Analyst Conference Summary


Regeneron Pharmaceuticals

conference date: May 7, 2015 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2015 (Q1, first quarter 2015)

Forward-looking statements

Overview: Continued rapid revenue and profit growth. Increased guidance for Eylea U.S. product sales for 2015

Basic data (GAAP):

Revenue was $869.6 million, up 8% sequentially from $802.3 million and up 39% from $625.7 million in the year-earlier quarter.

Net income was $76.0 million, down 31% sequentially from $110.2 million, and up 11% from $ million year-earlier.

Diluted Earnings Per Share (EPS) was $0.66, down 31% sequentially from $0.96 and up 8% from $0.61 year-earlier.


Eylea U.S. net product sales for 2015 are now expected to grow 30% to 35% over 2014. Capital expenditures range narrowed to $650 to $750 million. Cash taxes are expected to be between 10% and 20% of GAAP taxes.

Conference Highlights:

Pleased with Eylea growth, and so raised guidance. Now has 16 products in the clinic since long term growth depends on expanding and advancing the pipeline.

There was some impact from currency exchange rates on revenue from sales outside the U.S.

Non-GAAP results: net income $336 million, up 2% sequentially from $328 million and up 28% from $263 million year earlier. Diluted EPS $2.88, up 3% sequentially from $2.79 and 27% from $2.26 year-earlier. Excludes the usual GAAP items, in particular non-cash taxes of about $152 million and $103 million in share-based compensation expense.

Total revenue of $869.6 million consisted of: product sales $544.6 million; Sanofi collaboration revenue $173.4 million; Bayer collaboration revenue (Eylea outside the U.S.) $123.8 million (including the final $15 million milestone); licensing and other, $27.8 million.

Eylea (aflibercept) U.S. revenue was $544.6 million, up 5% sequentially from $518 million and up 50% from $362.4 million year-earlier. $292 million international revenue (split with Bayer), where geographic expansion continues. Eylea data released in February in the New England Journal of Medicine showed its superiority to other therapies. Diabetic retinopathy in patients with DME (diabetic macular edema) was added to the labor.

Zaltrap for metastatic colorectal cancer is included in collaboration revenue from Sanofi (but is likely minimal). The agreement was amended this quarter for Sanofi to pay all costs and then to pay Regeneron a royalty.

Application for approval for Praluent (Alirocumab) for LDL cholesterol was accepted by the FDA in January; target (PDUFA) date for a decision is July 24, 2015. Positive data continues to accumulate. This is in collaboration with Sanofi. On June 9 there will be an FDA advisory committee meeting. Regeneron expects the payer and reimbursement environment to be complex, so there could be gradual uptake at launch.

Sarilumab for rheumatoid arthritis in enrolling a Phase 3 trial, with another Phase 3 trial comparing it as a monotherapy against adalimumab begun recently. Data should be out in 2015 and a BLA submitted to the FDA.

Dupilumab is being studied for atopic dermatitis, asthma, and chronic sinusitis. The Phase 3 trial will begin in the first half of 2015. This initiated a mid-stage, Phase 2 trial for eosinophilic esophagitis. A phase 3 study for persistent asthma was initiated in Q2 and Phase 2b data will be presented this month.

REGN2810 antibody for PD-1 for cancer is in a Phase 1 trial.

REGN1033 for sarcopenia trials showed positive Phase 2 results.

REGN1500, another dyslipidemia treatment, started Phase 2 trials.

REGN2222 targeting RSV (respiratory syncytial virus) is set to enter pivotal trials this year.

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 $1.23 billion, down sequentially from $1.36 billion. $144 million senior convertible notes, but $127 million of notes are being closed this quarter.

GAAP expenses of $586.1 million consisted of: cost of goods sold $42.6 million; research and development $343.1 million; selling, general and administrative $159.0 million; collaboration manufacturing costs $41.4 million. Leaving income from operations of $283.6 million. Interest and other expense was $7.0 million. Income tax expense was $200.5 million (but cash taxes were insignificant).


Eylea growth is being helped by gains from competitors, partly based on the new DME data (protocol T). But Prototocl T is not in the label, so our sales force cannot talk to doctors about it.

2222 timeline? Normally we would need to have 2 pivotal trials, which would take 2 seasons. RSV occurs most frequently in full term infants.

DME share? There is some growth in anti-VEGF use, but this is a disease in which some physicians go slower, often because they are being treated by an optometrist. We are working to get better awareness of the diagnosis and treatment.

Sanofi meeting? We meet with Sanofi regularly. We believe they see our relationship as very important. We both want the launches to go seemlessly and spectacularly. We will be doing 3 major launches in the next few years.

Questions or topics for the Praluent advisory panel? We are waiting for the FDA briefing book and questions to come out.

REGN1033 functional endpoints? It is a genetically defined pathway. We can see the right type of biological responses. It is a very young field, so endpoints are still being developed.

RSV program, regulator buy in? Current standard of care is that infants treated are very narrowly defined. FDA has indicated it would like a broader approach. We hope to have a differentiated product based on how long immunity lasts.

Statins will remain the front line of cholesterol therapy; Praluent will be an add on. Some projections in the press about numbers of patients to be treated seem to be exagerated.

Differences with Amgen product for PCSK9 for cholesterol? Regeneron has 75 mg and 150 mg doses, and many patients will benefit at 75 mg. Of course trials lasted 18 months, and patients may face a lifetime of therapy. The choice of dose is the main differentiator.

The main difference in Praluent in Europe is the different type of payer.

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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