10-QPeriod: Q3 FY2013

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 5, 2013For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. (REGN) reported a strong third quarter and first nine months of 2013, driven by significant growth in EYLEA® net product sales in the U.S. Total revenues increased by 40% in Q3 2013 to $597.0 million and by 55% for the nine-month period to $1,494.3 million compared to the prior year. This growth was bolstered by milestone payments from collaborations with Bayer HealthCare related to EYLEA's international commercialization. Despite increased operating expenses, primarily in research and development and selling, general, and administrative functions due to headcount expansion and increased clinical trial activities, the company maintained profitability. Net income for Q3 2013 was $141.3 million, or $1.25 per diluted share, and $327.6 million, or $2.95 per diluted share, for the nine months. The company's cash position also strengthened, with cash, cash equivalents, and marketable securities reaching $775.2 million at the end of the period.

Financial Highlights

46 data points
Beta

Revenue

$597.03M

95.3% Gross Margin

Net Income

$141.31M

23.7% Net Margin

EPS (Diluted)

$1.25

Total Assets

$2.64B

Cash & Equivalents

$263.21M

Free Cash Flow

$92.45M

Financial Statements
Beta
Revenue$597.03M
Cost of Revenue$28.25M
Gross Profit$568.77M
R&D Expenses$224.04M
SG&A Expenses$97.61M
Operating Expenses$360.23M
Operating Income$236.80M
Interest Expense$11.74M
Net Income$141.31M
EPS (Basic)$1.44
EPS (Diluted)$1.25
Shares Outstanding (Basic)98.23M
Shares Outstanding (Diluted)116.71M

Key Highlights

  • 1EYLEA® net product sales in the U.S. surged by 49% year-over-year in Q3 2013 to $363.1 million and by 79% for the first nine months to $1,006.8 million.
  • 2Collaboration revenue from Bayer HealthCare significantly increased by 230% in Q3 2013 to $88.6 million, driven by milestone payments related to EYLEA's international sales and regulatory approvals.
  • 3Total revenues increased by 40% in Q3 2013 to $597.0 million and by 55% for the nine months to $1,494.3 million, reflecting strong product sales and collaboration income.
  • 4Research and Development (R&D) expenses increased by 42% in Q3 2013 to $224.0 million and by 33% for the nine months to $591.8 million, supporting ongoing clinical programs.
  • 5Selling, General, and Administrative (SG&A) expenses more than doubled in Q3 2013 to $97.6 million and increased by 61% for the nine months to $247.3 million, largely due to commercialization efforts and increased headcount.
  • 6Net income for Q3 2013 was $141.3 million ($1.25/share), a decrease from $191.5 million ($1.72/share) in Q3 2012, primarily due to higher operating and tax expenses.
  • 7The company's cash, cash equivalents, and marketable securities increased to $775.2 million as of September 30, 2013, from $587.5 million at the end of 2012, indicating a strong liquidity position.

Frequently Asked Questions

The primary driver of revenue growth is the strong performance of EYLEA® net product sales in the United States. Additionally, collaboration revenue from Bayer HealthCare has significantly increased, boosted by milestone payments related to EYLEA's international commercialization and regulatory approvals.

The increase in R&D expenses is attributed to expanded clinical trial activities for key products like alirocumab and dupilumab, and increased clinical manufacturing costs. The rise in SG&A expenses is primarily due to intensified commercialization efforts for EYLEA, increased headcount, and higher administrative costs associated with business growth.

Regeneron remains profitable, reporting net income of $141.3 million for Q3 2013 and $327.6 million for the first nine months. However, net income decreased year-over-year in Q3 due to higher operating expenses and increased income tax provisions. The company's ability to sustain profitability is closely tied to the continued success of EYLEA sales and effective management of its growing R&D and commercialization investments.

Regeneron's financial health appears robust. Cash, cash equivalents, and marketable securities significantly increased to $775.2 million as of September 30, 2013. This strong liquidity position provides ample resources to fund ongoing operations, research and development activities, and potential future investments.