Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) today announced financial results for the second quarter of 2020 and provided a business update.
"I'm very proud of how the Regeneron team has continued to drive important progress for patients, despite the significant challenges of the COVID-19 pandemic," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "We have advanced REGN-COV2, our antibody cocktail for COVID-19, into late-stage clinical studies in record time and are working to ensure supply is available later this year. We are continuing to drive strong performance with our marketed medicines, including EYLEA, Dupixent, and Libtayo, while also advancing research, development, and regulatory progress across a number of therapeutic areas including cancer, Type 2 inflammatory diseases, pain, and rare diseases."
"Regeneron's business continues to be resilient during these times, delivering double digit top- and bottom-line growth in the second quarter," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "Our strong balance sheet, improved competitive outlook, increasingly diversified commercial portfolio, and robust pipeline position Regeneron well for sustained long-term growth."
Financial Highlights
| Q2 2020 | Q2 2019 | % Change | ||||||||||||||||||||
| GAAP | % Change | Non-GAAP(1) | % Change | |||||||||||||||||||
| Q2 2020 | Q2 2019 | Q2 2020 | Q2 2019 | * | * | * | * | |||||||||||||||
| * GAAP and non-GAAP amounts are equivalent as no non-GAAP adjustments have been recorded | ||||||||||||||||||||||
- GAAP R&D expenses in the second quarter of 2020 included $85 million in up-front payments in connection with the collaboration agreement with Intellia. GAAP R&D expenses in the second quarter of 2019 included a $400 million up-front payment in connection with the collaboration agreement with Alnylam Pharmaceuticals, Inc. Non-GAAP R&D expenses increased in the second quarter of 2020 principally due to additional costs incurred in connection with COVID-19 related development activities, higher headcount and headcount-related costs, and an increase in clinical manufacturing activities.
- The higher GAAP and non-GAAP SG&A expenses in the second quarter of 2020 were primarily due to higher headcount-related costs, higher contributions to independent not-for-profit patient assistance organizations, and the Company no longer receiving Praluent-related cost reimbursements from Sanofi.
- The increase in cost of collaboration and contract manufacturing in the second quarter of 2020 was primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent, process validation costs in connection with manufacturing REGN-EB3 under the BARDA Ebola agreement, and recognition of costs in connection with manufacturing ex-U.S. commercial supplies of Praluent for Sanofi under the new agreement.
- Other operating (income) expense, net, includes recognition of a portion of amounts previously deferred in connection with up-front and development milestone payments, as applicable, received in connection with the Company's collaborative arrangements.
In the second quarter of 2020, the Company's GAAP effective tax rate was 2.4%, compared to 14.1% in the second quarter of 2019. The GAAP effective tax rate for the second quarter of 2020 was positively impacted, compared to the U.S. federal statutory rate, primarily by stock-based compensation, and, to a lesser extent, income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate and federal tax credits for research activities. In the second quarter of 2020, the non-GAAP effective tax rate was 0.9%, compared to 19.1% in the second quarter of 2019. The Company expects its full year 2020 GAAP effective tax rate to be 9–11% and its non-GAAP effective tax rate to be 10–12% (see financial guidance table below).
GAAP net income per diluted share was $7.61 in the second quarter of 2020, compared to GAAP net income per diluted share of $1.68 in the second quarter of 2019. Non-GAAP net income per diluted share was $7.16 in the second quarter of 2020, compared to non-GAAP net income per diluted share of $6.02 in the second quarter of 2019. A reconciliation of the Company's GAAP to non-GAAP results is included in Table 3 of this press release.
As described above, during the second quarter of 2020, the Company purchased 9,806,805 shares of Common Stock from Sanofi and recorded the cost of the shares received, or $5 billion, as Treasury Stock.
The Company generated $943 million of net cash provided by operating activities in the second quarter of 2020, compared to $188 million in the second quarter of 2019, which led to $814 million in free cash flow for the second quarter of 2020, compared to $94 million for the second quarter of 2019.
About Regeneron Pharmaceuticals, Inc.
Regeneron is a leading biotechnology company that invents life-transforming medicines for people with serious diseases. Founded and led for over 30 years by physician-scientists, Regeneron's unique ability to repeatedly and consistently translate science into medicine has led to seven FDA-approved treatments and numerous product candidates in development, all of which were homegrown in Regeneron's laboratories. Regeneron's medicines and pipeline are designed to help patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, infectious diseases, and rare diseases.
Regeneron is accelerating and improving the traditional drug development process through its proprietary VelociSuite® technologies, such as VelocImmune®, which uses unique genetically-humanized mice to produce optimized fully-human antibodies and bispecific antibodies, and through ambitious research initiatives such as the Regeneron Genetics Center®, which is conducting one of the largest genetics sequencing efforts in the world.
For additional information about the Company, please visit www.regeneron.com or follow @Regeneron on Twitter.
