01—Abstract
Summary
Summary of the 10-K filed February 6, 2023. Cited figures are marked; the original filing is the authoritative source.
Regeneron's FY2022 10-K shows a company in transition.
Total revenues fell 24% to $12.17 billiona from $16.07 billion in 2021, driven by the roughly $5.8 billion of REGEN-COV U.S. government sales that did not recur. Net income fell 46% to $4.34 billion, and diluted EPS dropped to $38.22 from $71.97. Underlying franchise performance was strong: U.S. EYLEA rose 8% to $6.26 billion, Dupixent-related profit share rose sharply (Regeneron's share of Antibody collaboration profits reached $2.08 billion), and Libtayo was brought in-house worldwide in July 2022 for a $900 million up-front payment plus a $100 million regulatory milestone.
The filing also highlights concentration and forward risks. EYLEA represented about 51%b of 2022 revenue, and its U.S. regulatory exclusivity expires May 17, 2024, opening the door to biosimilar competition. Two customers accounted for 83% of gross U.S. product revenue.
Pending litigation includes the Praluent patent fight with Amgen, the DOJ Anti-Kickback and False Claims Act matters tied to EYLEA and other products, and several EYLEA biosimilar patent disputes. Management also disclosed that REGEN-COV is no longer authorized in any U.S. jurisdiction after a December 2022 complete response letter, forcing inventory write-downs of $258.7 millionc. Balance sheet and cash generation remain robust.
Cash and marketable securities totaled $14.3 billiond against $2.0 billion of long-term notes plus a $720 million Tarrytown finance lease. Operating cash flow was $5.0 billion, and the company repurchased $2.1 billion of stock while authorizing an additional $3.0 billion program in January 2023. Key 2023 catalysts include the aflibercept 8 mg BLA decision (Q3 2023), odronextamab and linvoseltamab BLA submissions, and the Phase 3 program starts for fianlimab and other oncology candidates.
02—Key points
Key Highlights
- Revenue declined 24% to $12.17B (2021: $16.07B) as $5.8B of 2021 REGEN-COV U.S. government sales did not recur; underlying revenue ex-COVID grew meaningfully.
- Net income fell to $4.34B ($38.22 diluted EPS) from $8.08B ($71.97) in 2021, largely due to the REGEN-COV roll-off and $258.7M of inventory write-offs and reserves.
- EYLEA U.S. net sales grew 8% to $6.26B, but EYLEA still represented ~51% of total revenue, creating major concentration risk ahead of biosimilar entry after May 17, 2024.
- Libtayo acquired worldwide rights from Sanofi effective July 2022 for a $900M up-front payment, with an $1.03B intangible asset recorded; Regeneron now pays Sanofi an 11% royalty through 2034.
- Strong cash position: $14.3B in cash and marketable securities versus ~$2.7B of debt and finance lease obligations; $5.0B of operating cash flow and $2.1B of share repurchases in 2022, plus a new $3.0B buyback authorized in January 2023.
- Pipeline catalysts for 2023 include the aflibercept 8 mg BLA decision (Q3 2023), BLA submissions for odronextamab and linvoseltamab, Dupixent pediatric EoE and CSU filings, and Phase 3 starts for fianlimab.
- Significant legal and regulatory overhang: DOJ Anti-Kickback and False Claims Act investigations into EYLEA, the Massachusetts U.S. Attorney's civil suit, related payor RICO suits, and Praluent patent litigation with Amgen (Supreme Court review scheduled for March 2023).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 6, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $12.17B$16.07B | −24.3% |
| R&D Expenses | $3.59B$2.86B | +25.6% |
| SG&A Expenses | $2.12B$1.82B | +15.9% |
| Operating Expenses | $7.43B$7.12B | +4.3% |
| Operating Income | $4.74B$8.95B | −47.0% |
| Interest Expense | $59.40M$57.30M | +3.7% |
| Net Income | $4.34B$8.08B | −46.3% |
| EPS (Basic) | $40.51$76.40 | −47.0% |
| EPS (Diluted) | $38.22$71.97 | −46.9% |
| Shares Outstanding (Basic) | 107.10M105.70M | +1.3% |
| Shares Outstanding (Diluted) | 113.50M112.20M | +1.2% |
05—Questions
Frequently Asked Questions
Why did Regeneron's revenue and earnings decline so sharply in 2022?
The decline was driven mainly by the absence of REGEN-COV sales to the U.S. government, which contributed roughly $5.8 billion of net product sales in 2021. Net product sales therefore fell to $6.89B from $12.12B. Net income also absorbed $258.7M of REGEN-COV-related inventory write-downs and a higher income tax rate compared with the prior year's COVID-era profits. Core products, especially EYLEA in the U.S. and Dupixent profit-sharing, grew.
How concentrated is Regeneron's revenue, and what is the biggest risk to it?
EYLEA U.S. sales represented about 51% of 2022 total revenue, and two customers (Besse Medical and McKesson) accounted for 83% of gross U.S. product revenue. The biggest risk is biosimilar competition: the FDA regulatory exclusivity period for EYLEA expires May 17, 2024, and several companies are developing aflibercept biosimilars. Regeneron is also litigating against several biosimilar filers, and its aflibercept 8 mg (pending FDA decision in Q3 2023) is intended as a successor product, though its eventual revenue offset is described as highly uncertain.
What is the status of REGEN-COV and what does it mean for future revenue?
REGEN-COV is no longer authorized for use in any U.S. jurisdiction because the FDA revised its Emergency Use Authorization in January 2022 to exclude Omicron-susceptible regions, and in December 2022 the FDA issued a complete response letter on the BLA for non-hospitalized treatment. Regeneron recognized no U.S. REGEN-COV sales in 2022 and records only its share of global gross profits from Roche (about $627M in 2022). Future revenue depends on reauthorization or on next-generation COVID antibodies, which management says cannot be predicted.
How strong is Regeneron's balance sheet and capital return program?
The balance sheet remains very strong, with $3.1B of cash and equivalents and $11.2B of marketable securities at year-end 2022 against $2.0B of senior unsecured notes and a $720M Tarrytown finance lease. The company has an undrawn $750M revolving credit facility. It repurchased $2.1B of stock in 2022 and authorized an additional $3.0B repurchase program in January 2023, with $745M remaining under the prior authorization. Management expects existing resources to meet operating needs for the foreseeable future, though 2023 capital expenditures of $825M to $950M will be significant.
06—Continue