Regeneron Pharmaceuticals (NASDAQ:REGN) could use some more good news. The company has picked up some key regulatory approvals for additional indications for its drugs in recent months and scored a win in a U.S. federal court related to a patent skirmish with Amgen. But Regeneron's share price was still down by a double-digit percentage headed into the drugmaker's third-quarter update this week.
The company announced those Q3 results before the market opened on Tuesday. As it turned out, Regeneron delivered the good news that investors were hoping for. Here are the highlights from the biotech's Q3 update.
By the numbers
Revenue of $2.1 billion during the third quarter was up 23% year over year. This topped the consensus Wall Street estimate of $1.99 billion.
The biotech generated net income of $670 million, or $5.86 per share, based on generally accepted accounting principles (GAAP). This reflected a solid increase from its GAAP earnings of $595 million, or $5.17 per share, reported in the same period in 2018.
Regeneron announced Q3 non-GAAP (adjusted) net income of $762 million, or $6.67 per share. This reflected a double-digit percentage increase from the prior-year period's adjusted earnings of $675 million, or $5.87 per share. It also handily beat the average analysts' adjusted earnings estimate of $6.36 per share.
Behind the numbers
When Regeneron's top two drugs, Eylea and Dupixent, perform well, the company performs well. That's what happened in the third quarter. Net product sales for Eylea in the quarter jumped 16% year over year to $1.2 billion. Regeneron's portion of sales for Dupixent skyrocketed 141% to $633 million. The company also recorded third-quarter net product sales of $51.5 million for Libtayo and $3 million for Arcalyst.
In addition to its direct product sales, Regeneron receives collaboration revenue from its partners, Sanofi and Bayer. The company's Q3 collaboration revenue from Sanofi totaled $404 million, while its collaboration revenue from Bayer was nearly $303 million.
Perhaps the biggest disappointment in Regeneron's Q3 update was the continued dismal performance for Praluent. Sales for the cholesterol drug, as recorded by Sanofi, fell 13% year over year to $69.7 million.
Regeneron's solid revenue growth also drove its bottom-line improvement. But operating expenses increased at a faster rate than revenue did, causing the company's earnings growth to come in a little lower than its revenue growth.
Regeneron now anticipates Sanofi collaboration revenue will be between $490 million and $510 million in full-year 2019. This range is lower from its previous guidance of $500 million to $530 million.
With biotech stocks like Regeneron, the main things for investors to look forward to are key regulatory approvals (along with subsequent commercial launches) along with other pipeline developments. Regeneron expects to launch its Eylea pre-filled syringe by the end of 2019 following Food and Drug Administration approval in August. It plans to submit for FDA approval of evinacumab in treating homozygous familial hypercholesterolemia (HoFH) in mid-2020. The company has also initiated a rolling submission of a biologics license application (BLA) for its REGN-EB3 Ebola virus drug.