10-QPeriod: Q2 FY2009

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 4, 2009For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. (REGN) reported its financial results for the second quarter and first half of 2009. The company continues to operate at a net loss, with a loss of $14.9 million for Q2 2009 and $30.3 million for the first half of 2009. Despite the losses, revenues showed a significant increase, driven by higher contract research and development revenue from collaborations with sanofi-aventis and Bayer HealthCare, as well as increased net product sales of ARCALYST®. Research and development expenses also increased, reflecting the company's expanding pipeline and ongoing clinical trials. Key financial developments include a strengthening cash position and strategic shifts in the company's investment portfolio towards higher-quality securities. Regeneron also reported progress in its late-stage clinical programs for aflibercept and VEGF Trap-Eye, with enrollment continuing and initial data expected in 2010. The company noted a significant amendment to its Tarrytown, NY lease agreement and provided an update on its collaboration with Bayer HealthCare for VEGF Trap-Eye, including a recently received $20 million milestone payment.

Financial Highlights

20 data points
Beta

Revenue

$90.03M

99.5% Gross Margin

Net Income

-$14.94M

-16.6% Net Margin

Cash & Equivalents

$271.47M

Free Cash Flow

-$16.00M

Financial Statements
Beta
Revenue$90.03M
Cost of Revenue$435K
Gross Profit$89.60M
R&D Expenses$94.23M
SG&A Expenses$11.63M
Operating Expenses$106.30M
Operating Income-$16.27M
Interest Expense$0
Net Income-$14.94M

Key Highlights

  • 1Net loss for Q2 2009 was $14.9 million ($0.19 per share), an improvement from $18.7 million ($0.24 per share) in Q2 2008.
  • 2First half 2009 net loss was $30.3 million ($0.38 per share), largely stable compared to $30.5 million ($0.39 per share) in the first half of 2008.
  • 3Total revenues increased significantly, reaching $90.0 million in Q2 2009 (up from $60.7 million in Q2 2008) and $165.0 million in the first half of 2009 (up from $117.0 million in the same period of 2008).
  • 4Research and development expenses rose to $94.2 million in Q2 2009 (from $66.8 million in Q2 2008) and $174.5 million in the first half of 2009 (from $128.3 million in the first half of 2008), reflecting pipeline expansion.
  • 5Cash, cash equivalents, restricted cash, and marketable securities totaled $466.4 million as of June 30, 2009.
  • 6The company initiated patient enrollment in Phase 3 trials for ARCALYST in gout prevention and treatment, and advanced its aflibercept and VEGF Trap-Eye programs with ongoing Phase 3 enrollment.
  • 7Regeneron received a $20.0 million milestone payment in July 2009 related to the dosing of the first patient in a Phase 3 trial of VEGF Trap-Eye for Central Retinal Vein Occlusion.

Frequently Asked Questions

Regeneron continues to experience net losses, with $14.9 million for the second quarter and $30.3 million for the first half of 2009. However, revenues have shown strong growth, driven by collaborations and ARCALYST sales. The company anticipates substantial losses to continue over the next several years due to ongoing R&D investments but believes its current capital resources and anticipated collaboration funding will support operations through at least 2012.

Regeneron is advancing its late-stage clinical programs. Aflibercept (VEGF Trap) has four Phase 3 trials underway for various cancer indications, with initial data expected in 2010. VEGF Trap-Eye is in Phase 3 trials for wet AMD and CRVO, with data also expected in 2010. ARCALYST is in Phase 3 trials for gout, with initial data anticipated in 2010. The company is also developing several monoclonal antibodies in collaboration with sanofi-aventis.

Regeneron maintained a healthy liquidity position, with $466.4 million in cash, cash equivalents, and marketable securities as of June 30, 2009. The company has been strategically shifting its investment portfolio towards higher-quality securities, such as U.S. Treasury and government agency securities, to reduce risk. Capital expenditures remain significant, primarily related to manufacturing facility expansion and new leased facilities.

Regeneron amended its lease for Tarrytown, NY facilities to increase the leased space. Due to accounting standards (EITF 97-10), the company is effectively deemed the owner during construction, leading to capitalization of landlord costs and a corresponding increase in long-term liabilities. This revision, however, consists of non-cash adjustments and did not impact current cash resources or operating cash flows.