On November 4, 2021 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the third quarter of 2021 and provided a business update (Press release, Regeneron, NOV 4, 2021, View Source [SID1234594449]).
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"Regeneron had another strong quarter of core business growth, with EYLEA and Dupixent reaching more patients than ever and progress made across our diverse pipeline," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "We secured a new U.S. government supply agreement and are delivering an additional 1.4 million doses of REGEN-COV. Our Biologics License Application for REGEN-COV as treatment and prophylaxis was accepted by the FDA for priority review, with a mid-April 2022 action date. During the third quarter, we announced positive data from Phase 3 trials of Dupixent in chronic spontaneous urticaria and pediatric atopic dermatitis. We also recently announced positive data from Phase 3 trials of Dupixent in eosinophilic esophagitis and prurigo nodularis, and that the FDA approval in pediatric asthma was extended to children as young as six. Finally, our abstracts that will be released today for the American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting highlight programs across the hematology portfolio, including our BCMA and C5 antibodies."
"Regeneron performed extremely well in the third quarter with strong top- and bottom-line growth driven by an increasingly diversified core business," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "We are approaching the end of 2021 with positive momentum as we continue to invest in our broad pipeline to drive sustained long-term growth."
Business Highlights
Key Pipeline Progress
Regeneron has over 30 product candidates in clinical development, including six marketed products for which it is investigating additional indications. Updates from the clinical pipeline include:
EYLEA (aflibercept) Injection
In August 2021, the Company announced that an ongoing Phase 2 trial evaluating an 8 mg dose of aflibercept in patients with neovascular age-related macular degeneration (wet AMD) met its primary safety and efficacy endpoints. The high-dose aflibercept formulation is currently also being evaluated in two large Phase 3 trials in wet AMD and diabetic macular edema (DME), which are expected to report results in the second half of 2022.
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 July 2021, the Company and Sanofi announced that a Phase 3 trial in patients with moderate-to-severe chronic spontaneous urticaria (CSU) met its primary and all key secondary endpoints at 24 weeks.
In October 2021, the Company and Sanofi announced that a second Phase 3 trial in adults and adolescents with eosinophilic esophagitis (EoE) met its co-primary endpoints in patients taking Dupixent 300 mg weekly, showing significant improvements in clinical (Dysphagia Symptom Questionnaire) and histologic disease measures compared to placebo. A rolling supplemental Biologics License Application (sBLA) has been initiated for adults and adolescents with EoE.
In October 2021, the Company and Sanofi announced that a Phase 3 trial in adults with uncontrolled prurigo nodularis met its primary and all key secondary endpoints, showing that Dupixent significantly reduced itch and skin lesions compared to placebo in this investigational setting. Results from an additional Phase 3 trial in prurigo nodularis are expected to be reported in the first half of 2022.
In August 2021, the Company and Sanofi announced that a Phase 3 trial in children aged 6 months to 5 years with moderate-to-severe atopic dermatitis met its primary and all secondary endpoints, and the companies expect to complete regulatory submissions in the United States and European Union (EU) in the coming months.
REGEN-COV (casirivimab and imdevimab)(2), a dual antibody cocktail to SARS-CoV-2 virus
In September 2021, the Company announced an agreement to supply the U.S. government with an additional 1.4 million doses of REGEN-COV (of which over 300,000 doses were delivered during the third quarter of 2021). Pursuant to the agreement, the U.S. government is obligated to purchase REGEN-COV doses delivered by January 31, 2022, resulting in aggregate payments to the Company of up to $2.940 billion. Roche will supply a portion of the doses to Regeneron to fulfill Regeneron’s agreement with the U.S. government.
The FDA accepted for priority review the BLA for COVID-19 treatment in non-hospitalized patients and as prophylaxis in certain individuals, with a target action date of April 13, 2022. A Marketing Authorization Application (MAA) for COVID-19 treatment in infected non-hospitalized patients or as prophylaxis was also submitted in the EU.
In September 2021, the Company announced that a Phase 3 trial in patients hospitalized with COVID-19 met its primary endpoint, showing REGEN-COV significantly reduced viral load. The FDA is currently reviewing the Company’s request to expand the Emergency Use Authorization (EUA) to include treatment in hospital settings, and the Company plans to submit a BLA and MAA for this patient population in the coming months.
The New England Journal of Medicine published positive detailed results from the Phase 3 trial that assessed the ability of REGEN-COV to treat COVID-19 in infected high-risk non-hospitalized patients.
Oncology Programs
The FDA accepted for priority review, with a target action date of January 30, 2022, the sBLA for Libtayo (cemiplimab) to treat patients with recurrent or metastatic cervical cancer whose disease progressed on or after chemotherapy. The MAA in the EU is expected to be submitted by the end of the year.
Positive data from the Phase 3 trial of Libtayo, in combination with chemotherapy, in patients with advanced non-small cell lung cancer, were presented at the European Society for Medical Oncology Virtual Congress 2021. These results will form the basis of regulatory submissions, which are planned in the United States and EU in the coming months.
A Phase 1 study of REGN5093-M114, a bispecific antibody-drug conjugate targeting two distinct MET epitopes, was initiated in MET-altered advanced non-small cell lung cancer.
Pozelimab, an antibody to C5
A Phase 3 study of pozelimab in combination with cemdisiran, a siRNA therapeutic, in myasthenia gravis was initiated.
REGN5713-5714-5715, a multi-antibody therapy to Bet v 1
The initial Phase 3 study in birch allergic patients with allergic rhinoconjunctivitis met its primary endpoint with a reduction in the combined allergic rhinitis symptom and medication score. The Company is currently evaluating further development plans, including an additional Phase 3 study during an upcoming birch pollen season.
Third Quarter 2021 Financial Results
Revenues
Total revenues increased by 51% to $3.453 billion in the third quarter of 2021, compared to $2.294 billion in the third quarter of 2020. Total revenues excluding (i) REGEN-COV (casirivimab and imdevimab) net product sales in the United States and (ii) the Company’s share of gross profits in connection with sales of casirivimab and imdevimab pursuant to the Roche collaboration agreement, increased by 18% to $2.649 billion in the third quarter of 2021, compared to the third quarter of 2020(1).
Net product sales recorded by the Company consist of the following:
During the third quarter of 2021, the Company commenced deliveries of REGEN-COV under its September 2021 supply agreement with the U.S. government (as described above).
Total revenues also include collaboration revenues(3) of $1.074 billion in the third quarter of 2021, compared to $653 million in the third quarter of 2020. Sanofi collaboration revenue increased primarily due to the Company’s share of profits from commercialization of antibodies, which were $387 million in the third quarter of 2021, compared to $213 million in the third quarter of 2020. The change in the Company’s share of profits from commercialization of antibodies was driven by higher Dupixent profits. In addition, in both the third quarter of 2021 and 2020, the Company earned $50 million sales-based milestones from Sanofi based upon sales of antibodies outside the United States on a rolling twelve-month basis. In the third quarter of 2021, the Company also recorded Roche collaboration revenue of $127 million in connection with the true-up payment owed from Roche in connection with global gross profits from sales of the casirivimab and imdevimab antibody cocktail.
Refer to Table 4 for a summary of collaboration revenue.
Other revenue decreased in the third quarter of 2021, compared to the third quarter of 2020, primarily due to lower amounts recognized in connection with the Company’s agreements with the Biomedical Advanced Research Development Authority (BARDA) related to funding of certain development activities for COVID-19 antibodies, and, to a lesser extent, Inmazeb.
The increase in SG&A expenses in the third quarter of 2021 was primarily due to higher headcount-related costs and an increase in commercialization-related expenses for EYLEA, including direct-to-consumer advertising.
The increase in COGS in the third quarter of 2021 was primarily due to the recognition of manufacturing costs in connection with product sales of REGEN-COV in the United States.
The increase in COCM in the third quarter of 2021 was primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent.
Other operating expense (income), net, includes recognition of a portion of amounts previously deferred in connection with up-front and development milestone payments, as applicable, received in connection with the Company’s collaborative arrangements. The decrease in other operating income in the third quarter of 2021 was primarily due to the recognition of a cumulative catch-up adjustment of $67 million 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 Financial Information
In the third quarter of 2021, the Company’s GAAP effective tax rate was 10.2%, compared to 15.6% in the third quarter of 2020. The decrease in the third quarter 2021 GAAP effective tax rate, compared to the third quarter of 2020, was due in part to the positive impact of stock-based compensation in the third quarter of 2021. In the third quarter of 2021, the non-GAAP effective tax rate was 10.8%, compared to 16.3% in the third quarter of 2020.
GAAP net income per diluted share was $14.33 in the third quarter of 2021, compared to GAAP net income per diluted share of $7.39 in the third quarter of 2020. Non-GAAP net income per diluted share was $15.37 in the third quarter of 2021, compared to non-GAAP net income per diluted share of $8.36 in the third quarter of 2020. A reconciliation of the Company’s GAAP to non-GAAP results is included in Table 3 of this press release.
Net cash provided by operating activities in the first nine months of 2021 was $4.709 billion, compared to $1.387 billion in the first nine months of 2020, resulting in $4.312 billion in free cash flow(1) for the first nine months of 2021, compared to $934 million for the first nine months of 2020. The increase in free cash flow was primarily due to the Company’s collection of amounts due from the U.S. government in connection with REGEN-COV sales in 2021.
2021 Financial Guidance(4)
The Company’s full year 2021 financial guidance consists of the following components:
Conference Call Information
Regeneron will host a conference call and simultaneous webcast to discuss its third quarter 2021 financial and operating results on Thursday, November 4, 2021, 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.