Analyst Conference Summary


Regeneron Pharmaceuticals

conference date: February 10, 2015 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2014 (Q4, fourth quarter 2014)

Forward-looking statements

Overview: Continued revenue and profit ramp.

Basic data (GAAP):

Revenue was $802.3 million, up 10% sequentially from $725.8 million and 31% from $610.4 million in the year-earlier quarter.

Net income was $110.2 million, up 38% sequentially from $79.7 million, and 14% from $96.8 million year-earlier.

Diluted Earnings Per Share (EPS) was $0.96, up 37% sequentially from $0.70 and up 12% from $0.86 year-earlier.


Expects Eylea U.S. sales to grow 25% to 30% over 2014. Non-GAAP R&D expense $525 to $575 million; SG&A $650 to $725 million. Cash tax rate anywhere between 10% and 20%. Capital expenditures $650 million to $800 million.

Conference Highlights:

2014 was a great year for achieving Regeneron's goals. Has potential for multiple significant revenue streams across therapeutic areas. Plans to open 2 new buildings in Tarrytown NY to house expanded work force; continues to invest in Irish production facility.

Non-GAAP results: net income $328 million, up 11% sequentially from $295.1 million and up 27% from $259 million year earlier. Diluted EPS $2.79, up 11% sequentially from $2.52 and 25% from $2.24 year-earlier. Excludes the usual GAAP items. For full 2014 non-GAAP EPS was $10.

Total revenue of $802.3 million consisted of: product sales $521.5 million; Sanofi collaboration revenue $135.3 million; Bayer collaboration revenue (Eylea outside the U.S.) $137.1 million; licensing and other, $8.4 million.

Eylea (aflibercept) U.S. revenue was $518 million, up 16% sequentially from $445 million and up 29% from $402 million year-earlier. $297 million international revenue (split with Bayer), where geographic expansion continues. Because the dosages are the same, it is difficult to distinguish between sales for wet AMD and DME (diabetic macular edema). In October the FDA had approved Eylea for macular edema following retinal vein occlusion. In January the European CHMP recommended Eylea for approval for macular edema secondary to CRVO or BRVO. Japan approved Eylea for DME.

An NIH (National Institute of Health) study released in October showed Eylea gave significantly better results than Avastin and Lucentis for visual acuity following DME (diabetic macular edema).

Zaltrap for metastatic colorectal cancer is included in collaboration revenue from Sanofi (but is likely minimal). Regeneron R&D reimbursements to Sanofi for Zaltrap in the quarter were $0.0 million.

Expects applications for approval for Praluent (Alirocumab) for LDL cholesterol was accepted by the FDA in January; target date for a decision is July 24, 2015. Positive data continues to accumulate. This is in collaboration with Sanofi.

Sarilumab for rheumatoid arthritis in enrolling a Phase 3 trial, with another Phase 3 trial comparing it as a monotherapy against adalimumab begun recently.

Dupilumab is being studied for atopic dermatitis, asthma, and chronic sinusitis. In October a Phase 3 study for atopic dermatitis began enrollment. Positive interim results were reported in November for the dosing range study for asthma. The Phase 3 trial will begin in the first half of 2015. This month will initiate a mid-stage, Phase 2 trial for eosinophilic esophagitis.

REGN2810 antibody for PD-1 for cancer entered a Phase 1 trial.

Regeneron plans to sequence the genomes of about 250,000 patients over the next few years.

Regeneron has a total of 14 antibodies in clinical development, all of which were developed in-house, but seven of which are in collaboration with Sanofi. See also the Regeneron Pipeline.

Cash and equivalents balance ended at $1.36 billion, down sequentially from $1.5 billion.

GAAP expenses of $555.0 million consisted of: cost of goods sold $38.0 million; research and development $351.7 million; selling, general and administrative $143.7 million; collaboration manufacturing costs $21.5 million. Leaving income from operations of $247.4 million. Interest and other expense was $26.1 million. Income tax expense was $111.1 million (but cash taxes were insignificant).

Will start paying significant cash taxes in 2015 as credits end, but at below the GAAP tax rate.


Do you expect Eylea to grow faster than the market in AMD in 2015? Forecasting is a tough business, but the revenue growth of 25% to 30% is our best prediction.

We do offer assistance to patients with DME if they have no insurance, and if they have a copay they cannot afford.

At top end of guidance the sequential Eylea growth rate appears to be a slowdown? We grew at 22% in 2014, so are predicting faster growth in 2015.

DME style of growth in 2015? Sales people won't be able to speak to specific subsets because they won't be in the label. But there will be medical presentations of new data. In DME the threat to vision is slower, so we expect the growth rate to be slower than it was for AMD.

Pricing color about payer responses? In general terms our goals are not that different than the payers. We want to get product to patients in an affordable way. We want to set a fair price.

We see Dupilumab as a potentially very important drug, perhaps on par with Praluent.

REGN1033 trial? We have proof of concept data coming out. When it does we will decide on the next steps. We have 15 antibodies that could be meeting unmet needs.

222 antibody, anti-RSV? We are talking about moving into a pivotal trial this year, in children. It could be quite differentiated from the existing treatments out there in efficacy and interval of dosing.

Dupilumab pediatric atopic dermatitis first trial will not be a pivotal trial, but we are pleased with how the program is going. We have breakthrough status from the FDA for it.

Dupilumab in asthma trial design? We try not to take additional risk, so it may closely resemble the Phase 2b trial, except with more patients.

Other approaches to retinal, like gene therapy? We have looked at some of the programs. Systemic VEGF could work, we did some studies in that area. But there is a risk with a more widespread blockade. We see excitement, but do not believe the new approaches will replace the standard of care, just niche areas.

Amgen lawsuit? No comment.

A new article came out indicating that the level of cholesterol is not the only factor, also how long people have had the high level. So the area under the curve is what counts.

OpenIcon Analyst Conference Summaries Main Page



More Analyst Conference Pages:



Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2015 William P. Meyers