7 Things Regeneron Pharmaceuticals Inc.'s Management Wants You to Know

Highlights from Regeneron's conference call.

Aug 26, 2014 at 5:58PM

Regeneron Pharmaceuticals (NASDAQ:REGN) held a conference call earlier this month to highlight its second-quarter earnings and give investors some insight into the biotech's prospects for the rest of the year. Here are seven things management wants you to know.

1. "We had also heard some concern by investors that the release of Medicare billing information had resulted in a shift away from the branded anti-VEGF therapies toward compounded bevacizumab. This is not a trend that we saw during the quarter."
-- Leonard Schleifer, Regeneron's founder, president, and CEO

Regeneron Bio

Leonard Schleifer. Source: Regeneron.

Off-label use of compounded bevacizumab has been a touchy subject for Regeneron Pharmaceuticals since before it launched its macular degeneration drug Eylea. In addition to competition from Roche's Lucentis, some doctors also use Roche's bevacizumab, known by its brand name Avastin. The cancer drug can be used in fairly small doses for macular degeneration, so when the bottle is split up -- referred to as compounding -- the cost per dose of Avastin is substantially less than Eylea and Lucentis.

Fortunately, compounded Avastin doesn't seem to be eating into Eylea's sales, with second-quarter sales up 26% year over year.

2. "For the full year, we are reaffirming our previously provided full-year U.S. Eylea net sales guidance of $1.7 billion to $1.8 billion."
-- Schleifer

Through the first half of the year, Regeneron generated $774 million in Eylea sales in the U.S., so the company is expecting that it could get more than $1 billion in sales in the second half of the year. That's as much as 15% quarter-over-quarter growth for the next two quarters.

Where's that growth going to come from?

3. "We expect the DME approval to help accelerate growth of Eylea in the second half of the year."
-- Schleifer

Last month, the Food and Drug Administration approved Eylea to treat diabetic macular edema, or DME. This is a big opportunity for Regeneron, considering there are about as many DME patients as there are patients with wet age-related macular degeneration. Lucentis has been approved as a DME treatment for over two years,  but Regeneron isn't necessarily counting on having those patients switch.

Only about 40% of DME patients are currently on an anti-VEGF treatment -- the rest are treated with lasers or steroids -- so there's potentially low-hanging fruit if Regeneron can convince doctors that Eylea is a better option. The biotech is also counting on convenience to compete with Lucentis, because Eyela comes in the same strength for DME and wet AMD, so doctors have to stock only one strength of the drug, unlike Lucentis.

4. "The retinal specialists who treat DME are mostly the same as those treating wet AMD and CRVO and already being called on by our specialty sales force. Therefore, we don't anticipate a significant increase in commercial expenses related to Eylea, even following the approval in additional indications. Thus, we anticipate a higher rate of profitability on these incremental DME sales."
-- Robert Landry, Regeneron's CFO and senior vice president of finance

Bob Landry

Robert Landry. Source: Regeneron. 

This is key to Regeneron's valuation. Read that last sentence again.

Regneneron is guiding for as much as 15% quarter-over-quarter growth in U.S. sales of Eylea for the remainder of the year, but earnings should go up even more because expenses won't increase by the same relative amount.

But enough about Eylea ...

5. "In total, we have a broad pipeline of 14 antibodies in clinical development, six of which are partnered with Sanofi (NYSE:SNY)."
-- Schleifer

The drugs in development weren't given much attention on the conference call, but investors shouldn't forget about them. As much as Eylea is the current driver of growth, Regeneron's pipeline is going to have to take over fairly soon.

One of the more advanced drugs is Regeneron and Sanofi's cholesterol treatment, alirocumab, which did get a highlight on the call because of a unique situation ...

6. "I did want to highlight that with our purchase of a priority review voucher, we expect alirocumab to be reviewed under a priority review designation in the United States, which has the potential to shorten the regulatory review time by four months."
-- Schleifer

Sanofi and Regeneron are in a battle with Amgen (NASDAQ:AMGN) to brink the first PCSK9 inhibitor to market. To try and get a bit of a jump start, the duo purchased a priority review voucher from BioMarin Pharmaceuticals (NASDAQ:BMRN), which allows a drug to get a priority review even though it only deserves a standard review .

As Schliefer notes, the voucher reduces the filing and review time from 12 months to eight from the time the application is submitted. Sanofi and Regeneron are on target to submit their application before the end of the year, potentially leapfrogging Amgen, which plans to file its application this quarter.

7. "Bob Landry was kind enough to explain this new term to me, and I think it's worth reflecting on how challenging this business can be, given that it took us over 25 years to finally get to this point of positive retained earnings, which, as I understand it, represents Regeneron earning more money that it has lost on a cumulative basis."
-- Schleifer

The whole reason investors buy money-losing biotechs is in the hopes that they'll one day have positive earnings (or be bought by a larger company expecting to get positive earnings from the drugs in the pipeline).

Getting past there, to where the company has made as much as it lost developing the drugs, is an impressive feat. That Regeneron did it in less than three years after gaining FDA approval for Eylea is quite remarkable.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. There's a product in development that will not only change how we treat a common chronic illness -- it could potentially revolutionize the entire health industry. Analysts are already licking their chops at the sales potential. To outsmart Wall Street and realize multi-bagger returns, you'll need The Motley Fool's new free report on the dream team responsible for this game-changing blockbuster. Click here now.

Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends BioMarin Pharmaceutical. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers