10-QPeriod: Q1 FY2018

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 3, 2018For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. reported a strong first quarter for 2018, with net income soaring to $478.0 million, or $4.16 per diluted share, a significant increase from $248.9 million, or $2.16 per diluted share, in the prior year's first quarter. This growth was driven by a 14.6% increase in total revenues, reaching $1.51 billion, largely propelled by robust net product sales of EYLEA in the United States, which grew by 15.2% to $984.0 million. Collaboration revenues also saw a healthy increase, particularly from Bayer, which grew by 28.3% to $247.9 million, though Sanofi collaboration revenue saw a slight decrease. Key operational highlights include continued strong performance in clinical development pipelines, with significant progress noted for Dupixent, Cemiplimab, and EYLEA. The company also adopted new accounting standards (ASC 606) which impacted revenue recognition timing from collaboration agreements, resulting in a reclassification of revenue and a reduction in retained earnings. Despite ongoing legal proceedings related to patent infringements, particularly concerning Praluent and Dupixent, the company appears financially sound, with a substantial increase in cash and cash equivalents and a solid balance sheet. Investors can look forward to continued pipeline advancements and product commercialization efforts.

Financial Highlights

45 data points
Beta

Revenue

$1.51B

95.4% Gross Margin

Net Income

$478.00M

31.6% Net Margin

EPS (Diluted)

$4.16

Total Assets

$9.37B

Cash & Equivalents

$1.03B

Free Cash Flow

$618.80M

Financial Statements
Beta
Revenue$1.51B
Cost of Revenue$69.24M
Gross Profit$1.44B
R&D Expenses$498.60M
SG&A Expenses$330.80M
Operating Expenses$944.30M
Operating Income$567.20M
Interest Expense$6.40M
Net Income$478.00M
EPS (Basic)$4.44
EPS (Diluted)$4.16
Shares Outstanding (Basic)107.60M
Shares Outstanding (Diluted)114.90M

Key Highlights

  • 1Net income more than doubled year-over-year, reaching $478.0 million ($4.16/share) in Q1 2018, up from $248.9 million ($2.16/share) in Q1 2017.
  • 2Total revenues increased by 14.6% to $1.51 billion, driven by strong EYLEA sales in the US and increased collaboration revenue from Bayer.
  • 3EYLEA net sales in the U.S. increased by 15.2% to $984.0 million, demonstrating continued market strength.
  • 4Sanofi collaboration revenue decreased by 9.9% to $189.5 million, primarily due to the end of a discovery agreement and lower reimbursement for Dupixent development.
  • 5Bayer collaboration revenue increased significantly by 28.3% to $247.9 million, indicating positive momentum in the EYLEA partnership outside the U.S.
  • 6The company adopted ASC 606, resulting in a $143.4 million reduction in retained earnings and adjustments to deferred revenue recognition for collaboration agreements.
  • 7Cash and cash equivalents increased by 25.4% to $1.02 billion, bolstering the company's liquidity position.

Frequently Asked Questions

Regeneron demonstrated significant financial growth in the first quarter of 2018. Net income more than doubled to $478.0 million ($4.16 per diluted share) from $248.9 million ($2.16 per diluted share) in Q1 2017. Total revenues increased by 14.6% to $1.51 billion, primarily driven by a 15.2% rise in EYLEA sales in the United States and a substantial increase in collaboration revenue from Bayer.

The Bayer collaboration saw a strong performance with revenue increasing by 28.3% to $247.9 million, driven by EYLEA sales outside the U.S. The Sanofi collaboration revenue experienced a slight decrease of 9.9% to $189.5 million. This reduction was mainly attributed to the end of a discovery agreement and lower reimbursement for Dupixent development, although specific product sales under the collaboration, like Dupixent and Kevzara, showed positive early traction.

Regeneron adopted Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, as of January 1, 2018, using the modified retrospective method. This adoption resulted in a cumulative-effect adjustment that reduced retained earnings by $143.4 million (net of tax) and impacted the timing of revenue recognition for collaboration agreements. Prior period financial statements were not restated.

Regeneron's liquidity improved significantly in the first quarter of 2018. Cash and cash equivalents increased by 25.4% to $1.02 billion from $811.8 million at the end of 2017. Marketable securities also saw an increase, leading to a total of $3.45 billion in financial assets. Working capital also grew, indicating a healthy financial position.