On November 3, 2022 Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) reported financial results for the third quarter of 2022 and provided a business update (Press release, Regeneron, NOV 3, 2022, View Source [SID1234622988]).
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"We were thrilled to see positive results from the aflibercept 8 mg pivotal trials which demonstrated the potential to reduce the treatment burden for patients with diabetic macular edema (DME) and neovascular age-related macular degeneration (wet AMD)," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "Global Dupixent sales and U.S. EYLEA sales once again achieved new quarterly records, with U.S. sales of EYLEA achieving double digit year-over-year percentage growth and Dupixent was bolstered by progress on launches in pediatric atopic dermatitis, eosinophilic esophagitis, and prurigo nodularis. Our oncology portfolio was furthered strengthened by positive data updates for our growing investigational oncology pipeline."
"Our third quarter 2022 financial performance reflects strong commercial momentum across our business, highlighted by 11% revenue growth when excluding contributions from REGEN-COV and Ronapreve," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "We continued to drive shareholder value creation by realizing the benefits of our sustained investment in R&D, focusing on commercial execution, and allocating over $2.8 billion to share repurchases and business development initiatives in the first nine months of 2022."
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:
Aflibercept 8 mg
The Company announced that the primary endpoints were met in two pivotal trials investigating aflibercept 8 mg with 12- and 16-week dosing regimens in patients with diabetic macular edema (DME) and neovascular age-related macular degeneration (wet AMD). The PHOTON trial in DME and the PULSAR trial in wet AMD both demonstrated that aflibercept 8 mg 12- and 16-week dosing regimens achieved non-inferiority in vision gains compared to the EYLEA 8-week dosing regimen. Furthermore, of the patients randomized to 12- and 16-week dosing intervals, 91% and 89% of DME patients, respectively, and 79% and 77% of wet AMD patients, respectively, maintained those intervals through 48 weeks. The safety of aflibercept 8 mg was similar to EYLEA in both trials, and consistent with the known safety profile of EYLEA from previous clinical trials. The Company intends to use a priority review voucher in connection with the submission of the aflibercept 8 mg Biologics License Application (BLA) for DME and wet AMD, which is currently planned for late 2022.
EYLEA (aflibercept) Injection
The U.S. Food and Drug Administration (FDA) accepted for priority review the supplemental BLA (sBLA) for EYLEA to treat retinopathy of prematurity (ROP) in preterm infants, with a target action date of February 11, 2023.
The FDA granted EYLEA pediatric exclusivity, extending the period of U.S. EYLEA market exclusivity by an additional six months through May 17, 2024.
Dupixent (dupilumab)
In September 2022, the FDA approved Dupixent for the treatment of adult patients with prurigo nodularis, making Dupixent the first and only medicine specifically indicated to treat prurigo nodularis in the United States.
Oncology Programs
Libtayo (cemiplimab)
The European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for Libtayo as a monotherapy for the treatment of adult patients with recurrent or metastatic cervical cancer and disease progression on or after platinum-based chemotherapy. The European Commission is expected to make a final decision on the application in the coming months.
The Company presented positive data from the Phase 2 trial for Libtayo in neoadjuvant cutaneous squamous cell carcinoma (CSCC) at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress 2022. The data were also published in the New England Journal of Medicine.
Fianlimab, an antibody to LAG-3
Positive data were presented from a Phase 1 trial studying fianlimab in combination with Libtayo in advanced melanoma at the ESMO (Free ESMO Whitepaper) Congress 2022.
Bispecific Antibodies and Costimulatory Bispecifics
The Company also presented at the ESMO (Free ESMO Whitepaper) Congress 2022 encouraging early data from the dose-escalation portions of two Phase 1/2 trials evaluating ubamatamab, a bispecific antibody targeting MUC16 and CD3, in platinum-resistant ovarian cancer; and REGN5093, a METxMET bispecific antibody, in MET-altered advanced non-small cell lung cancer (NSCLC).
Enrollment was completed in the potentially pivotal Phase 2 study of linvoseltamab, a bispecific antibody targeting BCMA and CD3, in multiple myeloma.
The Company continues to enroll patients in a Phase 1/2 study investigating REGN5678, a PSMAxCD28 costimulatory bispecific antibody, in combination with Libtayo in advanced metastatic castration-resistant prostate cancer. Preliminary clinical data from the study were disclosed in August 2022 and further detailed in Regeneron’s ESMO (Free ESMO Whitepaper) 2022 Investor Event in September 2022.
Other Programs
Inmazeb, the first FDA-approved treatment for Zaire ebolavirus, has been recognized as the "Best Biotechnology Product" of 2022 by the Galien Foundation, which acknowledges extraordinary scientific innovations that improve the human condition.
A Phase 3 study was initiated for garetosamab, an antibody to Activin A, in fibrodysplasia ossificans progressiva (FOP).
The Company and Alnylam Pharmaceuticals, Inc. announced preliminary Phase 1 data of ALN-HSD, an RNAi therapeutic targeting HSD17B13, for the treatment of nonalcoholic steatohepatitis (NASH).
Intellia Therapeutics, Inc. and the Company announced positive interim results from the cardiomyopathy arm of the ongoing Phase 1 trial of NTLA-2001, an in vivo CRISPR/Cas9 genome editing therapy, which is in development as a single-dose treatment for transthyretin (ATTR) amyloidosis.
The Company has discontinued (i) further clinical development of fasinumab, an antibody to NGF, which was previously being studied in osteoarthritis pain of the knee or hip in collaboration with Teva and Mitsubishi Tanabe Pharma; and (ii) the Phase 3 study of REGN1908-1909, a multi-antibody therapy to Fel d 1, in cat allergy, due to futility.
Corporate and Business Development Updates
Effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide under an Amended and Restated Immuno-oncology License and Collaboration Agreement with Sanofi. Under the terms of the agreement, the Company made a $900 million up-front payment, and Sanofi is eligible to receive a $100 million regulatory milestone and up to an aggregate of $100 million in sales-based milestones upon achieving certain amounts of worldwide net product sales of Libtayo through 2023. The Company also pays Sanofi a royalty on net product sales of Libtayo.
Pursuant to an amendment to the Antibody License and Collaboration Agreement, the percentage of the Company’s share of profits used to reimburse Sanofi for its development balance reimbursement obligation increased from 10% to 20%.
The Company announced that Craig B. Thompson, M.D., was elected to the Board of Directors. Dr. Thompson most recently served as the President and Chief Executive Officer of Memorial Sloan Kettering Cancer Center (MSK) and continues to oversee the Craig Thompson Lab at MSK studying cellular metabolism and its role in disease.
Total revenues decreased 15% to $2.936 billion in the third quarter of 2022, compared to $3.453 billion in the third quarter of 2021. Total revenues excluding REGEN-COV and Ronapreve(b) revenues for both periods increased by 11% to $2.930 billion in the third quarter of 2022, compared to the third quarter of 2021(a). There have been no sales of REGEN-COV in the United States during 2022 as the Company had completed its final deliveries of drug product under its agreements with the U.S. government as of December 31, 2021.
Sanofi collaboration revenue increased by 22% to $711 million in the third quarter of 2022, compared to the third quarter of 2021. This increase was primarily due to the Company’s share of profits from commercialization of antibodies, which were $551 million in the third quarter of 2022, compared to $387 million in the third quarter of 2021. The change in the Company’s share of profits from commercialization of antibodies was driven by higher Dupixent profits, partly offset by a one-time payment of $57 million, recorded during the third quarter of 2022, in connection with the amended Antibody License and Collaboration Agreement as described above. In addition, in the third quarter of 2021, the Company earned a $50 million sales-based milestone from Sanofi based upon sales of antibodies outside the United States on a rolling twelve-month basis.
Roche collaboration revenue decreased in the third quarter of 2022, compared to the third quarter of 2021, due to lower sales of Ronapreve.
Refer to Table 4 for a summary of collaboration revenue.
GAAP and non-GAAP R&D expenses increased in the third quarter of 2022, compared to the third quarter of 2021, partially driven by the impact of the amendments to the Sanofi collaboration agreements described above. The increase was also due to higher headcount and headcount-related costs, an increase in clinical manufacturing activities, and additional costs incurred in connection with the Company’s oncology and earlier-stage pipeline.
GAAP and non-GAAP SG&A expenses increased in the third quarter of 2022, compared to the third quarter of 2021, primarily due to an increase in commercialization-related expenses for Libtayo.
GAAP and non-GAAP COGS decreased in the third quarter of 2022, compared to the third quarter of 2021, primarily due to the Company not recognizing any REGEN-COV net product sales in the United States during 2022 and the Company no longer being obligated to pay Sanofi for their share of U.S. Libtayo gross profits following the acquisition of Libtayo worldwide rights.
Other operating (income) expense, net, in the third quarter of 2022 included the recognition of $44 million (an increase to other operating income) as a result of discontinuing further clinical development of fasinumab related to the Company’s Teva and Mitsubishi Tanabe Pharma collaborative arrangements. During the third quarter of 2021, the Company recognized a cumulative catch-up adjustment of $67 million (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 Financial Information
GAAP other income (expense) included the recognition of net unrealized gains on equity securities of $254 million in the third quarter of 2022, compared to $29 million of net unrealized losses in the third quarter of 2021.
In the third quarter of 2022, the Company’s GAAP effective tax rate (ETR) was 12.9%, compared to 10.2% in the third quarter of 2021. The GAAP ETR in the third quarter of 2022, compared to the third quarter of 2021, included a lower benefit from stock-based compensation and a higher benefit from the proportion of income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate (mainly due to no sales of REGEN-COV in the United States during 2022). In the third quarter of 2022, the non-GAAP ETR was 12.1%, compared to 10.8% in the third quarter of 2021.
GAAP net income per diluted share was $11.66 in the third quarter of 2022, compared to $14.33 in the third quarter of 2021. Non-GAAP net income per diluted share was $11.14 in the third quarter of 2022, compared to $15.37 in the third 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 third quarter of 2022, the Company repurchased shares of common stock under its share repurchase program, and recorded the cost of the shares, or $913 million, as Treasury Stock. As of September 30, 2022, $1.186 billion remained available for share repurchases under the program.
2022 Financial Guidance(d)
Conference Call Information
Regeneron will host a conference call and simultaneous webcast to discuss its third quarter 2022 financial and operating results on Thursday, November 3, 2022, at 8:30 AM Eastern Time. Participants may access the conference call live via webcast, or register in advance and participate via telephone, on the "Investors and Media" page of Regeneron’s website at www.regeneron.com. 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.