Does Regeneron have any products on the market or generating product sales?

No. The company states it has received no revenue from commercial product sales and does not expect any for at least several years. Its revenue comes from collaborator research funding, contract manufacturing for Merck, and investment income.

What happened to the BDNF program and what is its current status?

The Phase III subcutaneous BDNF trial for ALS did not meet its primary endpoints in January 1997. After a retrospective review, a subset of patients may have benefited, so Amgen-Regeneron Partners is now running an intrathecal study and subcutaneous studies that began in Q1 1998 to test that signal prospectively. Sumitomo plans a Phase I safety study in Japan. Results are uncertain, and a further failure could materially hurt the company.

How much cash does Regeneron have, and is it enough?

Cash, equivalents, and marketable securities were $128.0 million at December 31, 1997. Management believes this supports operating needs for at least several years, but it also acknowledges that programs, collaborator funding, and capital contributions to Amgen-Regeneron Partners (about $5.7 million expected in 1998) could change that outlook. The company has no bank credit line.

What is the Procter & Gamble agreement and why does it matter?

The May 1997 ten-year collaboration, expanded in September 1997, gives P&G the right to buy up to $60.0 million of Regeneron equity over five years and to fund up to $94.7 million of research. Research costs are shared equally after year five, and products are to be co-developed and profits split equally. The company estimates it could receive more than $100 million from P&G through mid-2002. P&G's rights cover much of Regeneron's current technology, so the deal is central to the company's funding and strategy.

What are AXOKINE's prospects?

AXOKINE is a second-generation ciliary neurotrophic factor developed for obesity and Type II diabetes with P&G, and separately for retinitis pigmentosa (Phase I planned for late 1998 or early 1999) and Huntington's disease with Medtronic. The company's preclinical data suggest it is more potent than CNTF. The filing provides no clinical efficacy data, and the company has not yet started Phase I in obesity.

REGN 10-K FY1997 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 26, 1998. Cited figures are marked; the original filing is the authoritative source.

Regeneron Pharmaceuticals' 1997 10-K presents a development-stage biotech with no commercial product revenue, a cumulative deficit of $168.6 million^a, and total 1997 revenue of $33.1 million (up from $24.1 million in 1996).

The net loss narrowed to $11.6 million^b, or $0.40 per share, from $32.4 million, or $1.33 per share, in 1996. The improvement came mainly from lower losses in Amgen-Regeneron Partners ($3.4 million versus $14.3 million), a $5.0 million Procter & Gamble milestone payment, and higher investment income. Year-end cash, cash equivalents, and marketable securities were $128.0 million, and management believes this is enough to fund operations for at least several years.

The central investor issue is the BDNF franchise. The Phase III ALS trial failed in January 1997, and the stock fell more than 50%^c on the news. Management is now pursuing subcutaneous and intrathecal studies on the basis of a retrospective survival subgroup, and the filing states plainly that further failure could materially harm the company, its share price, and its ability to raise capital.

The company's strategic direction has shifted toward its May 1997 ten-year Procter & Gamble collaboration, which could bring up to $60.0 million^d in equity purchases and $94.7 million in research support over five years, along with AXOKINE (a second-generation ciliary neurotrophic factor) for obesity and diabetes, which is in development with P&G and Medtronic. Other risks include heavy dependence on partners such as Amgen, P&G, and Glaxo, a patent landscape with several interference proceedings (the Amgen settlement in March 1998 resolved the CNTF dispute), and a competitive field that includes Rhone-Poulenc Rorer's riluzole.

The company also has a $45.2 million capital commitment to Amgen-Regeneron Partners, with $5.7 million expected in 1998. Its share price in early 1998 was about $8.81, well below the 1996 highs.

02—Key points

Key Highlights

1997 total revenue rose 37% to $33.1 million (from $24.1 million), driven by a $5.0 million P&G research progress payment and $6.2 million in investment income.
Net loss narrowed to $11.6 million ($0.40/share) from $32.4 million ($1.33/share) in 1996, largely because the Amgen-Regeneron Partners loss fell to $3.4 million from $14.3 million.
Accumulated deficit reached $168.6 million at December 31, 1997. The company has never had a commercial product and does not expect product revenue for at least several years.
Cash, cash equivalents, and marketable securities totaled $128.0 million at year-end 1997, up from $97.0 million, after $43.4 million in net stock issuance proceeds, mostly from P&G.
The BDNF ALS Phase III trial failed in January 1997 and the stock fell over 50%. Subcutaneous and intrathecal follow-on studies are underway, and the failure risk is still material.
A ten-year P&G collaboration (May 1997) could provide up to $60.0 million in equity and $94.7 million in research support over five years, and was expanded in September 1997 to include AXOKINE for obesity and Type II diabetes.
The March 1998 settlement with Amgen resolved CNTF/AXOKINE patent interference proceedings without royalties or payments by either party.

03—Questions

Frequently Asked Questions

Does Regeneron have any products on the market or generating product sales?
No. The company states it has received no revenue from commercial product sales and does not expect any for at least several years. Its revenue comes from collaborator research funding, contract manufacturing for Merck, and investment income.
What happened to the BDNF program and what is its current status?
The Phase III subcutaneous BDNF trial for ALS did not meet its primary endpoints in January 1997. After a retrospective review, a subset of patients may have benefited, so Amgen-Regeneron Partners is now running an intrathecal study and subcutaneous studies that began in Q1 1998 to test that signal prospectively. Sumitomo plans a Phase I safety study in Japan. Results are uncertain, and a further failure could materially hurt the company.
How much cash does Regeneron have, and is it enough?
Cash, equivalents, and marketable securities were $128.0 million at December 31, 1997. Management believes this supports operating needs for at least several years, but it also acknowledges that programs, collaborator funding, and capital contributions to Amgen-Regeneron Partners (about $5.7 million expected in 1998) could change that outlook. The company has no bank credit line.
What is the Procter & Gamble agreement and why does it matter?
The May 1997 ten-year collaboration, expanded in September 1997, gives P&G the right to buy up to $60.0 million of Regeneron equity over five years and to fund up to $94.7 million of research. Research costs are shared equally after year five, and products are to be co-developed and profits split equally. The company estimates it could receive more than $100 million from P&G through mid-2002. P&G's rights cover much of Regeneron's current technology, so the deal is central to the company's funding and strategy.
What are AXOKINE's prospects?
AXOKINE is a second-generation ciliary neurotrophic factor developed for obesity and Type II diabetes with P&G, and separately for retinitis pigmentosa (Phase I planned for late 1998 or early 1999) and Huntington's disease with Medtronic. The company's preclinical data suggest it is more potent than CNTF. The filing provides no clinical efficacy data, and the company has not yet started Phase I in obesity.

04—Continue

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