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: August 4, 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 August 4, 2015, Reporting Second Quarter 2015 Financial and Operating Results. |
• | Second quarter 2015 EYLEA® (aflibercept) Injection global net sales increased 50% to $993 million (consisting of $655 million in the U.S. and $338 million in rest of world(1)) versus second quarter 2014 |
• | Second quarter 2015 non-GAAP net income(2) increased 17% to $338 million, or $2.89 per diluted share, versus second quarter 2014 |
• | Raised estimated full year 2015 EYLEA U.S. net sales growth guidance to 45% - 50% over 2014, from the previous guidance of 30% - 35% |
• | Phase 3 pivotal trials for dupilumab in atopic dermatitis fully enrolled |
Financial Highlights | |||||||||||
($ in millions, except per share data) | Three Months Ended June 30, | ||||||||||
2015 | 2014* | % Change | |||||||||
EYLEA U.S. net product sales | $ | 655 | $ | 415 | 58 | % | |||||
Total revenues | $ | 999 | $ | 666 | 50 | % | |||||
Non-GAAP net income (2) | $ | 338 | $ | 289 | 17 | % | |||||
Non-GAAP net income per share - diluted (2) | $ | 2.89 | $ | 2.47 | 17 | % | |||||
GAAP net income | $ | 195 | $ | 96 | 103 | % | |||||
GAAP net income per share - diluted | $ | 1.69 | $ | 0.85 | 99 | % | |||||
* See note (4) below for an explanation of revisions made to certain amounts previously reported for the three months ended June 30, 2014. |
• | In the second quarter of 2015, net sales of EYLEA in the United States increased 58% to $655 million from $415 million in the second 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 second quarter of 2015, net sales of EYLEA outside of the United States(1) were $338 million, compared to $247 million in the second quarter of 2014. In the second quarter of 2015, Regeneron recognized $107 million from its share of net profit from EYLEA sales outside the United States, compared to $67 million in the second quarter of 2014. |
• | In June 2015, the Ministry of Health, Labour and Welfare (MHLW) in Japan approved EYLEA for the treatment of patients with macular edema secondary to retinal vein occlusion (RVO), which includes macular edema secondary to branch retinal vein occlusion (BRVO) in addition to the previously-approved indication of macular edema secondary to central retinal vein occlusion (CRVO). |
• | In July 2015, following the U.S. Food and Drug Administration (FDA) approval of Praluent for the treatment of adults with heterozygous familial hypercholesterolemia or clinical atherosclerotic cardiovascular disease (ASCVD), who require additional lowering of LDL cholesterol, the Company and Sanofi commenced their launch of Praluent. |
• | In July 2015, the European Medicines Agency's (EMA's) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for the marketing authorization of Praluent, recommending its approval for use in certain adult patients with hypercholesterolemia. |
• | In July 2015, the Company and Sanofi reported that the Phase 3 ODYSSEY JAPAN trial met its primary endpoint. At week 24, Japanese patients treated with Praluent experienced an average 64% greater reduction from baseline in LDL-C when added to current standard of care including statins, compared to standard of care alone. |
• | The Phase 3 ODYSSEY program remains ongoing. |
• | Multiple Phase 3 studies of dupilumab in atopic dermatitis are currently underway. Phase 3 pivotal trials in atopic dermatitis are fully enrolled. |
• | The second pivotal study of dupilumab in patients with uncontrolled persistent asthma was initiated in the second quarter of 2015. |
EYLEA U.S. net product sales | 45% - 50% growth over 2014 (previously 30% - 35% growth over 2014) |
Non-GAAP unreimbursed R&D (2) | $510 million - $550 million (previously $525 million - $575 million) |
Non-GAAP SG&A (2) | $610 million - $650 million (previously $650 million - $725 million) |
Cash tax as a % of non-GAAP pre-tax income (2) | 15% - 22% (previously 10% - 20%) |
Capital expenditures | $675 million - $750 million (previously $650 million - $750 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 June 30, 2014 and as of December 31, 2014 have been revised to reflect certain revisions, including 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 June 30, 2015 (Notes 1 and 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 |
June 30, | December 31, | |||||||
2015 | 2014* | |||||||
Assets: | ||||||||
Cash and marketable securities | $ | 1,193,843 | $ | 1,360,634 | ||||
Accounts receivable - trade, net | 1,071,665 | 739,379 | ||||||
Accounts receivable from Sanofi and Bayer HealthCare | 323,460 | 236,993 | ||||||
Inventories | 171,266 | 128,861 | ||||||
Deferred tax assets | 393,387 | 315,416 | ||||||
Property, plant, and equipment, net | 1,326,112 | 974,309 | ||||||
Other assets | 47,237 | 82,080 | ||||||
Total assets | $ | 4,526,970 | $ | 3,837,672 | ||||
Liabilities and stockholders' equity: | ||||||||
Accounts payable, accrued expenses, and other liabilities | $ | 606,313 | $ | 619,083 | ||||
Deferred revenue | 192,589 | 209,274 | ||||||
Facility lease obligations | 359,250 | 312,291 | ||||||
Convertible senior notes | 30,360 | 146,773 | ||||||
Stockholders' equity | 3,338,458 | 2,550,251 | ||||||
Total liabilities and stockholders' equity | $ | 4,526,970 | $ | 3,837,672 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014* | 2015 | 2014* | |||||||||||||
Revenues: | ||||||||||||||||
Net product sales | $ | 657,819 | $ | 418,022 | $ | 1,202,392 | $ | 780,400 | ||||||||
Sanofi collaboration revenue | 195,110 | 142,595 | 368,466 | 273,103 | ||||||||||||
Bayer HealthCare collaboration revenue | 134,237 | 97,295 | 258,083 | 222,607 | ||||||||||||
Technology licensing and other revenue | 11,451 | 7,788 | 39,288 | 15,330 | ||||||||||||
998,617 | 665,700 | 1,868,229 | 1,291,440 | |||||||||||||
Expenses: | ||||||||||||||||
Research and development | 390,330 | 294,501 | 733,443 | 581,880 | ||||||||||||
Selling, general, and administrative | 174,588 | 96,730 | 333,579 | 199,957 | ||||||||||||
Cost of goods sold | 60,855 | 29,945 | 103,425 | 57,418 | ||||||||||||
Cost of collaboration and contract manufacturing (COCM) | 27,985 | 16,434 | 69,370 | 32,533 | ||||||||||||
653,758 | 437,610 | 1,239,817 | 871,788 | |||||||||||||
Income from operations | 344,859 | 228,090 | 628,412 | 419,652 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment and other income | 1,849 | 1,677 | 1,930 | 2,614 | ||||||||||||
Interest expense | (2,748 | ) | (10,177 | ) | (8,917 | ) | (21,790 | ) | ||||||||
Loss on extinguishment of debt | (15,964 | ) | (10,787 | ) | (16,906 | ) | (10,787 | ) | ||||||||
(16,863 | ) | (19,287 | ) | (23,893 | ) | (29,963 | ) | |||||||||
Income before income taxes | 327,996 | 208,803 | 604,519 | 389,689 | ||||||||||||
Income tax expense | (133,353 | ) | (112,452 | ) | (333,855 | ) | (225,033 | ) | ||||||||
Net income | $ | 194,643 | $ | 96,351 | $ | 270,664 | $ | 164,656 | ||||||||
Net income per share - basic | $ | 1.89 | $ | 0.96 | $ | 2.64 | $ | 1.65 | ||||||||
Net income per share - diluted | $ | 1.69 | $ | 0.85 | $ | 2.35 | $ | 1.46 | ||||||||
Weighted average shares outstanding - basic | 102,886 | 100,391 | 102,558 | 100,085 | ||||||||||||
Weighted average shares outstanding - diluted | 115,259 | 113,032 | 114,962 | 113,121 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014* | 2015 | 2014* | |||||||||||||
GAAP net income | $ | 194,643 | $ | 96,351 | $ | 270,664 | $ | 164,656 | ||||||||
Adjustments: | ||||||||||||||||
R&D: Non-cash share-based compensation expense | 60,045 | 43,814 | 119,547 | 87,118 | ||||||||||||
SG&A: Non-cash share-based compensation expense | 32,159 | 20,483 | 74,334 | 52,447 | ||||||||||||
COGS and COCM: Non-cash share-based compensation expense | 2,053 | 531 | 4,135 | 1,048 | ||||||||||||
Interest expense: Non-cash interest related to convertible senior notes | 335 | 4,947 | 2,583 | 10,871 | ||||||||||||
Other expense: Loss on extinguishment of debt | 15,964 | 10,787 | 16,906 | 10,787 | ||||||||||||
Non-cash income taxes | 32,925 | 112,452 | 185,891 | 225,033 | ||||||||||||
Non-GAAP net income | $ | 338,124 | $ | 289,365 | $ | 674,060 | $ | 551,960 | ||||||||
Non-GAAP net income per share - basic | $ | 3.29 | $ | 2.88 | $ | 6.57 | $ | 5.51 | ||||||||
Non-GAAP net income per share - diluted (a) | $ | 2.89 | $ | 2.47 | $ | 5.78 | $ | 4.70 | ||||||||
Shares used in calculating: | ||||||||||||||||
Non-GAAP net income per share - basic | 102,886 | 100,391 | 102,558 | 100,085 | ||||||||||||
Non-GAAP net income per share - diluted (b) | 116,977 | 117,805 | 116,778 | 118,027 |
(a) | For diluted non-GAAP net income per share calculations, excludes $1.4 million of interest expense for the three months ended June 30, 2014, and $0.4 million and $3.2 million, respectively, of interest expense for the six-month periods ended June 30, 2015 and 2014, related to the contractual coupon interest rate on the Company's 1.875% convertible senior notes, since these securities were dilutive. Such amount was not material for the three months ended June 30, 2015. |
(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 June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Sanofi collaboration revenue: | ||||||||||||||||
Regeneron's share of losses in connection with commercialization of antibodies | $ | (46,313 | ) | $ | (4,295 | ) | $ | (68,718 | ) | $ | (4,295 | ) | ||||
Regeneron's share of losses in connection with commercialization of ZALTRAP® | — | (692 | ) | — | (3,904 | ) | ||||||||||
Reimbursement of Regeneron research and development expenses | 211,516 | 139,231 | 381,022 | 267,145 | ||||||||||||
Reimbursement of Regeneron commercialization-related expenses | 27,346 | 4,307 | 35,804 | 5,375 | ||||||||||||
Other | 2,561 | 4,044 | 20,358 | 8,782 | ||||||||||||
Total Sanofi collaboration revenue | 195,110 | 142,595 | 368,466 | 273,103 | ||||||||||||
Bayer HealthCare collaboration revenue: | ||||||||||||||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States | 106,631 | 66,781 | 196,057 | 127,940 | ||||||||||||
Sales milestones | — | 15,000 | 15,000 | 45,000 | ||||||||||||
Cost-sharing of Regeneron development expenses | 8,390 | 2,120 | 12,301 | 22,980 | ||||||||||||
Other | 19,216 | 13,394 | 34,725 | 26,687 | ||||||||||||
Total Bayer HealthCare collaboration revenue | 134,237 | 97,295 | 258,083 | 222,607 | ||||||||||||
Total collaboration revenue | $ | 329,347 | $ | 239,890 | $ | 626,549 | $ | 495,710 |
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