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: February 9, 2016 | 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 February 9, 2016, Reporting Fourth Quarter and Full Year 2015 Financial and Operating Results. |
• | Fourth quarter 2015 EYLEA® (aflibercept) Injection U.S. net sales increased 44% to $746 million versus fourth quarter 2014 and full year 2015 EYLEA U.S. net sales increased 54% to $2.68 billion versus full year 2014 |
• | Fourth quarter 2015 EYLEA global net sales(1) increased 42% to $1.16 billion versus fourth quarter 2014 and full year 2015 EYLEA global net sales(1) increased 47% to $4.09 billion versus full year 2014 |
• | Full year 2015 non-GAAP net income per diluted share(2) increased 21% to $12.07 versus full year 2014. Full year 2015 non-GAAP net income(2) increased 19% to $1.40 billion versus full year 2014. Fourth quarter 2015 non-GAAP net income per diluted share increased 1% to $2.83 versus fourth quarter 2014. Fourth quarter non-GAAP net income of $327 million was unchanged versus fourth quarter of 2014. |
• | Estimated full year 2016 EYLEA U.S. net sales growth of approximately 20% over 2015 |
Financial Highlights | ||||||||||||||||||||||
($ in millions, except per share data) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
2015 | 2014* | % Change | 2015 | 2014* | % Change | |||||||||||||||||
EYLEA U.S. net product sales | $ | 746 | $ | 518 | 44 | % | $ | 2,676 | $ | 1,736 | 54 | % | ||||||||||
Total revenues | $ | 1,098 | $ | 802 | 37 | % | $ | 4,104 | $ | 2,820 | 46 | % | ||||||||||
Non-GAAP net income(2) | $ | 327 | $ | 328 | — | % | $ | 1,404 | $ | 1,175 | 19 | % | ||||||||||
Non-GAAP net income per share - diluted(2) | $ | 2.83 | $ | 2.79 | 1 | % | $ | 12.07 | $ | 10.00 | 21 | % | ||||||||||
GAAP net income | $ | 155 | $ | 90 | 72 | % | $ | 636 | $ | 338 | 88 | % | ||||||||||
GAAP net income per share - diluted | $ | 1.34 | $ | 0.78 | 72 | % | $ | 5.52 | $ | 2.98 | 85 | % | ||||||||||
* See note (4) below for an explanation of revisions made to certain amounts previously reported for the three months and year ended December 31, 2014. |
• | In the fourth quarter of 2015, net sales of EYLEA in the United States increased 44% to $746 million from $518 million in the fourth quarter of 2014. For the full year of 2015, net sales of EYLEA in the United States increased 54% to $2.676 billion from $1.736 billion for the full year 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 fourth quarter of 2015, net sales of EYLEA outside of the United States(1) were $413 million, compared to $297 million in the fourth quarter of 2014. In the fourth quarter of 2015, Regeneron recognized $140 million from its share of net profit from EYLEA sales outside the United States, compared to $88 million in the fourth quarter of 2014. For the full year of 2015, net sales of EYLEA outside of the United States(1) were $1.413 billion, compared to $1.039 billion for the full year 2014. For the full year of 2015, Regeneron recognized $467 million from its share of net profit from EYLEA sales outside the United States, compared to $301 million for the full year 2014. |
• | In October 2015, the European Commission granted marketing authorization of EYLEA for the treatment of visual impairment due to myopic choroidal neovascularization. |
• | In the fourth quarter of 2015, net sales of Praluent were $7 million. For the full year of 2015, net sales of Praluent were $11 million. Product sales for Praluent are recorded by Sanofi, and the Company shares in any profits or losses from the commercialization of Praluent. Praluent was launched in the United States in the third quarter of 2015 and in certain countries in the European Union in the fourth quarter of 2015. |
• | The Phase 3 ODYSSEY OUTCOMES trial completed enrollment during the fourth quarter of 2015. |
• | Multiple Phase 3 studies of dupilumab in atopic dermatitis are currently underway. Phase 3 pivotal trials in atopic dermatitis are fully enrolled. |
• | A Phase 3 pivotal study of dupilumab in patients with uncontrolled persistent asthma continues to enroll patients. |
Clinical Programs | Milestones | |
EYLEA | | Initiate Phase 3 study for the treatment of diabetic retinopathy in patients without diabetic macular edema (DME) |
REGN2176-3 (PDGFR-beta Antibody co-formulated with aflibercept) | | Report results from Phase 2 study |
Nesvacumab/aflibercept (Ang2 Antibody co-formulated with aflibercept) | | Initiate Phase 2 study |
Praluent | | Independent Data Monitoring Committee (IDMC) interim analyses of ODYSSEY OUTCOMES trial |
| Ongoing launch in the United States as well as in additional territories outside the United States | |
Sarilumab (IL-6R Antibody) | | Regulatory decision in the United States |
| File for regulatory approvals outside the United States | |
| Report results from Phase 3 SARIL-RA-MONARCH trial evaluating sarilumab versus adalimumab in monotherapy | |
Dupilumab (IL-4R Antibody) | | Report results from Phase 3 atopic dermatitis pivotal trials |
| Complete rolling BLA submission for atopic dermatitis in the United States | |
Fasinumab (NGF Antibody) | | Report results from Phase 2b/3 study in osteoarthritis |
| Initiate longer duration (greater than 16 weeks) Phase 3 trial | |
Immuno-oncology (PD-1 Antibody and bi-specific antibody against CD20 and CD3) | | Report data from Phase 1 studies in patients with cancer |
EYLEA U.S. net product sales | Approximately 20% growth over 2015 |
Non-GAAP unreimbursed R&D(2) | $875 million - $950 million |
Non-GAAP SG&A(2) | $925 million - $1,000 million |
Cash tax as a % of non-GAAP pre-tax income(2) | 35% - 45%* |
Capital expenditures | $580 million - $680 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) the incremental charge recorded in the third quarter of 2014 related to the issuance of the final IRS regulations that provide guidance on the annual fee imposed by the Patient Protection and Affordable Care Act (the final IRS regulations differed from the temporary regulations issued in 2011 which resulted in the recognition of a catch-up adjustment); (iii) 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; (iv) loss on extinguishment of debt, since this non-cash charge is based on factors that are not within the Company's control; and (v) income tax expense for 2014, which was principally a non-cash expense due primarily to utilization of net operating loss and tax credit carryforwards, 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 2016 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 originally reported for the three months and year ended December 31, 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-K for the year ended December 31, 2015 (Notes 1 and 14 of the Notes to Consolidated Financial Statements) for further details. |
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 |
December 31, | ||||||||
2015 | 2014* | |||||||
Assets: | ||||||||
Cash and marketable securities | $ | 1,677,385 | $ | 1,360,634 | ||||
Accounts receivable - trade, net | 1,152,489 | 739,379 | ||||||
Accounts receivable from Sanofi and Bayer HealthCare | 315,304 | 236,993 | ||||||
Inventories | 238,578 | 128,861 | ||||||
Deferred tax assets | 461,945 | 315,416 | ||||||
Property, plant, and equipment, net | 1,594,120 | 974,309 | ||||||
Other assets | 169,311 | 82,080 | ||||||
Total assets | $ | 5,609,132 | $ | 3,837,672 | ||||
Liabilities and stockholders' equity: | ||||||||
Accounts payable, accrued expenses, and other liabilities | $ | 760,619 | $ | 619,083 | ||||
Deferred revenue | 818,166 | 209,274 | ||||||
Facility lease obligations | 364,708 | 312,291 | ||||||
Convertible senior notes | 10,802 | 146,773 | ||||||
Stockholders' equity | 3,654,837 | 2,550,251 | ||||||
Total liabilities and stockholders' equity | $ | 5,609,132 | $ | 3,837,672 |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014* | 2015 | 2014* | |||||||||||||
Revenues: | ||||||||||||||||
Net product sales | $ | 749,524 | $ | 521,518 | $ | 2,689,478 | $ | 1,750,762 | ||||||||
Sanofi collaboration revenue | 165,672 | 135,271 | 758,873 | 541,299 | ||||||||||||
Bayer HealthCare collaboration revenue | 164,809 | 137,095 | 580,488 | 495,555 | ||||||||||||
Other revenue | 18,072 | 8,445 | 74,889 | 31,941 | ||||||||||||
1,098,077 | 802,329 | 4,103,728 | 2,819,557 | |||||||||||||
Expenses: | ||||||||||||||||
Research and development | 461,210 | 351,745 | 1,620,577 | 1,271,353 | ||||||||||||
Selling, general, and administrative | 294,954 | 175,307 | 838,526 | 519,267 | ||||||||||||
Cost of goods sold | 71,078 | 37,957 | 241,702 | 129,030 | ||||||||||||
Cost of collaboration and contract manufacturing | 39,753 | 21,517 | 151,007 | 75,988 | ||||||||||||
866,995 | 586,526 | 2,851,812 | 1,995,638 | |||||||||||||
Income from operations | 231,082 | 215,803 | 1,251,916 | 823,919 | ||||||||||||
Other income (expense): | ||||||||||||||||
Investment and other income (expense) | 1,750 | 2,952 | 6,283 | 8,157 | ||||||||||||
Interest expense | (3,609 | ) | (6,350 | ) | (14,241 | ) | (37,372 | ) | ||||||||
Loss on extinguishment of debt | (1,934 | ) | (22,682 | ) | (18,861 | ) | (33,469 | ) | ||||||||
(3,793 | ) | (26,080 | ) | (26,819 | ) | (62,684 | ) | |||||||||
Income before income taxes | 227,289 | 189,723 | 1,225,097 | 761,235 | ||||||||||||
Income tax expense | (72,295 | ) | (99,628 | ) | (589,041 | ) | (423,109 | ) | ||||||||
Net income | $ | 154,994 | $ | 90,095 | $ | 636,056 | $ | 338,126 | ||||||||
Net income per share - basic | $ | 1.49 | $ | 0.89 | $ | 6.17 | $ | 3.36 | ||||||||
Net income per share - diluted | $ | 1.34 | $ | 0.78 | $ | 5.52 | $ | 2.98 | ||||||||
Weighted average shares outstanding - basic | 103,765 | 101,467 | 103,061 | 100,612 | ||||||||||||
Weighted average shares outstanding - diluted | 115,496 | 114,246 | 115,230 | 113,413 |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014* | 2015 | 2014* | |||||||||||||
GAAP net income | $ | 154,994 | $ | 90,095 | $ | 636,056 | $ | 338,126 | ||||||||
Adjustments: | ||||||||||||||||
R&D: Non-cash share-based compensation expense | 72,570 | 51,180 | 255,708 | 184,347 | ||||||||||||
SG&A: Non-cash share-based compensation expense | 82,212 | 61,095 | 193,026 | 134,715 | ||||||||||||
SG&A: Branded Prescription Drug Fee incremental charge | — | — | — | 40,600 | ||||||||||||
COGS and COCM: Non-cash share-based compensation expense | 3,609 | 744 | 10,315 | 2,688 | ||||||||||||
Interest expense: Non-cash interest related to convertible senior notes | 41 | 2,375 | 2,818 | 17,821 | ||||||||||||
Other expense: Loss on extinguishment of debt | 1,934 | 22,682 | 18,861 | 33,469 | ||||||||||||
Non-cash income taxes | 11,433 | 99,628 | 287,110 | 423,109 | ||||||||||||
Non-GAAP net income | $ | 326,793 | $ | 327,799 | $ | 1,403,894 | $ | 1,174,875 | ||||||||
Non-GAAP net income per share - basic | $ | 3.15 | $ | 3.23 | $ | 13.62 | $ | 11.68 | ||||||||
Non-GAAP net income per share - diluted (a) | $ | 2.83 | $ | 2.79 | $ | 12.07 | $ | 10.00 | ||||||||
Shares used in calculating: | ||||||||||||||||
Non-GAAP net income per share - basic | 103,765 | 101,467 | 103,061 | 100,612 | ||||||||||||
Non-GAAP net income per share - diluted (b) | 115,639 | 117,825 | 116,355 | 117,966 |
(a) | For diluted non-GAAP net income per share calculation, excludes $5.0 million of interest expense for the year ended December 31, 2014 related to the contractual coupon interest rate on the Company's 1.875% convertible senior notes, since these securities were dilutive. Such amounts were not material for the three months ended December 31, 2015 and 2014, and for the year ended December 31, 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 December 31, | Year Ended December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Sanofi collaboration revenue: | ||||||||||||||||
Regeneron's share of losses in connection with commercialization of antibodies | $ | (96,459 | ) | $ | (24,253 | ) | $ | (240,042 | ) | $ | (41,378 | ) | ||||
Reimbursement of Regeneron research and development expenses | 171,366 | 143,664 | 776,086 | 552,567 | ||||||||||||
Reimbursement of Regeneron commercialization-related expenses | 68,205 | 12,417 | 157,350 | 19,480 | ||||||||||||
Other | 22,560 | 3,443 | 65,479 | 10,630 | ||||||||||||
Total Sanofi collaboration revenue | 165,672 | 135,271 | 758,873 | 541,299 | ||||||||||||
Bayer HealthCare collaboration revenue: | ||||||||||||||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States | 140,100 | 88,011 | 466,667 | 301,302 | ||||||||||||
Sales milestones | — | 30,000 | 15,000 | 105,000 | ||||||||||||
Cost-sharing of Regeneron development expenses | 3,326 | (1,661 | ) | 18,962 | 26,231 | |||||||||||
Other | 21,383 | 20,745 | 79,859 | 63,022 | ||||||||||||
Total Bayer HealthCare collaboration revenue | 164,809 | 137,095 | 580,488 | 495,555 | ||||||||||||
Total collaboration revenue | $ | 330,481 | $ | 272,366 | $ | 1,339,361 | $ | 1,036,854 |
H/N*O45*;3NBFDU9G!W/PC\-3R!HWOK<8^[%,"/\ QY2:M:=\+_#& MGLKM:RW;KG!N9-P/U48!_*NRHK9XJLU;F9DL/23ORH;'%'#&L<2*D:C"JHP M/0"F7-O%=VLUM,I:*9#&X#%25(P>1R/PJ6BL+]38Y>V^'?A6TNHKF'2MLL+B M1&^T2G# Y!P6P>:ZBBBKG4G/XG