Table of Contents
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 Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 2, 2007 (March 1, 2007)
REGENERON PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Charter)
| New York | 000-19034 | 133444607 | ||
| (State or other jurisdiction of | (Commission File No.) | (IRS Employer Identification No.) | ||
| Incorporation) |
777 Old Saw Mill River Road, Tarrytown, New York 10591-6707
(Address of principal executive offices, including zip code)
(914) 347-7000
(Registrant’s 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 the 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
| Item 2.02 Results of Operations and Financial Condition | ||||||||
| Item 9.01 Financial Statements and Exhibits | ||||||||
| SIGNATURES | ||||||||
| Exhibit Index | ||||||||
| EX-99.1: PRESS RELEASE | ||||||||
Table of Contents
Item 2.02 Results of Operations and Financial Condition.
On March 1, 2007, Regeneron Pharmaceuticals, Inc. issued a press release announcing its
financial and operating results for the quarter and year ended December 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 as Exhibit 99.1 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 Press Release dated March 1, 2007.
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| REGENERON PHARMACEUTICALS, INC. |
||||
| By: | /s/ Stuart Kolinski | |||
| Date: March 2, 2007 | Name: | Stuart Kolinski | ||
| Title: | Senior Vice President and General Counsel | |||
Table of Contents
Exhibit 99.1
FOR IMMEDIATE RELEASE
REGENERON REPORTS FOURTH QUARTER AND FULL YEAR 2006
FINANCIAL AND OPERATING RESULTS
FINANCIAL AND OPERATING RESULTS
Tarrytown, New York (March 1, 2007) — Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) today
announced financial and operating results for the fourth quarter and full year of 2006. The Company
reported a net loss of $31.0 million, or $0.51 per share (basic and diluted), for the fourth
quarter of 2006 compared with a net loss of $29.7 million, or $0.53 per share (basic and diluted),
for the fourth quarter of 2005. The Company reported a net loss of $102.3 million, or $1.77 per
share (basic and diluted), for the year ended December 31, 2006 compared with a net loss of $95.4
million, or $1.71 per share (basic and diluted), for the same period in 2005. Results for 2005
included other income of $30.6 million resulting from one-time, non-recurring payments of $25.0
million from the sanofi-aventis Group and $5.6 million from The Procter & Gamble Company in
connection with amendments to the Company’s collaboration agreements with sanofi-aventis and
Procter & Gamble.
At December 31, 2006, cash and marketable securities totaled $522.9 million compared with $316.7
million at December 31, 2005. In October 2006, the Company entered into a collaboration agreement
with Bayer HealthCare, as described below, and Bayer made an up-front payment to the Company of
$75.0 million. In November 2006, the Company completed a public offering of 7,600,000 shares of
common stock and received proceeds, after expenses, of $174.6 million. The Company’s $200.0
million of convertible notes, which bear interest at 5.5% per annum, mature in October 2008.
Current Business Highlights
Regeneron is currently focused on three clinical development programs: IL-1 Trap (rilonacept) in
various inflammatory indications, the VEGF Trap in oncology and the VEGF Trap-Eye in eye diseases.
The Company also is developing its pipeline of preclinical antibody candidates discovered utilizing
its VelocImmune® technology.
The VEGF Trap-Eye, a specially purified and formulated form of the VEGF Trap for use in intraocular
applications, is being developed in collaboration with Bayer HealthCare. The development program
in eye disease is expected to total over $250 million over the next several years, with the Company
and Bayer HealthCare sharing the costs. The VEGF Trap is being developed in oncology in
collaboration with the sanofi-aventis Group. The development program in oncology is expected to
total over $400 million over the next several years, which will be funded by sanofi-aventis.
IL-1 Trap – Inflammatory Diseases
In October 2006, Regeneron reported positive data from a Phase 3 clinical program designed to
provide two separate demonstrations of efficacy for the IL-1 Trap (rilonacept) within a single
group of patients suffering from a rare chronic disease known as CAPS (Cryopyrin-Associated
Periodic Syndromes). The Phase 3 program included two efficacy studies in which the IL-1 Trap
markedly reduced disease activity in subjects with this rare chronic disease. The primary
endpoint, which was met in both studies, was the change in disease activity, as measured by a
composite symptom score composed of a daily evaluation of fever/chills, rash, fatigue, joint pain,
and eye redness/pain.
Regeneron has announced plans to submit a Biologics License Application (BLA) with the U.S. Food
and Drug Administration (FDA) for CAPS in the second quarter of 2007, following completion of a
24-week open-label safety extension phase of the Phase 3 trials. The FDA has granted Orphan Drug
status and Fast Track designation to the IL-1 Trap for the treatment of CAPS.
Regeneron also is evaluating the potential use of the IL-1 Trap in other indications in which IL-1
may play a role. Based on preclinical evidence that IL-1 appears to play a critical role in gout,
the Company initiated a proof of concept study of the IL-1 Trap in gout in the first quarter of
2007. The Company also is preparing to initiate exploratory proof of concept studies of the IL-1
Trap in other indications.
VEGF Trap – Eye Diseases
In October 2006, Bayer HealthCare and Regeneron announced that the companies had entered into a
collaboration agreement for the development and commercialization of the VEGF Trap-Eye outside the
United States. Under the agreement, Bayer and Regeneron will collaborate and share the costs of
development of the VEGF Trap-Eye through an integrated global plan that encompasses the neovascular
form of age-related macular degeneration (wet AMD), diabetic eye diseases, and other eye diseases
and disorders. The companies will share equally in profits from ex-U.S. sales of the VEGF Trap-Eye.
Within the U.S., Regeneron has retained exclusive commercialization rights in all indications and
will retain 100% of all profits from any such sales. Regeneron can earn development and regulatory
milestones related to the development of the VEGF Trap-Eye and marketing approvals in major market
countries outside the U.S. Regeneron also can earn sales milestones if total annual ex-U.S. sales
of the VEGF Trap-Eye achieve certain specified levels starting at $200 million.
In the clinical development program for the VEGF Trap-Eye, the companies currently are conducting a
Phase 2 trial of the VEGF Trap-Eye in wet AMD. This trial is evaluating the safety and biological
effect of intravitreal administration of the VEGF Trap-Eye using different doses and different
dosing regimens. Regeneron expects to report initial three-month data from the first 75 patients
enrolled in the Phase 2 trial in early 2007 and complete three-month data on all 150 patients
enrolled in the study by the end of the year. An initial Phase 3 trial of the VEGF Trap-Eye in
wet AMD is planned to begin in the second half of 2007.
VEGF Trap – Oncology
Regeneron and sanofi-aventis have underway a broad-based Phase 2 single-agent program for the VEGF
Trap in cancer patients. Currently, sanofi-aventis and Regeneron are conducting Phase 2 studies,
with patient enrollment underway in advanced ovarian cancer (AOC), non-small cell lung
adenocarcinoma (NSCLA), and AOC patients with symptomatic malignant ascites (SMA). Sanofi-aventis
reported earlier this month that a registration filing is possible for the VEGF Trap in at least
one of these single-agent indications in 2008.
In addition, five new Phase 2 single-agent studies have begun in conjunction with the National
Cancer Institute (NCI) Cancer Therapy Evaluation Program (CTEP) in relapsed/refractory multiple
myeloma, metastatic colorectal cancer, recurrent or metastatic cancer of the urothelium, locally
advanced or metastatic gynecological soft tissue sarcoma, and recurrent malignant gliomas. An
additional study is expected to begin shortly in metastatic breast cancer. The companies are
working to finalize plans with NCI/CTEP for at least four additional trials in different cancer
types.
Sanofi-aventis and Regeneron intend to conduct five Phase 3 trials evaluating the safety and
efficacy of the VEGF Trap in combination with standard chemotherapy regimens in specific cancer
types, with at least three of these trials planned to begin in 2007. The companies plan to
initiate these Phase 3 trials in the following indications:
| • | first-line metastatic hormone resistant prostate cancer in combination with Taxotere® | ||
| • | first-line metastatic pancreatic cancer in combination with gemcitabine-based regimen, | ||
| • | first-line gastric cancer in combination with Taxotere®, | ||
| • | second-line non-small cell lung cancer in combination with Taxotere®, and | ||
| • | second-line metastatic colorectal cancer in combination with FOLFIRI (Folinic Acid, Fluorouracil, and irinotecan). |
Five safety and tolerability studies of the VEGF Trap in combination with standard chemotherapy
regimens are continuing in a variety of cancer types to support the planned Phase 3 clinical
program.
Monoclonal Antibodies
VelocImmune®, Regeneron’s novel technology for producing fully human monoclonal
antibodies, is part of the Company’s suite of proprietary, inter-related technology platforms that
is designed to provide Regeneron with its next generation of therapeutic candidates. Regeneron
plans to move two new antibody candidates into clinical trials every year beginning around the end
of 2007.
In February 2007, Regeneron entered into a non-exclusive license agreement with AstraZeneca that
will allow AstraZeneca to utilize VelocImmune technology in their internal research programs to
discover human monoclonal antibodies. AstraZeneca made a $20.0 million up-front, non-refundable
payment and will make up to five additional annual payments of $20.0 million, subject to the
ability to terminate the agreement after making the first three additional payments. Upon
commercialization of any antibody products discovered utilizing VelocImmune, AstraZeneca will pay
to Regeneron a mid-single-digit royalty on product sales.
Financial Results
Regeneron’s total revenue decreased to $10.3 million in the fourth quarter of 2006 from $17.4
million in the same quarter of 2005 and to $63.4 million for the full year 2006 from $66.2 million
for the same period of 2005. Contract research and development revenue in 2006 principally related
to the Company’s VEGF Trap collaboration with sanofi-aventis in cancer indications. In 2005,
contract research and development revenue related both to the Company’s collaboration with
sanofi-aventis and the Company’s collaboration with Procter & Gamble, which ended in June 2005.
Contract manufacturing revenue related to Regeneron’s long-term manufacturing agreement with Merck
& Co., Inc., which expired in October 2006.
Regeneron recognized contract research and development revenue of $9.1 million in the fourth
quarter of 2006 and $47.8 million for the full year 2006 related to the Company’s collaboration
with sanofi-aventis, compared with $13.0 million and $43.4 million, respectively, for the same
periods of 2005. Contract research and development revenue from the sanofi-aventis collaboration
consisted of reimbursement of VEGF Trap development expenses plus recognition of amounts related to
$105.0 million of previously received and deferred up-front, non-refundable payments.
Reimbursement of expenses decreased to $6.8 million in the fourth quarter of 2006 from $10.5
million in the comparable quarter of 2005, but increased to $36.4 million for the full year 2006
from $33.9 million in the same period of 2005, principally because costs related to the Company’s
manufacture of VEGF Trap clinical supplies were lower in the fourth quarter of 2006, but higher for
the full year 2006, compared to the same periods of 2005. With respect to the up-front payments
from sanofi-aventis, $2.2 million was recognized in the fourth quarter of 2006 compared to $2.5
million in the same quarter of 2005, and $11.4 million was recognized in the full year 2006
compared to $9.5 million in the same period of 2005.
Sanofi-aventis also incurs VEGF Trap development expenses directly and these expenses 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, Regeneron, from its 50% share of VEGF Trap profits,
will reimburse sanofi-aventis for 50% of the VEGF Trap development expenses previously paid by
sanofi-aventis.
As described above, in October 2006, the Company entered into a collaboration with Bayer for the
development and commercialization of the VEGF Trap-Eye outside the United States, and received a
$75.0 million up-front, non-refundable payment which was
recorded as deferred revenue. When the Company and Bayer have formalized their global development
plans for the VEGF Trap-Eye and the projected responsibilities of each of the companies under those
plans, the Company will begin recognizing contract research and development revenue related to
payments from Bayer, including the $75.0 million up-front payment. The Company recognizes revenue
from collaborations in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition and
FASB Emerging Issue Task Force Issue No. 00-21, Accounting for Revenue Arrangements with Multiple
Deliverables.
Total operating expenses for the fourth quarter of 2006 were $43.8 million, 7 percent lower than
the comparable quarter in 2005, and $171.1 million for the full year 2006, 10 percent lower than
the same period in 2005, due, in part, to lower Company headcount. Average Company headcount
declined to 573 in 2006 from 696 in the same period of 2005, primarily as a result of workforce
reductions made in the fourth quarter of 2005 and mid-year in 2006.
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 fourth quarter of 2006 and 2005 include a total of $5.1 million
and $3.8 million, respectively, of Stock Option Expense, as follows:
For the three months ended December 31,
(in millions)
| 2006 | ||||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | Stock Option | Expenses as | ||||||||||
| Expenses | Option Expense | Expense | Reported | |||||||||
Research and development |
$ | 32.9 | $ | 2.9 | $ | 35.8 | ||||||
Contract manufacturing |
0.4 | 0.4 | ||||||||||
General and administrative |
5.4 | 2.2 | 7.6 | |||||||||
Total operating expenses |
$ | 38.7 | $ | 5.1 | $ | 43.8 | ||||||
For the three months ended December 31,
(in millions)
| 2005 | ||||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | Stock Option | Expenses as | ||||||||||
| Expenses | Option Expense | Expense | Reported | |||||||||
Research and development |
$ | 36.0 | $ | 1.9 | $ | 37.9 | ||||||
Contract manufacturing |
2.1 | 0.1 | 2.2 | |||||||||
General and administrative |
5.1 | 1.8 | 6.9 | |||||||||
Total operating expenses |
$ | 43.2 | $ | 3.8 | $ | 47.0 | ||||||
Operating expenses for the full year of 2006 and 2005 include a total of $18.4 million and
$19.9 million, respectively, of Stock Option Expense, as follows:
For the year ended December 31.,
(in millions)
| 2006 | ||||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | Stock Option | Expenses as | ||||||||||
| Expenses | Option Expense | Expense | Reported | |||||||||
Research and development |
$ | 126.9 | $ | 10.2 | $ | 137.1 | ||||||
Contract manufacturing |
7.8 | 0.3 | 8.1 | |||||||||
General and administrative |
18.0 | 7.9 | 25.9 | |||||||||
Total operating expenses |
$ | 152.7 | $ | 18.4 | $ | 171.1 | ||||||
For the year ended December 31,
(in millions)
| 2005 | ||||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | Stock Option | Expenses as | ||||||||||
| Expenses | Option Expense | Expense | Reported | |||||||||
Research and development |
$ | 143.7 | $ | 11.9 | $ | 155.6 | ||||||
Contract manufacturing |
9.2 | 0.4 | 9.6 | |||||||||
General and administrative |
17.8 | 7.6 | 25.4 | |||||||||
Total operating expenses |
$ | 170.7 | $ | 19.9 | $ | 190.6 | ||||||
Research and development (R&D) expenses decreased to $35.8 million in the fourth quarter of
2006 from $37.9 million in the comparable quarter of 2005, and to $137.1 million for the full year
2006 from $155.6 million in the same period of 2005. In addition to the impact of lower Company
headcount, as described above, in 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 and VEGF Trap-Eye.
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, which was adopted effective January 1,
2005. 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 SFAS 123R adoption date. This adjustment reduced
the Company’s loss by $0.8 million and is included in the Company’s operating results for the first
nine months 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 agreements
with the sanofi-aventis Group and Bayer HealthCare, 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 Regeneron’s filings
with the United States Securities and Exchange Commission (SEC), including its Form 10-K for the
year ended December 31, 2005 and Form 10-Q for the quarter ended September 30, 2006. 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.
###
Contacts: |
||||
Investors:
|
Media: | |||
Charles Poole
|
Lauren Tortorete | |||
914.345.7640
|
212.845.5609 | |||
Investor.relations@regeneron.com
|
ltortorete@biosector2.com | |||
REGENERON
PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
| December 31, | ||||||||
| 2006 | 2005 | |||||||
ASSETS |
||||||||
Cash and marketable securities |
$ | 522,859 | $ | 316,654 | ||||
Receivables |
7,493 | 36,521 | ||||||
Property, plant, and equipment, net |
49,353 | 60,535 | ||||||
Other assets |
5,385 | 9,791 | ||||||
Total assets |
$ | 585,090 | $ | 423,501 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 21,471 | $ | 23,337 | ||||
Deferred revenue |
146,995 | 86,162 | ||||||
Notes payable |
200,000 | 200,000 | ||||||
Stockholders’ equity |
216,624 | 114,002 | ||||||
Total liabilities and stockholders’ equity |
$ | 585,090 | $ | 423,501 | ||||
REGENERON
PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
| For the three months | For the year | |||||||||||||||
| ended December 31, | ended December 31, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues |
||||||||||||||||
Contract research and development |
$ | 10,110 | $ | 13,867 | $ | 51,136 | $ | 52,447 | ||||||||
Contract manufacturing |
236 | 3,557 | 12,311 | 13,746 | ||||||||||||
| 10,346 | 17,424 | 63,447 | 66,193 | |||||||||||||
Expenses |
||||||||||||||||
Research and development |
35,774 | 37,911 | 137,064 | 155,581 | ||||||||||||
Contract manufacturing |
430 | 2,145 | 8,146 | 9,557 | ||||||||||||
General and administrative |
7,628 | 6,895 | 25,892 | 25,476 | ||||||||||||
| 43,832 | 46,951 | 171,102 | 190,614 | |||||||||||||
Loss from operations |
(33,486 | ) | (29,527 | ) | (107,655 | ) | (124,421 | ) | ||||||||
Other income (expense) |
||||||||||||||||
Other contract income |
30,640 | |||||||||||||||
Investment income |
5,525 | 2,866 | 16,548 | 10,381 | ||||||||||||
Interest expense |
(3,010 | ) | (3,011 | ) | (12,043 | ) | (12,046 | ) | ||||||||
| 2,515 | (145 | ) | 4,505 | 28,975 | ||||||||||||
Net loss before cumulative effect
of a change in accounting principle |
(30,971 | ) | (29,672 | ) | (103,150 | ) | (95,446 | ) | ||||||||
Cumulative effect of adopting |
||||||||||||||||
Statement of Financial Accounting |
||||||||||||||||
Standards No. 123R (“SFAS 123R”) |
813 | |||||||||||||||
Net loss |
($ | 30,971 | ) | ($ | 29,672 | ) | ($ | 102,337 | ) | ($ | 95,446 | ) | ||||
Net loss per share amounts, basic and diluted: |
||||||||||||||||
Net loss before cumulative effect of a
change in accounting principle |
($ | 0.51 | ) | ($ | 0.53 | ) | ($ | 1.78 | ) | ($ | 1.71 | ) | ||||
Cumulative effect of adopting SFAS 123R |
0.01 | |||||||||||||||
Net loss |
($ | 0.51 | ) | ($ | 0.53 | ) | ($ | 1.77 | ) | ($ | 1.71 | ) | ||||
Weighted average shares
outstanding, basic and diluted |
61,229 | 56,091 | 57,970 | 55,950 | ||||||||||||