Regeneron Reports First Quarter 2018 Financial and Operating Results

TARRYTOWN, N.Y., May 3, 2018 /PRNewswire/ --  

• First quarter 2018 GAAP net income per diluted share increased by 93% to $4.16 versus first quarter 2017 and first quarter 2018 non-GAAP net income per diluted share increased 60% to $4.67 versus first quarter 2017
• First quarter 2018 EYLEA^® (aflibercept) Injection U.S. net sales increased 15% to $984 million versus first quarter 2017 and first quarter 2018 EYLEA global net sales⁽¹⁾ increased 20% to $1.61 billion versus first quarter 2017
• Positive results reported from Praluent^® (alirocumab) ODYSSEY OUTCOMES study
• Agreement reached with Express Scripts that provides patients with straightforward and more affordable patient access to Praluent
• Supplemental Biologics License Application for Dupixent^® (dupilumab) in asthma accepted with a target action date of October 20, 2018
• Biologics License Application for cemiplimab for the treatment of advanced cutaneous squamous cell carcinoma (CSCC) accepted for priority review
• Positive Phase 3 results reported for EYLEA in non-proliferative diabetic retinopathy trial

Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) today announced financial results for the first quarter of 2018 and provided a business update.

"Regeneron's commercial business continues to advance with positive sales growth for EYLEA and strong underlying demand for Dupixent," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron.  "This year, we have reported positive Phase 3 results for Praluent in cardiovascular risk reduction and for EYLEA in diabetic retinopathy - and look forward to continued progress with Dupixent, including a U.S. regulatory decision in uncontrolled asthma and Phase 3 results in both adolescents with atopic dermatitis and adults with nasal polyps.  Our immuno-oncology portfolio is advancing rapidly, with a potential first approval for cemiplimab in advanced cutaneous squamous cell carcinoma, and a broad pivotal program in lung cancer."

First Quarter 2018 Business Highlights

Key Pipeline Progress

Regeneron has seventeen product candidates in clinical development, which consist of EYLEA and fully human antibodies generated using the Company's VelocImmune^® technology, including six in collaboration with Sanofi.  Updates from the clinical pipeline include:

EYLEA^® (aflibercept) Injection

• In the first quarter of 2018, the Company announced positive top-line results from the Phase 3 PANORAMA study of EYLEA in moderately severe to severe non-proliferative diabetic retinopathy (NPDR).  PANORAMA will form the basis of a supplemental Biologics License Application (sBLA) to the U.S. Food and Drug Administration (FDA) by the end of the year.

Dupixent^® (dupilumab) Injection

• Dupixent, an antibody that blocks signaling of IL-4 and IL-13, is currently approved in atopic dermatitis for adults in the United States, European Union, and certain other countries outside the United States.
• Dupilumab is being studied in asthma, adolescent and pediatric atopic dermatitis, nasal polyps, and eosinophilic esophagitis (EoE), with additional studies planned in 2018. Data are expected to be reported from Phase 3 studies in patients with nasal polyps and adolescent patients with atopic dermatitis during 2018.
• In March 2018, the sBLA for Dupixent as an add-on maintenance treatment in certain adults and adolescents (12 years of age and older) with moderate-to-severe asthma was filed with the FDA, with a target action date of October 20, 2018. In the first quarter of 2018, regulatory applications were also accepted for review by the European Medicines Agency (EMA) and the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan for Dupixent in asthma.
• Dupixent for the treatment of atopic dermatitis in adults not adequately controlled with existing therapies was approved by the Ministry of Health, Labor and Welfare (MHLW) in Japan in the first quarter of 2018, and has recently been launched.
• In the first quarter of 2018, a Phase 2/3 study in younger pediatric patients (from six months to five years of age) with severe atopic dermatitis was initiated.

Praluent^® (alirocumab) Injection

• In the first quarter of 2018, the Company and Sanofi announced that the ODYSSEY OUTCOMES trial met its primary endpoint, demonstrating that high-risk patients who added Praluent to maximally-tolerated statins experienced significantly fewer major adverse cardiovascular events compared to those on maximally-tolerated statins alone. In addition, in this study, adding Praluent to maximally-tolerated statins was associated with reduced death from any cause.
• In May 2018, the Company and Sanofi announced they will lower the net price of Praluent in exchange for straightforward, more affordable patient access from Express Scripts. Praluent will become the exclusive PCSK9 inhibitor therapy on the Express Scripts national formulary. The agreement takes effect on July 1, 2018 for commercial patients covered by the Express Scripts National Preferred Formulary (approximately 25 million individuals in total).

Cemiplimab, an antibody to programmed cell death protein 1 (PD-1), is being studied in patients with cancer.

• In April 2018, the FDA accepted for priority review the BLA for cemiplimab for the treatment of patients with metastatic CSCC or patients with locally advanced CSCC who are not candidates for surgery. The target action date for the FDA decision is October 28, 2018.
• In April 2018, the EMA also accepted for review the Marketing Authorization Application (MAA) for cemiplimab in patients with metastatic CSCC or patients with locally advanced CSCC who are not candidates for surgery.

Fasinumab, an antibody targeting Nerve Growth Factor (NGF), is being studied in patients with osteoarthritis of the knee or hip and chronic low back pain in patients with concomitant osteoarthritis of the knee or hip.

• An independent Data Monitoring Committee monitoring the ongoing safety and efficacy of the fasinumab clinical trials recommended that the higher dose-regimens be discontinued based on the risk benefit assessment and that the program may continue with the lower dose-regimens of fasinumab.  The trials are being modified accordingly.  

Evinacumab is an antibody to angiopoietin-like protein 3 (ANGPTL3).  A Phase 3 study in homozygous familial hypercholesterolemia (HoFH) was initiated in the first quarter of 2018.

REGN3500 is an antibody to interleukin-33 (IL-33).  In the first quarter of 2018, a Phase 2 study in asthma was initiated.

Select Upcoming 2018 Milestones

Financial Results

Product Revenues: Net product sales were $988 million in the first quarter of 2018, compared to $858 million in the first quarter of 2017.  EYLEA net product sales in the United States were $984 million in the first quarter of 2018, compared to $854 million in the first quarter of 2017.  Overall distributor inventory levels remained within the Company's one- to two-week targeted range.

Total Revenues: Total revenues, which include product revenues described above, increased by 15% to $1.511 billion in the first quarter of 2018, compared to $1.319 billion in the first quarter of 2017.  Total revenues include Sanofi and Bayer collaboration revenues of $437 million in the first quarter of 2018, compared to $404 million in the first quarter of 2017.  Sanofi collaboration revenue in the first quarter of 2018 decreased primarily due to the Company's Discovery and Preclinical Development Agreement with Sanofi ending on December 31, 2017, lower reimbursement for Dupixent (dupilumab) development activities, and an increase in the Company's share of the collaborations' Dupixent commercialization expenses.  These decreases were partly offset by the Company's share of higher net sales of Dupixent (as the product was launched at the end of March 2017), and an increase in reimbursement revenues in connection with late-stage clinical development activities for cemiplimab.  Bayer collaboration revenue increased in the first quarter of 2018 primarily due to an increase in the Company's share of net profits in connection with higher sales of EYLEA outside the United States.

Other revenue in the first quarter of 2018 increased primarily due to higher reimbursements of the Company's fasinumab research and development expenses in connection with the Company's collaboration agreement with Teva.

The Company adopted Accounting Standard Codification (ASC) 606, Revenue from Contracts with Customers, as of January 1, 2018.  The Company adopted the standard using the modified retrospective method; prior period amounts have not been adjusted and the Company recognized a cumulative-effect adjustment to reduce Retained earnings and increase Deferred revenue on January 1, 2018 by $143 million, net of tax.  The adoption of the new standard did not have a material impact of the Company's total revenues in the first quarter of 2018.  

Refer to Table 4 for a summary of collaboration and other revenue.

Research and Development (R&D) Expenses: GAAP R&D expenses were $499 million in the first quarter of 2018, compared to $507 million in the first quarter of 2017.  The lower R&D expenses in the first quarter of 2018 were principally due to a decrease in clinical manufacturing costs and a decrease in dupilumab development costs.  These decreases were partly offset by an increase in cemiplimab and fasinumab clinical trial costs.  In the first quarter of 2018, R&D-related non-cash share-based compensation expense was $41 million, compared to $74 million in the first quarter of 2017.  The decrease in total non-cash share-based compensation expense in the first quarter of 2018 was primarily attributable to a revision in the Company's estimate of the number of stock options that are expected to be forfeited.

Selling, General, and Administrative (SG&A) Expenses: GAAP SG&A expenses were $331 million in the first quarter of 2018, compared to $297 million in the first quarter of 2017.  The higher SG&A expenses in the first quarter of 2018 were primarily due to higher headcount and headcount-related costs and an increase in commercialization-related expenses to support the launch of Dupixent.  In the first quarter of 2018, SG&A-related non-cash share-based compensation expense decreased to $35 million, compared to $54 million in the first quarter of 2017, primarily due to the revision in the Company's estimate of stock option forfeitures as described under "R&D Expenses" above.

Income Tax Expense: In the first quarter of 2018, GAAP income tax expense was $107 million and the effective tax rate was 18.3%, compared to $183 million and 42.4% in the first quarter of 2017.  The Company's effective tax rate for the first quarter of 2018 was significantly impacted by the bill known as the Tax Cuts and Jobs Act (the "U.S. Tax Reform Act"), which reduced the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018.  The effective tax rate for the first quarter of 2018 was positively impacted, compared to the U.S. federal statutory rate, primarily by the foreign-derived intangible income deduction and the federal tax credit for research activities.

Other income, net: GAAP other income in the first quarter of 2018 included the recognition of unrealized gains on equity securities.  In the first quarter of 2018, the Company adopted Accounting Standards Update ("ASU") 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, as of January 1, 2018, which requires the Company to measure equity investments at fair value with changes in fair value recognized in net income; previously, such changes in fair value were recognized in Other comprehensive income (loss).  Refer to Table 3 for the non-GAAP adjustment related to these gains.

GAAP and Non-GAAP Net Income⁽²⁾: GAAP net income was $478 million, or $4.44 per basic share and $4.16 per diluted share, in the first quarter of 2018, compared to GAAP net income of $249 million, or $2.36 per basic share and $2.16 per diluted share, in the first quarter of 2017.

Non-GAAP net income was $537 million, or $4.99 per basic share and $4.67 per diluted share, in the first quarter of 2018, compared to non-GAAP net income of $337 million, or $3.19 per basic share and $2.92 per diluted share, in the first quarter of 2017.

A reconciliation of the Company's GAAP to non-GAAP results is included in Table 3 of this press release.

2018 Financial Guidance⁽³⁾

The Company's updated full year 2018 financial guidance consists of the following components:

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its first quarter 2018 financial and operating results on Thursday, May 3, 2018, at 8:30 AM.  To access this call, dial (800) 708-4540 (U.S.) or (847) 619-6397 (International).  A link to the webcast may be accessed from the "Investors & Media" page of Regeneron's website at http://investor.regeneron.com/events.cfm.  A replay of the conference call and webcast will be archived on the Company's website and will be available for 30 days. 

About Regeneron Pharmaceuticals, Inc.

Regeneron is a leading biotechnology company that invents life-transforming medicines for people with serious diseases.  Founded and led for 30 years by physician-scientists, Regeneron's unique ability to repeatedly and consistently translate science into medicine has led to six FDA-approved treatments and numerous product candidates in development, all of which were homegrown in Regeneron's laboratories.  Regeneron's medicines and pipeline are designed to help patients with eye disease, heart disease, allergic and inflammatory diseases, pain, cancer, infectious diseases, and rare diseases.

Regeneron is accelerating and improving the traditional drug development process through its proprietary VelociSuite^® technologies, such as VelocImmune^® which produces optimized fully-human antibodies, and ambitious research initiatives such as the Regeneron Genetics Center^®, which is conducting one of the largest genetics sequencing efforts in the world.

For additional information about the Company, please visit www.regeneron.com or follow @Regeneron on Twitter.

Forward-Looking Statements and Use of Digital Media

This press release includes forward-looking statements that involve risks and uncertainties relating to future events and the future performance of Regeneron Pharmaceuticals, Inc. ("Regeneron" or the "Company"), and actual events or results may differ materially from these forward-looking statements.  Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate," variations of such words, and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words.  These statements concern, and these risks and uncertainties include, among others, the nature, timing, and possible success and therapeutic applications of Regeneron's products, product candidates, and research and clinical programs now underway or planned; the likelihood and timing of achieving any of the anticipated milestones described in this news release; unforeseen safety issues resulting from the administration of products and product candidates in patients, including serious complications or side effects in connection with the use of Regeneron's product candidates in clinical trials; the likelihood and timing of possible regulatory approval and commercial launch of Regeneron's late-stage product candidates and new indications for marketed products, including without limitation EYLEA^® (aflibercept) Injection, Dupixent^® (dupilumab) Injection, Praluent^® (alirocumab) Injection, Kevzara^® (sarilumab) Injection, cemiplimab, fasinumab, and evinacumab; the extent to which the results from the research and development programs conducted by Regeneron or its collaborators may be replicated in other studies and lead to therapeutic applications; ongoing regulatory obligations and oversight impacting Regeneron's marketed products (such as EYLEA, Dupixent, Praluent, and Kevzara), research and clinical programs, and business, including those relating to patient privacy; determinations by regulatory and administrative governmental authorities which may delay or restrict Regeneron's ability to continue to develop or commercialize Regeneron's products and product candidates; competing drugs and product candidates that may be superior to Regeneron's products and product candidates; uncertainty of market acceptance and commercial success of Regeneron's products and product candidates and the impact of studies (whether conducted by Regeneron or others and whether mandated or voluntary), on the commercial success of Regeneron's products and product candidates; the ability of Regeneron to manufacture and manage supply chains for multiple products and product candidates; the ability of Regeneron's collaborators, suppliers, or other third parties to perform filling, finishing, packaging, labeling, distribution, and other steps related to Regeneron's products and product candidates; coverage and reimbursement determinations by third-party payers, including Medicare and Medicaid; unanticipated expenses; the costs of developing, producing, and selling products; the ability of Regeneron to meet any of its financial projections or guidance and changes to the assumptions underlying those projections or guidance, including without limitation those relating to Sanofi reimbursement of Regeneron commercialization-related expenses, non-GAAP unreimbursed R&D, non-GAAP SG&A, effective tax rate, and capital expenditures; the potential for any license or collaboration agreement, including Regeneron's agreements with Sanofi, Bayer, and Teva Pharmaceutical Industries Ltd. (or their respective affiliated companies, as applicable), to be cancelled or terminated without any further product success; and risks associated with intellectual property of other parties and pending or future litigation relating thereto, including without limitation the patent litigation proceedings relating to Praluent, the ultimate outcome of any such litigation proceedings, and the impact any of the foregoing may have on Regeneron's business, prospects, operating results, and financial condition.  A more complete description of these and other material risks can be found in Regeneron's filings with the U.S. Securities and Exchange Commission.  Any forward-looking statements are made based on management's current beliefs and judgment, and the reader is cautioned not to rely on any forward-looking statements made by Regeneron.  Regeneron does not undertake any obligation to update publicly any forward-looking statement, including without limitation any financial projection or guidance, whether as a result of new information, future events, or otherwise.

Regeneron uses its media and investor relations website and social media outlets to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Regeneron is routinely posted and is accessible on Regeneron's media and investor relations website (http://newsroom.regeneron.com) and its Twitter feed (http://twitter.com/regeneron).

Non-GAAP Financial Measures

This press release and/or the financial results attached to this press release include amounts that are considered "non-GAAP financial measures" under SEC rules.  As required, Regeneron has provided reconciliations of historical non-GAAP financial measures.

SOURCE Regeneron Pharmaceuticals, Inc.