It has been about a month since the last earnings report for Regeneron (REGN - Free Report) . Shares have lost about 8.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Regeneron Misses on Q1 Earnings & Sales
Regeneron reported earnings of $4.45 per share in the first quarter, lagging the Zacks Consensus Estimate of $5.52. The bottom line also fell from $4.67 in the year-ago quarter.
Total revenues in the reported quarter increased 13% year over year to $1.71 billion but fell short of the Zacks Consensus Estimate of $1.74 billion. Year-over-year growth in the top line was driven by strong Eylea and Dupixent sales.
Net product sales increased to $1.1 billion in the quarter under review, up 12% year over year. Majority of the sales came in from Eylea in the United States ($1.074 billion, up 9.1%).
Regeneron co-developed Eylea with the HealthCare unit of Bayer AG. 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 the ex-U.S. Eylea sales, except in Japan where the company receives a royalty on net sales.
Total revenues also included Sanofi and Bayer’s collaboration revenues of $523 million compared with $437 million in the year-earlier quarter.
The increase in Sanofi collaboration revenues was primarily owing to the company’s share of higher net sales derived from Dupixent.
Praluent’s global net sales logged $63.9 million in the reported quarter, up from $59.9 million in the prior-year quarter. Sale proceeds from products like Praluent, Dupixent and Kevzara are garnered by Sanofi while Regeneron earns profits or incurs losses from the commercialization of all three drugs.
Dupixent’s sales summed $373.7 million, up from $131.4 million a year ago. The drug was approved in 2017 for treating adults with moderate-to-severe atopic dermatitis. Kevzara recorded sales of $33.7 million, up from $12.4 million in the year-earlier quarter.
The FDA approved Libtayo last September for the treatment of patients with metastatic or locally advanced CSCC, who are not candidates for curative surgery or curative radiation. Libtayo sales in the quarter totaled $26.8 million.
R&D expenses rose 28.7% while selling, general and administrative (SG&A) expenses escalated 24.2% during the quarter under consideration.
Collaboration revenues from Sanofi are projected around $500-$535 million. The company expects adjusted unreimbursed R&D expenses of $1.61-$1.71 billion. Adjusted unreimbursed SG&A expenses are anticipated around $1.50-$1.58 billion.
The pipeline progress in the first quarter was encouraging.
The supplemental Biologics License Application (sBLA) for Eylea with respect to diabetic retinopathy is under review in the United States with a target action date set for May 13, 2019. Last month, Regeneron resubmitted a supplemental BLA for Eylea in a pre-filled syringe.
Regeneron is also working to expand Dupixent’s label. The FDA approved Dupixent for adolescent patients aged from 12 to 17 years with moderate-to-severe atopic dermatitis. The FDA accepted the priority review of the sBLA for Dupixent as an add-on maintenance treatment for adults with inadequately controlled severe chronic rhinosinusitis with nasal polyps (CRSwNP).
A target action date to this end is set for Jun 26, 2019. The European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for Dupixent regarding its use in adults and adolescents aged 12 years and older as an add-on maintenance treatment for severe asthma.
A phase III study on the chronic obstructive pulmonary disease (COPD) indication has also been initiated.
The CHMP has also recommended a conditional approval for Libtayo to address CSCC.
Moreover, the FDA approved Praluent to reduce the risk of heart attack, stroke and unstable angina, requiring hospitalization of adults with an established cardiovascular disease.
Regeneron also entered into a collaboration agreement with Alnylam Pharmaceuticals, Inc. to discover, develop and commercialize the new RNA interference (RNAi) therapeutics for diseases of the eye and the central nervous system.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -9.8% due to these changes.
At this time, Regeneron has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Regeneron has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.