering from moderate-to-severe asthma aged 12 years or older, with an eosinophilic phenotype or with oral corticosteroid-dependent asthma.

Regeneron and Sanofi are evaluating Dupixent in a broad range of clinical development programs, for diseases driven by allergic or type 2 inflammation. Last month, both the companies announced that the two phase III studies on Dupixent for the indication of chronic rhinosinusitis with nasal polyps (CRSwNP) were successful.

Kevzara, an anti-interleukin (IL)-6 receptor monoclonal antibody for the treatment of adult patients with moderately to severely active rheumatoid arthritis, was approved by the FDA in May 2017. The uptake of the drug has been encouraging so far.

The company has a collaboration agreement with Sanofi for both the drugs. The company updated its projection for collaboration revenues along with second-quarter results. Collaboration revenues from Sanofi are now projected around $455-$485 million compared with the previous guidance of $450-$485 million.

In September 2018, Regeneron and Sanofi announced that the FDA will review the supplemental biologics license application (sBLA) for its PCSK9 inhibitor Praluent (alirocumab) injection. The sBLA seeks to get Praluent approved for a new indication — risk reduction of major adverse cardiovascular events (MACE).  The FDA set an action date of Apr 28, 2019.

Meanwhile, the FDA approved Libtayo (cemiplimab-rwlc) for the treatment of patients with metastatic cutaneous squamous cell carcinoma (CSCC) or locally advanced CSCC who are not eligible for curative surgery or curative radiation.  The candidate was reviewed by the FDA under priority review.

Hence, focus will be on the company’s performance, particularly on Eylea and Dupixient’s uptake during the earnings call. Investors are also expected to await updates on the company’s pipeline.

Share Price Performance

Regeneron’s stock has lost 7.3% year to date against the industry’s decline of 18.8%.

 

Other Stock That Warrants a Look

Here is another health care stock you may want to consider as our model shows that this too has the right combination of elements to post an earnings beat this quarter.

Alnylam Pharmaceuticals, Inc. (ALNY - Free Report) has an Earnings ESP of +12.54% and a Zacks Rank #3. The company is expected to release third-quarter results on Nov 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

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