10-QPeriod: Q1 FY2006

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q1 Ended Mar 31, 2006

Filed May 8, 2006For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. reported a net loss of $20.4 million for the first quarter of 2006, a significant increase from the $4.1 million net loss in the same period of 2005. This widening loss is attributed to a decrease in other income, primarily due to the absence of a one-time $25 million payment from sanofi-aventis received in Q1 2005 related to a collaboration agreement amendment. Total revenues saw a modest increase of $2.0 million to $18.2 million, driven by growth in both contract research and development and contract manufacturing revenues. The company is actively advancing its key product candidates, VEGF Trap (in oncology and ophthalmology) and IL-1 Trap (in inflammatory diseases), with ongoing clinical trials and strategic collaborations, particularly with sanofi-aventis for the VEGF Trap. Despite the increased net loss and ongoing substantial investment in research and development, the company maintains a healthy cash position and expects existing capital resources to sustain operations through at least mid-2008, though future funding needs remain a consideration.

Key Highlights

  • 1Net loss widened to $20.4 million ($0.36/share) in Q1 2006 from $4.1 million ($0.07/share) in Q1 2005, largely due to the absence of a significant one-time payment from sanofi-aventis in the prior year.
  • 2Total revenues increased by 12.3% to $18.2 million, driven by higher contract research and development revenue from sanofi-aventis and increased contract manufacturing revenue from Merck.
  • 3Significant investment continues in research and development, with expenses totaling $32.1 million, focused on advancing the VEGF Trap (oncology and eye diseases) and IL-1 Trap (inflammatory diseases) programs.
  • 4The company received a $25 million non-refundable, up-front payment from sanofi-aventis in January 2006 related to the expansion of their VEGF Trap collaboration to include Japan.
  • 5Cash and cash equivalents, along with marketable securities, stood at $324.2 million as of March 31, 2006, providing a solid liquidity position.
  • 6Regeneron anticipates its current capital resources will be sufficient to fund operations through at least mid-2008, though future financing may be required.
  • 7The company adopted SFAS 123R (Share-Based Payment) effective January 1, 2006, resulting in a cumulative effect adjustment of $0.8 million that reduced the Q1 2006 net loss.

Frequently Asked Questions

Regeneron reported a net loss of $20.4 million, or $0.36 per share, for the first quarter of 2006. This is a wider loss compared to the $4.1 million net loss, or $0.07 per share, reported in the same period of 2005. The increase in net loss was primarily influenced by the absence of a $25 million one-time payment from sanofi-aventis received in the first quarter of 2005.

Total revenues for the first quarter of 2006 increased by approximately 12% to $18.2 million, up from $16.2 million in the first quarter of 2005. This growth was driven by an increase in contract research and development revenue, largely from the sanofi-aventis collaboration, and higher contract manufacturing revenue from Merck.

Regeneron's core focus remains on three primary development programs: VEGF Trap (for oncology and eye diseases), VEGF Trap-Eye (specifically for eye diseases), and IL-1 Trap (for inflammatory indications). The company is progressing these candidates through various stages of clinical trials and is actively pursuing collaborations to advance their development.

As of March 31, 2006, Regeneron had $324.2 million in cash, cash equivalents, and marketable securities. The company believes its existing capital resources are sufficient to meet operating needs through at least mid-2008. However, substantial ongoing investment in research and development means that future financing needs will likely need to be addressed.