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 5, 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 May 5, 2016, Reporting First Quarter 2016 Financial and Operating Results. |
• | First quarter 2016 EYLEA® (aflibercept) Injection U.S. net sales increased 44% to $781 million versus first quarter 2015 |
• | First quarter 2016 EYLEA global net sales(1) increased 44% to $1.20 billion versus first quarter 2015 |
• | Raised estimated full year 2016 EYLEA U.S. net sales growth guidance to 20% - 25% over 2015, from the previous guidance of approximately 20% |
• | Positive dupilumab topline results reported from two Phase 3 trials in atopic dermatitis |
Financial Highlights | |||||||||||
($ in millions, except per share data) | Three Months Ended March 31, | ||||||||||
2016 | 2015 | % Change | |||||||||
EYLEA U.S. net product sales | $ | 781 | $ | 541 | 44 | % | |||||
Total revenues | $ | 1,201 | $ | 870 | 38 | % | |||||
Non-GAAP net income(2) | $ | 293 | $ | 336 | (13 | %) | |||||
Non-GAAP net income per share - diluted(2) | $ | 2.57 | $ | 2.88 | (11 | %) | |||||
GAAP net income | $ | 166 | $ | 76 | 118 | % | |||||
GAAP net income per share - diluted | $ | 1.45 | $ | 0.66 | 120 | % | |||||
• | In the first quarter of 2016, net sales of EYLEA in the United States increased 44% to $781 million from $541 million in the first quarter of 2015. Overall distributor inventory levels remained within the Company's one- to two-week targeted range. |
• | Bayer commercializes EYLEA outside the United States. In the first quarter of 2016, net sales of EYLEA outside of the United States(1) were $419 million, compared to $292 million in the first quarter of 2015. In the first quarter of 2016, Regeneron recognized $146 million from its share of net profit from EYLEA sales outside the United States, compared to $89 million in the first quarter of 2015. |
• | A Phase 3 study of EYLEA for the treatment of non-proliferative diabetic retinopathy in patients without diabetic macular edema (DME) was initiated in the first quarter of 2016. |
• | In the first quarter of 2016, net sales of Praluent were $13 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 commencing in the fourth quarter of 2015. |
• | In March 2016, the Company and Sanofi reported data from the Phase 3 ODYSSEY ESCAPE study in patients with heterozygous familial hypercholesterolemia (HeFH) who were undergoing LDL apheresis therapy. The trial achieved its primary endpoint, demonstrating that patients who added Praluent to their existing treatment regimen significantly reduced the frequency of their apheresis therapy by 75%, compared to placebo. |
• | In the first quarter of 2016, the Data Monitoring Committee (DMC) of the ODYSSEY OUTCOMES study for Praluent completed the first interim analysis. In accordance with the protocol, the DMC performed a futility assessment. The DMC recommended the study continue with no changes. Regeneron remains blinded to the actual results of this analysis. The ongoing ODYSSEY OUTCOMES trial is assessing the potential of Praluent to demonstrate cardiovascular benefit. |
• | In March 2016, the Company and Sanofi reported results from the 24-week Phase 3 SARIL-RA-MONARCH study in adult patients with active rheumatoid arthritis who were inadequate responders to, intolerant of, or inappropriate candidates for methotrexate (MTX) therapy. The study met its primary endpoint, demonstrating that sarilumab monotherapy was superior to adalimumab monotherapy (marketed by AbbVie Inc. as HUMIRA®). |
• | In December 2015, the U.S. Food and Drug Administration (FDA) accepted for review a Biologics License Application (BLA) for sarilumab, with a target action date of October 30, 2016. |
• | In April 2016, the Company and Sanofi reported that the Phase 3 LIBERTY AD SOLO 1 and SOLO 2 trials evaluating dupilumab in adult patients with inadequately controlled moderate-to-severe atopic dermatitis met their primary endpoints. |
• | A Phase 2 study of dupilumab in pediatric patients (6-17 years of age) with moderate-to-severe atopic dermatitis is fully enrolled and ongoing. |
• | A Phase 3 pivotal study of dupilumab in patients with uncontrolled persistent asthma continues to enroll patients. |
• | A Phase 2 study of dupilumab in eosinophilic esophagitis is ongoing. |
• | The Company recently reported results from a Phase 2/3 study evaluating fasinumab in patients with moderate-to-severe osteoarthritis pain of the hip or knee who have a history of inadequate pain relief or intolerance to current analgesic therapies. The study met its primary endpoint at 16 weeks. |
• | In the first quarter of 2016, the Company initiated a Phase 3 long-term safety and efficacy study of fasinumab in patients with pain due to osteoarthritis of the knee or hip, and this trial is currently enrolling patients. |
• | In the first quarter of 2016, the Company also initiated a Phase 2b/3 study of fasinumab in chronic lower back pain. |
Clinical Programs | Milestones | |
REGN2176-3 (PDGFR-beta Antibody co-formulated with aflibercept) | | Report results from Phase 2 study |
Praluent | | DMC interim analysis of ODYSSEY OUTCOMES trial |
| Ongoing launch in additional countries | |
Sarilumab (IL-6R Antibody) | | FDA target action date of October 30, 2016 |
| File for regulatory approvals outside the United States | |
Dupilumab (IL-4R Antibody) | | Report primary endpoint results from Phase 3 CHRONOS study in atopic dermatitis |
| Complete rolling BLA submission for atopic dermatitis in the United States | |
| Initiate Phase 3 study in pediatric patients in atopic dermatitis | |
REGN2810 (PD-1 Antibody) | | Report data from Phase 1 study in patients with cancer |
• | In the first quarter of 2016, the New England Journal of Medicine published a Regeneron Genetics Center paper showing that inactivating mutations of the angiopoeitin-like 4 (ANGPTL4) gene are associated with a significantly reduced risk of coronary artery disease in humans. ANGPTL4 and ANGPTL3 are thought to be related inhibitors of lipoprotein lipase (LPL). |
• | In March 2016, the Company and Bayer entered into a collaboration agreement to jointly develop a combination therapy of the Ang2 antibody nesvacumab and aflibercept for the treatment of serious eye diseases. |
• | In April 2016, the Company and Intellia Therapeutics, Inc. entered into a license and collaboration agreement to advance CRISPR/Cas gene-editing technology for in vivo therapeutic development. In addition to the discovery, development and commercialization of new therapies, the companies will focus on technology development of the CRISPR/Cas platform. |
EYLEA U.S. net product sales | 20% - 25% growth over 2015 (previously approximately 20% growth over 2015) |
Sanofi reimbursement of Regeneron commercialization-related expenses | $320 million - $370 million |
Non-GAAP unreimbursed R&D(2) | $875 million - $950 million (reaffirmed) |
Non-GAAP SG&A(2) | $925 million - $1.0 billion (reaffirmed) |
Cash tax as a % of non-GAAP pre-tax income(2) | 35% - 45%* (reaffirmed) |
Capital expenditures | $550 million - $625 million (previously $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 in countries other than Japan and sales by Santen Pharmaceutical Co., Ltd. in Japan under a co-promotion agreement with an affiliate of Bayer. The Company recognizes its share of the profits (including a percentage on sales in Japan) from EYLEA sales outside the United States within "Bayer 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; and (iii) loss on extinguishment of debt, since this non-cash charge is based on factors that are not within the Company's control. Non-GAAP measures also include income tax expense adjustments to 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 has been 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. |
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, | |||||||
2016 | 2015 | |||||||
Assets: | ||||||||
Cash and marketable securities | $ | 1,404,389 | $ | 1,677,385 | ||||
Accounts receivable - trade, net | 1,450,572 | 1,152,489 | ||||||
Accounts receivable from Sanofi and Bayer | 414,649 | 315,304 | ||||||
Inventories | 303,294 | 238,578 | ||||||
Deferred tax assets | 543,689 | 461,945 | ||||||
Property, plant, and equipment, net | 1,666,391 | 1,594,120 | ||||||
Other assets | 121,476 | 169,311 | ||||||
Total assets | $ | 5,904,460 | $ | 5,609,132 | ||||
Liabilities and stockholders' equity: | ||||||||
Accounts payable, accrued expenses, and other liabilities | $ | 855,412 | $ | 760,619 | ||||
Deferred revenue | 909,371 | 818,166 | ||||||
Facility lease obligations | 364,136 | 364,708 | ||||||
Convertible senior notes | 10,459 | 10,802 | ||||||
Stockholders' equity | 3,765,082 | 3,654,837 | ||||||
Total liabilities and stockholders' equity | $ | 5,904,460 | $ | 5,609,132 |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Revenues: | ||||||||
Net product sales | $ | 784,182 | $ | 544,573 | ||||
Sanofi collaboration revenue | 219,694 | 173,356 | ||||||
Bayer collaboration revenue | 179,592 | 123,846 | ||||||
Other revenue | 17,381 | 27,837 | ||||||
1,200,849 | 869,612 | |||||||
Expenses: | ||||||||
Research and development | 470,112 | 343,113 | ||||||
Selling, general, and administrative | 289,677 | 158,991 | ||||||
Cost of goods sold | 78,942 | 42,570 | ||||||
Cost of collaboration and contract manufacturing | 32,810 | 41,385 | ||||||
871,541 | 586,059 | |||||||
Income from operations | 329,308 | 283,553 | ||||||
Other income (expense), net | 843 | (7,030 | ) | |||||
Income before income taxes | 330,151 | 276,523 | ||||||
Income tax expense | (164,415 | ) | (200,502 | ) | ||||
Net income | $ | 165,736 | $ | 76,021 | ||||
Net income per share - basic | $ | 1.59 | $ | 0.74 | ||||
Net income per share - diluted | $ | 1.45 | $ | 0.66 | ||||
Weighted average shares outstanding - basic | 104,290 | 102,227 | ||||||
Weighted average shares outstanding - diluted | 114,228 | 114,519 |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
GAAP net income | $ | 165,736 | $ | 76,021 | ||||
Adjustments: | ||||||||
R&D: Non-cash share-based compensation expense | 78,102 | 59,502 | ||||||
SG&A: Non-cash share-based compensation expense | 60,082 | 42,175 | ||||||
COGS and COCM: Non-cash share-based compensation expense | 4,066 | 2,082 | ||||||
Other expense: Non-cash interest and loss on extinguishment related to convertible senior notes | 84 | 3,190 | ||||||
Non-cash income taxes | (15,271 | ) | 152,568 | |||||
Non-GAAP net income | $ | 292,799 | $ | 335,538 | ||||
Non-GAAP net income per share - basic | $ | 2.81 | $ | 3.28 | ||||
Non-GAAP net income per share - diluted (a) | $ | 2.57 | $ | 2.88 | ||||
Shares used in calculating: | ||||||||
Non-GAAP net income per share - basic | 104,290 | 102,227 | ||||||
Non-GAAP net income per share - diluted (b) | 113,859 | 116,506 |
(a) | For diluted non-GAAP net income per share calculations, interest expense related to the contractual coupon interest rate on the Company's 1.875% convertible senior notes were excluded since these securities were dilutive. Such interest expense was not material for the three months ended March 31, 2016 and 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 March 31, | ||||||||
2016 | 2015 | |||||||
Sanofi collaboration revenue: | ||||||||
Reimbursement of Regeneron research and development expenses | $ | 222,877 | $ | 169,506 | ||||
Reimbursement of Regeneron commercialization-related expenses | 73,274 | 8,458 | ||||||
Regeneron's share of losses in connection with commercialization of antibodies | (99,422 | ) | (22,405 | ) | ||||
Other | 22,965 | 17,797 | ||||||
Total Sanofi collaboration revenue | 219,694 | 173,356 | ||||||
Bayer collaboration revenue: | ||||||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States | 145,835 | 89,426 | ||||||
Sales milestones | — | 15,000 | ||||||
Cost-sharing of Regeneron development expenses | 4,639 | 3,911 | ||||||
Other | 29,118 | 15,509 | ||||||
Total Bayer collaboration revenue | 179,592 | 123,846 | ||||||
Total collaboration revenue | $ | 399,286 | $ | 297,202 |
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