10-QPeriod: Q3 FY2016

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 4, 2016For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. reported solid financial results for the third quarter and first nine months of 2016, demonstrating strong revenue growth driven primarily by EYLEA sales. Total revenues increased by 7% for the quarter and 21% year-to-date, reaching $1.22 billion and $3.63 billion, respectively. Net income also saw a significant rise, up 26% for the quarter and 33% year-to-date, reaching $264.8 million and $642.4 million, respectively. This growth reflects successful commercialization efforts for EYLEA and continued progress in key collaboration programs with Sanofi and Bayer. Key developments include ongoing clinical trials for several promising product candidates, notably Dupixent for allergic and inflammatory conditions, and Praluent for cholesterol management. The company's investment in research and development remains robust, indicating a commitment to expanding its pipeline. Despite legal challenges, particularly concerning Praluent, and the ongoing costs associated with its extensive pipeline, Regeneron's financial performance appears strong and positioned for continued growth, supported by its strategic collaborations and its core product, EYLEA.

Financial Highlights

44 data points
Beta

Revenue

$1.22B

97.5% Gross Margin

Net Income

$264.80M

21.7% Net Margin

EPS (Diluted)

$2.27

Total Assets

$6.83B

Cash & Equivalents

$920.36M

Free Cash Flow

$651.03M

Financial Statements
Beta
Revenue$1.22B
Cost of Revenue$29.90M
Gross Profit$1.19B
R&D Expenses$543.05M
SG&A Expenses$270.05M
Operating Expenses$857.32M
Operating Income$362.80M
Net Income$264.80M
EPS (Basic)$2.53
EPS (Diluted)$2.27
Shares Outstanding (Basic)104.83M
Shares Outstanding (Diluted)116.47M

Key Highlights

  • 1Total revenues increased by 7% to $1.22 billion for the third quarter of 2016 and by 21% to $3.63 billion for the first nine months of 2016.
  • 2Net income grew by 26% to $264.8 million for the third quarter and by 33% to $642.4 million for the first nine months of 2016.
  • 3EYLEA net product sales in the U.S. increased to $853.6 million in Q3 2016 from $734.4 million in Q3 2015, and to $2.47 billion for the first nine months of 2016 from $1.93 billion in the same period of 2015.
  • 4Collaboration revenue from Bayer increased by 27% for the quarter and 36% year-to-date, primarily due to Regeneron's share of profits from EYLEA sales outside the U.S.
  • 5Research and development expenses increased significantly, up 28% for the quarter and 36% year-to-date, reflecting ongoing investment in pipeline development.
  • 6The company initiated several new Phase 3 clinical trials and reported positive top-line results from ongoing studies, particularly for Dupixent and fasinumab.
  • 7A $250 million non-refundable up-front payment was received from Teva in September 2016 in connection with a fasinumab collaboration agreement.

Frequently Asked Questions

Regeneron's revenue growth was primarily driven by strong U.S. net product sales of EYLEA, which increased to $853.6 million in the third quarter of 2016 from $734.4 million in the same period of 2015. Collaboration revenue from Bayer also contributed significantly to the growth.

Praluent, developed with Sanofi, received marketing authorization in Japan in July 2016 and is being studied in the ODYSSEY OUTCOMES trial for cardiovascular benefit. Dupixent, also with Sanofi, has shown positive Phase 3 results for atopic dermatitis and has a pending supplemental BLA with the FDA with a target action date in March 2017.

Research and development expenses saw a substantial increase, rising by 28% to $543.0 million in Q3 2016 and by 36% to $1.57 billion for the first nine months of 2016. This reflects continued investment in their extensive pipeline of product candidates across various therapeutic areas.

Regeneron's collaborations, particularly with Sanofi and Bayer, are crucial to its financial performance. They provide significant funding for research and development and share in the profits and losses of commercialized products like EYLEA and Praluent. The upfront payments received from new collaborations, such as the $250 million from Teva for fasinumab, also contribute to revenue and liquidity.