10-QPeriod: Q3 FY2002

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2002

Filed November 12, 2002For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. reported a net loss of $32.8 million ($0.75 per share) for the third quarter of 2002, an increase from the $19.9 million ($0.46 per share) net loss in the same period of 2001. This widening loss is primarily driven by a significant increase in research and development expenses, which rose to $34.3 million from $25.0 million year-over-year, largely due to the advancement of its Phase III clinical program for AXOKINE and increased staffing. Total revenues for the quarter saw a modest increase to $6.6 million from $5.5 million, boosted by contract manufacturing revenue which included a non-recurring payment from Merck. For the nine-month period ended September 30, 2002, the company's net loss was $88.7 million ($2.02 per share), compared to a loss of $47.8 million ($1.15 per share) in the prior year. This substantial increase in losses over the nine months is also attributable to higher R&D spending, with a notable acceleration in the AXOKINE Phase III program. The company's cash position has decreased significantly from $247.4 million at the end of 2001 to $75.6 million as of September 30, 2002, reflecting the substantial investment in its development pipeline and ongoing operations. Despite the increased burn rate, management anticipates existing capital resources will be sufficient to meet operating needs through at least 2003.

Key Highlights

  • 1Net loss for Q3 2002 increased to $32.8 million ($0.75/share) from $19.9 million ($0.46/share) in Q3 2001.
  • 2Nine-month net loss widened to $88.7 million ($2.02/share) from $47.8 million ($1.15/share) in the prior year.
  • 3Research and Development (R&D) expenses significantly increased, up to $34.3 million in Q3 2002 from $25.0 million in Q3 2001, driven by the AXOKINE Phase III program.
  • 4Total revenues for Q3 2002 increased to $6.6 million from $5.5 million in Q3 2001, aided by contract manufacturing revenue and a one-time payment from Merck.
  • 5Cash and cash equivalents decreased substantially, from $247.4 million at year-end 2001 to $75.6 million at September 30, 2002.
  • 6The company issued $200 million in convertible senior subordinated notes in October 2001, leading to increased interest expense in the current periods.
  • 7Management believes current capital resources are sufficient to meet operating needs through at least 2003.

Frequently Asked Questions

For the third quarter of 2002, Regeneron reported a net loss of $32.8 million, or $0.75 per share. This is an increase compared to a net loss of $19.9 million, or $0.46 per share, reported in the same period of 2001. The widening loss is primarily attributed to increased research and development expenses.

The primary driver for increased operating expenses is the significant rise in Research and Development (R&D) costs. For the third quarter of 2002, R&D expenses were $34.3 million, up from $25.0 million in the prior year. This increase is largely due to the ongoing Phase III clinical program for AXOKINE, expanded research programs, and additional staffing to support these activities.

The company's cash and cash equivalents have seen a substantial decrease, falling from $247.4 million at December 31, 2001, to $75.6 million at September 30, 2002. This reduction reflects significant investments in R&D and ongoing operations. Despite this decrease, management believes that its existing capital resources are sufficient to meet operating needs through at least 2003.

Regeneron is advancing several product candidates, with AXOKINE being a major focus. The Phase III clinical program for AXOKINE in obese subjects is ongoing, with the primary pivotal trial expected to complete its treatment period in January 2003. The company also initiated additional studies in the AXOKINE Phase III program in the second quarter of 2002 to assess safety and efficacy in various patient groups, including those with type 2 diabetes.