10-QPeriod: Q2 FY2013

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 6, 2013For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. (REGN) reported strong financial performance for the second quarter and first half of 2013, primarily driven by the continued success of its lead product, EYLEA. Total revenues significantly increased year-over-year, reaching $457.6 million in Q2 2013 and $897.3 million in the first half, up from $304.4 million and $536.2 million in the respective periods of 2012. This growth was largely fueled by EYLEA net product sales, which nearly doubled in the second quarter to $329.8 million. The company also saw an increase in net income to $87.4 million ($0.79 per diluted share) for Q2 2013 and $186.3 million ($1.69 per diluted share) for the first half of 2013, a notable improvement from the prior year. Beyond EYLEA, Regeneron continues to advance its robust pipeline of antibody-based and Trap-based product candidates through significant collaborations with Sanofi and Bayer HealthCare. The company's strategic investments in research and development are reflected in increased R&D expenses, which are partially offset by collaboration revenue. The company also made progress on its infrastructure, including new lease agreements for expanded facilities, signaling a commitment to future growth. Overall, Regeneron demonstrates a strong growth trajectory driven by its key products and a promising pipeline.

Financial Highlights

46 data points
Beta

Revenue

$457.64M

94.0% Gross Margin

Net Income

$87.38M

19.1% Net Margin

EPS (Diluted)

$0.79

Total Assets

$2.38B

Cash & Equivalents

$381.68M

Free Cash Flow

$128.16M

Financial Statements
Beta
Revenue$457.64M
Cost of Revenue$27.28M
Gross Profit$430.36M
R&D Expenses$187.46M
SG&A Expenses$72.46M
Operating Expenses$299.54M
Operating Income$158.10M
Interest Expense$11.37M
Net Income$87.38M
EPS (Basic)$0.89
EPS (Diluted)$0.79
Shares Outstanding (Basic)97.70M
Shares Outstanding (Diluted)111.06M

Key Highlights

  • 1EYLEA product sales surged to $329.8 million in Q2 2013 and $643.7 million in H1 2013, marking substantial year-over-year growth and driving overall revenue.
  • 2Total revenues increased by approximately 50% year-over-year for both the second quarter ($457.6M vs $304.4M) and the first half of the year ($897.3M vs $536.2M).
  • 3Net income for H1 2013 reached $186.3 million, more than doubling compared to $88.4 million in H1 2012, with diluted EPS of $1.69 vs $0.81.
  • 4Research and development expenses increased significantly to $187.5 million in Q2 2013 and $367.8 million in H1 2013, reflecting continued investment in pipeline development.
  • 5Sanofi collaboration revenue remained robust, while Bayer HealthCare collaboration revenue saw a significant increase due to EYLEA sales outside the US.
  • 6The company is actively pursuing new indications for EYLEA, with positive Phase 3 results for Diabetic Macular Edema (DME) and plans for US regulatory submission in 2013.
  • 7Regeneron has strengthened its balance sheet with $710.8 million in cash, cash equivalents, and marketable securities as of June 30, 2013.

Frequently Asked Questions

The primary driver of revenue growth was the significant increase in net product sales of EYLEA, which nearly doubled year-over-year in the second quarter of 2013. EYLEA's strong performance in treating wet age-related macular degeneration and macular edema following central retinal vein occlusion was the key factor.

Regeneron is significantly increasing its investment in Research and Development (R&D) expenses, which rose by approximately 27% year-over-year for the second quarter ($187.5M vs $147.4M). This increased investment is largely driven by pipeline expansion and clinical trial costs for key antibody candidates like alirocumab and dupilumab. Collaboration revenues from Sanofi and Bayer HealthCare help to offset some of these R&D costs.

The company has positive Phase 3 trial results for EYLEA in Diabetic Macular Edema (DME) and expects to submit for US marketing approval in 2013, ahead of schedule. This, along with ongoing regulatory submissions for EYLEA in other indications and geographies, indicates a strong growth outlook for the product.

Regeneron demonstrated improved profitability and generated significant net income in H1 2013. The company ended the period with substantial cash reserves ($710.8 million in cash, cash equivalents, and marketable securities), indicating a healthy financial position. Key funding sources include EYLEA sales, ongoing collaboration revenues from Sanofi and Bayer HealthCare, and licensing agreements.