Regeneron Tops on Q2 Earnings, Eylea HD, Dupixent Fuel Sales

Regeneron Pharmaceuticals, Inc. REGN reported earnings per share of $11.56, which beat the Zacks Consensus Estimate of $10.57. The company recorded an EPS of $10.24 in the year-ago period.

The upside in the bottom line can be attributed to higher revenues.

Total revenues increased 12% year over year to $3.54 billion, fueled by higher Dupixent, Eylea HD and Libtayo sales. Revenues also beat the Zacks Consensus Estimate of $3.38 billion. 

Shares are trading up in response to the better-than-expected results.

Regeneron's shares have risen 22.8% year to date against the industry's decline of 0.6%.

Image Source: Zacks Investment Research

Quarterly Highlights

Eylea's sales in the United States declined 18% year over year to $1.2 billion, primarily due to increased competition resulting in lower volumes and a reduced net selling price.

Please note that Regeneron co-developed Eylea with the HealthCare unit of Bayer AG BAYRY. Regeneron records net product sales of Eylea in the United States and Bayer does the same outside the country. Regeneron records its share of profits/losses in connection with the sales of Eylea outside the United States.

In August 2023, the FDA approved Eylea HD (higher dose of Eylea) for the treatment of patients with wet age-related macular degeneration, diabetic macular edema and diabetic retinopathy.

Eylea HD generated revenues of $304 million in the United States, driven by the addition of new patients and the transition of patients from other anti-VEGF products, including Eylea.

Total Eylea and Eylea HD sales in the United States were $1.53 billion, up 2% year over year. The figure also beat the Zacks Consensus Estimate of $1.52 billion.

Total revenues include collaboration revenues of $1.52 billion from Sanofi SNY and Bayer. The figure increased 15.7% from that recorded in the year-ago quarter. Total collaboration revenues beat the Zacks Consensus Estimate of $1.43 billion.

Sanofi's collaboration revenues increased 21% to $1.1 billion, driven by profits associated with higher Dupixent sales. We note that Sanofi records global net product sales of Dupixent and Kevzara, while Regeneron records its share of profits/losses in connection with the global sales of both drugs. Dupixent's sales increased 27% year over year to $3.5 billion.

Bayer's collaboration revenues totaled $375 million, down 1% year over year.

Regeneron records net product sales of Praluent in the United States and Sanofi does the same outside the country. SNY pays REGN a royalty on such sales. Regeneron records global net product sales of Libtayo and pays Sanofi a royalty on such sales.

Total Libtayo sales came in at $297.4 million, up 42% year over year. The figure beat the Zacks Consensus Estimate of $285 million.

Praluent's net sales in the United States were $56.1 million. Kevzara recorded global sales of $109.7 million, up 10% from the year-ago quarter's level.

Adjusted R&D expenses jumped 10% year over year to $1.1 billion due to the advancement of the company's late-stage oncology programs, and higher headcount and headcount-related costs. Adjusted SG&A expenses increased 19% to $667 million due to higher commercialization-related expenses to support the launch of Eylea HD and higher headcount and headcount-related costs.

Pipeline and Regulatory Update

In June 2024, the European Commission approved Dupixent as an add-on maintenance treatment for adults with uncontrolled chronic obstructive pulmonary disease (COPD) characterized by raised blood eosinophils.

However, in May 2024, the FDA extended the target action date of its priority review of the supplemental biologics license application (sBLA) for Dupixent as an add-on maintenance treatment in certain adult patients with uncontrolled COPD by three months. The revised target action date is Sep 27, 2024.

The FDA accepted (for priority review) the sBLA for Dupixent as an add-on maintenance treatment for adolescents aged 12 to 17 years with inadequately controlled chronic rhinosinusitis with nasal polyposis (CRSwNP), with a target action date of Sep 15, 2024.

The European Medicines Agency's, Committee for Medicinal Products for Human Use adopted a positive opinion recommending conditional marketing authorization of odronextamab to treat adults with relapsed/refractory (R/R) follicular lymphoma or R/R diffuse large B-cell lymphoma (DLBCL), after two or more lines of systemic therapy.

Regeneron initiated a phase II study on fianlimab, an antibody to LAG-3, in combination with Libtayo, for the treatment of perioperative non-small cell lung cancer. A phase II/III study evaluating fianlimab, in combination with Libtayo, for treating perioperative melanoma was also initiated.

A phase II study was initiated for trevogrumab, an antibody to myostatin (GDF8), in combination with semaglutide with and without garetosmab, for the treatment of obesity.

Our Take

Regeneron's performance in the second quarter was impressive with both the top and bottom lines surpassing their respective estimates.

While Eylea sales have been under pressure due to competition from Roche's RHHBY Vabysmo, the uptake of the higher dose of the drug is encouraging as Eylea patients transition to the higher dose.

Regeneron's efforts to broaden its oncology portfolio and foray into the lucrative obesity space are also encouraging.

The uptake of Vabysmo has been outstanding. Roche has designed Vabysmo to block pathways involving Ang-2 and VEGF-A. Roche recorded CHF 1.8 billion of Vabysmo sales in the first half of 2024 on strong demand in all regions.

Zacks Rank

Regeneron currently carries a Zacks Rank #3 (Hold).

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