FORM 8-K |
REGENERON PHARMACEUTICALS, INC. | ||
(Exact Name of Registrant as Specified in Charter) | ||
New York | 000-19034 | 13-3444607 |
(State or other jurisdiction | (Commission | (IRS Employer |
of Incorporation) | File No.) | Identification No.) |
777 Old Saw Mill River Road, Tarrytown, New York 10591-6707 | ||
(Address of principal executive offices, including zip code) | ||
(914) 847-7000 | ||
(Registrant's telephone number, including area code) | ||
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Date: May 7, 2015 | REGENERON PHARMACEUTICALS, INC. | ||
By: | /s/ Joseph J. LaRosa | ||
Name: | Joseph J. LaRosa | ||
Title: | Senior Vice President, General Counsel and Secretary |
Number | Description |
99.1 | Press Release, dated May 7, 2015, Reporting First Quarter 2015 Financial and Operating Results. |
• | First quarter 2015 EYLEA® (aflibercept) Injection global net sales increased 44% to $833 million (consisting of $541 million in the U.S. and $292 million in rest of world(1)) versus first quarter 2014 |
• | First quarter 2015 non-GAAP net income(2) increased 28% to $336 million, or $2.88 per diluted share, versus first quarter 2014 |
• | Raised estimated full year 2015 EYLEA U.S. net sales growth guidance to 30% - 35% over 2014 |
Financial Highlights | |||||||||||
($ in millions, except per share data) | Three Months Ended March 31, | ||||||||||
2015 | 2014* | % Change | |||||||||
EYLEA U.S. net product sales | $ | 541 | $ | 359 | 51 | % | |||||
Total revenues | $ | 870 | $ | 626 | 39 | % | |||||
Non-GAAP net income (2) | $ | 336 | $ | 263 | 28 | % | |||||
Non-GAAP net income per share - diluted (2) | $ | 2.88 | $ | 2.26 | 27 | % | |||||
GAAP net income | $ | 76 | $ | 68 | 12 | % | |||||
GAAP net income per share - diluted | $ | 0.66 | $ | 0.61 | 8 | % | |||||
* See note (4) below for an explanation of revisions made to certain amounts previously reported for the three months ended March 31, 2014. |
• | In the first quarter of 2015, net sales of EYLEA in the United States increased 51% to $541 million from $359 million in the first quarter of 2014. Overall distributor inventory levels remained within the Company's one- to two-week targeted range. |
• | Bayer HealthCare commercializes EYLEA outside the United States. In the first quarter of 2015, net sales of EYLEA outside of the United States(1) were $292 million, compared to $218 million in the first quarter of 2014. In the first quarter of 2015, Regeneron recognized $89 million from its share of net profit from EYLEA sales outside the United States (after repayment of $14 million in development expenses), compared to $61 million in the first quarter of 2014 (after repayment of $14 million in development expenses). |
• | In March 2015, the U.S. Food and Drug Administration (FDA) approved EYLEA for the treatment of diabetic retinopathy in patients with diabetic macular edema (DME). |
• | In February 2015, the European Commission approved EYLEA for the treatment of visual impairment due to macular edema secondary to retinal vein occlusion (RVO), which includes macular edema following branch retinal vein occlusion (BRVO), in addition to the previously-approved indication of macular edema secondary to central retinal vein occlusion (CRVO). |
• | In February 2015, the Company announced that results from the National Institutes of Health (NIH)-sponsored, Diabetic Retinopathy Clinical Research Network comparative effectiveness study in patients with DME (Protocol T) were published in The New England Journal of Medicine. In this study, EYLEA demonstrated significantly greater improvement on the primary endpoint of mean visual acuity letter score change at one year (EYLEA +13 letters; bevacizumab (Avastin®) +10; ranibizumab (Lucentis®) +11). These differences were driven by patients with moderate or worse vision loss at the start of the trial (worse than 20/40); in these patients, EYLEA showed a statistically significant 7-letter (approximately 1.5 lines on an eye chart) improvement over bevacizumab and a 5-letter (1 line on an eye chart) improvement over ranibizumab (EYLEA +19 letters; bevacizumab +12; ranibizumab +14). The independently conducted, government-sponsored study was designed to compare three different anti-VEGF therapies, EYLEA, bevacizumab and ranibizumab, for the treatment of DME. |
• | In January 2015, the FDA accepted for priority review the BLA for Praluent, with a target action date of July 24, 2015. The FDA's Endocrinologic and Metabolic Drugs Advisory Committee is scheduled to meet on June 9, 2015 to discuss the BLA for Praluent. |
• | The European Medicines Agency (EMA) has also accepted for review the Marketing Authorization Application (MAA) for Praluent. |
• | In January 2015, the Company and Sanofi announced that the ODYSSEY CHOICE I and ODYSSEY CHOICE II studies, which evaluated every four-week dosing, met their primary efficacy endpoints. The trials compared the reduction from baseline in LDL-C at 24 weeks with Praluent versus placebo in patients with hypercholesterolemia. |
• | In February 2015, 18-month (78-week) results of the ODYSSEY LONG TERM Phase 3 trial of Praluent, involving 2,341 high risk patients with hypercholesterolemia, were published online in The New England Journal of Medicine. In this trial, Praluent 150 mg every two weeks reduced LDL-C by an additional 62% at week 24 when compared to placebo, the primary efficacy endpoint of the study, with consistent LDL-C lowering maintained over 78 weeks. |
• | The Phase 3 ODYSSEY program remains ongoing. |
• | Multiple Phase 3 studies of dupilumab in atopic dermatitis are currently underway. |
• | A Phase 3 study of dupilumab in patients with uncontrolled persistent asthma was initiated in the second quarter of 2015. Results of the interim analysis of a dose-ranging Phase 2b of dupilumab in adult patients with uncontrolled persistent asthma will be presented at the American Thoracic Society meeting later this month. |
• | In the first quarter of 2015, a Phase 2 study of dupilumab in adolescents and children with atopic dermatitis was initiated. |
• | In the first quarter of 2015, a Phase 2 study of dupilumab in eosinophilic esophagitis was initiated. |
EYLEA U.S. net product sales | 30% - 35% growth over 2014 (previously 25% - 30% growth over 2014) |
Non-GAAP unreimbursed R&D (2) | $525 million - $575 million (reaffirmed) |
Non-GAAP SG&A (2) | $650 million - $725 million (reaffirmed) |
Cash tax as a % of non-GAAP pre-tax income (2) | 10% - 20% (reaffirmed) |
Capital expenditures | $650 million - $750 million (previously $650 million - $800 million) |
(1) | Regeneron records net product sales of EYLEA in the United States. Outside the United States, EYLEA net product sales comprise sales by Bayer HealthCare in countries other than Japan and sales by Santen Pharmaceutical Co., Ltd. in Japan under a co-promotion agreement with an affiliate of Bayer HealthCare. The Company recognizes its share of the profits (including a percentage on sales in Japan) from EYLEA sales outside the United States within "Bayer HealthCare collaboration revenue" in its Statements of Operations. |
(2) | This press release uses non-GAAP net income, non-GAAP net income per share, non-GAAP unreimbursed R&D, non-GAAP SG&A, and cash tax as a percentage of non-GAAP pre-tax income, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The Company believes that the presentation of these non-GAAP measures is useful to investors because they exclude, as applicable: (i) non-cash share-based compensation expense, which fluctuates from period to period based on factors that are not within the Company's control, such as the Company's stock price on the dates share-based grants are issued; (ii) non-cash interest expense related to the Company's convertible senior notes since this is not deemed useful in evaluating the Company's operating performance; (iii) loss on extinguishment of debt, since this non-cash charge is based on factors that are not within the Company's control; and (iv) income tax expense for 2014, which was principally a non-cash expense due primarily to utilization of net operating loss and tax credit carry-forwards, and deductions related to employee stock option exercises. In 2015, income tax expense adjustments consider the tax effect of reconciling items and an adjustment from GAAP tax expense to the amount of taxes that are paid or payable in cash in respect of the current period. As there is a significant difference between the Company's effective tax rate and actual cash income taxes paid or payable, GAAP income tax expense is not deemed useful in evaluating the Company's operating performance. Non-GAAP unreimbursed R&D represents non-GAAP R&D expenses reduced by R&D expense reimbursements from the Company's collaboration partners. Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company's non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by Regeneron should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of the Company's historical GAAP to non-GAAP results is included in Table 3 of this press release. |
(3) | The Company's 2015 financial guidance does not assume the completion of any significant business development transactions not completed as of the date of this press release. |
(4) | Applicable amounts previously reported for the three months ended March 31, 2014 and as of December 31, 2014 have been revised to reflect a correction to the Company's accounting for certain stock option awards. These revisions consisted entirely of non-cash adjustments and had no impact on the Company's previously reported non-GAAP financial measures, including non-GAAP net income and non-GAAP net income per share. Refer to the Company's Form 10-Q for the quarterly period ended March 31, 2015 (Note 4 of the Notes to Condensed Consolidated Financial Statements) for further details. |
(5) | In the fourth quarter of 2014, Sanofi provided notice to Regeneron that it had elected not to continue co-development of REGN2222 effective December 2015. |
Contact Information: | ||
Manisha Narasimhan, Ph.D. | Hala Mirza | |
Investor Relations | Corporate Communications | |
914-847-5126 | 914-847-3422 | |
manisha.narasimhan@regeneron.com | hala.mirza@regeneron.com |
March 31, | December 31, | |||||||
2015 | 2014* | |||||||
Assets: | ||||||||
Cash and marketable securities | $ | 1,225,469 | $ | 1,360,634 | ||||
Accounts receivable - trade, net | 1,015,962 | 739,379 | ||||||
Accounts receivable from Sanofi and Bayer HealthCare | 322,500 | 278,020 | ||||||
Inventories | 133,863 | 128,861 | ||||||
Deferred tax assets | 351,610 | 338,256 | ||||||
Property, plant, and equipment, net | 1,110,597 | 974,309 | ||||||
Other assets | 38,572 | 74,520 | ||||||
Total assets | $ | 4,198,573 | $ | 3,893,979 | ||||
Liabilities and stockholders' equity: | ||||||||
Accounts payable, accrued expenses, and other liabilities | $ | 519,049 | $ | 620,137 | ||||
Deferred revenue | 234,161 | 250,301 | ||||||
Facility lease obligations | 329,851 | 312,291 | ||||||
Convertible senior notes | 144,082 | 146,773 | ||||||
Stockholders' equity | 2,971,430 | 2,564,477 | ||||||
Total liabilities and stockholders' equity | $ | 4,198,573 | $ | 3,893,979 |
Three Months Ended March 31, | ||||||||
2015 | 2014* | |||||||
Revenues: | ||||||||
Net product sales | $ | 544,573 | $ | 362,378 | ||||
Sanofi collaboration revenue | 173,356 | 130,508 | ||||||
Bayer HealthCare collaboration revenue | 123,846 | 125,312 | ||||||
Technology licensing and other revenue | 27,837 | 7,542 | ||||||
869,612 | 625,740 | |||||||
Expenses: | ||||||||
Research and development | 343,113 | 287,379 | ||||||
Selling, general, and administrative | 158,991 | 103,227 | ||||||
Cost of goods sold | 42,570 | 27,473 | ||||||
Cost of collaboration and contract manufacturing | 41,385 | 16,099 | ||||||
586,059 | 434,178 | |||||||
Income from operations | 283,553 | 191,562 | ||||||
Other income (expense): | ||||||||
Investment and other income | 81 | 937 | ||||||
Interest expense | (6,169 | ) | (11,613 | ) | ||||
Loss on extinguishment of debt | (942 | ) | — | |||||
(7,030 | ) | (10,676 | ) | |||||
Income before income taxes | 276,523 | 180,886 | ||||||
Income tax expense | (200,502 | ) | (112,581 | ) | ||||
Net income | $ | 76,021 | $ | 68,305 | ||||
Net income per share - basic | $ | 0.74 | $ | 0.69 | ||||
Net income per share - diluted | $ | 0.66 | $ | 0.61 | ||||
Weighted average shares outstanding - basic | 102,227 | 98,709 | ||||||
Weighted average shares outstanding - diluted | 114,519 | 112,151 |
Three Months Ended March 31, | ||||||||
2015 | 2014* | |||||||
GAAP net income | $ | 76,021 | $ | 68,305 | ||||
Adjustments: | ||||||||
R&D: Non-cash share-based compensation expense | 59,502 | 43,304 | ||||||
SG&A: Non-cash share-based compensation expense | 42,175 | 31,964 | ||||||
COGS: Non-cash share-based compensation expense | 2,082 | 517 | ||||||
Interest expense: Non-cash interest related to convertible senior notes | 2,248 | 5,924 | ||||||
Other expense: Loss on extinguishment of debt | 942 | — | ||||||
Non-cash income taxes | 152,568 | 112,581 | ||||||
Non-GAAP net income | $ | 335,538 | $ | 262,595 | ||||
Non-GAAP net income per share - basic | $ | 3.28 | $ | 2.66 | ||||
Non-GAAP net income per share - diluted (a) | $ | 2.88 | $ | 2.26 | ||||
Shares used in calculating: | ||||||||
Non-GAAP net income per share - basic | 102,227 | 98,709 | ||||||
Non-GAAP net income per share - diluted (b) | 116,506 | 117,186 |
(a) | For diluted non-GAAP net income per share calculations, excludes $0.4 million and $1.7 million, respectively, of interest expense for the three-month periods ended March 31, 2015 and 2014, related to the contractual coupon interest rate on the Company's 1.875% convertible senior notes, since these securities were dilutive. |
(b) | Weighted average shares outstanding includes the dilutive effect, if any, of employee stock options, restricted stock awards, convertible senior notes, and warrants. |
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Sanofi collaboration revenue: | ||||||||
Regeneron's share of losses in connection with commercialization of ZALTRAP | — | $ | (3,212 | ) | ||||
Regeneron's share of losses in connection with commercialization of antibodies | $ | (22,405 | ) | — | ||||
Reimbursement of Regeneron research and development expenses | 169,506 | 127,914 | ||||||
Reimbursement of Regeneron commercialization-related expenses | 8,458 | — | ||||||
Other | 17,797 | 5,806 | ||||||
Total Sanofi collaboration revenue | 173,356 | 130,508 | ||||||
Bayer HealthCare collaboration revenue: | ||||||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States | 89,426 | 61,159 | ||||||
Sales milestones | 15,000 | 30,000 | ||||||
Cost-sharing of Regeneron development expenses | 3,911 | 20,860 | ||||||
Other | 15,509 | 13,293 | ||||||
Total Bayer HealthCare collaboration revenue | 123,846 | 125,312 | ||||||
Total collaboration revenue | $ | 297,202 | $ | 255,820 |
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