10-QPeriod: Q2 FY2020

REGENERON PHARMACEUTICALS, INC. Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 5, 2020For Securities:REGN

Summary

Regeneron Pharmaceuticals, Inc. (REGN) reported a strong second quarter of 2020, with significant increases in both revenue and net income compared to the prior year. Total revenues grew by approximately 24% to $1.95 billion, driven by substantial growth in net product sales for Dupixent and Libtayo, along with increased collaboration revenue from Sanofi. Net income more than quadrupled year-over-year, reaching $897.3 million, or $7.61 per diluted share. This financial performance reflects the robust commercial execution across key products and ongoing advancements in the company's extensive clinical pipeline, including progress on REGN-COV2 for COVID-19. Despite the positive financial results, the company is navigating a complex operating environment due to the COVID-19 pandemic, which has impacted clinical trial enrollment and supply chain operations, though management has stated no material impact on financial statements as of this report. Significant events during the quarter included the end of the Praluent collaboration with Sanofi, with Regeneron now solely responsible for U.S. commercialization. Additionally, Sanofi completed a significant sale of its Regeneron shares, reducing its ownership stake. The company also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

43 data points
Beta

Revenue

$1.95B

Net Income

$897.30M

46.0% Net Margin

EPS (Diluted)

$7.61

Total Assets

$14.43B

Cash & Equivalents

$2.00B

Free Cash Flow

$943.40M

Financial Statements
Beta
Revenue$1.95B
R&D Expenses$722.00M
SG&A Expenses$348.30M
Operating Expenses$1.30B
Operating Income$656.40M
Interest Expense$9.70M
Net Income$897.30M
EPS (Basic)$8.19
EPS (Diluted)$7.61
Shares Outstanding (Basic)109.60M
Shares Outstanding (Diluted)117.90M

Key Highlights

  • 1Total revenues increased by 24% to $1.95 billion for the three months ended June 30, 2020, compared to $1.58 billion in the prior year period.
  • 2Net income surged by 364% to $897.3 million for the three months ended June 30, 2020, compared to $193.1 million in the prior year period.
  • 3Diluted earnings per share (EPS) rose to $7.61 from $1.68 in the comparable prior year period.
  • 4Net product sales for Dupixent increased significantly by 70% to $945.0 million for the three months ended June 30, 2020, driven by strong growth in the U.S. market.
  • 5Collaboration revenue from Sanofi saw a substantial increase of 255% to $269.1 million, largely due to higher profit sharing from Dupixent and Kevzara, and reimbursement for manufacturing.
  • 6The company repurchased approximately $5.4 billion of its common stock during the first six months of 2020, including a $5 billion purchase from Sanofi.
  • 7Research and development expenses decreased by approximately 18% to $722.0 million for the three months ended June 30, 2020, reflecting lower spending on certain programs and collaboration reimbursements.

Frequently Asked Questions

Regeneron's financial performance in Q2 2020 was primarily driven by strong net product sales growth, particularly for Dupixent and Libtayo, and increased collaboration revenue from Sanofi, largely stemming from higher profit sharing on Dupixent and Kevzara, as well as manufacturing reimbursements. The company also benefited from the restructuring of its Praluent agreement with Sanofi.

Regeneron noted that the COVID-19 pandemic has impacted clinical trial enrollment and supply chain operations. However, management stated that there was no material impact on the condensed consolidated financial statements for the period ending June 30, 2020. Net product sales of EYLEA in the U.S. saw a decrease in Q2 2020 compared to the prior year, partly attributed to the pandemic's impact on patient visits and elective procedures.

Effective April 1, 2020, Regeneron and Sanofi amended their antibody collaboration to remove Praluent. Regeneron is now solely responsible for Praluent's U.S. commercialization, while Sanofi handles it internationally and pays Regeneron a royalty. Sanofi also completed a significant sale of its Regeneron shares during the quarter, reducing its ownership stake substantially.

Regeneron's liquidity remains strong with substantial cash and marketable securities. The company actively manages its capital, evidenced by the $5.4 billion spent on share repurchases in the first half of 2020, including a significant purchase from Sanofi. Additionally, the company has a $1.0 billion share repurchase program authorized, with $473.1 million remaining available as of June 30, 2020.