On February 4, 2022 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the fourth quarter and full year 2021 and provided a business update (Press release, Regeneron, FEB 4, 2022, View Source [SID1234607757]).
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"In 2021, Regeneron delivered strong results across our core business with impressive EYLEA and Dupixent growth, while also helping address the ongoing pandemic by delivering REGEN-COV to millions of patients," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "For 2022, we remain focused on building on EYLEA’s success, expanding approvals and patient reach for Dupixent, pursuing new indications for Libtayo, and reading out data from our oncology pipeline – all while continuing to progress our diversified earlier-stage pipeline. We also remain committed to our efforts to fight the COVID-19 pandemic and address the significant need for effective treatments and preventative approaches to SARS-CoV-2. Given the lack of efficacy of REGEN-COV against the Omicron variant, we are working hard to develop next generation antibodies that are active against Omicron and all other variants of concern."
"In 2021, Regeneron delivered solid top- and bottom-line growth driven by strong execution within our core business," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "With growth continuing across our existing portfolio and investments in our R&D engine supported by our strong balance sheet, we are well positioned for sustainable long-term growth."
Business Highlights
Key Pipeline Progress
Regeneron has over 30 product candidates in clinical development, including a number of marketed products for which it is investigating additional indications. Updates from the clinical pipeline in the fourth quarter of 2021 and 2022 to date include:
Dupixent (dupilumab)
In October 2021, the U.S. Food and Drug Administration (FDA) approved Dupixent for children aged 6 to 11 years with moderate-to-severe asthma. In January 2022, the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion, recommending to extend the approval of Dupixent in the European Union (EU) for the treatment of severe asthma in children aged 6 to 11 years old. A final decision from the European Commission (EC) regarding the regulatory application is expected in the coming months.
The New England Journal of Medicine published positive results from the Phase 3 trial in children aged 6 to 11 years with moderate-to-severe asthma.
A supplemental Biologics License Application (sBLA) for Dupixent for children aged 6 months to 5 years with moderate-to-severe atopic dermatitis was submitted. A regulatory submission is also expected to be completed in the EU in the coming months.
In January 2022, the Company and Sanofi announced positive results from a second Phase 3 trial in adults with uncontrolled prurigo nodularis. The trial met its primary and key secondary endpoints, showing that Dupixent significantly reduced itch and skin lesions compared to placebo at 24 weeks. Regulatory submissions are expected to commence in the first half of 2022.
Antibodies to SARS-CoV-2 virus
In the fourth quarter of 2021, the Company completed its final deliveries of drug product under its agreement with the U.S. government, delivering an additional 1.1 million doses of REGEN-COV, and recognizing $2.30 billion of REGEN-COV sales.
In November 2021, the European Commission approved the casirivimab and imdevimab(2) antibody cocktail for people aged 12 years and older for the treatment of non-hospitalized patients with confirmed COVID-19 who do not require oxygen supplementation and who are at increased risk of progressing to severe COVID-19, and to prevent COVID-19.
In November 2021, the Company announced additional positive results from a Phase 3 COVID-19 prevention trial jointly run with the National Institute of Allergy and Infectious Diseases (NIAID), showing that a single dose of REGEN-COV reduced the risk of contracting COVID-19 by 81.6% during the pre-specified follow-up period (months 2–8), maintaining the previously reported 81.4% risk reduction during the first month after administration (the primary endpoint).
Based on laboratory data that showed markedly decreased binding to the Omicron spike protein, REGEN-COV is highly unlikely to be active against the Omicron variant. In January 2022, the FDA revised the Emergency Use Authorization (EUA) for REGEN-COV to exclude its use in geographic regions where, based on available information including variant susceptibility and regional variant frequency, infection or exposure is likely due to a variant such as Omicron (B.1.1.529) that is not susceptible to the treatment. With this EUA revision, REGEN-COV is not currently authorized for use in any U.S. states, territories, or jurisdictions, since Omicron is currently the dominant variant across the United States. If, in the future, patients in certain geographic regions are likely to be infected or exposed to a variant that is susceptible to REGEN-COV, then the limitation on use may be revised in these areas.
The Company continues to progress "next generation" antibodies that are active against Omicron, Delta (B.1.617.2), and other variants of concern. Pending regulatory discussions, new therapeutic candidates could enter clinical development in the coming months.
Oncology Programs
The FDA accepted the sBLA for Libtayo (cemiplimab), in combination with chemotherapy, to treat patients with advanced non-small cell lung cancer (NSCLC), with a target action date of September 19, 2022. A regulatory application was also submitted in the EU.
In January 2022, the Company and Sanofi announced the voluntary withdrawal of the sBLA for Libtayo as a second-line treatment for patients with advanced cervical cancer. The decision was made after the companies and the FDA were not able to align on certain post-marketing studies. Discussions with regulatory authorities outside of the United States are ongoing.
In December 2021, the Company announced results for higher dose level cohorts from the Phase 1 portion of the REGN5458 Phase 1/2 trial in patients with multiple myeloma, which were presented at the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting. The results showed a 75% overall response rate in patients treated with the highest dose levels studied. REGN5458 is a bispecific antibody targeting BCMA and CD3. The Company expects to complete enrollment in a potentially pivotal Phase 2 trial in multiple myeloma in the first quarter of 2022.
The Company has additional CD3 bispecifics in clinical development, including a Phase 1 study of REGN4336, a bispecific antibody targeting PSMA and CD3, which was recently initiated in prostate cancer.
The Company has ongoing clinical development for three costimulatory CD28 bispecifics targeting prostate cancer, ovarian cancer, and other solid tumors.
In NSCLC, the Company is in dose expansion for REGN5093, which is a METxMET bispecific targeting cancers driven by MET mutations and/or amplifications. The Company is also studying REGN5093-M114, its first bispecific antibody-drug conjugate, in MET-altered advanced NSCLC.
Pozelimab
A Phase 3 study of pozelimab, an antibody to C5, in combination with Alnylam’s cemdisiran, an siRNA therapeutic, in paroxysmal nocturnal hemoglobinuria (PNH) was initiated.
Business Development Update
In January 2022, the Company entered into a license and collaboration agreement for Ultragenyx Pharmaceutical Inc. to develop and commercialize Evkeeza in countries outside of the United States.
Select 2022 Milestones
Programs
Milestones
Aflibercept 8 mg
Report results from Phase 3 studies in neovascular age-related macular degeneration (wet AMD) and diabetic macular edema (DME)
Dupixent (dupilumab)
Complete rolling sBLA submission for eosinophilic esophagitis (EoE) in adults and adolescents
Report results from additional Phase 3 study for chronic spontaneous urticaria (CSU)
FDA decision on sBLA for children aged 6 months to 5 years with moderate-to-severe atopic dermatitis
Antibodies to SARS-CoV-2 virus
FDA decision on BLA (target action date of April 13, 2022) for COVID-19 treatment of non-hospitalized patients and prevention
Submit sBLA for COVID-19 treatment of hospitalized patients
Initiate "next generation" monoclonal antibody clinical study
Libtayo (cemiplimab)
FDA decision on sBLA (target action date of September 19, 2022) and EC decision on regulatory submission for NSCLC, chemotherapy combination
REGN5458 (BCMA and CD3
Bispecific Antibody)
Report results from potentially pivotal Phase 2 study in multiple
myeloma
Initiate Phase 1 and Phase 3 studies exploring combinations with
standard of care and additional combination studies
Odronextamab (CD20 and CD3 Bispecific Antibody)
Report additional results from potentially pivotal Phase 2 study in B-cell non-Hodgkin lymphoma (B-NHL)
Initiate OLYMPIA Phase 3 program and additional combination studies
Solid Tumor Bispecific Antibodies
Report results from REGN4018 (MUC16 and CD3 bispecific antibody) Phase 1 study in platinum-resistant ovarian cancer
Report results from REGN5678 (PSMA and CD28 bispecific antibody) Phase 1 study in prostate cancer
Report results from REGN5093 (bispecific antibody targeting two distinct MET epitopes) Phase 1 study in MET-altered advanced NSCLC
Fourth Quarter and Full Year 2021 Financial Results
Revenues
Total revenues increased by 104% to $4.952 billion in the fourth quarter of 2021, compared to $2.423 billion in the fourth quarter of 2020. Full year 2021 total revenues increased 89% to $16.072 billion, compared to $8.497 billion for the full year 2020. Total revenues excluding (i) REGEN-COV (casirivimab and imdevimab) net product sales in the United States and (ii) true-up payments recorded to collaboration revenue in connection with global gross profits from sales of the casirivimab and imdevimab antibody cocktail pursuant to the Roche collaboration agreement, increased by 17% to $2.654 billion in the fourth quarter of 2021, compared to the fourth quarter of 2020, and increased by 19% to $9.882 billion for the full year 2021, compared to the full year 2020(1).
During the fourth quarter of 2021, the Company completed its final deliveries of REGEN-COV under its agreement with the U.S. government.
Total revenues also include collaboration revenues(3) of $890 million in the fourth quarter and $3.673 billion for the full year 2021, compared to $678 million in the fourth quarter and $2.373 billion for the full year 2020. Sanofi collaboration revenue increased primarily due to the Company’s share of profits from commercialization of antibodies, which were $388 million and $1.363 billion in the fourth quarter and full year 2021, respectively, compared to $230 million and $785 million in the fourth quarter and full year 2020, respectively. The change in the Company’s share of profits from commercialization of antibodies was driven by higher Dupixent profits. The Company also recorded Roche collaboration revenue of $362 million for the full year 2021 in connection with the true-up payment from Roche attributable to global gross profits from sales of the casirivimab and imdevimab antibody cocktail. No Roche collaboration revenue was recorded during the fourth quarter of 2021, as the Company owed a true-up payment to Roche in connection with global gross profits from sales of the antibody cocktail, which was recorded to Cost of goods sold.
Refer to Table 4 for a summary of collaboration revenue.
Other revenue decreased in the fourth quarter and full year of 2021, compared to the same periods of 2020, primarily due to lower amounts recognized in connection with the Company’s agreement with the Biomedical Advanced Research Development Authority (BARDA) related to funding of certain development activities for COVID-19 antibodies.
GAAP and non-GAAP R&D expenses in the fourth quarter of 2021, compared to the fourth quarter of 2020, included lower costs incurred in connection with REGEN-COV development activities, additional costs incurred in connection with the Company’s earlier-stage pipeline, higher headcount and headcount-related costs, and an increase in clinical manufacturing activities. Non-GAAP R&D expenses in the fourth quarter of 2021 excluded $44 million of aggregate up-front payments, primarily in connection with the collaboration agreement with Nykode Therapeutics.
GAAP and non-GAAP R&D expenses for full year 2021, compared to full year 2020, included higher headcount and headcount related costs, an increase in facilities-related expenses, and lower costs incurred in connection with development activities for fasinumab and Kevzara (for the treatment of COVID-19). Non-GAAP R&D expenses for full year 2020 excluded $85 million of up-front payments in connection with the Intellia collaboration agreement.
The increase in GAAP and non-GAAP SG&A expenses in the fourth quarter and full year 2021, compared to the same periods in the prior year, was primarily due to an increase in commercialization-related expenses for EYLEA, including direct-to-consumer advertising, educational campaigns related to COVID-19, and higher headcount-related costs. Non-GAAP SG&A expenses in the fourth quarter and full year 2020 excluded the reversal of accruals for Praluent litigation-related loss contingencies.
The increase in GAAP and non-GAAP COGS in the fourth quarter and full year 2021, compared to the same periods in the prior year, was primarily due to the recognition of manufacturing costs in connection with product sales of REGEN-COV in the United States, in addition to a $260 million fourth quarter 2021 true-up payment owed to Roche in connection with global gross profits under the Company’s collaboration agreement described above. Additionally, during the fourth quarter of 2021, the Company recorded a $232 million charge to write down its REGEN-COV inventory as a result of data that showed REGEN-COV was highly unlikely to be active against the Omicron variant and the FDA revision of the EUA for REGEN-COV, pursuant to which REGEN-COV was no longer authorized for use in any U.S. states, territories, or jurisdictions.
Other operating (income) expense, net, for full year 2021 included the recognition of a cumulative catch-up adjustment of $67 million, which was recorded as a reduction to other operating income, arising from an update to the estimate of the total R&D costs expected to be incurred under the Sanofi Immuno-oncology collaboration agreement. Other operating (income) expense, net, in the fourth quarter and full year 2020 included the recognition of cumulative catch-up adjustments of $100 million, which was recorded as an increase to other operating income, arising from an update to the estimate of total R&D costs expected to be incurred for certain collaboration programs.
Other Financial Information
GAAP other income (expense) included the recognition of net unrealized losses on equity securities of $138 million in the fourth quarter of 2021, compared to $62 million of net unrealized gains in the fourth quarter of 2020. GAAP other income (expense) included the recognition of net unrealized gains on equity securities of $386 million for full year 2021, compared to $196 million for full year 2020.
In the fourth quarter and full year 2021, the Company’s GAAP effective tax rate was 11.0% and 13.4%, respectively, compared to 6.2% and 7.8% in the fourth quarter and full year 2020, respectively. The increase in the fourth quarter and full year 2021 GAAP effective tax rate, compared to the same periods in the prior year, was due in part to the impact of higher REGEN-COV sales in the United States. In the fourth quarter and full year 2021, the non-GAAP effective tax rate was 12.7% and 13.6%, respectively, compared to 7.7% and 9.1% in the fourth quarter and full year 2020, respectively.
GAAP net income per diluted share was $19.69 in the fourth quarter of 2021, compared to $10.24 in the fourth quarter of 2020. GAAP net income per diluted share was $71.97 for the full year 2021, compared to $30.52 for full year 2020. Non-GAAP net income per diluted share was $23.72 in the fourth quarter of 2021, compared to $9.53 in the fourth quarter of 2020. Non-GAAP net income per diluted share was $74.66 for the full year 2021, compared to $31.47 for the full year 2020. A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.
In November 2021, the Company’s board of directors authorized a new share repurchase program to repurchase up to $3.0 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.
Net cash provided by operating activities for the full year 2021 was $7.081 billion, compared to $2.618 billion for the full year 2020, resulting in $6.529 billion in free cash flow for the full year 2021, compared to $2.004 billion for the full year 2020. The increase in free cash flow for the full year 2021 was primarily due to the Company’s collection of amounts due from the U.S. government in connection with REGEN-COV sales.
2022 Financial Guidance(4)
Conference Call Information
Regeneron will host a conference call and simultaneous webcast to discuss its fourth quarter and full year 2021 financial and operating results on Friday, February 4, 2022, at 8:30 AM Eastern Time. Participants may access the conference call live via webcast on the "Investors and Media" page of Regeneron’s website at www.regeneron.com. To participate via telephone, please register in advance at View Source 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.