Regeneron Pharmaceuticals Inc.
) second quarter 2012 earnings (excluding special items but
including stock-based compensation) of 71 cents per share blew past
the Zacks Consensus Estimate of 25 cents. The company suffered an
adjusted loss of 69 cents per share in the year-ago quarter. Higher
revenues boosted earnings in the second quarter of 2012.
Total revenue in the reported quarter soared 182.3% to $304.4
million, driven by strong sales of eye drug, Eylea. This was the
second 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
Revenues handsomely beat the Zacks Consensus Estimate of $259
million. Total revenue included collaboration revenue, technology
licensing revenue, net product sales and contract research and
The Quarter in Details
Net product sales jumped to $199.5 million in the reported
quarter from $5 million a year-ago. Eylea sales came in at $194
million in the reported quarter, up 57% sequentially. Arcalyst,
Regeneron's other marketed product for treating
cryopyrin-associated periodic syndromes, accounted for the
remaining product sales in the quarter
Collaboration revenues came in at $98.1 million, up 2.6%. This
included $89 million in collaboration revenues from Regeneron's
antibody collaboration with
) and $9.1 million under Regeneron's collaboration with the
Healthcare unit of
Revenues from technology licensing climbed 12.7% 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 3%) and
selling, general and administrative (SG&A) expenses (up 94%) -
including stock-based compensation expenses- 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
Encouraged by the strong performance of Eylea, since its US
launch, the company increased its forecast for 2012 US Eylea sales
for the second successive quarter. Management now expects the eye
drug to record 2012 sales in the range of $700-$750 million as
opposed to the previously forecasted range of $500-$550 million.
Regeneron expects to be profitable in 2012
Remainder of 2012 Promises to be Exciting
The promising Eylea performance apart, Regeneron boasts a robust
pipeline. It has three key action dates lined up in 2012. The
US Food and Drug Administration (FDA) is expected to decide on
whether to approve Zaltrap for treating previously treated patients
suffering from metastatic colorectal cancer by August 4, 2012.
The other two action dates correspond to Regeneron's efforts to
expand the label of both its marketed products - Arcalyst and
Eylea. While Regeneron is looking to get Arcalyst approved for
preventing gout flares in patients initiating uric acid-lowering
therapy (action date: July 30), the company is looking to get Eylea
approved for central retinal vein occlusion in the US (action date:
September 23). Positive news from the FDA would boost the
In view of the positives mentioned above, we upgraded Regeneron
to Outperform from Neutral earlier in the month. Our long term
recommendation is in line with the Zacks #1 Rank (Strong Buy)
carried by the stock in the short run.
BAYER A G -ADR (BAYRY): Free Stock Analysis
REGENERON PHARM (REGN): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
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