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Regeneron's (REGN) Q3 Earnings Beat on Dupixent Strength

Zacks Equity Research

Regeneron Pharmaceuticals, Inc. REGN reported better-than-expected results for the third quarter of 2019, wherein both earnings and sales beat estimates.

Shares are up in pre-market trading on strong results. However, the stock has lost 16.7% in the year so far against the industry’s growth of 0.7%.

Regeneron reported earnings of $6.67 per share in the third quarter, beating the Zacks Consensus Estimate of $6.33 and increasing from $5.87 in the year-ago quarter.

Total revenues in the reported quarter increased 23% year over year to $2.05 billion and comfortably beat the Zacks Consensus Estimate of $1.98 billion. The year-over-year growth was driven by strong Eylea and Dupixent sales.

Quarterly Highlights

Net product sales increased to $1.238 billion in the quarter under review, up from $1.025 billion in the year-ago quarter. Majority of sales in the United States came in from Eylea ($1.188 billion, up from $1.022 billion in the year-ago quarter).

We note that Regeneron co-developed Eylea with the HealthCare unit of Bayer AG BAYRY. 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 SNY and Bayer’s collaboration revenues of $707 million compared with $521 million in the year-earlier quarter. The increase was primarily owing to higher net product sales of Dupixent.

Dupixent’s sales summed $633.1 million, up from $262.6 million a year ago. Kevzara recorded sales of $54.8 million, up from $24.9 million in the year-earlier quarter.

Praluent’s global net sales logged $69.7 million in the reported quarter, down from $80.2 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 the drugs.

The FDA approved Libtayo last September for the treatment of patients with metastatic or locally advanced cutaneous squamous cell carcinoma, who are not candidates for curative surgery or curative radiation. The drug’s sales in the quarter totaled $51.5 million, up from $40.8 million in the prior quarter.

R&D expenses were up 19.1% to $663.4 million, while SG&A expenses increased to $419.9 million during the quarter under consideration from $369.2 million in the year-ago quarter.

2019 Outlook Updated

Collaboration revenues from Sanofi are projected to be $490-$510 million (previous guidance: $500-$530 million).

Shares Repurchase Program

In November, the board of directors authorized a share repurchase program to buy back up to $1.0 billion of the common stock.

Pipeline Update

In August, the FDA approved the Eylea pre-filled syringe, which is expected to be launched before the end of this year. A phase II study exploring less frequent dosing intervals using a high-dose formulation of Eylea in wet AMD was initiated.

Regeneron is also working to expand Dupixent’s label. In August, the European Commission (EC) approved a label expansion of the drug to include adolescents 12 to 17 years of age with moderate-to-severe atopic dermatitis, who are candidates for systemic therapy. In the same month, Regeneron and Sanofi announced that the phase III trial to treat severe atopic dermatitis in children 6 to 11 years of age met its primary and secondary endpoints. Submissions for a supplemental Biologics License Application (sBLA) and Marketing Authorization Application (MAA) for the same are expected by the end of the year. In October, the EC approved Dupixent in chronic rhinosinusitis with nasal polyposis. Regeneron and Sanofi plan to initiate phase III studies in bullous pemphigoid, prurigo nodularis, chronic spontaneous urticaria and additional type 2 inflammatory diseases.

Our Take

Regeneron’s third-quarter results were impressive as the company beat on both sales and earnings, driven by the label expansion of Eylea and strong Dupixent sales in moderate-to-severe atopic dermatitis and asthma. The company’s efforts to expand the label of its approved drugs and concurrently develop the pipeline are encouraging. The immuno-oncology platform, which includes Libtayo and a wide portfolio of bispecific antibodies, is progressing well.

Regeneron Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

Regeneron Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Regeneron Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Regeneron Pharmaceuticals, Inc. Quote

Earlier, Regeneron inked a collaboration agreement with Alnylam Pharmaceuticals, Inc. ALNY to discover, develop and commercialize the new RNA interference (RNAi) therapeutics for diseases of the eye and the central nervous system.

Regeneron currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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