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What is in Store for Regeneron (REGN) This Earnings Season?

·5 min read

Regeneron Pharmaceuticals, Inc. REGN is scheduled to release second-quarter 2022 results on Aug 3, before the opening bell.

The company has an impressive track record. In the last reported quarter, it beat earnings expectations by 22.63%. It surpassed earnings estimates by 34.89%, on average, in the last four quarters.

 

Regeneron Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

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

Factors at Play

A major chunk of Regeneron’s revenues comes from the sales of its key drug, Eylea, which is approved for various ophthalmology indications (neovascular age-related macular degeneration, diabetic macular edema and macular edema, among others). Eylea was developed in collaboration with Bayer AG.

Regeneron records net product sales of Eylea in the United States, while Bayer records net product sales of the drug outside the country. Regeneron also records its share of profits/losses in connection with sales of Eylea outside the United States.

Eylea sales in the United States in the previous quarter increased 13%.  Sales in the second quarter are likely to have witnessed a sequential increase with growth in demand. The Zacks Consensus Estimate for Eylea sales in the United States is pegged at $1.59 billion.

Apart from Eylea, investors will focus on the asthma drug Dupixent’s performance and additional label expansions, sales of which are recorded by Sanofi SNY. Regeneron has a collaboration agreement with Sanofi for drugs like Dupixent and Kevzara. While Sanofi records sales, Regeneron records its share of profits/losses in connection with global sales of Dupixent and Kevzara.  Revenues from Dupixent sales have been REGN’s primary growth driver in the last few quarters.

Dupixent has maintained its stellar performance on continuous label expansion all through. The trend is expected to have continued in the to-be-reported quarter. Total sales in the last quarter were up 43%.  Label expansion of the drug in the past few months is likely to have boosted sales further and resulted in incremental revenues for Regeneron in the second quarter.

Investors will focus on the performance of Libtayo and PCSK9 inhibitor Praluent. Regeneron records net product sales of Libtayo in the United States, and Sanofi records net product sales of the drug outside the country. Both the companies equally share profits/losses in connection with global sales of Libtayo. Sales of Libtayo were up 14% in the previous quarter in the United States. Sales are likely to have recorded sequential growth in the to-be-reported quarter on recent label expansions.

Effective Apr 1, 2020, Regeneron records net product sales of Praluent in the United States.  Sanofi records net product sales of the drug outside the United States and pays Regeneron a royalty on such sales. Total sales in the previous quarter were up 7%. Praluent sales are likely to have recorded sequential growth in the second quarter.

In January 2022, the FDA revised the authorizations for a few monoclonal antibody treatments, including Regeneron’s REGEN-COV (casirivimab and imdevimab), as data indicated that these treatments are highly unlikely to be active against the Omicron variant. REGEN-COV is a cocktail of two monoclonal antibodies (casirivimab and imdevimab, also known as REGN10933 and REGN10987, respectively).  Therefore, REGEN-COV is not currently authorized for use in any U.S. states, territories or jurisdictions. Hence, this revision dented sales in the first quarter from this stream, and sales are likely to have been negligible in the second quarter as well.

Recent Updates

Regeneron recently completed the acquisition of Sanofi's stake in Libtayo, which has given the former exclusive worldwide development, commercialization and manufacturing rights to the drug. REGN will update its annual guidance for 2022 to reflect the Libtayo purchase during its second-quarter earnings.

In May 2022, Regeneron acquired Checkmate Pharmaceuticals for approximately $250 million. As a result of the acquisition, Regeneron expects to record in the second quarter of 2022 an acquired in-process research and development charge of approximately $195 million, which might have adversely impacted earnings per share by about $1.70.

Share Price Performance

Regeneron’s shares have lost 7.8% in the year so far against the industry’s decline of 18.6%.

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Zacks Investment Research


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Earnings Whispers

Our proven model does not predict an earnings beat for Regeneron in this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Regeneron has an Earnings ESP of -2.06% as the Zacks Consensus Estimate is pegged at $8.53  and the Most Accurate Estimate stands at $8.36.

Zacks Rank: Regeneron currently carries a Zacks Rank #3.

Stocks to Consider

Here are a couple of drug/biotech stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Ionis Pharmaceuticals IONS has an Earnings ESP of +27.61% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ionis has a mixed track record, having topped earnings estimates in two of the last four quarters and missing in the remaining two. It pulled off a four-quarter earnings surprise of 24.35%, on average.

Gilead GILD has an Earnings ESP of +0.17% and a Zacks Rank #3.

Gilead topped earnings estimates in three of the last four quarters. GILD delivered a four-quarter earnings surprise of 6.30%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar



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