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Why Is Regeneron (REGN) Up 2.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Regeneron (REGN - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Regeneron due for a pullback? 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 Q3 Earnings Beat Estimates, Revenues In Line

Regeneron beat on earnings estimates in the third quarter, while sales came in-line with the same.

Regeneron reported earnings of $5.87 per share in the third quarter, comfortably beating the Zacks Consensus Estimate of $5.21. The bottom line also increased from $3.99 recorded in the year-ago quarter.

Total revenues in the quarter increased 11% year over year to $1.66 billion, driven by strong sales of Dupixent and flagship drug Eylea. Revenues came in-line with the Zacks Consensus Estimate.

Quarterly Highlights

Net product sales increased to $1.025 billion in the quarter, up 7.1% year over year. The majority of sales came from Eylea in the United States ($1.022 billion, up 7.2%).

Total revenues also included the Sanofi and Bayer collaboration revenues of $521 million compared with $482 million recorded in the year-ago quarter. The increase in Sanofi collaboration revenues was primarily owing to the Regeneron’s share of higher net sales of Dupixent and Praluent.  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 $80.1 million in the quarter, up from $49.4 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 $262.5 million, up from $90 million in the year-ago quarter. The drug was approved in 2017 for the treatment of adults with moderate-to-severe atopic dermatitis. Kevzara recorded sales of $24.8 million, up from $2.9 million in the year-ago quarter.

R&D expenses increased 5.1%, while selling, general and administrative (SG&A) expenses increased 20.2% during the quarter.

2018 Outlook Updated

Collaboration revenues from Sanofi are now projected around $430-$455 million compared with the previous guidance of $455-$485 million. The company now expects adjusted unreimbursed R&D expenses of $1.19-$1.225 billion compared with the previous projection of $1.21-$1.26 billion. Adjusted unreimbursed SG&A expenses are now projected around $1.33-$1.37 billion compared with the earlier estimate of $1.34-$1.39 billion.

Pipeline Update

The pipeline progress was encouraging.

The FDA approved Eylea for an every 12-week dosing regimen option after one year of effective therapy in patients with wet AMD. The FDA also accepted for review the supplemental Biologics License Application (sBLA) of Eylea for the treatment of diabetic retinopathy, with a target action date of May 13, 2019.

The phase III PANORAMA trial, evaluating Eylea in patients with moderately severe and severe non-proliferative diabetic retinopathy, met its one-year primary endpoint and key secondary endpoints, including both the improvement of diabetic retinopathy and a reduction in the rate of vision-threatening complications. However, the FDA issued a Complete Response Letter regarding the Chemistry, Manufacturing, and Controls Prior-Approval Supplement (PAS) for the Eylea pre-filled syringe. Consequently, Regeneron plans to compile all the requested information and resubmit the PAS in the first half of 2019.

Regeneron is also working to expand Dupixent’s label. The FDA approved Dupixent as an add-on maintenance therapy in patients with moderate-to-severe asthma aged 12 years or older with an eosinophilic phenotype or with oral corticosteroid-dependent asthma in October 2018. Regeneron and Sanofi submitted an sBLA and a Marketing Authorization Application (MAA) for the label expansion of the drug, for the indication of atopic dermatitis in adolescent patients (aged 12-17 years).

The FDA has accepted for priority review the sBLA for atopic dermatitis in adolescent patients and set a target action date of Mar 11, 2019. A phase II/III study in eosinophilic esophagitis and a phase II study in peanut allergy were initiated.

Moreover, the FDA approved Praluent for the treatment of patients with heterozygous familial hypercholesterolemia (HeFH) undergoing apheresis. The agency also accepted an sBLA for Praluent as a potential treatment to reduce major adverse cardiovascular events and set a target action date of Apr 28, 2019.

The FDA also accepted for review an sBLA for Praluent for first-line treatment of hyperlipidemia, with a target action date of Apr 29, 2019. A phase III study in pediatric patients with homozygous familial hypercholesterolemia (HoFH) was also initiated.

The FDA approved Libtayo for the treatment of patients with metastatic or locally advanced CSCC who are not candidates for curative surgery or curative radiation, in September 2018.

Regeneron also entered into a collaboration agreement with bluebird bio, Inc. to research, develop and commercialize novel immune cell therapies for cancer.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.59% due to these changes.

VGM Scores

Currently, Regeneron has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Regeneron has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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