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Regeneron Reports First Quarter 2013 Financial and Operating Results



     Regeneron Reports First Quarter 2013 Financial and Operating Results

- First quarter EYLEA® (aflibercept) Injection net sales of $314 million in
the U.S. and $65 million in rest of world

- Estimated full year 2013 EYLEA U.S. net sales forecast raised to $1.25
billion - $1.325 billion

- First quarter non-GAAP net income of $201 million or $1.78 per diluted share

PR Newswire

TARRYTOWN, N.Y., May 3, 2013

TARRYTOWN, N.Y., May 3, 2013 /PRNewswire/ -- Regeneron Pharmaceuticals, Inc.
(NASDAQ: REGN)  today announced financial and operating results for the first
quarter of 2013 and provided an update on development programs. 

The Company reported total revenues of $440 million in the first quarter of
2013, compared to $232 million in the first quarter of 2012.  Total revenues
include EYLEA U.S. net product sales of $314 million in the first quarter of
2013, compared to $124 million in the first quarter of 2012.  The Company
reported non-GAAP net income of $201 million, or $1.78 per diluted share, in
the first quarter of 2013, compared to $40 million, or $0.37 per diluted
share, in the first quarter of 2012.  Non-GAAP net income excludes non-cash
share-based compensation expense, non-cash interest expense related to the
Company's convertible senior notes, and non-cash income taxes.  The Company
reported GAAP net income of $99 million, or $0.90 per diluted share, in the
first quarter of 2013, compared to $12 million, or $0.11 per diluted share, in
the first quarter of 2012. 

"The first quarter of 2013 was a productive quarter where we delivered
sustained revenue and earnings growth," said Leonard S. Schleifer, M.D.,
Ph.D., President and Chief Executive Officer of Regeneron.  "EYLEA sales in
the U.S. continue to enjoy strong growth and we are raising our estimate of
full year U.S. EYLEA net sales to $1.25 to $1.325 billion in 2013.  The
ex-U.S. launch of EYLEA by our partner, Bayer HealthCare, is also going very
well and resulted in a positive contribution to our earnings this quarter. 
Our broad, late-stage pipeline is making progress.  We expect our first data
from the alirocumab Phase 3 program for reducing LDL cholesterol in the second
half of 2013.  We reported positive data with our IL-4R inhibitor, dupilumab,
in atopic dermatitis and additional data for dupilumab are expected in
allergic asthma later this month."

2013 Business Highlights

EYLEA^® (aflibercept) Injection for Intravitreal Injection

  o EYLEA is currently approved in the United States for the treatment of
    neovascular age-related macular degeneration (wet AMD) and macular edema
    following central retinal vein occlusion (CRVO).  In the first quarter of
    2013, net sales were $314 million, compared to $124 million in the first
    quarter of 2012, and $276 million in the fourth quarter of 2012.
  o The Company and Bayer HealthCare collaborate on the global development and
    commercialization of EYLEA outside the United States, and share profits
    and losses from commercialization of EYLEA outside the United States
    except for Japan, where the Company receives a royalty on sales. 
    Regeneron maintains exclusive rights to EYLEA in the United States and is
    entitled to all profits from any such sales.
  o Bayer HealthCare commenced sales of EYLEA for the treatment of wet AMD in
    the fourth quarter of 2012 following receipt of regulatory approvals in
    the European Union, Japan, Australia, and other regions.  In the first
    quarter of 2013, Bayer HealthCare recorded net sales of EYLEA outside of
    the United States of $65 million, compared to $19 million in the fourth
    quarter of 2012.  Our share of profits (including royalties on sales in
    Japan) for EYLEA was $19 million, and after repaying $13 million in
    development expenses, we recognized $6 million in net profit from EYLEA
    sales outside the United States in the quarter.
  o Launches in additional countries are anticipated to continue throughout
    2013 as regulatory and pricing approvals for EYLEA for the treatment of
    wet AMD are achieved.
  o Applications for marketing authorization for EYLEA for the treatment of
    macular edema following CRVO are also pending in Europe, Japan, and other
    regions.
  o Regeneron and Bayer HealthCare are conducting Phase 3 trials, VISTA-DME
    and VIVID-DME, to evaluate the efficacy and safety of EYLEA in the
    treatment of diabetic macular edema (DME).  Both studies are fully
    enrolled.  In February 2013, Bayer HealthCare initiated another Phase 3
    DME trial, VIVID EAST-DME, in Russia, China, and other Asian countries.
  o The VIBRANT study of EYLEA in macular edema following branch retinal vein
    occlusion (BRVO) is now fully enrolled.

ZALTRAP^® (ziv-aflibercept) Injection for Intravenous Infusion

  o The Company and Sanofi collaborate on the global development and
    commercialization of ZALTRAP, and share profits and losses from
    commercialization of ZALTRAP except for Japan, where the Company will
    receive a royalty on sales. 
  o In February 2013, the European Commission (EC) granted marketing
    authorization in the European Union for ZALTRAP concentrate for solution
    for infusion in combination with irinotecan/5-fluorouracil/folinic acid
    (FOLFIRI) chemotherapy in adults with metastatic colorectal cancer (mCRC)
    that is resistant to or has progressed after an oxaliplatin-containing
    regimen.  Marketing authorization applications for ZALTRAP are also
    currently under review by other regulatory agencies worldwide.
  o In the first quarter of 2013, Sanofi recorded worldwide net sales of
    ZALTRAP of $14 million.  

Monoclonal Antibodies

  o Regeneron has eleven fully human monoclonal antibodies based on the
    Company's VelocImmune^® technology in clinical development, including six
    in collaboration with Sanofi.
  o ODYSSEY, a large, global Phase 3 program with alirocumab (REGN727), an
    antibody targeting PCSK9 to reduce LDL cholesterol, was initiated in June
    2012 and is currently enrolling patients.  The Company expects to report
    initial results from a Phase 3 ODYSSEY trial in the second half of 2013. 
    Alirocumab is being developed in collaboration with Sanofi.
  o Positive proof of concept data from two Phase 1b trials with dupilumab
    (REGN668), an antibody targeting IL-4R, in atopic dermatitis were
    presented at the 71^st Annual Meeting of the American Academy of
    Dermatology in March 2013.  Data from a Phase 2a trial of dupilumab in
    allergic asthma will be presented at the American Thoracic Society meeting
    in May 2013.  Dupilumab is being developed in collaboration with Sanofi.

First Quarter 2013 Financial Results

Total Revenues: Total revenues were $440 million in the first quarter of 2013,
compared to $232 million in the first quarter of 2012.  Total revenues include
collaboration revenues of $114 million in the first quarter of 2013, compared
to $97 million in the first quarter of 2012. 

Product Revenues: Net product sales were $319 million in the first quarter of
2013, compared to $128 million in the first quarter of 2012.  EYLEA net
product sales were $314 million in the first quarter of 2013, compared to $124
million in the first quarter of 2012.  ARCALYST net product sales were $5
million in the first quarter of 2013, compared to $4 million in the first
quarter of 2012.  

Research and Development (R&D) Expenses: GAAP R&D expenses were $180 million
in the first quarter of 2013, compared to $139 million in the first quarter of
2012.  The higher R&D expenses in 2013 were principally due to increased R&D
headcount and activities, primarily related to the Company's antibody
collaboration with Sanofi, and higher non-cash share-based compensation
expense.  In the first quarter of 2013, R&D related non-cash share-based
compensation expense was $27 million, compared to $11 million in the first
quarter of 2012.

Selling, General, and Administrative (SG&A) Expenses: GAAP SG&A expenses were
$77 million in the first quarter of 2013, compared to $58 million in the first
quarter of 2012.  The increase was primarily due to higher expenses in
connection with commercialization of EYLEA and higher non-cash share-based
compensation expense.  In the first quarter of 2013, SG&A related non-cash
share-based compensation expense was $26 million, compared to $13 million in
the first quarter of 2012.    

Cost of Goods Sold (COGS): GAAP COGS was $29 million in the first quarter of
2013, compared to $12 million in the first quarter of 2012.  The increase was
due to higher EYLEA sales in 2013.

Interest Expense: GAAP interest expense was $12 million in the first quarter
of 2013, compared to $11 million in the first quarter of 2012.  In connection
with the Company's convertible senior notes, which were issued in October
2011, the Company incurred interest expense of $8 million in the first quarter
of 2013, which included $6 million of non-cash interest expense.  In the first
quarter of 2012, the Company incurred interest expense of $7 million related
to the Company's convertible senior notes, which included $5 million of
non-cash interest expense.

Income Tax Expense: GAAP income tax expense was $43 million in the first
quarter of 2013.   The effective tax rate of 30.3% for the quarter includes
the impact of The American Taxpayer Relief Act, which was enacted in January
2013, and retroactively extended various expiring tax provisions, including
the credit for increased research activities.  As a result, during the first
quarter of 2013, the Company recognized the benefit of its full year 2012
federal research tax credit.

In the first quarter of 2012, the Company continued to recognize a full
valuation allowance against its net operating loss carry-forward and other
deferred tax assets since the Company had an extended history of losses.  In
the fourth quarter of 2012, the Company recorded an income tax benefit
attributable to the release of substantially all of the remaining valuation
allowance against the Company's deferred tax assets.  The decision to reverse
the valuation allowance was made after the Company determined that it was more
likely than not that these deferred tax assets would be realized.  Due to the
release of the valuation allowance in 2012, starting in 2013, the Company has
recorded income taxes on GAAP income using an estimated effective tax rate.
Non-GAAP net income excludes non-cash income tax expense.  The Company does
not currently pay, or expect to pay in the near future, significant cash
income taxes. 

Non-GAAP and GAAP Net Income: The Company reported non-GAAP net income of $201
million, or $2.07 per basic share and $1.78 per diluted share, in the first
quarter of 2013, compared to non-GAAP net income of $40 million, or $0.43 per
basic share and $0.37 per diluted share, in the first quarter of 2012. 
Non-GAAP net income excludes non-cash share-based compensation expense,
non-cash interest expense related to the convertible senior notes, and
non-cash income tax expense. 

The Company reported GAAP net income of $99 million, or $1.02 per basic share
and $0.90 per diluted share, in the first quarter of 2013, compared to GAAP
net income of $12 million, or $0.12 per basic share and $0.11 per diluted
share, in the first quarter of 2012. 

Cash Position: At March 31, 2013, cash and marketable securities totaled $663
million (including $8 million of restricted cash and marketable securities),
compared to $588 million (including $8 million of restricted cash and
marketable securities) at December 31, 2012.  In addition, accounts receivable
related to sales of EYLEA totaled $702 million at March 31, 2013, compared to
$592 million at December 31, 2012.

Use of Non-GAAP Financial Measures: The Company believes that the presentation
of non-GAAP measures is useful to investors because it excludes (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)
non-cash income tax expense, since the Company does not currently pay, or
expect to pay in the near future, significant cash income taxes due primarily
to the utilization of net operating loss and tax credit carry-forwards;
therefore, non-cash income tax expense is not deemed useful in evaluating the
Company's operating performance.  Furthermore, 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 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.  The non-GAAP financial measures 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 GAAP to non-GAAP
results is included in Table 3 of this press release.

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its
first quarter 2013 financial and operating results on Friday, May 3, 2013, at
8:30 AM.  To access this call, dial (888) 660-6127 (U.S.) or (973) 890-8355
(International).  A link to the webcast may be accessed from the 'Events and
Presentations' page of Regeneron's website at www.regeneron.com.  A replay of
the conference call and webcast will be archived on the Company's website and
will be available for 30 days. 

About Regeneron Pharmaceuticals, Inc.

Regeneron is a leading science-based biopharmaceutical company based in
Tarrytown, New York that discovers, invents, develops, manufactures, and
commercializes medicines for the treatment of serious medical conditions. 
Regeneron markets medicines for eye diseases, colorectal cancer, and a rare
inflammatory condition and has product candidates in development in other
areas of high unmet medical need, including hypercholesterolemia, oncology,
rheumatoid arthritis, allergic asthma, and atopic dermatitis.  For additional
information about the company, please visit www.regeneron.com.

Regeneron Forward-Looking Statement

This news release includes forward-looking statements that involve risks and
uncertainties relating to future events and the future financial performance
of Regeneron, and actual events or results may differ materially from these
forward-looking statements.  These statements concern, and these risks and
uncertainties include, among others, the nature, timing, and possible success
and therapeutic applications of Regeneron's products, product candidates, and
research and clinical programs now underway or planned, including without
limitation EYLEA^® (aflibercept); unforeseen safety issues resulting from the
administration of products and product candidates in patients; the likelihood
and timing of possible regulatory approval and commercial launch of
Regeneron's late-stage product candidates; determinations by regulatory and
administrative governmental authorities which may delay or restrict
Regeneron's ability to continue to develop or commercialize Regeneron's
products and product candidates; competing drugs and product candidates that
may be superior to Regeneron's products and product candidates; uncertainty of
market acceptance of Regeneron's products and product candidates; the ability
of Regeneron to manufacture and manage supply chains for multiple products and
product candidates; coverage and reimbursement determinations by third-party
payers, including Medicare and Medicaid; unanticipated expenses; the costs of
developing, producing, and selling products; the ability of Regeneron to meet
any of its sales or other financial projections or guidance and changes to the
assumptions underlying those projections or guidance; the potential for any
license or collaboration agreement, including Regeneron's agreements with
Sanofi and Bayer HealthCare, to be canceled or terminated without any further
product success; and risks associated with third party intellectual property
and pending or future litigation relating thereto.  A more complete
description of these and other material risks can be found in Regeneron's
filings with the United States Securities and Exchange Commission, including
its Form 10-K for the year ended December 31, 2012.  Regeneron does not
undertake any obligation to update publicly any forward-looking statement,
including without limitation any financial projection or guidance, whether as
a result of new information, future events, or otherwise, unless required by
law.

This news release and/or the financial results attached to this news release
include amounts that are considered "non-GAAP financial measures" under SEC
rules.  As required, Regeneron has provided reconciliations of these measures.

Contacts Information:
Michael Aberman, M.D.         Peter Dworkin
Investor Relations            Corporate Communications
914.847.7799                  914.847.7640                      
michael.aberman@regeneron.com peter.dworkin@regeneron.com

 

TABLE 1
REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)
                                                   March 31,     December 31,
                                                   2013          2012
ASSETS
Cash, restricted cash, and marketable securities   $ 662,811     $  587,511
Accounts receivable - trade, net                     703,857        593,207
Accounts receivable from Sanofi                      98,781         99,913
Deferred tax assets                                  300,951        340,156
Property, plant, and equipment, net                  392,378        379,940
Other assets                                         117,220        79,763
Total assets                                       $ 2,275,998   $  2,080,490
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses, and other      $ 154,199     $  118,604
liabilities
Deferred revenue                                     252,703        259,173
Facility lease obligations                           160,480        160,810
Convertible senior notes                             302,268        296,518
Stockholders' equity                                 1,406,348      1,245,385
Total liabilities and stockholders' equity         $ 2,275,998   $  2,080,490

 

TABLE 2
REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
                                                 Three months ended
                                                 March 31,
                                                 2013         2012
Revenues:
   Net product sales                             $ 318,740    $ 127,931
   Sanofi collaboration revenue                    99,273       85,005
   Bayer HealthCare collaboration revenue          14,907       12,483
   Technology licensing                            5,893        5,893
   Other revenue                                   851          477
                                                   439,664      231,789
Expenses:
   Research and development                        180,299      138,862
   Selling, general, and administrative            77,260       58,428
   Cost of goods sold                              29,055       12,298
                                                   286,614      209,588
Income from operations                             153,050      22,201
Other income (expense):
   Investment income                               456          610
   Interest expense                                (11,675)     (11,160)
                                                   (11,219)     (10,550)
Income before income taxes                         141,831      11,651
Income tax expense                                 (42,957)
Net income                                       $ 98,874     $ 11,651
Net income per share - basic                     $ 1.02       $ 0.12
Net income per share - diluted                   $ 0.90       $ 0.11
Weighted average shares outstanding - basic        96,878       93,446
Weighted average shares outstanding - diluted      109,369      107,734

 

TABLE 3
REGENERON PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME (Unaudited)
(In thousands, except per share data)
                                          Three months ended
                                          March 31,
                                          2013           2012
GAAP net income                           $ 98,874       $ 11,651
Adjustments:
   R&D: Non-cash share-based                26,761         10,556
compensation expense
   SG&A: Non-cash share-based               25,787         12,578
compensation expense
   COGS: Non-cash share-based               483            111
compensation expense
   Interest expense: Non-cash interest
related to convertible                      5,781          5,218

     senior notes
   Income taxes: Non-cash income tax        42,957
expense
Non-GAAP net income                       $ 200,643      $ 40,114
Non-GAAP net income per share - basic     $ 2.07         $ 0.43
Non-GAAP net income per share - diluted   $ 1.78         $ 0.37
^(1)
Shares used in calculating:
Non-GAAP net income per share - basic       96,878         93,446
Non-GAAP net income per share - diluted     113,730        112,495
^(2)

 

     For diluted non-GAAP per share calculations, excludes $1.9 million of
     interest expense for both the three month periods ended March 31, 2013
^(1) and 2012, related to the contractual coupon interest rate on the
     Company's 1.875% convertible senior notes, since these securities were
     dilutive
     Weighted average shares outstanding includes the dilutive effect, if any,
^(2) of employee stock options, restricted stock awards, convertible senior
     notes, and warrants

 

 

SOURCE Regeneron Pharmaceuticals, Inc.

Website: http://www.regeneron.com
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