INVESTORS & MEDIA

TARRYTOWN, N.Y., Feb. 11, 2014 /PRNewswire/ -- Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) today announced financial results for the fourth quarter and full year 2013 and provided an update on development programs.

 

 

"We are pleased with our performance in 2013, with strong EYLEA sales growth globally and continued progress in our pipeline, as well as the launch of our new research initiative in the field of genomics through our Regeneron Genetics Center," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron.  "Looking forward, in 2014 we expect EYLEA to continue to grow through demographic and geographic expansion, as well as potential approvals in new indications, such as diabetic macular edema.  We also look forward to additional clinical data from our Phase 3 program for alirocumab for lowering LDL-cholesterol and Phase 2b data for dupilumab for atopic dermatitis (dupilumab is also being developed for asthma).  In addition, we anticipate advancing clinical development of new antibodies, including our PDGFR-beta antibody and EYLEA combination product, which just commenced a Phase 1 study, and our CD20-CD3 bi-specific antibody, which is planned to enter clinical development later this year in immuno-oncology.  EYLEA's continued growth, our advancing late-stage pipeline, and new R&D initiatives provide a strong foundation for the company's future."

Business Highlights

EYLEA^® (aflibercept) Injection for Intravitreal Injection

• In the fourth quarter of 2013, net sales of EYLEA in the United States were $402 million, compared to $276 million in the fourth quarter of 2012. For the full year 2013, net sales of EYLEA in the United States were $1.409 billion, compared to $838 million for the full year 2012.
• Bayer HealthCare commercializes EYLEA outside the United States for the treatment of neovascular age-related macular degeneration (wet AMD) and macular edema following central retinal vein occlusion (CRVO). In the fourth quarter, net sales of EYLEA outside of the United States⁽¹⁾ were $184 million and $472 million for the full year 2013, compared to $19 million in both the fourth quarter and full year 2012. In the fourth quarter of 2013, Regeneron recognized $44 million from its share of net profit from EYLEA sales outside the United States, after repayment of $15 million in development expenses. For the full year 2013, Regeneron recognized $102 million from its share of net profit from EYLEA sales outside the United States, after repayment of $58 million in development expenses.
• During the fourth quarter of 2013, the Company submitted a supplemental BLA for U.S. regulatory approval of EYLEA in diabetic macular edema (DME); the target date for an FDA decision on the supplemental BLA is August 18, 2014. An application for marketing approval in the European Union for DME was also submitted in the fourth quarter of 2013.
• In February 2014, the Company reported positive two year results from the Phase 3 VISTA-DME trial for the treatment of DME.
• In October 2013, the Company reported positive top-line results from the Phase 3 VIBRANT trial for the treatment of macular edema following branch retinal vein occlusion (BRVO). These results were presented during the annual meeting of the American Academy of Ophthalmology (AAO) held in November 2013 in New Orleans.
• An application for regulatory approval of EYLEA in myopic choroidal neovascularization (mCNV) was submitted in Japan in the fourth quarter of 2013.

ZALTRAP^® (ziv-aflibercept) Injection for Intravenous Infusion

• ZALTRAP is currently approved in over 30 countries, including the United States and in the European Union, for treatment, in combination with 5-fluorouracil, leucovorin, irinotecan (FOLFIRI), of patients with metastatic colorectal cancer that is resistant to or has progressed following an oxaliplatin-containing regimen. Marketing authorization applications for ZALTRAP are currently under review by additional regulatory agencies outside the United States.
• ZALTRAP net product sales commenced in the United States in August 2012 and in Europe in the first quarter of 2013. In the fourth quarter of 2013, Sanofi's worldwide net sales of ZALTRAP were $20 million, compared to $23 million in the fourth quarter of 2012. Sanofi's worldwide net sales of ZALTRAP were $70 million for the full year of 2013, compared to $32 million for the full year of 2012.

Monoclonal Antibodies

• Regeneron has fourteen fully human monoclonal antibodies based on the Company's VelocImmune^® technology in clinical development, including seven in collaboration with Sanofi.
• Alirocumab: Two trials of alirocumab dosed every four weeks, ODYSSEY CHOICE I and CHOICE II, were initiated during the fourth quarter of 2013 and the first quarter of 2014, respectively. All of the alirocumab trials in the ODYSSEY program with every two week dosing are fully enrolled with the exception of the 18,000 patient ODYSSEY OUTCOMES study. In October 2013, positive top-line results were reported from the Phase 3 ODYSSEY MONO trial. These were the first Phase 3 data to be reported from the PCSK9 inhibitor class of investigational drugs. Data from additional Phase 3 trials are expected to be available in mid-2014. Alirocumab, an antibody targeting PCSK9 to reduce LDL cholesterol, is being developed in collaboration with Sanofi.
• Sarilumab: In November 2013, it was announced that in the SARIL-RA-MOBILITY Phase 3 clinical trial in adult patients with active rheumatoid arthritis who were inadequate responders to methotrexate (MTX) therapy, sarilumab treatment in combination with MTX improved disease signs and symptoms as well as physical function, and inhibited progression of joint damage. Additionally, a Phase 2 study, SARIL-NIU-SATURN, in non-infectious uveitis was initiated in the fourth quarter of 2013. Sarilumab, the first fully-human monoclonal antibody to IL-6R, is being developed in collaboration with Sanofi.
• PDGFR-beta Antibody: In January 2014, the Company entered into a license and collaboration agreement with Bayer HealthCare governing the joint development and commercialization outside the United States of an antibody product candidate (REGN2176) to Platelet Derived Growth Factor Receptor Beta (PDGFR-beta), including in combination with EYLEA, for the treatment of ocular diseases and disorders. In February 2014, the Company initiated a Phase 1 trial of REGN2176 in combination with EYLEA for the treatment of wet AMD. Under the agreement, the Company will conduct the initial development of REGN2176 in combination with EYLEA through completion of the first proof-of-concept study, upon which Bayer HealthCare will have a right to opt-in to the collaboration for further development and commercialization. If Bayer HealthCare opts-in, they will have exclusive commercialization rights to the combination product outside the United States where they will share profits from sales equally with Regeneron. Within the United States, Regeneron has exclusive commercialization rights and will retain 100% of the profits from sales.

Human Genetics Initiative

• In January 2014, the Company announced the launch of a new human genetics initiative via a wholly owned subsidiary, Regeneron Genetics Center LLC (RGC).  RGC will perform sequencing and genotyping to generate de-identified genomic data.  The objective of RGC is to expand the use of human genetics for discovering and validating genetic factors that cause or influence a range of diseases where there are major unmet medical needs.  The hope is to improve all aspects of the drug discovery and development process.  In January 2014, the Company also announced that RGC and Geisinger Health System, one of the largest integrated health systems in the United States serving approximately 3 million residents, entered into a research collaboration focused on studying the genetic determinants of human disease.

Fourth Quarter and Full Year 2013 Financial Results

Product Revenues: Net product sales were $406 million in the fourth quarter and $1.426 billion for the full year 2013, compared to $281 million in the fourth quarter and $858 million for the full year 2012.  EYLEA net product sales in the United States were $402 million in the fourth quarter and $1.409 billion for the full year 2013, compared to $276 million in the fourth quarter and $838 million for the full year 2012.  ARCALYST^® net product sales were $4 million in the fourth quarter and $17 million for the full year 2013, compared to $5 million in the fourth quarter and $20 million for the full year 2012.  

Total Revenues: Total revenues increased by 47% to $610 million in the fourth quarter of 2013, compared to $415 million in the fourth quarter of 2012.  Total revenues include collaboration revenues of $197 million in the fourth quarter of 2013, compared to $127 million in the fourth quarter of 2012.  Collaboration revenues primarily increased due to an increase in the Company's net profit from commercialization of EYLEA outside the United States.  Collaboration revenues in the fourth quarter of 2013 also included $25 million of milestone payments earned from Bayer HealthCare, compared to $10 million in the fourth quarter 2012.  

Total revenues increased by 53% to $2.105 billion for the full year 2013, compared to $1.378 billion for the full year 2012.  Total revenues include collaboration revenues of $650 million for the full year 2013, compared to $494 million for the full year 2012.  Collaboration revenues primarily increased due to an increase in the Company's net profit from commercialization of EYLEA outside the United States and higher reimbursement of the Company's development expenses under its antibody collaboration with Sanofi.  Collaboration revenue for the full year 2013 included $70 million of milestone payments from Bayer HealthCare in connection with the companies' EYLEA collaboration outside the United States, comprised of $25 million in development milestones related to regulatory approvals of EYLEA and three $15 million sales milestones.  Collaboration revenue for the full year 2012 included a $50 million milestone payment from Sanofi and $25 million of milestone payments from Bayer HealthCare in connection with regulatory approvals of ZALTRAP and EYLEA, respectively. 

Refer to Table 4 for a summary of collaboration revenue.

Research and Development (R&D) Expenses: In 2013, GAAP R&D expenses were $268 million in the fourth quarter and $860 million for the full year, compared to $181 million in the fourth quarter and $626 million for full year 2012.  The higher 2013 R&D expenses in the fourth quarter and full year were principally due to increased R&D activities, primarily related to the Company's antibody collaboration with Sanofi, higher R&D headcount, and higher non-cash share-based compensation expense.  In 2013, R&D-related non-cash share-based compensation expense was $34 million for the fourth quarter and $117 million for the full year, compared to $18 million in the fourth quarter and $54 million for the full year 2012.

Selling, General, and Administrative (SG&A) Expenses: In 2013, GAAP SG&A expenses were $82 million in the fourth quarter and $329 million for the full year, compared to $58 million in the fourth quarter and $211 million for full year 2012.  The increases were primarily due to higher expenses in connection with commercialization of EYLEA and higher non-cash share-based compensation expense.  In 2013, SG&A-related non-cash share-based compensation expense was $21 million for the fourth quarter and $80 million for the full year, compared to $12 million in the fourth quarter and $39 million for the full year 2012.    

Cost of Goods Sold (COGS): In 2013, GAAP COGS was $34 million in the fourth quarter and $118 million for the full year, compared to $30 million in the fourth quarter and $84 million for the full year 2012.  The increase was due to higher U.S. EYLEA sales in 2013.  

Cost of Collaboration Manufacturing: In 2013, GAAP cost of collaboration manufacturing was $14 million in the fourth quarter and $37 million for the full year, compared to $1 million in both the fourth quarter and full year of 2012.   Cost of collaboration manufacturing increased primarily due to the launch of EYLEA outside the United States in the fourth quarter of 2012.  Cost of collaboration manufacturing primarily consists of third-party royalties, as well as costs of producing commercial supplies of EYLEA for Bayer HealthCare and ZALTRAP for Sanofi. 

Interest Expense: In 2013, GAAP interest expense was $12 million in the fourth quarter and $46 million for the full year, compared to $11 million in the fourth quarter and $45 million for the full year 2012.  GAAP interest expense in 2013 and 2012 primarily includes interest associated with the Company's $400 million aggregate principal amount of 1.875% convertible senior notes, including amortization of the note discount and debt issuance costs, and interest associated with facility lease obligations. 

Income Tax Expense (Benefit): In 2013, GAAP income tax expense was $101 million in the fourth quarter and $289 million for the full year, compared to a GAAP income tax benefit of $336 million in both the fourth quarter and full year 2012.  The effective tax rate was 51.1% for the quarter and 40.5% for full year 2013.

In the fourth quarter of 2012, the Company recorded an income tax benefit attributable to the release of substantially all of the valuation allowance against the Company's deferred tax assets.  Starting in 2013, the Company has recorded income taxes on GAAP income using an estimated effective tax rate.  Non-GAAP net income excludes non-cash income tax expense and the release of the valuation allowance.  The Company does not currently pay, or expect to pay in at least the next 12 months, significant cash income taxes.

Non-GAAP and GAAP Net Income: The Company reported non-GAAP net income of $259 million, or $2.62 per basic share and $2.24 per diluted share, in the fourth quarter of 2013, compared to non-GAAP net income of $171 million, or $1.79 per basic share and $1.47 per diluted share, in the fourth quarter of 2012.  The Company reported non-GAAP net income of $935 million, or $9.55 per basic share and $8.17 per diluted share, for the full year 2013, compared to non-GAAP net income of $530 million, or $5.60 per basic share and $4.66 per diluted share, for the full year 2012.  

The Company reported GAAP net income of $97 million, or $0.98 per basic share and $0.86 per diluted share, in the fourth quarter of 2013, compared to GAAP net income of $470 million, or $4.92 per basic share and $4.08 per diluted share, in the fourth quarter of 2012.  The Company reported GAAP net income of $424 million, or $4.33 per basic share and $3.81 per diluted share, for the full year 2013, compared to GAAP net income of $750 million, or $7.92 per basic share and $6.75 per diluted share, for the full year 2012.  The decrease in both fourth quarter and full year 2013 GAAP net income resulted primarily from (i) the non-cash tax benefit of $336 million recorded in the fourth quarter of 2012 primarily related to the Company's release of substantially all of the valuation allowance associated with its deferred tax assets, (ii) the Company's recognition of an income tax provision commencing in 2013, and (iii) higher operating expenses in 2013.  These changes were partly offset by higher revenues, primarily driven by higher EYLEA sales within the United States by the Company and outside the United States by Bayer HealthCare⁽¹⁾.

Cash Position: At December 31, 2013, cash and marketable securities totaled $1.084 billion, compared to $588 million (including $8 million of restricted cash and marketable securities) at December 31, 2012. 

2014 Financial Guidance

The Company's full year 2014 financial guidance consists of the following components:

 

 

 

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its fourth quarter and full year 2013 financial and operating results on Tuesday, February 11, 2014, at 8:30 AM.  To access this call, dial (888) 660-6127 (U.S.) or (973) 890-8355 (International).  A link to the webcast may be accessed from the 'Events and Presentations' page of Regeneron's website at www.regeneron.com.  A replay of the conference call and webcast will be archived on the Company's website and will be available for 30 days.

About Regeneron Pharmaceuticals

Regeneron is a leading science-based biopharmaceutical company based in Tarrytown, New York that discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious medical conditions.  Regeneron markets medicines for eye diseases, colorectal cancer, and a rare inflammatory condition and has product candidates in development in other areas of high unmet medical need, including hypercholesterolemia, oncology, rheumatoid arthritis, asthma, and atopic dermatitis.  For additional information about the company, please visit www.regeneron.com.

Forward-Looking Statement

This press release includes forward-looking statements that involve risks and uncertainties relating to future events and the future performance of Regeneron, and actual events or results may differ materially from these forward-looking statements.  Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate," variations of such words and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words.  These statements concern, and these risks and uncertainties include, among others, the nature, timing, and possible success and therapeutic applications of Regeneron's products, product candidates, and research and clinical programs now underway or planned, including without limitation Regeneron's human genetics initiative; unforeseen safety issues resulting from the administration of products and product candidates in patients, including serious complications or side effects in connection with the use of Regeneron's product candidates in clinical trials; the likelihood and timing of possible regulatory approval and commercial launch of Regeneron's late-stage product candidates and new indications for marketed products, including without limitation EYLEA^® for the treatment of diabetic macular edema and macular edema following branch retinal vein occlusion, alirocumab, sarilumab, dupilumab, REGN2176, and CD20-CD3 bi-specific antibody; ongoing regulatory obligations and oversight impacting Regeneron's research and clinical programs and business, including those relating to patient privacy; determinations by regulatory and administrative governmental authorities which may delay or restrict Regeneron's ability to continue to develop or commercialize Regeneron's products and product candidates; competing drugs and product candidates that may be superior to Regeneron's products and product candidates; uncertainty of market acceptance and commercial success of Regeneron's products and product candidates; the ability of Regeneron to manufacture and manage supply chains for multiple products and product candidates; coverage and reimbursement determinations by third-party payers, including Medicare and Medicaid; unanticipated expenses; the costs of developing, producing, and selling products; the ability of Regeneron to meet any of its sales or other financial projections or guidance and changes to the assumptions underlying those projections or guidance, including without limitation those relating to EYLEA U.S. net product sales, non-GAAP unreimbursed R&D, non-GAAP SG&A, capital expenditures, and income tax obligations; the potential for any license or collaboration agreement, including Regeneron's agreements with Sanofi and Bayer HealthCare, to be cancelled or terminated without any further product success; and risks associated with third party intellectual property and pending or future litigation relating thereto.  A more complete description of these and other material risks can be found in Regeneron's filings with the U.S. Securities and Exchange Commission, including its Form 10-K for the fiscal year ended December 31, 2012 and its Form 10-Q for the quarterly period ended September 30, 2013, in each case including in the sections thereof captioned "Item 1A. Risk Factors."  Any forward-looking statements are made based on management's current beliefs and judgment, and the reader is cautioned not to rely on any forward-looking statements made by Regeneron.  Regeneron does not undertake any obligation to update publicly any forward-looking statement, including without limitation any financial projection or guidance, whether as a result of new information, future events, or otherwise.

This press release and/or the financial results attached to this press release include amounts that are considered "non-GAAP financial measures" under SEC rules.  As required, Regeneron has provided reconciliations of these measures.

 

 

 

 

 

 

 

 

 

 

 

SOURCE Regeneron Pharmaceuticals, Inc.