On May 4, 2022 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported that financial results for the first quarter of 2022 and provided a business update (Press release, Regeneron, MAY 4, 2022, View Source [SID1234613468]).
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"Our strong first quarter performance was marked by top- and bottom-line growth, accompanied by R&D progress and continued investment in our pipeline," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "We continued to see substantial U.S. sales growth for EYLEA and Dupixent worldwide. We are well-positioned to reach even more patients with type 2 inflammatory disease through FDA priority review designations for Dupixent in children with atopic dermatitis and in adults and adolescents with eosinophilic esophagitis."
"Our business achieved strong revenue growth in the first quarter of 2022 as we continue to realize the benefits of our sustained R&D investment and our focus on commercial execution," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "We remain confident that our differentiated products and significant pipeline opportunities position us well to deliver strong results and provide sustainable value to patients and shareholders."
Business Highlights
Key Pipeline Progress
Regeneron has approximately 35 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 (aflibercept) Injection
A supplemental Biologics License Application (sBLA) for EYLEA for an every-16-weeks dosing regimen in patients with non-proliferative diabetic retinopathy (NPDR) was submitted.
Aflibercept 8 mg
In February 2022, the Company announced detailed results from its Phase 2 trial evaluating an investigational 8 mg high dose of aflibercept compared to the currently-approved 2 mg dose of EYLEA in patients with neovascular age-related macular degeneration (wet AMD). The trial met its primary endpoints for safety, and no new safety signals were observed through week 44. Consistent with initial data announced last year, aflibercept 8 mg continued to show numeric improvements in anatomical and vision outcomes compared to EYLEA through 44 weeks.
Dupixent (dupilumab)
In April 2022, the European Commission (EC) approved Dupixent for the treatment of severe asthma in children aged 6 to 11 years.
The U.S. Food and Drug Administration (FDA) accepted for priority review the sBLA for Dupixent for children aged 6 months to 5 years with moderate-to-severe atopic dermatitis, with a target action date of June 9, 2022. A regulatory application was also submitted in the European Union (EU).
The FDA accepted for priority review the sBLA for Dupixent for adults and adolescents aged 12 years and older with eosinophilic esophagitis (EoE), with a target action date of August 3, 2022. A regulatory application was also submitted in the EU.
In January 2022, the Company and Sanofi announced positive results from a second Phase 3 trial in adults with uncontrolled prurigo nodularis. An sBLA and a regulatory submission in the EU for Dupixent for adults with uncontrolled prurigo nodularis were subsequently submitted.
In February 2022, the Company and Sanofi provided an update on Dupixent in patients with chronic spontaneous urticaria (CSU), in which they had previously reported positive results from the first trial in biologic-naïve patients (i.e., not previously treated with omalizumab) that showed Dupixent significantly reduced itch and hives compared to standard-of-care antihistamines alone. The Company and Sanofi announced that they stopped a second trial in patients refractory to omalizumab due to futility.
Antibodies to SARS-CoV-2 virus
In April 2022, the Company announced that the FDA extended by three months its review of the BLA for REGEN-COV (casirivimab and imdevimab) to treat COVID-19 in non-hospitalized patients and as prophylaxis in certain individuals. The extension is due to ongoing discussions with the FDA on pre-exposure prophylactic use, for which Regeneron has submitted additional data from its completed prophylaxis trial that the FDA has accepted for review. The FDA determined these additional data constitute a Major Amendment to the BLA and provided a new target action date of July 13, 2022.
A regulatory application was submitted in the EU for RonapreveTM(b) for the treatment of COVID-19 in hospitalized patients.
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 an Omicron-lineage variant that is not susceptible to the treatment. 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.
The Company is progressing investigational "next generation" antibodies that are active against multiple variants including those of Omicron-lineage, and has initiated a first-in-human clinical trial.
Fianlimab, an antibody to LAG-3
A Phase 3 study in first-line metastatic melanoma was initiated.
Odronextamab, a CD20xCD3 bispecific antibody
The FDA granted Fast Track designation for follicular lymphoma and diffuse large B-cell lymphoma.
NTLA-2001, a CRISPR/Cas9 therapeutic for TTR gene knockout
In February 2022, Intellia Therapeutics, Inc. and the Company reported updated positive interim data from the Phase 1 trial in transthyretin (ATTR) amyloidosis.
Business Development Update
In April 2022, the Company entered into a definitive merger agreement to acquire Checkmate Pharmaceuticals, Inc. at a total equity value of approximately $250 million. On May 2, 2022, the Company initiated a tender offer to acquire any and all outstanding shares of Checkmate common stock at a price of $10.50 per share, to be paid to each shareholder tendering Checkmate shares in cash, without interest, subject to reduction for any applicable withholding taxes. The transaction is expected to close, subject to the satisfaction of customary closing conditions including regulatory approvals, in mid-2022.
First Quarter 2022 Financial Results
Revenues
Total revenues increased by 17% to $2.965 billion in the first quarter of 2022, compared to $2.529 billion in the first quarter of 2021. Total revenues excluding REGEN-COV and Ronapreve(b) revenues for both periods increased by 25% to $2.749 billion in the first quarter of 2022, compared to the first quarter of 2021(a).
Net product sales recorded by the Company consist of the following:
Total revenues also include collaboration revenues(c) of $1.233 billion in the first quarter of 2022, compared to $754 million in the first quarter of 2021. Sanofi collaboration revenue increased primarily due to the Company’s share of profits from commercialization of antibodies, which were $415 million in the first quarter of 2022, compared to $261 million in the first quarter of 2021. The change in the Company’s share of profits from commercialization of antibodies was driven by higher Dupixent profits. In the first quarter of 2022, the Company earned a $50 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States exceeding $2.0 billion on a rolling twelve-month basis.
Bayer collaboration revenue increased to $385 million in the first quarter of 2022, compared to $323 million in the first quarter of 2021.
The Company also recorded Roche collaboration revenue of $216 million for the first quarter of 2022, compared to $67 million in the first quarter of 2021, in connection with payments from Roche attributable to global gross profits from sales of Ronapreve.
Refer to Table 4 for a summary of collaboration revenue.
Other revenue in the first quarter of 2022 included a $30 million up-front payment received from Ultragenyx in connection with the Company’s Evkeeza license and collaboration agreement.
GAAP and non-GAAP R&D expenses increased in the first quarter of 2022, compared to the first quarter of 2021, primarily due to higher headcount and headcount-related costs, an increase in clinical manufacturing activities, and lower reimbursements from Roche related to REGEN-COV. The increase was partly offset by lower costs incurred in connection with REGEN-COV development activities.
Acquired IPR&D in the first quarter of 2022 included a $20 million opt-in payment in connection with a product candidate under the Company’s collaboration agreement with Adicet Bio, Inc.
The increase in GAAP and non-GAAP SG&A expenses in the first quarter of 2022, compared to the first quarter of 2021, was primarily due to higher headcount and headcount-related costs and an increase in commercialization-related expenses for EYLEA.
GAAP COGS in the first quarter of 2022 included $58 million of costs related to REGEN-COV, including inventory write-offs and reserves, as a result of the FDA revision of the EUA for REGEN-COV (as described above). GAAP and non-GAAP COGS in the first quarter of 2022 included lower REGEN-COV manufacturing costs since there were no net product sales in the United States.
COCM increased in the first quarter of 2022, compared to the first quarter of 2021, primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent and an increase in shipments of commercial supplies of Praluent for Sanofi outside the United States.
Other Financial Information
GAAP other income (expense) included the recognition of net unrealized losses on equity securities of $211 million in the first quarter of 2022, compared to $144 million of net unrealized gains in the first quarter of 2021.
In the first quarter of 2022, the Company’s GAAP effective tax rate was 8.3%, compared to 11.0% in the first quarter of 2021. The decrease in the GAAP effective tax rate was due in part to the impact of stock-based compensation. In the first quarter of 2022, the non-GAAP effective tax rate was 11.6%, compared to 10.5% in the first quarter of 2021.
GAAP net income per diluted share was $8.61 in the first quarter of 2022, compared to $10.09 in the first quarter of 2021. Non-GAAP net income per diluted share was $11.49 in the first quarter of 2022, compared to $9.89 in the first quarter of 2021. A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.
During the first quarter of 2022, the Company repurchased shares of common stock under its share repurchase program, and recorded the cost of the shares received, or $352 million, as Treasury Stock. As of March 31, 2022, $2.493 billion remained available for share repurchases under the program.
Net cash provided by operating activities in the first quarter of 2022 was $2.102 billion, compared to $669 million in the first quarter of 2021, resulting in $1.960 billion in free cash flow for the first quarter of 2022, compared to $553 million for the first quarter of 2021. The increase in free cash flow in the first quarter of 2022 was primarily due to the Company’s collection of amounts due from the U.S. government in connection with REGEN-COV sales in the fourth quarter of 2021.
2022 Financial Guidance(d)
The Company’s full year 2022 financial guidance consists of the following components:
* GAAP and non-GAAP amounts are equivalent as no non-GAAP adjustments have been or are expected to be recorded.
** ETR guidance excludes the impact of the provision requiring capitalization and amortization of R&D expenses enacted as part of the Tax Cuts and Job Act (TCJA), as management’s current expectation is it will be deferred or repealed by Congress in 2022. If this provision of the TCJA is not deferred or repealed, the Company would expect its ETR to be lower than the guidance disclosed herein.
A reconciliation of full year 2022 GAAP to non-GAAP financial guidance is included below:
Conference Call Information
Regeneron will host a conference call and simultaneous webcast to discuss its first quarter 2022 financial and operating results on Wednesday, May 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.