Regeneron's Earnings Disappoint; Dumps More And More Cash On R&D
November 5, 2014
By Jessica Wilson, BioSpace.com Breaking News Staff
Regeneron Pharmaceuticals, Inc. yesterday announced financial results for the third quarter of 2014, which were categorized as “disappointing” by biotech analysts and pushed the share price of the Tarrytown, N.Y.-based biotech company down by more than 6 percent Tuesday, a drop which continued in mid-morning trading today.
The cause of the disappointment was two-fold: Regeneron’s earnings fell below forecasts and sales of its key product, Eylea, were pared back from the the expected amount. Used to treat age-related macular degeneration, Eylea only saw sale of $445 million during the quarter, which RBC Capital Markets analyst Adnan Butt calculated as $16 million lower than expected. Eylea sales worldwide beat the company’s sales estimates for the product, but its stateside sales were significantly lower than expected—a problem for a drug that was hoped to see greater market traction in the U.S.
The U.S. Food and Drug Administration (FDA) recently approved Eylea for the treatment of diabetic macular edema, or DME. Though Eylea was approved three years ago, the drug was only approved for DME in July 2014.
Regeneron, unsurprisingly, put a positive spin on Eylea’s results. “We believe Eylea is positioned for continued strong growth given recent approvals in macular edema following retinal vein occlusion and diabetic macular edema (DME) as well as top-line results of the NIH-sponsored DRCR Protocol T DME study, in which Eylea showed significant gains in visual acuity compared to both alternative anti-VEGF therapies,” Leonard Schleifer, president and chief executive officer, was quoted as saying in a press release from the company.
In fact, Eylea did produce positive results. Its sales rose 23 percent year over year, and international sales more than doubled. The puzzle, then, is why this news did not please investors. One reason, concluded Brian Orelli of The Motley Fool, could be the fact that, “The company tightened its guidance for the year to the lower end of the previous guidance, pegging sales between $1.7 billion and $1.74 billion from a previous guidance that extended all the way to $1.8 billion.”
Regeneron has not put all its eggs in the Eylea basket. The company invested heavily in research and development for other products this year. In the third quarter of 2014, the company spent $338 million on R&D, compared to $224 million in the third quarter of 2013.
Schleifer explained the R&D results in the press release, “Regeneron also continues to advance an innovative pipeline of therapies with unique potential to help patients with serious needs. Over the last few months, we reported strong Phase 3 results with alirocumab in hypercholesterolemia, positive proof-of-concept data in a third allergic disease for dupilumab, and advanced two additional programs into human clinical development for cancer and eye disease.”