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)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter). | ||
Emerging growth company ¨ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
Date: November 8, 2017 | REGENERON PHARMACEUTICALS, INC. | ||
By: | /s/ Joseph J. LaRosa | ||
Name: | Joseph J. LaRosa | ||
Title: | Senior Vice President, General Counsel and Secretary |
• | Third quarter 2017 EYLEA® (aflibercept) Injection U.S. net sales increased 12% to $953 million versus third quarter 2016 |
• | Third quarter 2017 EYLEA global net sales(1) increased 15% to $1.52 billion versus third quarter 2016 |
• | Third quarter 2017 GAAP net income per diluted share increased 46% to $3.32 versus third quarter 2016. Third quarter 2017 non-GAAP net income per diluted share increased 27% to $3.99 versus third quarter 2016. |
• | Phase 3 EYLEA PANORAMA study for the treatment of diabetic retinopathy is fully enrolled with U.S. regulatory submission expected in 2018 |
• | Appellate court ordered a new trial and vacated permanent injunction in U.S. Praluent® patent case |
Financial Highlights | |||||||||||
($ in millions, except per share data) | Three Months Ended September 30, | ||||||||||
2017 | 2016 | % Change | |||||||||
EYLEA U.S. net product sales | $ | 953 | $ | 854 | 12 | % | |||||
Total revenues | $ | 1,501 | $ | 1,220 | 23 | % | |||||
GAAP net income | $ | 388 | $ | 265 | 46 | % | |||||
GAAP net income per share - diluted | $ | 3.32 | $ | 2.27 | 46 | % | |||||
Non-GAAP net income(2) | $ | 470 | $ | 365 | 29 | % | |||||
Non-GAAP net income per share - diluted(2) | $ | 3.99 | $ | 3.13 | 27 | % |
• | In the third quarter of 2017, net sales of EYLEA in the United States increased 12% to $953 million from $854 million in the third quarter of 2016. Overall distributor inventory levels remained within the Company's one- to two-week targeted range. |
• | In the third quarter of 2017, enrollment was completed in the Phase 3 PANORAMA study in patients with non-proliferative diabetic retinopathy without diabetic macular edema (DME). |
• | Bayer commercializes EYLEA outside the United States. In the third quarter of 2017, net sales of EYLEA outside of the United States(1) were $564 million, compared to $471 million in the third quarter of 2016. In the third quarter of 2017, Regeneron recognized $205 million from its share of net profit from EYLEA sales outside the United States, compared to $171 million in the third quarter of 2016. |
• | Dupilumab, an antibody that blocks signaling of IL-4 and IL-13, is currently being studied in asthma, pediatric atopic dermatitis, nasal polyps, and eosinophilic esophagitis (EoE). |
• | In the third quarter of 2017, global net sales of Dupixent were $89 million, which were almost exclusively in the United States. Product sales for Dupixent are recorded by Sanofi, and the Company shares in any profits or losses from the commercialization of Dupixent. |
• | In September 2017, the European Commission granted marketing authorization for Dupixent for use in adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy. |
• | In September 2017, the Company and Sanofi presented positive results from the Phase 3 LIBERTY AD CAFÉ study in atopic dermatitis at the annual European Academy of Dermatology and Venereology (EADV) Congress. |
• | In September 2017, the Company and Sanofi announced that the Phase 3 LIBERTY ASTHMA QUEST study of dupilumab in a broad population of adults and adolescents with uncontrolled, persistent asthma met its two primary endpoints. |
• | In October 2017, the Company and Sanofi announced that the Phase 3 LIBERTY ASTHMA VENTURE study evaluating dupilumab in adults and adolescents with severe, steroid-dependent asthma met its primary endpoint and key secondary endpoints. |
• | In September 2017, the FDA granted orphan drug designation for the treatment of EoE. |
• | In October 2017, the Company and Sanofi presented positive results from the Phase 2 study in adults with active moderate-to-severe EoE at the World Congress of Gastroenterology. |
• | In the third quarter of 2017, global net sales of Praluent were $49 million, compared to $38 million in the third 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. |
• | In October 2017, the U.S. Court of Appeals for the Federal Circuit ordered a new trial on the issues of written description and enablement and vacated the permanent injunction in the ongoing PCSK9 litigation. |
• | A Phase 3 study in homozygous familial hypercholesterolemia (HoFH) was initiated in the fourth quarter of 2017. |
• | In the third quarter of 2017, global net sales of Kevzara were $3 million. Product sales for Kevzara are recorded by Sanofi, and the Company shares in any profits or losses from the commercialization of Kevzara. |
• | In September 2017, the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan approved Kevzara for the treatment of adult patients with rheumatoid arthritis who have had an inadequate response to conventional treatments. |
• | In the third quarter of 2017, the FDA granted Breakthrough Therapy designation for the treatment of adults with metastatic cutaneous squamous cell carcinoma (CSCC) and adults with locally advanced and unresectable CSCC. |
• | A pivotal Phase 2 study in metastatic or locally advanced and unresectable CSCC is ongoing. |
• | A Phase 3 study in cervical cancer was initiated in the third quarter of 2017. |
Programs | Milestones | |
EYLEA | | File sBLA with FDA for every 12-week dosing interval in neovascular age-related macular degeneration (wet AMD) |
Dupixent | | Submit sBLA for asthma in adult/adolescent patients |
| Initiate Phase 3 studies in younger pediatric patients in atopic dermatitis | |
Praluent | | Complete ODYSSEY OUTCOMES study (with data expected in early 2018) |
| File sBLA with FDA for use with apheresis | |
Cemiplimab (PD-1 Antibody) | | Report interim data from pivotal Phase 2 CSCC study |
Fasinumab (NGF Antibody) | | Initiate Phase 3 study in patients with both chronic low back pain and osteoarthritis |
Nesvacumab/aflibercept (Ang2 Antibody co-formulated with aflibercept) | | Report top-line data from Phase 2 studies in DME (RUBY) and wet AMD (ONYX) |
REGN2477 (Activin A Antibody) | | Initiate Phase 2 study in patients with Fibrodysplasia Ossificans Progressiva (FOP) |
EYLEA U.S. net product sales | Approximately 10% growth over 2016 (reaffirmed) |
Sanofi reimbursement of Regeneron commercialization-related expenses | $350 million - $375 million (previously $370 million - $400 million) |
Non-GAAP unreimbursed R&D(2)(4) | $885 million - $915 million (previously $925 million - $965 million) |
Non-GAAP SG&A(2)(4) | $1.070 billion - $1.100 billion (previously $1.120 billion - $1.160 billion) |
Effective tax rate | 26% - 29% (previously 27% - 31%) |
Capital expenditures | $265 million - $285 million (previously $250 million - $285 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. |
(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) | $ | 1,145 | $ | 1,190 | ||||
R&D: Non-cash share-based compensation expense | (260 | ) | (275 | ) | ||||
Non-GAAP unreimbursed R&D | $ | 885 | $ | 915 | ||||
GAAP SG&A | $ | 1,270 | $ | 1,325 | ||||
SG&A: Non-cash share-based compensation expense | (200 | ) | (225 | ) | ||||
Non-GAAP SG&A | $ | 1,070 | $ | 1,100 |
(5) | Unreimbursed R&D represents R&D expenses reduced by R&D expense reimbursements from the Company's collaborators and/or customers. |
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 |
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
Assets: | ||||||||
Cash and marketable securities | $ | 2,706,247 | $ | 1,902,944 | ||||
Accounts receivable - trade, net | 1,532,693 | 1,343,368 | ||||||
Accounts receivable from Sanofi and Bayer | 438,756 | 268,252 | ||||||
Inventories | 641,588 | 399,356 | ||||||
Property, plant, and equipment, net | 2,274,529 | 2,083,421 | ||||||
Deferred tax assets | 927,023 | 825,303 | ||||||
Other assets | 180,379 | 150,822 | ||||||
Total assets | $ | 8,701,215 | $ | 6,973,466 | ||||
Liabilities and stockholders' equity: | ||||||||
Accounts payable, accrued expenses, and other liabilities | $ | 943,985 | $ | 980,659 | ||||
Deferred revenue | 1,003,320 | 1,062,436 | ||||||
Capital and facility lease obligations | 702,317 | 481,126 | ||||||
Stockholders' equity | 6,051,593 | 4,449,245 | ||||||
Total liabilities and stockholders' equity | $ | 8,701,215 | $ | 6,973,466 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Net product sales | $ | 957,367 | $ | 857,468 | $ | 2,739,745 | $ | 2,475,869 | ||||||||
Sanofi collaboration revenue | 245,175 | 144,392 | 677,670 | 527,500 | ||||||||||||
Bayer collaboration revenue | 236,625 | 191,298 | 640,919 | 562,786 | ||||||||||||
Other revenue | 61,506 | 26,964 | 231,446 | 67,445 | ||||||||||||
1,500,673 | 1,220,122 | 4,289,780 | 3,633,600 | |||||||||||||
Expenses: | ||||||||||||||||
Research and development | 529,749 | 543,047 | 1,547,159 | 1,573,089 | ||||||||||||
Selling, general, and administrative | 306,766 | 270,045 | 910,520 | 851,760 | ||||||||||||
Cost of goods sold | 46,388 | 29,901 | 149,774 | 150,090 | ||||||||||||
Cost of collaboration and contract manufacturing | 57,844 | 14,327 | 141,547 | 74,923 | ||||||||||||
940,747 | 857,320 | 2,749,000 | 2,649,862 | |||||||||||||
Income from operations | 559,926 | 362,802 | 1,540,780 | 983,738 | ||||||||||||
Other income (expense), net | 5,679 | 3,079 | (17,036 | ) | 4,550 | |||||||||||
Income before income taxes | 565,605 | 365,881 | 1,523,744 | 988,288 | ||||||||||||
Income tax expense | (177,288 | ) | (101,077 | ) | (498,752 | ) | (345,881 | ) | ||||||||
Net income | $ | 388,317 | $ | 264,804 | $ | 1,024,992 | $ | 642,407 | ||||||||
Net income per share - basic | $ | 3.64 | $ | 2.53 | $ | 9.66 | $ | 6.14 | ||||||||
Net income per share - diluted | $ | 3.32 | $ | 2.27 | $ | 8.84 | $ | 5.51 | ||||||||
Weighted average shares outstanding - basic | 106,706 | 104,833 | 106,108 | 104,586 | ||||||||||||
Weighted average shares outstanding - diluted | 117,028 | 116,466 | 115,994 | 116,567 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
GAAP net income | $ | 388,317 | $ | 264,804 | $ | 1,024,992 | $ | 642,407 | ||||||||
Adjustments: | ||||||||||||||||
R&D: Non-cash share-based compensation expense | 70,123 | 80,572 | 213,174 | 237,991 | ||||||||||||
R&D: Upfront payments related to license and collaboration agreements | — | 25,000 | — | 100,000 | ||||||||||||
SG&A: Non-cash share-based compensation expense | 47,672 | 49,369 | 146,192 | 157,181 | ||||||||||||
COGS and COCM: Non-cash share-based compensation expense | 7,302 | 1,438 | 20,778 | 10,148 | ||||||||||||
Other expense: Loss on extinguishment of debt | — | — | 30,100 | 466 | ||||||||||||
Income tax effect of reconciling items above | (42,958 | ) | (56,210 | ) | (141,458 | ) | (181,558 | ) | ||||||||
Non-GAAP net income | $ | 470,456 | $ | 364,973 | $ | 1,293,778 | $ | 966,635 | ||||||||
Non-GAAP net income per share - basic | $ | 4.41 | $ | 3.48 | $ | 12.19 | $ | 9.24 | ||||||||
Non-GAAP net income per share - diluted | $ | 3.99 | $ | 3.13 | $ | 11.09 | $ | 8.28 | ||||||||
Shares used in calculating: | ||||||||||||||||
Non-GAAP net income per share - basic | 106,706 | 104,833 | 106,108 | 104,586 | ||||||||||||
Non-GAAP net income per share - diluted | 117,819 | 116,644 | 116,616 | 116,764 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Sanofi collaboration revenue: | ||||||||||||||||
Reimbursement of Regeneron research and development expenses | $ | 190,188 | $ | 167,615 | $ | 609,464 | $ | 567,074 | ||||||||
Reimbursement of Regeneron commercialization-related expenses | 90,339 | 64,418 | 251,002 | 213,957 | ||||||||||||
Regeneron's share of losses in connection with commercialization of antibodies | (98,315 | ) | (112,001 | ) | (328,998 | ) | (333,530 | ) | ||||||||
Other | 62,963 | 24,360 | 146,202 | 79,999 | ||||||||||||
Total Sanofi collaboration revenue | 245,175 | 144,392 | 677,670 | 527,500 | ||||||||||||
Bayer collaboration revenue: | ||||||||||||||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States | 205,367 | 170,854 | 571,126 | 484,181 | ||||||||||||
Reimbursement of Regeneron development expenses | 13,378 | 9,652 | 26,447 | 21,351 | ||||||||||||
Other | 17,880 | 10,792 | 43,346 | 57,254 | ||||||||||||
Total Bayer collaboration revenue | 236,625 | 191,298 | 640,919 | 562,786 | ||||||||||||
Total Sanofi and Bayer collaboration revenue | $ | 481,800 | $ | 335,690 | $ | 1,318,589 | $ | 1,090,286 | ||||||||
Other revenue: | ||||||||||||||||
Reimbursement of Regeneron research and development expenses - Teva | $ | 28,537 | $ | 3,064 | $ | 82,068 | $ | 3,064 | ||||||||
Reimbursement of Regeneron research and development expenses - other | 150 | 933 | 3,562 | 1,553 | ||||||||||||
Substantive development milestones | — | — | 55,000 | — | ||||||||||||
Other | 32,819 | 22,967 | 90,816 | 62,828 | ||||||||||||
Total other revenue | $ | 61,506 | $ | 26,964 | $ | 231,446 | $ | 67,445 |
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