8-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): May 4, 2006 (May 3, 2006)
REGENERON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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New
York |
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000-19034
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133444607
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification Number) |
777 Old Saw Mill River Road, Tarrytown, New York 10591-6707
(Address of principal executive offices)
(Zip Code)
(914) 347-7000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
TABLE OF CONTENTS
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Item 2.02 |
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Results of Operations and Financial Condition |
On
May 3, 2006, Regeneron Pharmaceuticals, Inc. issued a press
release announcing its
financial and operating results for the quarter and three months
ended March 31, 2006. The press release is being furnished to
the Securities and Exchange Commission pursuant to Item 2.02 of
Form 8-K and is attached hereto as Exhibit 99(a).
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Item 9.01 |
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Financial Statements and Exhibits |
(c) Exhibits
99(a) Press Release of Regeneron Pharmaceuticals, Inc. dated May 3, 2006.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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REGENERON PHARMACEUTICALS, INC. |
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Dated: May 4, 2006
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By:
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/s/ Stuart Kolinski
Stuart Kolinski
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Vice President and General Counsel |
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2
Exhibit Index
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Number |
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Description |
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99(a)
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Press Release of Regeneron Pharmaceuticals, Inc. dated May 3, 2006. |
3
EX-99.A
Exhibit 99(a)
Regeneron Reports First Quarter Financial and Operating Results
TARRYTOWN, N.Y.(BUSINESS WIRE)Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) today announced
financial and operating results for the first quarter of 2006. The Company reported a net loss of
$20.4 million, or $0.36 per share (basic and diluted) for the first quarter of 2006 compared with a
net loss of $4.1 million, or $0.07 per share (basic and diluted) for the first quarter of 2005.
Results for the first quarter of 2005 included a $25.0 million one-time, non-recurring payment from
the sanofi-aventis Group in connection with an amendment to the Companys collaboration agreement
with sanofi-aventis, which was recognized as other contract income.
At March 31, 2006, cash and marketable securities totaled $324.2 million compared with $316.7
million at December 31, 2005. In January 2006, Regeneron received an up-front payment of $25.0
million from sanofi-aventis related to the expansion of the companies VEGF Trap collaboration
program to include Japan. The Companys $200.0 million of convertible notes, which bear interest at
5.5% per annum, mature in October 2008.
Current Business Highlights
In the first quarter of 2006, Regeneron continued to expand its broad-based clinical development
program that is centered on product candidates in oncology, eye diseases, and inflammatory
indications. In oncology, Regenerons Vascular Endothelial Growth Factor (VEGF) Trap is being
developed in collaboration with sanofi-aventis. The Company is independently developing the VEGF
Trap-Eye, a specially purified and formulated form of the VEGF Trap for use in intraocular
applications, and the Interleukin-1 (IL-1) Trap for certain inflammatory indications.
In the first quarter of 2006, Regeneron and sanofi-aventis initiated their phase 2 single-agent
program for the VEGF Trap in cancer. Patient enrollment is underway in non-small cell lung
adenocarcinoma (NSCLA), and two additional safety/efficacy studies in advanced ovarian cancer and
symptomatic malignant ascites (SMA) are planned to begin shortly. In addition, the companies intend
to conduct three trials evaluating the safety and efficacy of the VEGF Trap in combination with
standard chemotherapy regimens, the first of which is planned to begin in the second half of 2006.
Currently, there are five safety and tolerability studies underway for the VEGF Trap in combination
with standard chemotherapy regimens in a variety of cancer types. The companies are also finalizing
plans with the National Cancer Institute (NCI) Cancer Therapeutics Evaluation Program to commence
at least ten other cancer trials in 2006.
In the clinical development program for the treatment of eye diseases, at the May 2006 Annual
Meeting of the Association for Research in Vision and Ophthalmology (ARVO),
4
the Company reported positive preliminary results from its phase 1 trial of the VEGF Trap-Eye in
patients with the neovascular form of age-related macular degeneration (wet AMD). A total of 21
patients received a single dose of VEGF Trap-Eye at doses ranging from .05 milligrams (mg) to 4 mg
intravitreally (direct injection into the eye) and were evaluated for six weeks to measure the
durability of effects and provide guidance for dosing regimens to be used in future trials. All
dose levels were generally well tolerated, and a maximum tolerated dose was not reached in the
study. Patients receiving the VEGF Trap-Eye demonstrated large, rapid, and sustained (at least six
weeks) reductions in retinal thickness, a clinical measure of disease activity in wet AMD as
measured by ocular coherence tomography (OCT). As measured by the OCT reading center (posterior
pole OCT scans), the median excess retinal thickness was 194 microns at baseline and 60 microns at
6 weeks. As measured by the computerized Fast Macular Scan protocol, the median excess retinal
thickness was 119 microns at baseline and 27 microns at 6 weeks.
Of the 20 patients evaluable for efficacy, 95 percent had stabilization or improvement in visual
acuity, defined as less than or equal to 15 letter loss on the Early Treatment of Diabetic
Retinopathy Study (ETDRS) eye chart. Patients were also evaluated for best-corrected visual acuity
(BCVA), the best acuity a person can achieve with glasses. BCVA for all patients in the study
increased by a mean of 4.8 letters at 6 weeks. In the two highest dose groups (2 mg and 4 mg), the
mean improvement in BCVA was 13.5 letters, with three of six patients gaining 15 or more letters.
Based on the preliminary phase 1 results in wet AMD, the Company has initiated a 150 patient, 12
week, phase 2 trial of the VEGF Trap in wet AMD. The trial is designed to evaluate treatment with
multiple doses of the VEGF Trap-Eye using different doses and different dosing regimens, as well as
safety and efficacy. The Company plans to conduct an initial evaluation of study results after all
patients have completed 12 weeks of treatment, which is expected to be prior to the end of 2006.
Subject to a review of the initial phase 2 study results, Regeneron plans to initiate a phase 3
trial of the VEGF Trap in wet AMD in early 2007.
Regeneron recently completed enrollment in the pivotal study of the IL-1 Trap in patients with
CIAS1-Associated Periodic Syndrome (CAPS), a spectrum of rare diseases associated with mutations in
the CIAS1 gene. Interleukin-1 (IL-1) appears to play a significant role in these diseases.
Participants in the trial will receive a 160 milligram dose of the IL-1 Trap once a week through
subcutaneous self-administration. The six-month placebo-controlled, double-blind, efficacy phase is
expected to be completed and preliminary data available by the end of 2006. The efficacy phase will
be followed by a six-month open-label extension phase. In addition, Regeneron has ongoing
proof-of-concept studies in other indications in which IL-1 may play a significant role, such as
systemic juvenile idiopathic arthritis (SJIA). The Company has received Orphan Drug designation for
the IL-1 Trap in CAPS and SJIA.
Financial Results
Regenerons total revenue increased to $18.2 million in the first quarter of 2006 from $16.2
million in the same period of 2005 due to increases of $1.1 million in contract
5
research and development revenue and $0.9 million in contract manufacturing revenue in the first
quarter of 2006 from the same period of 2005. Contract research and development revenue in the
first quarter of 2006 principally related to the Companys VEGF Trap collaboration with
sanofi-aventis in cancer indications. In the first quarter of 2005, contract research and
development revenue related both to the Companys collaboration with sanofi-aventis and the
Companys collaboration with The Procter & Gamble Company, which ended in June 2005. Contract
manufacturing revenue relates to Regenerons long-term manufacturing agreement with Merck & Co.,
Inc., which will expire in the second half of 2006.
Regeneron recognized contract research and development revenue of $13.9 million in the first
quarter of 2006 related to the Companys collaboration with sanofi-aventis, compared with $9.8
million in the same period of 2005. Contract research and development revenue from the
sanofi-aventis collaboration consists of reimbursement of VEGF Trap development expenses plus
recognition of amounts related to $105.0 million of previously received up-front, non-refundable
payments. Reimbursement of expenses increased to $10.8 million in the first quarter of 2006 from
$7.4 million in the same period of 2005, primarily due to higher costs in 2006 related to the
Companys manufacture of VEGF Trap clinical supplies. With respect to the up-front payments from
sanofi-aventis, $3.1 million was recognized as revenue in the first quarter of 2006 compared to
$2.4 million in the same quarter of 2005.
Sanofi-aventis also incurs VEGF Trap development expenses which are increasing because of the
growing number of clinical trials sanofi-aventis is overseeing in the VEGF Trap oncology program.
During the term of the collaboration, sanofi-aventis pays 100% of agreed-upon VEGF Trap development
expenses incurred by both companies. Following commercialization of a VEGF Trap product by the
collaboration, the Company will repay out of VEGF Trap profits 50% of these VEGF Trap development
expenses previously paid by sanofi-aventis.
Total operating expenses for the first quarter of 2006 were $39.9 million, 10 percent lower than
the same period in 2005, due, in part, to lower Company headcount. Average Company headcount
declined to 587 in the first quarter of 2006 from 734 in the same period of 2005 primarily as a
result of workforce reductions made in the fourth quarter of 2005.
The Company recognized non-cash compensation expense related to employee stock option awards (Stock
Option Expense) in accordance with Statement of Financial Accounting Standards No. (SFAS) 123 in
2005, and in accordance with SFAS 123R (which is a revision of SFAS 123), effective January 1,
2006. Operating expenses in the first quarter of 2006 and 2005 include a total of $3.9 million and
$5.4 million, respectively of Stock Option Expense, as follows:
6
For the three months ended March 31,
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(in millions) |
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2006 |
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Expenses before |
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Stock |
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inclusion of Stock |
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Option |
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Expenses as |
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Expenses |
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Option Expense |
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Expense |
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Reported |
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Research and development |
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$ |
30.1 |
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$ |
2.0 |
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$ |
32.1 |
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Contract manufacturing |
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1.8 |
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0.1 |
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1.9 |
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General and
administrative |
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4.1 |
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1.8 |
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5.9 |
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Total operating expenses |
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$ |
36.0 |
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$ |
3.9 |
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$ |
39.9 |
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For the three months ended March 31,
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(in millions) |
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2005 |
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Expenses before |
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Stock |
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inclusion of Stock |
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Option |
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Expenses as |
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Expenses |
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Option Expense |
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Expense |
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Reported |
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Research and development |
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$ |
32.5 |
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$ |
3.4 |
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$ |
35.9 |
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Contract manufacturing |
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2.5 |
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2.5 |
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General and
administrative |
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4.1 |
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2.0 |
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6.1 |
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Total operating expenses |
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$ |
39.1 |
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$ |
5.4 |
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$ |
44.5 |
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Research and development (R&D) expenses decreased to $32.1 million in the first quarter of
2006 from $35.9 million in the comparable quarter of 2005. In addition to the impact of lower
Company headcount, as described above, in the first quarter of 2006, the Company incurred lower
development expenses for the IL-1 Trap and other clinical development programs, which were partly
offset by higher development expenses for the VEGF Trap.
Effective January 1, 2005, the Company adopted the fair value based method of accounting for
stock-based employee compensation under the provisions of SFAS 123, Accounting for Stock-Based
Compensation, using the modified prospective method described in SFAS 148, Accounting for
Stock-Based Compensation Transition and Disclosure. As a result, in 2005, the Company recognized
compensation expense in an amount equal to the fair market value of share-based payments (including
stock option awards) on their date of grant over the vesting period of the awards using the
multiple-option approach. Under the modified prospective method, compensation expense for the
Company is recognized for (a) all share-based payments granted on or after January 1, 2005 and (b)
all awards granted to employees prior to January 1, 2005 that were unvested on that date.
Effective January 1, 2006, the Company adopted the provisions of SFAS 123R, Share-Based Payment,
which is a revision of SFAS 123. SFAS 123R requires companies to estimate the number of awards that
are expected to be forfeited at the time of grant and to revise this estimate, if necessary, in
subsequent periods if actual forfeitures differ from those estimates. Prior to the adoption of SFAS
123R, the Company recognized the effect of forfeitures in stock-based compensation cost in the
period when they occurred, in accordance with SFAS 123. Upon adoption of SFAS 123R effective
January 1, 2006, the Company was required to record a cumulative effect adjustment to reflect the
effect of estimated forfeitures related to outstanding awards that are not expected to vest as of
the
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SFAS 123R adoption date. This adjustment reduced the Companys loss by $0.8 million
and is included in the Companys operating results for the first quarter of 2006 as a
cumulative-effect adjustment of a change in accounting principle.
About Regeneron Pharmaceuticals
Regeneron is a biopharmaceutical company that discovers, develops, and intends to commercialize
therapeutic medicines for the treatment of serious medical conditions. Regeneron has therapeutic
candidates in clinical trials for the potential treatment of cancer, eye diseases, and inflammatory
diseases, and has preclinical programs in other diseases and disorders.
This news release discusses historical information and includes forward-looking statements about
Regeneron and its products, programs, finances, and business, all of which involve a number of
risks and uncertainties, such as risks associated with preclinical and clinical development of our
drug candidates, determinations by regulatory and administrative governmental authorities which may
delay or restrict our ability to continue to develop or commercialize our drug candidates,
competing drugs that are superior to our product candidates, unanticipated expenses, the
availability and cost of capital, the costs of developing, producing, and selling products, the
potential for any collaboration agreement, including our agreement with the sanofi-aventis Group,
to be canceled or to terminate without any product success, risks associated with third party
intellectual property, and other material risks. A more complete description of these and other
material risks can be found in Regenerons filings with the United States Securities and Exchange
Commission (SEC), including its Form 10-K for the year ended December 31, 2005. Regeneron does not
undertake any obligation to update publicly any forward-looking statement, whether as a result of
new information, future events, or otherwise unless required by law.
REGENERON PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
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March 31, |
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December 31, |
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2006 |
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2005 |
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ASSETS |
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Cash and marketable securities |
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$ |
324,229 |
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$ |
316,654 |
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Receivables |
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11,010 |
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36,521 |
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Inventory |
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3,254 |
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2,904 |
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Property, plant, and equipment, net |
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57,421 |
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60,535 |
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Other assets |
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6,175 |
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6,887 |
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Total assets |
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$ |
402,089 |
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$ |
423,501 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Accounts payable and accrued expenses |
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$ |
18,383 |
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$ |
23,337 |
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Deferred revenue |
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81,383 |
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86,162 |
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Notes payable |
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200,000 |
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200,000 |
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Stockholders equity |
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102,323 |
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114,002 |
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Total liabilities and stockholders
equity |
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$ |
402,089 |
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$ |
423,501 |
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8
REGENERON PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
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For the three months |
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ended March 31, |
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2006 |
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2005 |
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Revenues |
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Contract research and development |
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$ |
14,587 |
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$ |
13,502 |
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Contract manufacturing |
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3,632 |
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2,707 |
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18,219 |
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16,209 |
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Expenses |
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Research and development |
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32,084 |
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35,912 |
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Contract manufacturing |
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1,852 |
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2,491 |
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General and administrative |
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5,946 |
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6,146 |
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39,882 |
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44,549 |
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Loss from operations |
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(21,663 |
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(28,340 |
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Other income (expense) |
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Other contract income |
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25,000 |
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Investment income |
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3,481 |
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2,230 |
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Interest expense |
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(3,011 |
) |
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(3,013 |
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|
470 |
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24,217 |
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Net loss before cumulative effect of a change in
accounting principle |
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(21,193 |
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(4,123 |
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Cumulative effect of adopting Statement of
Financial Accounting Standards No. 123R
(SFAS 123R) |
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813 |
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Net loss |
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($ |
20,380 |
) |
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($ |
4,123 |
) |
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Net loss per share amounts, basic and diluted: |
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Net loss before cumulative effect of a change
in accounting principle |
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($ |
0.37 |
) |
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($ |
0.07 |
) |
Cumulative effect of adopting SFAS 123R |
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0.01 |
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Net loss |
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($ |
0.36 |
) |
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($ |
0.07 |
) |
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Weighted average shares outstanding,
basic and diluted |
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56,727 |
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55,815 |
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CONTACT :
Investors:
Charles Poole, Regeneron
914-345-7640
charles.poole@regeneron.com
or
Media:
Lauren Tortorete, Biosector2
212-845-5609
ltortorete@biosector2.com
10