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: August 2, 2018 | REGENERON PHARMACEUTICALS, INC. | ||
By: | /s/ Joseph J. LaRosa | ||
Name: | Joseph J. LaRosa | ||
Title: | Senior Vice President, General Counsel and Secretary |
• | Second quarter 2018 GAAP net income per diluted share increased by 44% to $4.82 versus second quarter 2017 and second quarter 2018 non-GAAP net income per diluted share increased 31% to $5.45 versus second quarter 2017 |
• | Second quarter 2018 EYLEA® (aflibercept) Injection U.S. net sales increased 8% to $992 million versus second quarter 2017 and second quarter 2018 EYLEA global net sales(1) increased 13% to $1.66 billion versus second quarter 2017 |
• | Positive results reported from Phase 3 trial of Dupixent® (dupilumab) in adolescents with inadequately controlled moderate-to-severe atopic dermatitis |
Financial Highlights | |||||||||||
($ in millions, except per share data) | Three Months Ended June 30, | ||||||||||
2018 | 2017 | % Change | |||||||||
Total revenues | $ | 1,608 | $ | 1,470 | 9 | % | |||||
GAAP net income | $ | 551 | $ | 388 | 42 | % | |||||
GAAP net income per share - diluted | $ | 4.82 | $ | 3.34 | 44 | % | |||||
Non-GAAP net income(2) | $ | 624 | $ | 487 | 28 | % | |||||
Non-GAAP net income per share - diluted(2) | $ | 5.45 | $ | 4.17 | 31 | % |
Net Product Sales of Regeneron-Discovered Products* | |||||||||||||||||||||||||||||||||
($ in millions) | Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
2018 | 2017 | % Change | |||||||||||||||||||||||||||||||
US | ROW | Total | US | ROW | Total | US | ROW | Total | |||||||||||||||||||||||||
EYLEA* | $ | 992 | $ | 666 | $ | 1,658 | $ | 919 | $ | 542 | $ | 1,461 | 8 | % | 23 | % | 13 | % | |||||||||||||||
ARCALYST | 4 | — | 4 | 5 | — | 5 | (20 | )% | — | (20 | %) | ||||||||||||||||||||||
Net product sales recorded by Regeneron | $ | 996 | ___* | ___* | $ | 924 | ___* | ___* | 8 | % | ___* | ** | |||||||||||||||||||||
Net product sales recorded by Sanofi*: | |||||||||||||||||||||||||||||||||
Dupixent | $ | 181 | $ | 28 | $ | 209 | $ | 28 | — | $ | 28 | 546 | % | ** | ** | ||||||||||||||||||
Praluent | 42 | 32 | 74 | 33 | $ | 13 | 46 | 27 | % | 146 | % | 61 | % | ||||||||||||||||||||
Kevzara | 19 | 5 | 24 | 1 | — | 1 | ** | ** | ** | ||||||||||||||||||||||||
ZALTRAP | 3 | 25 | 28 | 2 | 18 | 20 | 50 | % | 39 | % | 40 | % | |||||||||||||||||||||
* Bayer records net product sales of EYLEA outside the United States and Sanofi records global net product sales of Dupixent, Praluent, Kevzara, and ZALTRAP. Refer to Table 4 below for the Company's share of profits/losses recorded in connection with sales of EYLEA outside the United States and global sales of Dupixent, Praluent, and Kevzara. Sanofi pays the Company a percentage of aggregate net sales of ZALTRAP. ** Percentage not meaningful |
• | The Company recently submitted a supplemental Biologics License Application (sBLA) for EYLEA for the treatment of diabetic retinopathy. |
• | In the second quarter of 2018, the Company submitted an sBLA for EYLEA in a pre-filled syringe. |
• | Dupixent, an antibody that blocks signaling of IL-4 and IL-13, is being studied in asthma, adolescent and pediatric atopic dermatitis, nasal polyps, eosinophilic esophagitis (EoE), and grass immunotherapy, with additional studies planned in 2018. |
• | In May 2018, the Company and Sanofi reported that a Phase 3 trial evaluating Dupixent to treat moderate-to-severe atopic dermatitis in adolescents (12–17 years of age) met its primary and key secondary endpoints. |
• | In May 2018, the Company and Sanofi announced that the New England Journal of Medicine published detailed, positive results from two Phase 3 trials of Dupixent in moderate-to-severe asthma. |
• | In the second quarter of 2018, a Phase 2 study of Dupixent in grass immunotherapy was initiated. |
• | In May 2018, the Company and Sanofi announced they will lower the net price of Praluent in exchange for straightforward, more affordable patient access from Express Scripts. Praluent has been chosen as the exclusive PCSK9 inhibitor therapy on the Express Scripts national formulary. The agreement took effect on July 1, 2018. |
• | An sBLA and a Marketing Authorization Application (MAA) for Praluent for cardiovascular risk reduction have been recently submitted. |
• | An sBLA for first-line treatment of hyperlipidemia has also been recently submitted. |
• | In the second quarter of 2018, a Phase 3 pediatric study in heterozygous familial hypercholesterolemia (HeFH) was initiated. |
• | In April 2018, the FDA accepted for priority review the BLA for cemiplimab for the treatment of patients with metastatic cutaneous squamous cell carcinoma (CSCC) or patients with locally advanced CSCC who are not candidates for surgery. The target action date for the FDA decision is October 28, 2018. |
• | In April 2018, the European Medicines Agency (EMA) also accepted for review the MAA for cemiplimab in patients with metastatic CSCC or patients with locally advanced CSCC who are not candidates for surgery. |
• | In June 2018, the Company and Sanofi announced that pivotal data from two trials evaluating cemiplimab in advanced CSCC were published in the New England Journal of Medicine. |
• | In May 2018, the Company and Sanofi announced positive interim results from a Phase 1 study assessing cemiplimab as a potential treatment for advanced non-small cell lung cancer (NSCLC). |
• | In April 2018, an independent Data Monitoring Committee monitoring the ongoing safety and efficacy of the fasinumab clinical trials recommended that the higher dose-regimens be discontinued based on the risk benefit assessment and that the program may continue with the lower dose-regimens of fasinumab; the ongoing osteoarthritis trials have been modified accordingly. Since the Phase 3 clinical study in chronic low back pain in patients with concomitant osteoarthritis was only using higher doses, the Company is no longer actively dosing patients in this study. |
Programs | Milestones | |
EYLEA | | FDA decision on sBLA for every 12-week dosing interval in wet AMD (target action date of August 11, 2018) |
| Report one-year data from Phase 3 PANORAMA study for the treatment of non-proliferative diabetic retinopathy in patients without diabetic macular edema (DME) | |
Dupixent (dupilumab) | | FDA decision on sBLA for asthma in adult/adolescent patients (target action date of October 20, 2018) |
| Additional regulatory agency decisions on applications for atopic dermatitis in adults outside the United States | |
| Submit sBLA and MAA for expanded indication in adolescent patients with atopic dermatitis (12–17 years of age) | |
| Report data from Phase 3 studies in nasal polyps | |
| Initiate Phase 3 study in EoE | |
| Initiate Phase 2 study in peanut allergy | |
Praluent (alirocumab) | | FDA decision on sBLA for use with apheresis (target action date of August 24, 2018) |
| Initiate Phase 3 pediatric study in homozygous familial hypercholesterolemia (HoFH) | |
Kevzara (sarilumab) | | Initiate Phase 3 study in giant cell arteritis |
| Initiate Phase 3 study in polymyalgia rheumatica | |
Cemiplimab (PD-1 Antibody) | | FDA decision on BLA for advanced CSCC (target action date of October 28, 2018) |
| Continue Phase 3 patient enrollment for the treatment of non-small cell lung cancer, as well as various other studies | |
Fasinumab (NGF Antibody) | | Report data from first Phase 3 efficacy study in osteoarthritis pain |
| Continue patient enrollment in Phase 3 long-term safety and efficacy studies in osteoarthritis | |
REGN3500 (IL-33 Antibody) | | Initiate Phase 2 study in atopic dermatitis |
Bispecific Antibodies | | Initiate Phase 2 study for REGN1979 (CD20xCD3 Antibody) in follicular lymphoma |
| Submit Investigational New Drug Application (IND) for BCMAxCD3 antibody |
Sanofi collaboration revenue: Sanofi reimbursement of Regeneron commercialization-related expenses | $455 million–$485 million (previously $450 million–$485 million) |
Non-GAAP unreimbursed R&D(2)(4) | $1.210 billion–$1.260 billion (previously $1.230 billion–$1.310 billion) |
Non-GAAP SG&A(2)(4) | $1.340 billion–$1.390 billion (previously $1.325 billion–$1.395 billion) |
Effective tax rate | 13%–16% (previously 15%–18%) |
Capital expenditures | $410 million–$450 million (previously $420 million–$480 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 estimated 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 or changes in the fair value of the Company's equity investments) or items that are not associated with normal, recurring operations (such as changes in applicable laws and regulations). 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 2018 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 2018 non-GAAP to GAAP financial guidance is included below: |
Projected Range | ||||||||
(In millions) | Low | High | ||||||
GAAP unreimbursed R&D (5) | $ | 1,425 | $ | 1,495 | ||||
R&D: Non-cash share-based compensation expense | (215 | ) | (235 | ) | ||||
Non-GAAP unreimbursed R&D | $ | 1,210 | $ | 1,260 | ||||
GAAP SG&A | $ | 1,505 | $ | 1,585 | ||||
SG&A: Non-cash share-based compensation expense | (165 | ) | (195 | ) | ||||
Non-GAAP SG&A | $ | 1,340 | $ | 1,390 |
(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 |
June 30, | December 31, | |||||||
2018 | 2017 | |||||||
Assets: | ||||||||
Cash and marketable securities | $ | 3,728,221 | $ | 2,896,074 | ||||
Accounts receivable - trade, net | 1,534,324 | 1,538,642 | ||||||
Accounts receivable from Sanofi and Bayer | 504,923 | 435,698 | ||||||
Inventories | 928,553 | 726,138 | ||||||
Property, plant, and equipment, net | 2,461,614 | 2,358,605 | ||||||
Deferred tax assets | 545,077 | 506,291 | ||||||
Other assets | 249,268 | 302,838 | ||||||
Total assets | $ | 9,951,980 | $ | 8,764,286 | ||||
Liabilities and stockholders' equity: | ||||||||
Accounts payable, accrued expenses, and other liabilities | $ | 1,032,635 | $ | 967,418 | ||||
Deferred revenue | 1,027,016 | 949,337 | ||||||
Capital and facility lease obligations | 705,903 | 703,453 | ||||||
Stockholders' equity | 7,186,426 | 6,144,078 | ||||||
Total liabilities and stockholders' equity | $ | 9,951,980 | $ | 8,764,286 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Net product sales | $ | 996,382 | $ | 924,133 | $ | 1,984,291 | $ | 1,782,378 | ||||||||
Sanofi collaboration revenue | 237,753 | 222,128 | 427,243 | 432,495 | ||||||||||||
Bayer collaboration revenue | 262,863 | 210,355 | 510,791 | 404,294 | ||||||||||||
Other revenue | 111,024 | 113,500 | 197,182 | 169,940 | ||||||||||||
1,608,022 | 1,470,116 | 3,119,507 | 2,789,107 | |||||||||||||
Expenses: | ||||||||||||||||
Research and development | 529,289 | 509,975 | 1,027,875 | 1,017,410 | ||||||||||||
Selling, general, and administrative | 364,884 | 306,908 | 695,654 | 603,754 | ||||||||||||
Cost of goods sold | 35,950 | 42,133 | 105,193 | 103,386 | ||||||||||||
Cost of collaboration and contract manufacturing | 55,711 | 60,788 | 101,366 | 83,703 | ||||||||||||
985,834 | 919,804 | 1,930,088 | 1,808,253 | |||||||||||||
Income from operations | 622,188 | 550,312 | 1,189,419 | 980,854 | ||||||||||||
Other income (expense), net | 33,886 | (24,462 | ) | 52,053 | (22,715 | ) | ||||||||||
Income before income taxes | 656,074 | 525,850 | 1,241,472 | 958,139 | ||||||||||||
Income tax expense | (104,662 | ) | (138,106 | ) | (212,080 | ) | (321,464 | ) | ||||||||
Net income | $ | 551,412 | $ | 387,744 | $ | 1,029,392 | $ | 636,675 | ||||||||
Net income per share - basic | $ | 5.12 | $ | 3.66 | $ | 9.56 | $ | 6.02 | ||||||||
Net income per share - diluted | $ | 4.82 | $ | 3.34 | $ | 8.97 | $ | 5.51 | ||||||||
Weighted average shares outstanding - basic | 107,800 | 106,034 | 107,724 | 105,804 | ||||||||||||
Weighted average shares outstanding - diluted | 114,477 | 116,137 | 114,697 | 115,607 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
GAAP net income | $ | 551,412 | $ | 387,744 | $ | 1,029,392 | $ | 636,675 | ||||||||
Adjustments: | ||||||||||||||||
R&D: Non-cash share-based compensation expense | 59,602 | 69,528 | 100,437 | 143,051 | ||||||||||||
SG&A: Non-cash share-based compensation expense | 40,467 | 44,708 | 75,481 | 98,520 | ||||||||||||
COGS and COCM: Non-cash share-based compensation expense | 6,726 | 7,022 | 13,299 | 13,476 | ||||||||||||
Other expense: Loss on extinguishment of debt | — | 30,100 | — | 30,100 | ||||||||||||
Other income/expense: Gains and losses on investments in equity securities (a) | (16,520 | ) | — | (25,889 | ) | — | ||||||||||
Income tax effect of reconciling items above | (18,035 | ) | (52,310 | ) | (32,336 | ) | (98,500 | ) | ||||||||
Non-GAAP net income | $ | 623,652 | $ | 486,792 | $ | 1,160,384 | $ | 823,322 | ||||||||
Non-GAAP net income per share - basic | $ | 5.79 | $ | 4.59 | $ | 10.77 | $ | 7.78 | ||||||||
Non-GAAP net income per share - diluted | $ | 5.45 | $ | 4.17 | $ | 10.12 | $ | 7.10 | ||||||||
Shares used in calculating: | ||||||||||||||||
Non-GAAP net income per share - basic | 107,800 | 106,034 | 107,724 | 105,804 | ||||||||||||
Non-GAAP net income per share - diluted | 114,478 | 116,832 | 114,700 | 115,903 | ||||||||||||
(a) Prior to the quarter ended March 31, 2018, unrealized gains and losses on equity securities were recorded in Other comprehensive income (loss). In connection with the adoption of ASU 2016-01, unrealized gains and losses on equity securities during the three and six months ended June 30, 2018 were recorded in Other income, net. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Sanofi collaboration revenue: | ||||||||||||||||
Reimbursement of Regeneron research and development expenses | $ | 141,536 | $ | 205,352 | $ | 275,754 | $ | 419,276 | ||||||||
Reimbursement of Regeneron commercialization-related expenses | 105,727 | 87,853 | 192,361 | 161,412 | ||||||||||||
Regeneron's share of losses in connection with commercialization of antibodies | (68,797 | ) | (122,281 | ) | (143,671 | ) | (230,683 | ) | ||||||||
Other | 59,287 | 51,204 | 102,799 | 82,490 | ||||||||||||
Total Sanofi collaboration revenue | 237,753 | 222,128 | 427,243 | 432,495 | ||||||||||||
Bayer collaboration revenue: | ||||||||||||||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States | 246,302 | 190,883 | 478,370 | 365,759 | ||||||||||||
Reimbursement of Regeneron development expenses | 3,867 | 6,720 | 7,864 | 13,069 | ||||||||||||
Other | 12,694 | 12,752 | 24,557 | 25,466 | ||||||||||||
Total Bayer collaboration revenue | 262,863 | 210,355 | 510,791 | 404,294 | ||||||||||||
Total Sanofi and Bayer collaboration revenue | $ | 500,616 | $ | 432,483 | $ | 938,034 | $ | 836,789 | ||||||||
Other revenue: | ||||||||||||||||
Reimbursement of Regeneron research and development expenses - Teva | $ | 34,310 | $ | 31,481 | $ | 73,439 | $ | 53,531 | ||||||||
Reimbursement of Regeneron research and development expenses - other | 3,889 | 762 | 6,584 | 3,412 | ||||||||||||
Other | 72,825 | 81,257 | 117,159 | 112,997 | ||||||||||||
Total other revenue | $ | 111,024 | $ | 113,500 | $ | 197,182 | $ | 169,940 |
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