Surgery News

Regeneron second-quarter total revenues increase to $115.9 million

March 25, 2016

At June 30, 2010, cash, restricted cash, and marketable securities totaled $380.2 million compared with $390.0 million at December 31, 2009.  During the first half of 2010, the Company received $47.5 million from its landlord in connection with tenant improvement costs for new laboratory and office facilities that the Company leases in Tarrytown, New York.  In addition, the Company received $20.0 million annual technology licensing payments from each of AstraZeneca and Astellas during the first six months of 2010, as described below.

Revenues

Total revenues increased to $115.9 million in the second quarter of 2010 from $90.0 million in the same quarter of 2009 and increased to $219.4 million for the first half of 2010 from $165.0 million for the same period of 2009.  The Company's revenue was comprised of collaboration revenue, technology licensing revenue, net product sales, and contract research and other revenue.  

Collaboration Revenue

Collaboration revenue relates to the Company's aflibercept and antibody collaborations with sanofi-aventis and the Company's VEGF Trap-Eye collaboration with Bayer HealthCare.  

Sanofi-aventis' reimbursement of Regeneron's aflibercept expenses decreased for the three and six months ended June 30, 2010, compared to 2009, due to lower costs related to manufacturing aflibercept clinical supplies as well as a decrease in internal research activities.  Sanofi-aventis also incurs aflibercept development expenses directly, including costs related to the Phase 3 clinical trials sanofi-aventis is overseeing.  

Sanofi-aventis' reimbursement of Regeneron's expenses under the antibody collaboration increased for the three and six months ended June 30, 2010, compared to the same periods in 2009, due to an increase in research activities under the companies' expanded collaboration, as described above, and increases in development activities for antibody candidates in clinical development.  

In periods when the Company recognizes VEGF Trap-Eye development expenses that the Company incurs under the collaboration with Bayer HealthCare, the Company also recognizes, as collaboration revenue, the portion of those VEGF Trap-Eye development expenses that is reimbursable by Bayer HealthCare.  Cost-sharing of the Company's VEGF Trap-Eye development expenses with Bayer HealthCare increased for the three and six months ended June 30, 2010, compared to the same period in 2009, due to higher costs incurred by the Company in connection with the collaboration's clinical development programs in wet AMD, DME, and CRVO.  In 2010 and 2009, development expenses incurred by Regeneron and Bayer HealthCare under the VEGF Trap-Eye global development plan were shared equally.  

Technology Licensing Revenue

Regeneron has entered into non-exclusive license agreements with AstraZeneca and Astellas that allow those companies to utilize VelocImmune? technology in their internal research programs to discover human monoclonal antibodies.  To date, the Company has received four $20.0 million annual, non-refundable payments from each of AstraZeneca and Astellas under these agreements.  Upon receipt, these payments are deferred and recognized as revenue ratably over the ensuing year of each agreement.    

Net Product Sales

Revenue and deferred revenue from product sales are recorded net of applicable provisions for prompt pay discounts, product returns, estimated rebates payable under governmental programs (including Medicaid), distributor fees, and other sales-related costs.  The Company had limited historical return experience for ARCALYST? (rilonacept) beginning with initial sales in 2008 through the end of 2009; therefore, ARCALYST? net product sales were deferred until the right of return no longer existed and rebates could be reasonably estimated.  Effective in the first quarter of 2010, the Company determined that it had accumulated sufficient historical data to reasonably estimate both product returns and rebates of ARCALYST?.  As a result, $4.8 million of previously deferred ARCALYST? net product sales were recognized as revenue in the first quarter of 2010.  

ARCALYST? net product sales totaled $5.2 million and $4.5 million for the three months ended June 30, 2010 and 2009, respectively, and $15.0 million and $8.4 million for the six months ended June 30, 2010 and 2009, respectively.  ARCALYST? net product sales during the first six months of 2010 included $10.2 million of net product sales made during this period and $4.8 million of previously deferred net product sales, as described above.  There was no deferred ARCALYST? net product sales revenue at June 30, 2010.  At June 30, 2009, deferred ARCALYST? net product sales revenue was $4.9 million.

Expenses

Total operating expenses for the second quarter of 2010 were $139.6 million, 31 percent higher than the same period in 2009, and $272.0 million for the first six months of 2010, 37 percent higher than the same period in 2009.  Average headcount increased to 1,214 in the second quarter of 2010 from 966 in the same period of 2009 and increased to 1,151 for the first half of 2010 from 952 in the same period of 2009, due primarily to the Company's expanding research and development activities, principally in connection with the sanofi-aventis antibody collaboration.  Operating expenses included non-cash compensation expense related to employee stock option and restricted stock awards of $8.7 million in the second quarter of 2010 and $17.5 million for the first six months of 2010, compared with $7.4 million and $15.1 million, respectively, for the same periods of 2009.  

Research and development (R&D) expenses increased to $124.5 million in the second quarter of 2010 from $94.2 million in the comparable quarter of 2009 and to $242.0 million in the first six months of 2010 from $174.5 million in the same period of 2009.  In the second quarter and first half of 2010, the Company incurred higher R&D costs, primarily related to additional R&D headcount and clinical development costs, manufacturing clinical supplies, and research and other development activities associated with the Company's monoclonal antibody programs.  In addition, R&D expenses include cost-sharing of Bayer HealthCare's VEGF Trap-Eye development expenses, which increased in the second quarter and first half of 2010 compared to the same periods in 2009, primarily due to higher costs in connection with the Phase 3 VEGF Trap-Eye studies being conducted by Bayer HealthCare.  

Selling, general, and administrative (SG&A) expenses increased to $14.7 million in the second quarter of 2010 from $11.7 million in the comparable quarter of 2009, and to $28.9 million in the first six months of 2010 from $23.1 million in the same period of 2009.  In the second quarter and first half of 2010, the Company incurred higher SG&A compensation expense due primarily to additional headcount, higher Non-cash Compensation Expense, and higher recruitment costs.    

Other Income and Expense

Investment income decreased to $0.6 million in the second quarter of 2010 from $1.3 million in the comparable quarter of 2009 and to $1.0 million in the first six months of 2010 compared to $3.1 million in the same period of 2009.  The decrease in investment income was primarily due to lower balances of, and lower yields on, cash and marketable securities in 2010 compared to 2009.  

Interest expense of $2.3 million in the second quarter of 2010 and $4.4 million in the first six months of 2010 was attributable to the imputed interest portion of the Company's payments to its landlord to lease newly constructed laboratory and office facilities in Tarrytown, New York.  These payments commenced in the third quarter of 2009.  

SOURCE Regeneron Pharmaceuticals, Inc.