A month has gone by since the last earnings report for Regeneron (REGN). Shares have lost about 5.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Regeneron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Regeneron Q2 Earnings Top Estimates, Eylea Sales Solid
Regeneron reported earnings of $6.02 per share in the second quarter, beating the Zacks Consensus Estimate of $5.42. The top line also increased from $5.45 in the year-ago quarter.
Total revenues in the reported quarter increased 20% year over year to $1.93 billion and comfortably beat the Zacks Consensus Estimate of $1.80 billion.
The year-over-year growth was driven by strong Eylea and Dupixent sales.
Net product sales increased to $1.205 billion in the quarter under review, up from $996 million in the year-ago quarter. Majority of the sales came in from Eylea in the United States ($1.160 billion, up 16.9%).
We note that Regeneron co-developed Eylea with the HealthCare unit of Bayer AG. The company is solely responsible for the sales of this eye drug and entitled to profits in the United States. However, it shares profits and losses from the ex-U.S. Eylea sales equally with Bayer, except in Japan where the company receives a royalty on net sales.
Total revenues also included Sanofi and Bayer’s collaboration revenues of $638 million compared with $501 million in the year-earlier quarter. The increase was primarily driven by higher net product sales of Dupixent.
Dupixent’s sales summed $557.3 million, up from $209.2 million a year ago. The drug was approved in 2017 for treating adults with moderate-to-severe atopic dermatitis. Kevzara recorded sales of $58.5 million, up from $24.1 million in the year-earlier quarter.
Praluent’s global net sales logged $73.7 million in the reported quarter, up from $73.5 million in the prior-year quarter. Sale proceeds from products like Praluent, Dupixent and Kevzara are garnered by Sanofi, while Regeneron earns profits or incurs losses from the commercialization of all three drugs.
The FDA approved Libtayo last September for the treatment of patients with metastatic or locally advanced cutaneous squamous cell carcinoma (CSCC), who are not candidates for curative surgery or curative radiation. The drug’s sales in the quarter totaled $40.8 million, up from $26.8 million in the prior quarter.
R&D expenses almost doubled to $1.04 billion, while SG&A expenses increased 14.4% to $417.3 million during the quarter under consideration.
2019 Outlook Updated
Collaboration revenues from Sanofi are projected to be $500-$530 million (previous guidance: $500-$535 million). The company expects adjusted unreimbursed R&D expenses of $1.65-$1.71 billion. Adjusted unreimbursed SG&A expenses are anticipated to be $1.53-$1.58 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 11.77% due to these changes.
At this time, Regeneron has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Regeneron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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