It has been about a month since the last earnings report for Regeneron (REGN). Shares have added about 14% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Regeneron due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Regeneron's Q3 Earnings Beat on Dupixent Strength
Regeneron reported earnings of $6.67 per share in the third quarter, beating the Zacks Consensus Estimate of $6.33 and increasing from $5.87 in the year-ago quarter.
Total revenues in the reported quarter increased 23% year over year to $2.05 billion and comfortably beat the Zacks Consensus Estimate of $1.98 billion.
The year-over-year growth was driven by strong Eylea and Dupixent sales.
Quarterly Highlights
Net product sales increased to $1.238 billion in the quarter under review, up from $1.025 billion in the year-ago quarter. Majority of sales in the United States came in from Eylea ($1.188 billion, up from $1.022 billion in the year-ago quarter).
We note that Regeneron co-developed Eylea with the HealthCare unit of Bayer AG (DE:BAYGN) . The company is solely responsible for the sales of this eye drug and entitled to profits in the United States. However, it shares profits and losses from the ex-U.S. Eylea sales equally with Bayer, except in Japan where the company receives a royalty on net sales.
Total revenues also included Sanofi (PA:SASY) and Bayer’s collaboration revenues of $707 million compared with $521 million in the year-earlier quarter. The increase was primarily owing to higher net product sales of Dupixent.
Dupixent’s sales summed $633.1 million, up from $262.6 million a year ago. Kevzara recorded sales of $54.8 million, up from $24.9 million in the year-earlier quarter.
Praluent’s global net sales logged $69.7 million in the reported quarter, down from $80.2 million in the prior-year quarter. Sale proceeds from products like Praluent, Dupixent and Kevzara are garnered by Sanofi, while Regeneron earns profits or incurs losses from the commercialization of the drugs.
The FDA approved Libtayo last September for the treatment of patients with metastatic or locally advanced cutaneous squamous cell carcinoma, who are not candidates for curative surgery or curative radiation. The drug’s sales in the quarter totaled $51.5 million, up from $40.8 million in the prior quarter.
R&D expenses were up 19.1% to $663.4 million, while SG&A expenses increased to $419.9 million during the quarter under consideration from $369.2 million in the year-ago quarter.
2019 Outlook Updated
Collaboration revenues from Sanofi are projected to be $490-$510 million (previous guidance: $500-$530 million).
Shares Repurchase Program
In November, the board of directors authorized a share repurchase program to buy back up to $1.0 billion of the common stock.
Pipeline Update
In August, the FDA approved the Eylea pre-filled syringe, which is expected to be launched before the end of this year. A phase II study exploring less frequent dosing intervals using a high-dose formulation of Eylea in wet AMD was initiated.
Regeneron is also working to expand Dupixent’s label. In August, the European Commission (EC) approved a label expansion of the drug to include adolescents 12 to 17 years of age with moderate-to-severe atopic dermatitis, who are candidates for systemic therapy. In the same month, Regeneron and Sanofi announced that the phase III trial to treat severe atopic dermatitis in children 6 to 11 years of age met its primary and secondary endpoints. Submissions for a supplemental Biologics License Application (sBLA) and Marketing Authorization Application (MAA) for the same are expected by the end of the year. In October, the EC approved Dupixent in chronic rhinosinusitis with nasal polyposis. Regeneron and Sanofi plan to initiate phase III studies in bullous pemphigoid, prurigo nodularis, chronic spontaneous urticaria and additional type 2 inflammatory diseases.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 17.81% due to these changes.
VGM Scores
At this time, Regeneron has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Regeneron has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report
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