Regeneron Pharmaceuticals Inc.'
s (
REGN
) first quarter 2012 earnings (excluding special items but
including stock-based compensation) of 15 cents per share compared
favorably with the Zacks Consensus Estimate of a net loss of 24
cents and the year-ago loss of 49 cents. Higher revenues boosted
earnings in the quarter.
Total revenue in the reported quarter soared 107% to $232.0
million driven by strong sales of eye-drug Eylea. This was the
first full quarter of the drug in the market. The drug, launched in
the US in November 2011, is marketed for treating patients
suffering from the neovascular form of age-related macular
degeneration.
Revenues handsomely beat the Zacks Consensus Estimate of $172
million. Total revenue included collaboration revenue, technology
licensing revenue, net product sales and contract research and
other revenue.
The Quarter in Details
Net product sales jumped to $128 million in the reported quarter
from $4 million a year-ago. While Eylea sales came in at $124
million in the reported quarter, Arcalyst, Regeneron's other
marketed product for treating cryopyrin-associated periodic
syndromes, contributed $4.0 million to product sales in the
quarter
Collaboration revenues came in flat at $97 million.
Collaboration revenues from Regeneron's antibody collaboration with
Sanofi
(
SNY
) came in at $85.0 million. $12.5 million came from Regeneron's
collaboration with the Healthcare unit of Bayer (
BAYRY
).
Revenues from technology licensing declined 25% to $5.9 million.
Revenues from contract research and others accounted for the
balance in the reported quarter.
Both research and development (R&D) expenses (up 7.3%) and
selling, general and administrative (SG&A) expenses (up 149.6%)
were on the upswing during the reported quarter.
The rise was primarily attributable to the higher R&D
expenses incurred in connection with the efforts to develop the
pipeline at Regeneron and the higher employee headcount in
connection with the antibody collaboration with Sanofi. Higher
costs related to the marketing of Eylea were primarily responsible
for pushing the SG&A costs up.
Bright Outlook for Eylea
Apart from announcing financial results, Regeneron provided
guidance for Eylea sales in 2012. Encouraged by the strong initial
sales ramp of the drug, the company nearly doubled its 2012
projected Eylea sales to $500-$550 million from $250-$300 million
provided while announcing the fourth quarter and full year 2011
results earlier in the year. Management expects strong Eylea sales
to drive earnings in the remaining quarters of 2012 as well.
Neutral on Regeneron
Currently, we have a Neutral stance on Regeneron in the long
run. The company carries a Zacks #3 Rank (Hold rating) for the
short run.
2012 is expected to be a key year for Regeneron with a couple of
action dates coming up. Regeneron and partner Bayer are seeking to
expand Eylea's label. The US Food and Drug Administration (FDA) is
expected to decide on Regeneron's application seeking approval to
market Eylea for another eye disorder, central retinal vein
occlusion by September 23, 2012. The companies are studying Eylea
for other eye-disorders also.
Regeneron is also seeking to expand the label of Arcalyst into
the gout indication in the US. The FDA is expected to give its
decision by July 30, 2012. Positive news from the FDA will boost
the stock. We are encouraged by Regeneron's efforts to
develop its pipeline.
BAYER A G -ADR (
BAYRY
): Free Stock Analysis Report
REGENERON PHARM (
REGN
): Free Stock Analysis Report
SANOFI-AVENTIS (
SNY
): Free Stock Analysis Report
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