10-QPeriod: Q3 FY2006

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2006

Filed November 6, 2006For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. reported a net loss of $27.4 million for the third quarter of 2006, a slight improvement from the $34.7 million loss in the same period of 2005. Revenues for the quarter were $15.6 million, down from $16.2 million year-over-year, primarily due to a decrease in contract manufacturing revenue. Research and development expenses also saw a decrease, falling to $34.8 million from $41.1 million, largely attributed to a reduction in headcount and lower clinical trial expenses for the IL-1 Trap program. A significant event during the quarter was the October 2006 collaboration agreement with Bayer HealthCare LLC for the VEGF Trap-Eye, which included a $75 million upfront payment. This partnership aims to develop and commercialize the VEGF Trap-Eye for eye diseases globally, with Regeneron retaining U.S. commercialization rights. The company's pipeline remains active with ongoing Phase 2 studies for VEGF Trap in oncology and initial Phase 2 trials for VEGF Trap-Eye in wet AMD and diabetic macular edema.

Key Highlights

  • 1Net loss for Q3 2006 was $27.4 million ($0.48 per share), an improvement from a $34.7 million loss ($0.62 per share) in Q3 2005.
  • 2Total revenues decreased to $15.6 million in Q3 2006 from $16.2 million in Q3 2005, driven by lower contract manufacturing revenue.
  • 3Research and development expenses decreased to $34.8 million in Q3 2006 from $41.1 million in Q3 2005, reflecting reduced headcount and program costs.
  • 4Regeneron entered into a significant collaboration agreement with Bayer HealthCare for the VEGF Trap-Eye in October 2006, receiving a $75 million upfront payment.
  • 5The company continues to advance its pipeline with ongoing Phase 2 studies for VEGF Trap in oncology and initial Phase 2 trials for VEGF Trap-Eye.
  • 6Cash, cash equivalents, and marketable securities stood at $289.6 million as of September 30, 2006.

Frequently Asked Questions

For the third quarter of 2006, Regeneron reported a net loss of $27.4 million, or $0.48 per share, which is an improvement compared to a net loss of $34.7 million, or $0.62 per share, in the same period of 2005. Total revenues for the quarter were $15.6 million, a slight decrease from $16.2 million in the prior year, primarily due to lower contract manufacturing revenue. Operating expenses decreased to $43.9 million from $50.6 million, largely driven by a reduction in headcount and lower research and development expenses.

A major development was the October 2006 collaboration agreement with Bayer HealthCare LLC for the VEGF Trap-Eye, which included a $75 million upfront payment. This partnership focuses on the global development and commercialization of the VEGF Trap-Eye for eye diseases. In the oncology space, the VEGF Trap is in Phase 2 studies with sanofi-aventis. The VEGF Trap-Eye is undergoing Phase 2 trials for wet AMD and a pilot study for diabetic macular edema. Additionally, positive Phase 3 data for the IL-1 Trap in CAPS was announced, with a Biologics License Application planned for Q2 2007.

As of September 30, 2006, Regeneron had $289.6 million in cash, cash equivalents, and marketable securities. The company used $30.2 million in cash for operating activities in the first nine months of 2006. Regeneron anticipates substantial funding requirements for ongoing research and development activities and expects its existing capital resources to meet operating needs through at least mid-2009. Future financing may be sought through collaborative arrangements or public/private offerings.