10-QPeriod: Q1 FY2012

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 26, 2012For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. (REGN) reported a significant shift from a net loss in Q1 2011 to a net income of $11.7 million ($0.11/diluted share) in Q1 2012. This turnaround was primarily driven by the launch of EYLEA® (aflibercept) Injection for wet age-related macular degeneration (AMD) in November 2011, which generated $123.5 million in net product sales during the quarter. Total revenues surged to $231.8 million, up from $112.2 million in the prior year's quarter, largely due to EYLEA's performance and sustained collaboration revenues from Sanofi and Bayer HealthCare. While R&D expenses increased to $138.9 million, reflecting ongoing clinical development, Selling, General, and Administrative expenses also rose significantly to $58.4 million, driven by EYLEA's commercialization efforts. Despite increased operating expenses, the strong product sales of EYLEA have propelled the company to profitability. Regeneron continues to advance a robust pipeline with 13 product candidates in clinical development, including EYLEA for other eye diseases, ZALTRAP® for oncology in collaboration with Sanofi, and ARCALYST® for gout flares.

Financial Statements
Beta
Revenue$231.79M
Cost of Revenue$12.30M
Gross Profit$219.49M
R&D Expenses$138.86M
SG&A Expenses$58.43M
Operating Expenses$209.59M
Operating Income$22.20M
Interest Expense$11.16M
Net Income$11.65M
EPS (Basic)$0.12
EPS (Diluted)$0.11
Shares Outstanding (Basic)93.45M
Shares Outstanding (Diluted)107.73M

Key Highlights

  • 1Net income turned positive at $11.7 million for Q1 2012, compared to a net loss of $43.4 million in Q1 2011.
  • 2EYLEA® net product sales reached $123.5 million in its first full quarter post-launch, significantly driving revenue growth.
  • 3Total revenues increased to $231.8 million from $112.2 million year-over-year, primarily due to EYLEA sales.
  • 4Research and Development expenses rose to $138.9 million, reflecting continued investment in a broad pipeline of 13 product candidates.
  • 5Selling, General, and Administrative expenses increased to $58.4 million, largely due to commercialization efforts for EYLEA.
  • 6Cash, cash equivalents, and marketable securities stood at $695.2 million, though operating activities used $87.0 million in cash, partly due to a significant increase in accounts receivable related to EYLEA sales.
  • 7Regeneron continues to advance its 'Trap' and antibody-based clinical programs, with regulatory decisions expected for ZALTRAP and ARCALYST in the coming months.

Frequently Asked Questions

The primary driver is the successful launch and strong initial sales of EYLEA® (aflibercept) Injection for the treatment of wet age-related macular degeneration (wet AMD), which generated $123.5 million in net product sales in its first full quarter.

EYLEA's strong performance has led to a significant increase in total revenues to $231.8 million for the quarter, enabling the company to report a net income of $11.7 million, a substantial improvement from the net loss of $43.4 million reported in the same quarter last year.

Regeneron continues to invest heavily in its pipeline, with 13 product candidates in clinical development. Regulatory decisions are anticipated in the coming months for ZALTRAP® (aflibercept) in oncology and ARCALYST® for gout flares, which could provide further growth opportunities.

Key risks include the dependency on continued EYLEA sales and potential regulatory hurdles for pipeline candidates, the significant increase in operating expenses (especially SG&A) related to commercialization, potential patent litigation with Genentech, and the need to manage manufacturing capacity and supply chain effectively.