Regeneron Pharmaceuticals Inc.
) third quarter 2012 earnings (excluding special items but
including stock-based compensation) of $1.70 per share breezed
past the Zacks Consensus Estimate of 93 cents. The company
suffered an adjusted loss of 68 cents per share in the year-ago
quarter. Higher revenues boosted earnings in the third quarter of
Total revenue in the reported quarter soared 316% to $428
million, driven by strong sales of eye drug, Eylea. This was the
third full quarter of the drug in the market. The drug was
launched in the US in November 2011 for treating patients
suffering from the neovascular form of age-related macular
degeneration (wet AMD). In September 2012, the label of the drug
was successfully expanded to treat patients suffering from
macular edema following central retinal vein occlusion
Revenues handsomely beat the Zacks Consensus Estimate of $350
million. Total revenue included net product sales, collaboration
revenue, technology licensing revenue and contract research and
The Quarter in Details
Net product sales jumped to $249 million in the reported
quarter from $5.5 million a year ago. Eylea sales came in at $244
million in the reported quarter, up 26% sequentially. Sales of
Regeneron's first marketed product, Arcalyst, for treating
cryopyrin-associated periodic syndromes, accounted for the
Moreover, Zaltrap was approved by the US Food and Drug
Administration (FDA) in August 2012 as a combination therapy for
treating patients suffering from metastatic colorectal cancer,
who are either resistant to or whose disease has progressed
following treatment with an oxaliplatin-containing regimen.
Regeneron co-developed Zaltrap with
As per the terms of the agreement, both companies share the
global profits of Zaltrap equally after Regeneron's obligation to
repay its share of development costs. As per Sanofi, sales of
Zaltrap were $8 million in the third quarter of 2012.
Collaboration revenues came in at $172 million, up 91%.
Collaboration revenues in the quarter were boosted by milestone
payments of $50 million and $10 million from Sanofi and the
Healthcare unit of
), respectively. The payment from Sanofi followed the FDA
approval of Zaltrap whereas the payment from Bayer followed the
Japanese approval of Eylea for wet AMD.
Revenues from technology licensing remained flat at $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 24%) and
selling, general and administrative (SG&A) expenses (up 43%),
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, the company
increased its forecast for 2012 US Eylea sales for the third
successive quarter. Management now expects the eye drug to record
2012 sales in the range of $790-$815 million as opposed to the
previously forecasted range of $700-$750 million.
We currently have a Neutral recommendation on Regeneron. The
stock carries a Zacks #2 Rank (Buy rating) 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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