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 4, 2017 | 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 4, 2017, Reporting First Quarter 2017 Financial and Operating Results. |
• | First quarter 2017 EYLEA® (aflibercept) Injection U.S. net sales increased 9% to $854 million versus first quarter 2016 |
• | First quarter 2017 EYLEA global net sales(1) increased 12% to $1.34 billion versus first quarter 2016 |
• | FDA approved Dupixent® (dupilumab) Injection for adults with moderate-to-severe atopic dermatitis |
• | Positive Phase 2 results in dupilumab eosinophilic esophagitis study |
• | Biologics License Application for Kevzara® (sarilumab) accepted with a target action date of May 22, 2017 |
Financial Highlights | |||||||||||
($ in millions, except per share data) | Three Months Ended March 31, | ||||||||||
2017 | 2016* | % Change | |||||||||
EYLEA U.S. net product sales | $ | 854 | $ | 781 | 9 | % | |||||
Total revenues | $ | 1,319 | $ | 1,201 | 10 | % | |||||
GAAP net income | $ | 249 | $ | 181 | 38 | % | |||||
GAAP net income per share - diluted | $ | 2.16 | $ | 1.59 | 36 | % | |||||
Non-GAAP net income(2) | $ | 337 | $ | 273 | 23 | % | |||||
Non-GAAP net income per share - diluted(2) | $ | 2.92 | $ | 2.40 | 22 | % | |||||
* See note (6) below and Table 3 for an explanation of revisions made to certain amounts previously reported for the three months ended March 31, 2016. |
• | In the first quarter of 2017, net sales of EYLEA in the United States increased 9% to $854 million from $781 million in the first quarter of 2016. 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 2017, net sales of EYLEA outside of the United States(1) were $484 million, compared to $419 million in the first quarter of 2016. In the first quarter of 2017, Regeneron recognized $175 million from its share of net profit from EYLEA sales outside the United States, compared to $146 million in the first quarter of 2016. |
• | Dupilumab, an antibody that blocks signaling of IL-4 and IL-13, is currently being studied in asthma, children with atopic dermatitis, nasal polyps, and eosinophilic esophagitis. |
• | The launch of Dupixent commenced following the March 28, 2017 U.S. Food and Drug Administration (FDA) approval for the treatment of adult patients with moderate-to-severe atopic dermatitis whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable. |
• | In the first quarter of 2017, a Phase 3 study of Dupixent in adolescent patients (12-17 years of age) with moderate-to-severe atopic dermatitis was initiated. |
• | In March 2017, the Company and Sanofi presented additional detailed results from the Phase 3 LIBERTY AD CHRONOS study. The study met its primary and secondary endpoints, with patients receiving Dupixent with topical corticosteroids (TCS) achieving significantly improved measures of overall disease severity at 16 and 52 weeks, compared to TCS alone in adults with uncontrolled moderate-to-severe atopic dermatitis. |
• | In the second quarter of 2017, a Phase 3 study of dupilumab in pediatric patients (6-11 years of age) with uncontrolled persistent asthma was initiated. |
• | The Company recently completed a positive primary analysis from a Phase 2 proof-of-concept study of dupilumab in patients with active, moderate-to-severe eosinophilic esophagitis, which can be a manifestation of food allergy. Detailed data from this study will be presented at an upcoming medical conference. The Company and Sanofi plan to meet with the FDA and other regulators to determine next steps for development of dupilumab in this indication. |
• | In the first quarter of 2017, global net sales of Praluent were $36 million, compared to $13 million in the first quarter of 2016. Product sales for Praluent are recorded by Sanofi, and the Company shares in any profits or losses from the commercialization of Praluent. |
• | On January 5, 2017, the United States District Court for the District of Delaware issued a permanent injunction prohibiting the Company and Sanofi from marketing, selling, or commercially manufacturing Praluent in the United States. On February 8, 2017, the United States Court of Appeals for the Federal Circuit stayed (suspended) the injunction pending appeal. This ruling means that Regeneron and Sanofi will continue to market, sell, and commercially manufacture Praluent in the United States during the appeal process. Oral argument on the appeal is currently scheduled for June 6, 2017. |
• | In April 2017, the FDA approved the supplemental Biologics License Application (sBLA) for a once-monthly (every four weeks), 300 mg dose of Praluent. |
• | The ODYSSEY OUTCOMES trial remains ongoing, and is assessing the potential of Praluent to demonstrate cardiovascular benefit. |
• | In January 2017, Health Canada approved Kevzara for the treatment of adult patients with moderately to severely active rheumatoid arthritis who have an inadequate response to or intolerance to one or more biologic or non-biologic Disease-Modifying Anti-Rheumatic Drugs (DMARDs). This was the first approval of Kevzara worldwide. |
• | In March 2017, the Company and Sanofi resubmitted the BLA for Kevzara, which the FDA has accepted for review with a target action date of May 22, 2017. |
• | In April 2017, the European Medicine Agency's Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for the marketing authorization of Kevzara, recommending its approval for use in adult patients with moderately to severely active rheumatoid arthritis. |
Programs | Milestones | |
Dupixent (dupilumab) | | Submission for additional regulatory approvals and regulatory agency decisions on applications outside of the United States |
| Report results from Phase 3 asthma study | |
| Submit sBLA for asthma in adults | |
| Initiate Phase 3 study in pediatric patients in atopic dermatitis | |
| Initiate Phase 2 study in food allergies | |
Kevzara | | FDA target action date of May 22, 2017 |
| Submission for additional regulatory approvals and regulatory agency decisions on applications outside of the United States | |
Praluent | | Complete ODYSSEY OUTCOMES study |
Suptavumab (REGN2222; RSV-F Antibody) | | Report results from Phase 3 study |
Fasinumab (NGF Antibody) | | Initiate additional Phase 3 study in osteoarthritis pain |
| Initiate Phase 3 study in chronic low back pain | |
REGN2810 (PD-1 Antibody) | | Initiate Phase 3 study in first-line non-small cell lung cancer |
| Initiate Phase 2 study in basal cell carcinoma | |
Nesvacumab/aflibercept (Ang2 Antibody co-formulated with aflibercept) | | Report data from Phase 2 studies in DME (RUBY) and wet AMD (ONYX) |
EYLEA U.S. net product sales | Single digit percentage growth over 2016 (reaffirmed) |
Sanofi reimbursement of Regeneron commercialization-related expenses | $385 million - $425 million (previously $400 million - $450 million) |
Non-GAAP unreimbursed R&D(2)(4) | $950 million - $1.025 billion (reaffirmed) |
Non-GAAP SG&A(2)(4) | $1.140 billion - $1.200 billion (previously $1.175 billion - $1.250 billion) |
Effective tax rate | 32% - 38% (reaffirmed) |
Capital expenditures | $300 million - $350 million (previously $375 million - $450 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, and non-GAAP SG&A, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures are computed by excluding certain non-cash and other items from the related GAAP financial measure. Non-GAAP adjustments also include the income tax effect of reconciling items. The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate 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. 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. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company's core business operations. 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 2017 financial guidance does not assume the completion of any significant business development transactions not completed as of the date of this press release and assumes that Praluent will remain on the market throughout 2017. |
(4) | A reconciliation of full year 2017 non-GAAP to GAAP financial guidance is included below: |
Projected Range | ||||||||
(In millions) | Low | High | ||||||
GAAP unreimbursed R&D (5) | $ | 1,245 | $ | 1,340 | ||||
R&D: Non-cash share-based compensation expense | (295 | ) | (315 | ) | ||||
Non-GAAP unreimbursed R&D | $ | 950 | $ | 1,025 | ||||
GAAP SG&A | $ | 1,345 | $ | 1,435 | ||||
SG&A: Non-cash share-based compensation expense | (205 | ) | (235 | ) | ||||
Non-GAAP SG&A | $ | 1,140 | $ | 1,200 |
(5) | Unreimbursed R&D represents R&D expenses reduced by R&D expense reimbursements from the Company's collaborators and/or customers. |
(6) | Applicable GAAP amounts previously reported for the three months ended March 31, 2016 have been revised due to the adoption of Accounting Standards Update 2016-09 ("ASU 2016-09"), Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting, during the second quarter of 2016. The Company revised its GAAP net income from the amounts originally reported for the quarterly period ended March 31, 2016 to include a $15.6 million income tax benefit, which was originally recorded as additional paid-in capital. In addition, refer to Table 3 for a description of revisions to non-GAAP measures previously reported for the three months ended March 31, 2016. |
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, | |||||||
2017 | 2016 | |||||||
Assets: | ||||||||
Cash and marketable securities | $ | 2,274,779 | $ | 1,902,944 | ||||
Accounts receivable - trade, net | 1,339,794 | 1,343,368 | ||||||
Accounts receivable from Sanofi and Bayer | 409,754 | 268,252 | ||||||
Inventories | 466,576 | 399,356 | ||||||
Deferred tax assets | 866,291 | 825,303 | ||||||
Property, plant, and equipment, net | 2,277,029 | 2,083,421 | ||||||
Other assets | 183,142 | 150,822 | ||||||
Total assets | $ | 7,817,365 | $ | 6,973,466 | ||||
Liabilities and stockholders' equity: | ||||||||
Accounts payable, accrued expenses, and other liabilities | $ | 1,168,901 | $ | 980,659 | ||||
Deferred revenue | 1,074,836 | 1,062,436 | ||||||
Capital and facility lease obligations | 707,607 | 481,126 | ||||||
Stockholders' equity | 4,866,021 | 4,449,245 | ||||||
Total liabilities and stockholders' equity | $ | 7,817,365 | $ | 6,973,466 |
Three Months Ended March 31, | ||||||||
2017 | 2016* | |||||||
Revenues: | ||||||||
Net product sales | $ | 858,245 | $ | 784,182 | ||||
Sanofi collaboration revenue | 210,367 | 219,694 | ||||||
Bayer collaboration revenue | 193,939 | 179,592 | ||||||
Other revenue | 56,440 | 17,381 | ||||||
1,318,991 | 1,200,849 | |||||||
Expenses: | ||||||||
Research and development | 507,435 | 470,112 | ||||||
Selling, general, and administrative | 296,846 | 289,677 | ||||||
Cost of goods sold | 61,253 | 78,942 | ||||||
Cost of collaboration and contract manufacturing | 22,915 | 32,810 | ||||||
888,449 | 871,541 | |||||||
Income from operations | 430,542 | 329,308 | ||||||
Other income (expense), net | 1,747 | 843 | ||||||
Income before income taxes | 432,289 | 330,151 | ||||||
Income tax expense | (183,358 | ) | (148,766 | ) | ||||
Net income | $ | 248,931 | $ | 181,385 | ||||
Net income per share - basic | $ | 2.36 | $ | 1.74 | ||||
Net income per share - diluted | $ | 2.16 | $ | 1.59 | ||||
Weighted average shares outstanding - basic | 105,572 | 104,290 | ||||||
Weighted average shares outstanding - diluted | 115,106 | 114,228 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
GAAP net income (a) | $ | 248,931 | $ | 181,385 | ||||
Adjustments: | ||||||||
R&D: Non-cash share-based compensation expense | 73,523 | 78,102 | ||||||
SG&A: Non-cash share-based compensation expense | 53,812 | 60,082 | ||||||
COGS and COCM: Non-cash share-based compensation expense | 6,454 | 4,066 | ||||||
Income tax effect of reconciling items above (b) | (46,179 | ) | (50,699 | ) | ||||
Non-GAAP net income (b) | $ | 336,541 | $ | 272,936 | ||||
Non-GAAP net income per share - basic | $ | 3.19 | $ | 2.62 | ||||
Non-GAAP net income per share - diluted | $ | 2.92 | $ | 2.40 | ||||
Shares used in calculating: | ||||||||
Non-GAAP net income per share - basic | 105,572 | 104,290 | ||||||
Non-GAAP net income per share - diluted | 115,178 | 113,859 |
(a) | Certain revisions have been made to the previously reported amount for the three months ended March 31, 2016. See note (6) above. |
(b) | Prior to the quarter ended June 30, 2016, non-GAAP measures presented by the Company also included an income tax expense adjustment from GAAP tax expense to the amount of taxes that were paid or payable in cash in respect of the relevant period. Historically, there had been a significant difference between the Company's GAAP effective tax rate and actual cash income taxes paid or payable primarily due to the utilization of excess tax benefits in connection with employee exercises of stock options (which were recorded to additional paid-in capital for GAAP reporting purposes). In connection with the adoption of ASU 2016-09 (see note (6) above) during the second quarter of 2016, the Company chose to discontinue such non-GAAP adjustment as ASU 2016-09 requires entities to recognize excess tax benefits in connection with employee exercises of stock options in the income statement. A reconciliation to the previously reported non-GAAP net income is presented below: |
Three Months Ended March 31, 2016 | ||||
Non-GAAP net income - as revised (see above) | $ | 272,936 | ||
Income tax benefit related to the adoption of ASU 2016-09 (see note 6 above) | (15,649 | ) | ||
Income tax effect of reconciling items (see above) | 50,699 | |||
Non-cash income taxes (as previously reported) | (15,271 | ) | ||
Non-GAAP net income - as previously reported | $ | 292,715 | ||
Note: As a result of the above revisions to non-GAAP net income, non-GAAP net income per share (basic and diluted) has also been revised accordingly. |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Sanofi collaboration revenue: | ||||||||
Reimbursement of Regeneron research and development expenses | $ | 213,924 | $ | 222,877 | ||||
Reimbursement of Regeneron commercialization-related expenses | 73,559 | 68,722 | ||||||
Regeneron's share of losses in connection with commercialization of antibodies | (108,402 | ) | (99,422 | ) | ||||
Other | 31,286 | 27,517 | ||||||
Total Sanofi collaboration revenue | 210,367 | 219,694 | ||||||
Bayer collaboration revenue: | ||||||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States | 174,876 | 145,835 | ||||||
Cost-sharing of Regeneron development expenses | 6,349 | 4,639 | ||||||
Other | 12,714 | 29,118 | ||||||
Total Bayer collaboration revenue | 193,939 | 179,592 | ||||||
Total Sanofi and Bayer collaboration revenue | $ | 404,306 | $ | 399,286 | ||||
Note: In addition to amounts presented in the table above, the Company recorded $22.1 million for the three months ended March 31, 2017 related to reimbursements of Regeneron research and development expenses in connection with its collaboration agreement with Teva. The Company also recorded $2.7 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively, related to reimbursements of Regeneron research and development expenses by other entities. |
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