10-QPeriod: Q2 FY2002

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q2 Ended Jun 30, 2002

Filed August 13, 2002For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. (REGN) reported its financial results for the period ending June 30, 2002. The company experienced a significant increase in operating expenses, particularly in research and development, driven by advancements in its clinical programs, notably the Phase III trials for AXOKINE. While total revenues saw a slight decrease compared to the prior year's period, contract manufacturing revenue showed a modest increase. The company's net loss widened considerably due to these increased R&D investments and higher interest expenses from a recent convertible debt issuance. Regeneron's liquidity remains a key focus, with substantial cash and marketable securities on hand. However, the company anticipates continued significant funding requirements for its extensive research and development activities, including clinical trials for its various pipeline candidates like AXOKINE, IL1 Trap, and VEGF Trap. Management projects R&D expenses to increase by over 30% in 2002 and anticipates needing to secure additional funding through collaborations or financing to support its long-term growth strategy, with current resources expected to cover operations through at least 2003.

Key Highlights

  • 1Net loss for the six months ended June 30, 2002, was $55.9 million ($1.27 per share), a significant increase from $27.9 million ($0.69 per share) in the same period of 2001.
  • 2Research and development expenses increased substantially to $56.2 million for the first six months of 2002, up from $36.4 million in the prior year, primarily due to expanded clinical trial activities, especially for AXOKINE.
  • 3Total revenues decreased to $10.5 million for the first six months of 2002 from $12.1 million in the prior year, with contract R&D revenue declining as studies for Amgen-Regeneron Partners concluded.
  • 4Cash and cash equivalents, marketable securities, and restricted marketable securities totaled $374.0 million as of June 30, 2002, providing a cushion for ongoing operations.
  • 5The company issued $200.0 million in convertible senior subordinated notes in October 2001, contributing to a significant increase in interest expense.
  • 6Significant progress was reported in clinical programs, including Phase III trials for AXOKINE, Phase II for IL1 Trap, and IND submission for IL4/13 Trap.
  • 7Regeneron anticipates continued substantial funding requirements and expects R&D expenses to increase by over 30% in 2002, with current resources estimated to sustain operations through at least 2003.

Frequently Asked Questions

Regeneron reported a net loss of $30.4 million for the three months ended June 30, 2002, an increase from $14.8 million in the same period of 2001. For the six-month period, the net loss was $55.9 million, up from $27.9 million in the prior year. This widening net loss is primarily driven by a significant increase in research and development expenses, largely due to expanded clinical programs like the Phase III AXOKINE trials, and increased interest expense from the recent convertible note issuance.

As of June 30, 2002, Regeneron held $374.0 million in cash, cash equivalents, and marketable securities. The company anticipates substantial funding needs for its ongoing R&D activities and expects R&D expenses to grow significantly in 2002. While current resources are projected to cover operations through at least 2003, management may seek additional funding through future collaboration agreements or public/private financing. There are no established short-term financing arrangements or lines of credit.

Regeneron made notable progress across several pipeline candidates. For AXOKINE, the Phase III program continued with enrollment in pivotal trials and initiation of new studies for obese patients with type 2 diabetes. A Phase I trial for pegylated AXOKINE also commenced. In the IL1 Trap program, positive preliminary results from a Phase I study were reported, and a Phase II trial was initiated. Additionally, an IND application was submitted to the FDA for the IL4/13 Trap for asthma, and a Phase I trial for VEGF Trap continued.

Total revenues for the six months ended June 30, 2002, decreased to $10.5 million from $12.1 million in the prior year, mainly due to a decline in contract R&D revenue as certain studies concluded. Contract manufacturing revenue saw a slight increase in the second quarter of 2002 but decreased in the six-month period, primarily related to the long-term agreement with Merck for a vaccine intermediate, due to lower product shipments. Operating expenses rose significantly, with R&D expenses being the largest component, reflecting increased investment in clinical development.