Why Regeneron Shares Dropped Today

Regeneron (NASDAQ: REGN  ) shares were down over 3% midday before recovering a bit in the afternoon. The drop followed the company's announcement of its fourth-quarter and fiscal-year results. What happened?

No bad news
Regeneron was up 11% on Monday after Sanofi (NYSE: SNY  ) announced plans to increase its Regeneron stake by purchasing stocks. The two companies collaborated on colorectal cancer drug Zaltrap, which earned approval last year and made headlines with a 50% price cut.

Zaltrap sales started in August and led to $23 million in net sales for the fourth quarter and $32 million for the year. The drug recently received European approval, and that should help drive sales. While Zaltrap ramps up, another partnered drug steers Regeneron's growth.

Regeneron and Bayer's vision treatment Eylea had net sales of $838 million for the year and represented nearly 60% of total revenues. The company predicts Eylea will cross the $1 billion blockbuster threshold this year.

The pipeline
Regeneron's pipeline will play a major role in shaping its future. I recently took an in-depth look at the development projects, and that's worth a look if you want to see upcoming catalysts.

The PCSK9 cholesterol treatment REGN727 is the only phase 3 reporting this year and should return data in the latter half of 2013. This drug will remain closely watched because of its anticipated drug class and the fact that Amgen has a potential competitor right on Regeneron's tail.

Phase 2 drug REGN688 for allergic asthma and an inflammatory skin condition will begin reporting data at the American Academy of Dermatology meeting next month.

Foolish bottom line
Regeneron's sitting in a decent position right now considering the approved drugs have existed for less than two years. Non-GAAP income was $171 million, or $1.47 per share, for the quarter and $4.66 per share for the year. Total revenues amounted to $1.4 billion thanks to Eylea's strong sales, Zaltrap's launch, and the associated milestone payments.

Investors should keep an eye on Zaltrap revenues to make sure they're growing steadily. And the cholesterol pipeline project's data could provide a look at the company's next best seller.

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