Regeneron Reports Third Quarter 2024 Financial and Operating Results

On October 31, 2024 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the third quarter of 2024 and provided a business update (Press release, Regeneron, OCT 31, 2024, View Source [SID1234647608]).

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"Regeneron had a strong third quarter marked by 11% revenue growth. We continued to deepen the impact of our commercialized medicines this quarter, with ongoing leadership for our retinal franchise, expanded global reach of Libtayo, and notable growth from Dupixent," said Leonard S. Schleifer, M.D., Ph.D., Board co-Chair, President and Chief Executive Officer of Regeneron. "Over one million patients around the globe are currently being treated with Dupixent, with more to come following the approvals for COPD in the U.S., Europe and China. Our remarkably diverse clinical portfolio now includes approximately 40 product candidates and many pivotal studies underway. We continue to invest in the world-class research and development engine that drives our scientific and clinical productivity, with data expected over the next twelve months in diseases as varied as non-small cell lung cancer, thrombosis, retinal vein occlusion, severe allergy, COPD, melanoma, and obesity."

Financial Highlights

($ in millions, except per share data) Q3 2024 Q3 2023 % Change
Total revenues $ 3,721 $ 3,363 11 %
GAAP net income $ 1,341 $ 1,008 33 %
GAAP net income per share – diluted $ 11.54 $ 8.89 30 %
Non-GAAP net income(a) $ 1,462 $ 1,329 10 %
Non-GAAP net income per share – diluted(a) $ 12.46 $ 11.59 8 %

"Our strong third quarter financial performance was highlighted by double-digit revenue growth and continued investment in our growing pipeline," said Christopher Fenimore, Senior Vice President, Finance and Chief Financial Officer of Regeneron. "We remain focused on translating cutting-edge science into differentiated medicines that have the greatest potential to serve patients, while deploying capital with the goal of maximizing shareholder returns, primarily through investing in innovation coupled with opportunistic share repurchases."

Business Highlights

Key Pipeline Progress
Regeneron has approximately 40 product candidates in clinical development, including a number of marketed products for which it is investigating additional indications. Updates from the clinical pipeline include:

EYLEA HD (aflibercept) 8 mg

The Company announced positive three-year (156-week) data from an extension study of the Phase 3 PHOTON trial in patients with diabetic macular edema (DME). At three years, the longer-term data showed the vast majority of EYLEA HD patients who entered the extension study sustained the visual gains and anatomic improvements achieved by the end of the second year. Of the EYLEA HD patients who completed the full 156 weeks of treatment, 48% were assigned a dosing interval of ≥20 weeks at the end of the third year. The results were presented at the American Academy of Ophthalmology (AAO) Annual Meeting.
Dupixent (dupilumab)

In September 2024, the U.S. Food and Drug Administration (FDA) approved Dupixent as an add-on maintenance treatment for adults with inadequately controlled COPD and an eosinophilic phenotype. With this approval, Dupixent is the first biologic medicine approved in the United States, European Union (EU), and China to treat these patients.
In September 2024, the FDA approved Dupixent as an add-on maintenance treatment for adolescents aged 12 to 17 years with inadequately controlled chronic rhinosinusitis with nasal polyposis (CRSwNP).
The European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending expanded approval of Dupixent in the EU to treat children aged 1 to 11 years with eosinophilic esophagitis (EoE). The European Commission (EC) is expected to announce a final decision in the coming months.
The Company and Sanofi announced that a confirmatory Phase 3 trial met the primary and key secondary endpoints for the investigational treatment of patients with uncontrolled, biologic-naïve CSU receiving background therapy with antihistamines, showing treatment with Dupixent resulted in a nearly 50% reduction in itch and urticaria activity scores from baseline. This positive trial confirms results from the first Phase 3 trial of Dupixent in this setting and these data supported the recent resubmission of a supplemental Biologics License Application (sBLA) to the FDA.
The Company and Sanofi announced that a Phase 3 trial in bullous pemphigoid met the primary and all key secondary endpoints evaluating the investigational use in adults with moderate-to-severe disease. In the trial, five times more Dupixent patients achieved sustained disease remission compared to those on placebo. This trial will support global regulatory submissions, including the anticipated fourth quarter 2024 submission in the United States.
Oncology Programs

In August 2024, the EC approved Ordspono (odronextamab) to treat adult patients with relapsed or refractory (R/R) follicular lymphoma (FL) or R/R diffuse large B-cell lymphoma (DLBCL), after two or more lines of systemic therapy.
The Company announced five-year results from the final pre-specified overall survival (OS) analysis of a Phase 3 trial, which evaluated Libtayo (cemiplimab) monotherapy versus chemotherapy as a first-line treatment for certain adults with advanced non-small cell lung cancer (NSCLC) with ≥50% PD-L1 expression. The results were presented at the IASLC 2024 World Conference on Lung Cancer.
The Company submitted a regulatory application in Japan for Libtayo for first-line advanced NSCLC (monotherapy and chemotherapy combination).
A Phase 2 study for Libtayo in neoadjuvant NSCLC was initiated.
The Company presented new, two-year results at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Annual Meeting, evaluating the investigational combination of fianlimab, an antibody to LAG-3, and Libtayo in adults with advanced melanoma across three independent expansion cohorts of a first-in-human, multi-cohort trial. These longer-term results show high clinical activity, including deepening responses, per a blinded independent central review.
In August 2024, the FDA issued a Complete Response Letter (CRL) for the BLA for linvoseltamab, a bispecific antibody targeting BCMA and CD3, in R/R multiple myeloma that has progressed after at least three prior therapies. The sole approvability issue identified is related to findings from a pre-approval inspection at a third-party fill/finish manufacturer. Resolution of this issue will be required for both FDA and EC regulatory approvals.
Other Programs

A Phase 3 study was initiated for pozelimab, an antibody to C5, in combination with cemdisiran, an siRNA therapy, in geographic atrophy.
A Phase 2 study for REGN7999, an antibody to TMPRSS6, for the treatment of iron overload in patients with beta-thalassemia was initiated.
Third Quarter 2024 Financial Results

Revenues

($ in millions) Q3 2024 Q3 2023 % Change
Net product sales:
EYLEA HD – U.S. $ 392 $ 43 *
EYLEA – U.S. 1,145 1,448 (21 %)
Total EYLEA HD and EYLEA – U.S. 1,537 1,491 3 %
Libtayo – Global 289 232 25 %
Praluent – U.S. 53 40 33 %
Evkeeza – U.S. 32 19 68 %
Inmazeb – Global 35 4 *
Total net product sales 1,946 1,786 9 %

Collaboration revenue:
Sanofi 1,263 1,065 19 %
Bayer 391 377 4 %
Other 6 (3 ) *
Other revenue 114 138 (17 %)
Total revenues $ 3,720 $ 3,363 11 %

* Percentage not meaningful

Total EYLEA HD and EYLEA net product sales in the U.S. increased 3% in the third quarter of 2024 compared to the third quarter of 2023. EYLEA HD was approved by the FDA in August 2023 and net product sales in the third quarter of 2024 were driven by the transition of patients from other anti-VEGF products, including EYLEA, as well as new patients naïve to anti-VEGF therapy. Net product sales of EYLEA in the third quarter of 2024 were adversely impacted by a lower net selling price compared to the third quarter of 2023. In addition, third quarter 2024 total EYLEA HD and EYLEA net product sales were favorably impacted by approximately $40 million as a result of higher wholesaler inventory levels for EYLEA HD at the end of the third quarter of 2024 compared to the end of the second quarter of 2024, partially offset by lower wholesaler inventory levels for EYLEA.

Sanofi collaboration revenue increased in the third quarter of 2024, compared to the third quarter of 2023, due to an increase in the Company’s share of profits from commercialization of antibodies, which were $1.09 billion in the third quarter of 2024, compared to $863 million in the third quarter of 2023. The change in the Company’s share of profits from commercialization of antibodies was driven by higher profits associated with an increase in Dupixent sales. Sanofi collaboration revenue in the third quarter of 2023 was positively impacted by the recognition of the final $50 million sales-based milestone.

Refer to Table 4 for a summary of collaboration revenue.

Operating Expenses

GAAP %
Change
Non-GAAP(a) %
Change
($ in millions) Q3 2024 Q3 2023 Q3 2024 Q3 2023
Research and development (R&D) $ 1,272 $ 1,075 18 % $ 1,146 $ 954 20 %
Acquired in-process research and development (IPR&D) $ 56 $ 100 (44 %) * * n/a
Selling, general, and administrative (SG&A) $ 714 $ 641 11 % $ 613 $ 534 15 %
Cost of goods sold (COGS) $ 262 $ 225 16 % $ 217 $ 181 20 %
Cost of collaboration and contract manufacturing (COCM) $ 229 $ 212 8 % * * n/a
Other operating expense (income), net $ 8 $ (1 ) ** $ — * **

* GAAP and non-GAAP amounts are equivalent as no non-GAAP adjustments have been recorded.
** Percentage not meaningful
GAAP and non-GAAP R&D expenses increased in the third quarter of 2024, compared to the third quarter of 2023, driven by the advancement of the Company’s clinical pipeline, including late-stage oncology programs, and higher headcount and headcount-related costs.
Acquired IPR&D for the third quarter of 2024 included a $45 million development milestone in connection with the Company’s collaboration agreement with Sonoma Biotherapeutics, Inc. Acquired IPR&D expense in the third quarter of 2023 related to a $100 million development milestone in connection with the Company’s collaboration with Alnylam Pharmaceuticals, Inc.
GAAP and non-GAAP SG&A expenses increased in the third quarter of 2024, compared to the third quarter of 2023, due to higher commercialization-related expenses to support the Company’s launch of EYLEA HD and higher headcount and headcount-related costs partly related to the Company’s international commercial expansion.
GAAP and non-GAAP COGS increased in the third quarter of 2024, compared to the third quarter of 2023, primarily due to higher start-up costs for the Company’s Rensselaer, New York fill/finish facility.
Other Financial Information

GAAP other income (expense) included the recognition of net unrealized gains on equity securities of $135 million in the third quarter of 2024, compared to $100 million of net unrealized losses in the third quarter of 2023. GAAP and Non-GAAP other income (expense) also included interest income of $187 million in the third quarter of 2024, compared to $134 million in the third quarter of 2023.

In the third quarter of 2024, the Company’s GAAP effective tax rate (ETR) was 10.2%, compared to 9.3% in the third quarter of 2023. The GAAP ETR increased in the third quarter of 2024, compared to the third quarter of 2023, due to a lower benefit from income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate. In the third quarter of 2024, the non-GAAP ETR was 10.7%, compared to 11.9% in the third quarter of 2023.

GAAP net income per diluted share was $11.54 in the third quarter of 2024, compared to $8.89 in the third quarter of 2023. Non-GAAP net income per diluted share was $12.46 in the third quarter of 2024, compared to $11.59 in the third quarter of 2023. A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.

During the third quarter of 2024, the Company repurchased shares of its common stock and recorded the cost of the shares, or $738 million, as Treasury Stock. As of September 30, 2024, $2.9 billion remained available for share repurchases under the Company’s share repurchase program.

2024 Financial Guidance(c)

The Company’s full year 2024 financial guidance consists of the following components:

2024 Guidance
Prior Updated
GAAP R&D $5.020–$5.170 billion $5.055–$5.145 billion
Non-GAAP R&D(a) $4.500–$4.600 billion $4.525–$4.575 billion
GAAP SG&A $2.920–$3.060 billion $2.930–$3.020 billion
Non-GAAP SG&A(a) $2.550–$2.650 billion $2.550–$2.600 billion
GAAP gross margin on net product sales(d) Approximately 86% Unchanged
Non-GAAP gross margin on net product sales(a)(d) Approximately 89% Unchanged
COCM(e)* $850–$910 million $860–$900 million
Capital expenditures* $750–$820 million $700–$740 million
GAAP effective tax rate 8%–9% Unchanged
Non-GAAP effective tax rate(a) 10%–11% Unchanged

* GAAP and non-GAAP amounts are equivalent as no non-GAAP adjustments have been or are expected to be recorded.

A reconciliation of full year 2024 GAAP to non-GAAP financial guidance is included below:

Projected Range
($ in millions) Low High
GAAP R&D $ 5,055 $ 5,145
Stock-based compensation expense 520 540
Acquisition and integration costs 10 30
Non-GAAP R&D $ 4,525 $ 4,575

GAAP SG&A $ 2,930 $ 3,020
Stock-based compensation expense 340 360
Acquisition, integration, and other costs 40 60
Non-GAAP SG&A $ 2,550 $ 2,600

GAAP gross margin on net product sales Approximately 86% Approximately 86%
Stock-based compensation expense 1 % 1 %
Intangible asset amortization expense 1 % 1 %
Acquisition and integration costs <1% <1%
Non-GAAP gross margin on net product sales Approximately 89% Approximately 89%

GAAP ETR 8 % 9 %
Income tax effect of GAAP to non-GAAP reconciling items 2 % 2 %
Non-GAAP ETR 10 % 11 %

(a) This press release uses non-GAAP R&D, non-GAAP SG&A, non-GAAP COGS, non-GAAP gross margin on net product sales, non-GAAP other operating (income) expense, net, non-GAAP other income (expense), net, non-GAAP ETR, non-GAAP net income, non-GAAP net income per share, total revenues excluding Ronapreve(b), and free cash flow, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are computed by excluding certain non-cash and/or other items from the related GAAP financial measure. The Company also includes a non-GAAP adjustment for the estimated income tax effect of reconciling items. A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.

The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate from period to period based on factors that are not within the Company’s control (such as the Company’s stock price on the dates share-based grants are issued or changes in the fair value of the Company’s investments in equity securities) or items that are not associated with normal, recurring operations (such as acquisition and integration costs). Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. With respect to free cash flows, the Company believes that this non-GAAP measure provides a further measure of the Company’s ability to generate cash flows from its operations. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company’s core business operations. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company’s non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by the Company should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP.

(b) The casirivimab and imdevimab antibody cocktail for COVID-19 is known as REGEN-COV in the United States and Ronapreve in other countries. Roche records net product sales of Ronapreve outside the United States.

(c) The Company’s 2024 financial guidance does not assume the completion of any business development transactions not completed as of the date of this press release.

(d) Gross margin on net product sales represents gross profit expressed as a percentage of total net product sales recorded by the Company. Gross profit is calculated as net product sales less cost of goods sold.

(e) Corresponding reimbursements from collaborators and others for manufacturing of commercial supplies is recorded within revenues.

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its third quarter 2024 financial and operating results on Thursday, October 31, 2024, at 8:30 AM Eastern Time. Participants may access the conference call live via webcast, or register in advance and participate via telephone, on the "Investors and Media" page of Regeneron’s website at www.regeneron.com. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. A replay of the conference call and webcast will be archived on the Company’s website for at least 30 days.