Regeneron (REGN) Q2 Earnings Beat, REGEN-COV Boosts Performance

Regeneron (NASDAQ:REGN) Pharmaceuticals, Inc. REGN posted stellar second-quarter 2021 results, beating on both earnings and sales driven by strong growth in Eylea and Dupixent along with a significant contribution from its antibody cocktail for COVID-19.

Regeneron’s shares have gained 20.2% in the year so far compared with the industry’s growth of 1%.

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Regeneron reported second-quarter earnings of $25.80 per share, comfortably beating the Zacks Consensus Estimate of $19.55. Earnings jumped 260% from the year-ago quarter due to higher sales.

Total revenues in the reported quarter surged 163% year over year to $5.14 billion and beat the Zacks Consensus Estimate of $3.89 billion. The year-over-year growth was driven by incremental contribution from the antibody cocktail, REGEN-COV (a cocktail of two monoclonal antibodies — casirivimab and imdevimab), for COVID-19. Total revenues, excluding REGEN-COV, increased 22% to $2.38 billion.

During the second quarter, Regeneron fulfilled its second agreement with the U.S. government to manufacture and deliver 1.25 million doses of REGEN-COV at the lowest treatment dose authorized by the FDA, and recognized $2.59 billion of REGEN-COV sales.

Quarterly Highlights

Lead drug Eylea’s sales in the United States were $1.4 billion compared with $1.1 billion in the year-ago quarter. Please note that Regeneron co-developed Eylea with the HealthCare unit of Bayer AG (DE:BAYGN) BAYRY. The company is solely responsible for sales of this eye drug and is entitled to profits in the United States. However, it shares profits and losses from the ex-U.S. Eylea sales equally with Bayer (OTC:BAYRY), except in Japan where the former receives a royalty on net sales.

Total revenues also included collaboration revenues of $954.7 million from Sanofi (NASDAQ:SNY) SNY, Bayer and Roche RHHBY (OTC:RHHBY), up from $513.3 million in the year-ago quarter. Sanofi’s collaboration revenues amounted to $437.7 million, up from $269.1 million in the year-ago quarter. Bayer’s collaboration revenues came in at $349.1 million, up from $244.2 million in the year-ago quarter. Roche’s collaboration revenues for REGEN-COV came in at $167.9 million.

Sanofi records global net product sales of Dupixent, Kevzara and ZALTRAP. Regeneron records its share of profits/losses in connection with global sales of Dupixent and Kevzara, and Sanofi pays the company a percentage of net sales of ZALTRAP. Regeneron records net product sales of Libtayo in the United States and Sanofi records the same outside the country.

Dupixent’s sales surged to $1.5 billion, up from $945 million in the year-ago quarter. Libtayo sales came in at $116.9 million, up from $80 million in the year-ago quarter. Kevzara recorded sales of $66.7 million, down 2% from the year-earlier quarter.

Praluent’s global net sales totaled $99.4 million in the reported quarter, up 15% from the prior-year quarter. Effective Apr 1, 2020, Regeneron records net product sales of Praluent in the United States and Sanofi records the same outside the country and pays the former a royalty on such sales.

REGEN-COV, its antibody cocktail for COVID-19, generated total sales of $3 billion in the quarter.

R&D expenses increased to $643.3 million from $580.1 million, while SG&A expenses jumped to $365.1 million from $301.4 million in the year-ago quarter.
REGEN-COV Updates

The FDA updated the Emergency Use Authorization for REGEN-COV by lowering the dose to 1,200 mg and permitting administration by subcutaneous injection when intravenous infusion is not feasible. The FDA also expanded the EUA to include post-exposure prophylaxis in people at high risk for progression to severe COVID-19, who are not fully vaccinated or are not expected to mount an adequate response to vaccination, and who have been exposed to an infected individual or are at high risk of exposure to an infected individual because of infection occurring in the same institutional setting (such as in nursing homes or prisons).

Pipeline and Regulatory Update

Enrollment in the phase III studies on Eylea for high-dose formulation in diabetic macular edema (DME) and neovascular age-related macular degeneration (wet AMD) was completed. Enrollment in the phase III study for retinopathy of prematurity (ROP) was also completed.

In June 2021, the European Commission approved Libtayo for the first-line treatment of patients with advanced non-small cell lung cancer (NSCLC) and for the treatment of metastatic or locally advanced basal cell carcinoma (BCC).
In June 2021, the FDA approved a 200 mg single-dose pre-filled pen for Dupixent.

Our Take

Regeneron’s second-quarter results were strong with broad-based growth. Strong demand for Eylea and Dupixent maintained momentum for the company. Incremental contribution from REGEN-COV has boosted the top line significantly and should propel sales as the pandemic continues. Continued growth in Eylea and Dupixent through further penetration in existing indications and a promising late-stage pipeline set the momentum for growth. The approval of Libtayo in the lucrative indication of NSCLC and BCC should also boost sales.

Regeneron currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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