On May 6, 2021 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the first quarter of 2021 and provided a business update (Press release, Regeneron, MAY 6, 2021, View Source [SID1234579371]).
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"Regeneron had a strong first quarter highlighting our continued evolution into a company with multiple durable product lines helping people with a range of serious diseases including COVID-19," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "We recently reported positive Phase 3 results for REGEN-COV in both the COVID-19 outpatient treatment and prevention settings and are working with national and state authorities to improve access. We expect continued growth with EYLEA in retinal diseases, as well as with Dupixent through further penetration in existing indications and a broad Phase 3 development program. In oncology, we are in the early days of launching Libtayo for advanced basal cell carcinoma and non-small cell lung cancer and recently announced positive pivotal data in cervical cancer with regulatory submissions planned for later this year."
"Our business is off to a strong start in 2021 with double-digit top- and bottom-line growth," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "Our financial strength and solid execution across the business continue to position the Company for sustainable long-term growth."
Business Highlights
Key Pipeline Progress
Regeneron has approximately 30 product candidates in clinical development, including six marketed products for which it is investigating additional indications. Updates from the clinical pipeline include:
EYLEA (aflibercept) Injection
In March 2021, JAMA Ophthalmology announced initial results from the National Institutes of Health-sponsored Protocol W trial evaluating EYLEA in patients with moderate to severe non-proliferative diabetic retinopathy (NPDR). The two-year data confirmed results from the Company-sponsored PANORAMA trial and demonstrated that EYLEA significantly reduced the risk of developing vision-threatening complications with an every-16-weeks dosing regimen. The Company plans to submit a supplemental Biologics License Application (sBLA) for an every-16-weeks dosing regimen in patients with NPDR later this year.
Dupixent (dupilumab)
The U.S. Food and Drug Administration (FDA) accepted for review, with a target action date of October 21, 2021, the sBLA for Dupixent for children aged 6 to 11 years with moderate-to-severe asthma. A regulatory application for Dupixent for children aged 6 to 11 years with severe asthma was also submitted in the European Union (EU).
REGEN-COVTM (casirivimab with imdevimab), a dual antibody cocktail to SARS-CoV-2 virus
In March 2021, the Company announced positive top-line results from the Phase 3 treatment trial in high-risk COVID-19 outpatients. The trial met its primary endpoint, showing that REGEN-COV significantly reduced the risk of hospitalization or death by approximately 70% with both REGEN-COV doses (1,200 mg and 2,400 mg) compared to placebo. The trial also met key secondary endpoints, including the ability to reduce symptom duration. Based on these results, the Company submitted a request to the FDA to update the Emergency Use Authorization (EUA) to the lower 1,200 mg dose.
In April 2021, the National Institutes of Health (NIH) COVID-19 Treatment Guidelines were updated to strongly recommended that REGEN-COV be used in non-hospitalized COVID-19 patients at high risk of clinical progression.
In April 2021, the Company announced positive results from the Phase 3 COVID-19 prevention trial in uninfected household contacts of SARS-CoV-2 infected individuals. The trial met its primary and key secondary endpoints, showing that REGEN-COV 1,200 mg administered subcutaneously reduced the risk of symptomatic infections by 81%. The Company has shared this data with the FDA and requested that the EUA be expanded to include COVID-19 prevention for appropriate populations.
In April 2021, the Company also announced positive data from a Phase 3 treatment trial in recently infected asymptomatic COVID-19 patients. The trial met all primary and key secondary endpoints, and demonstrated that the 1,200 mg subcutaneous injection of REGEN-COV reduced the risk of progressing to symptomatic COVID-19 by 31%, and by 76% after the third day.
In January 2021, the Company announced a second agreement with the U.S. government to manufacture and deliver REGEN-COV. The U.S. government has agreed to acquire up to 1.25 million additional doses at the lowest treatment dose authorized or approved by the FDA for the indication authorized under the EUA, resulting in payments to the Company of up to $2.625 billion in the aggregate. The Company anticipates being able to provide at least 1 million doses by June 30, 2021 if the EUA is updated to the lower 1,200 mg dose. The U.S. government is obligated to purchase all filled and finished doses of drug product delivered by June 30, 2021, and may accept additional doses through September 30, 2021 at its discretion. A number of factors may impact the quantity of filled and finished product supplied by June 30, 2021, including manufacturing considerations and authorized dose levels.
Libtayo (cemiplimab)
In February 2021, the FDA approved Libtayo for the first-line treatment of patients with advanced NSCLC.
In February 2021, the FDA also approved Libtayo for the treatment of metastatic or locally advanced BCC.
In March 2021, the Company and Sanofi announced positive results from the Phase 3 trial in cervical cancer, which was stopped early based on a recommendation by the Independent Data Monitoring Committee (IDMC). The results demonstrated an overall survival benefit compared to chemotherapy. Regulatory submissions are planned for later this year.
Evkeeza, an antibody to ANGPTL3
In February 2021, the FDA approved Evkeeza for the treatment of adults and adolescents with HoFH.
Bispecific Antibodies
The Company retained the exclusive rights to develop and commercialize two bispecific antibodies targeting BCMAxCD3 (REGN5458 and REGN5459) and a bispecific antibody targeting MUC16xCD3 (REGN4018) as Sanofi did not exercise its options to license rights to these product candidates under the companies’ immuno-oncology collaboration. REGN5458 and REGN5459 are in clinical development for multiple myeloma, and REGN4018 is being studied in ovarian cancer.
REGN1908-1909, a multi-antibody therapy to Fel d 1
In February 2021, the Company announced that the Phase 2 study in cat allergic patients with mild asthma met its primary and key secondary endpoints. The Company plans to initiate a Phase 3 study in cat allergic asthmatics later this year.
First Quarter 2021 Financial Results
Revenues
Total revenues increased by 38% to $2.529 billion in the first quarter of 2021, compared to $1.828 billion in the first quarter of 2020. Total revenues excluding REGEN-COV increased by 20% to $2.200 billion in the first quarter of 2021, compared to the first quarter of 2020.
Net product sales recorded by the Company consist of the following:
Total revenues also include collaboration revenues(2) of $754 million in the first quarter of 2021, compared to $528 million in the first quarter of 2020. Sanofi collaboration revenue increased primarily due to the Company’s share of profits from commercialization of antibodies, which were $261 million in the first quarter of 2021, compared to $171 million in the first quarter of 2020. The change in the Company’s share of profits from commercialization of antibodies was primarily driven by higher Dupixent profits. In the first quarter of 2021, the Company also recorded Roche collaboration revenue of $67 million in connection with the Company’s share of gross profits from sales of the casirivimab with imdevimab antibody cocktail (known as REGEN-COV in the United States).
Refer to Table 4 for a summary of collaboration revenue.
The higher GAAP and non-GAAP R&D expenses in the first quarter of 2021 were primarily due to costs incurred in connection with development activities related to REGEN-COV.
The increase in GAAP and non-GAAP SG&A expenses in the first quarter of 2021 was primarily due to an increase in product launch-related costs and higher headcount-related costs.
The increase in COGS in the first quarter of 2021 was primarily due to the recognition of manufacturing costs in connection with product sales of REGEN-COV in the United States, as well as Praluent in the United States (which were recorded by Sanofi prior to April 1, 2020).
Other operating (income) expense, net, includes recognition of a portion of amounts previously deferred in connection with up-front and development milestone payments, as applicable, received in connection with the Company’s collaborative arrangements.
Other Financial Information
GAAP other income (expense), net, includes the recognition of net gains on equity securities of $144 million in the first quarter of 2021, compared to net losses of $57 million in the first quarter of 2020.
In the first quarter of 2021, the Company’s GAAP effective tax rate was 11.0%, compared to 6.6% in the first quarter of 2020. The GAAP effective tax rate for the first quarter 2021 was positively impacted, compared to the U.S. federal statutory rate, primarily by the reversal of liabilities related to uncertain tax positions, stock-based compensation, income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate, and federal tax credits for research activities. In the first quarter of 2021, the non-GAAP effective tax rate was 10.5%, compared to 9.5% in the first quarter of 2020.
GAAP net income per diluted share was $10.09 in the first quarter of 2021, compared to GAAP net income per diluted share of $5.43 in the first quarter of 2020. Non-GAAP net income per diluted share was $9.89 in the first quarter of 2021, compared to non-GAAP net income per diluted share of $6.60 in the first quarter of 2020. A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.
In January 2021, the Company’s board of directors authorized a new share repurchase program to repurchase up to $1.5 billion of the Company’s common stock. Repurchases may be made from time to time at management’s discretion through a variety of methods. The program has no time limit and can be discontinued at any time. During the first quarter of 2021, the Company repurchased shares of common stock under the program, and recorded the cost of the shares received, or $323 million, as Treasury Stock. As of March 31, 2021, $1.177 billion remained available for share repurchases under the program.
Net cash provided by operating activities in the first quarter of 2021 was $669 million, compared to $698 million in the first quarter of 2020, resulting in $553 million in free cash flow for the first quarter of 2021, compared to $528 million for the first quarter of 2020.
2021 Financial Guidance(3)
The Company’s full year 2021 financial guidance consists of the following components:
Conference Call Information
Regeneron will host a conference call and simultaneous webcast to discuss its first quarter 2021 financial and operating results on Thursday, May 6, 2021, at 8:30 AM Eastern Time. To access this call, dial (888) 660-6127 (U.S.) or (973) 890-8355 (International), conference ID 7794757. A link to the webcast may be accessed from the "Investors and Media" 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 at least 30 days.