Regeneron Reports First Quarter Financial and Operating Results.Business Editors/Health/Medical Writers BIOWIRE2K TARRYTOWN, N.Y.--(BUSINESS WIRE)--April 26, 2004 Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) today announced financial and operating results for the first quarter of 2004. Regeneron reported net income of $64.5 million, or $1.17 per basic share and $1.06 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the first quarter of 2004 compared with a net loss of $30.3 million, or $0.68 per share (basic and diluted), for the first quarter of 2003. The increase in net income was due principally to non-recurring income related to the Company's collaboration with Novartis Pharma AG. In the first quarter of 2004, Novartis notified Regeneron of its decision to forgo its right under the collaboration to jointly develop the Interleuken-1 (IL-1) Trap and agreed to pay $42.75 million to satisfy its obligation to fund development costs for the IL-1 Trap for the nine month period following its notification and for the two months prior to that notice. Regeneron included this $42.75 million in other contract income in the first quarter. In addition, the Company recognized contract research and development revenue of $22.1 million which represents the remaining amount of the March 2003 up-front, non-refundable payment from Novartis that had previously been deferred. Novartis also forgave for·gave v. Past tense of forgive. forgave Verb the past tense of forgive forgave forgive all of its outstanding loans to Regeneron totaling $17.8 million, based on Regeneron's achieving a pre-defined development milestone, which was recognized as a research progress payment. At March 31, 2004, cash, marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , and restricted marketable securities totaled $351.4 million compared with $366.6 million at December 31, 2003. In April 2004, the Company received the $42.75 million payments from Novartis described above. The Company expects to end the year with a cash balance of $300 to $325 million. The Company's $200.0 million of convertible notes, which bear interest at 5.5% per annum Per annum Yearly. , mature in 2008. Regeneron's total revenue increased to $62.0 million in the first quarter of 2004 from $9.9 million in the same period of 2003 due principally to the Company's collaborations with Novartis and Aventis. Contract research and development revenue increased to $41.6 million in the first quarter of 2004 from $9.2 million in the same period of 2003. Contract research and development revenue related to the Novartis collaboration was $22.1 million in the first quarter of 2004 (as described above) compared to $6.5 million in the first quarter of 2003. Regeneron does not expect future contract research and development revenue from Novartis. Contract research and development revenue also increased in the first quarter of 2004 compared with 2003 due to the recognition of $16.4 million of revenue related to the Company's collaboration with Aventis for the joint development and commercialization of the VEGF VEGF vascular endothelial growth factor. Trap. The Aventis revenue consists of $13.7 million for reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. of VEGF Trap development expenses and $2.7 million related to a September 2003 up-front, non-refundable payment. The Company recognizes revenue in connection with collaborations in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Staff Accounting Bulletin No. 104, Revenue Recognition. As a result, $73.6 million of the Aventis up-front payment has been deferred as of March 31, 2004 and will be recognized as revenue in future periods. Contract manufacturing revenue relates to Regeneron's long-term manufacturing agreement with Merck & Co., Inc. Contract manufacturing revenue increased to $2.6 million in the first quarter of 2004 from $0.7 million in the same period of 2003 because the Company shipped more product to Merck during the quarter. The Company recognizes revenue and the related manufacturing expense as product is shipped to Merck. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the first quarter of 2004 were $38.2 million, one percent lower than the same period in 2003. Research and development (R&D) expenses decreased 6.4% to $32.2 million in the first quarter of 2004 from $34.4 million in the comparable quarter of 2003 primarily due to a decline in development expenses for the Company's AXOKINE(R) and IL-1 Trap programs. This decline in expenses for the AXOKINE and IL-1 Trap programs was partially offset by increased VEGF Trap development expenses, which are being fully funded by Aventis. Contract manufacturing expense, which relates to the Merck agreement, increased to $2.2 million in the first quarter of 2004 from $0.7 million in the comparable quarter of 2003 primarily because more product was shipped to Merck. General and administrative expenses increased 9.6% to $3.8 million in the first quarter of 2004 from $3.5 million in the comparable quarter of 2003 primarily due to an increase in professional fees and patent-related expenses. Investment income declined 7.0% in the first quarter of 2004 compared with the same period of 2003 due to lower effective interest rates on investment securities. Interest expense increased 6.7% in the first quarter of 2004 compared with the same period in 2003. Interest expense is attributable primarily to the Company's convertible notes. Per share amounts are based on the weighted average number of shares of the Company's Common Stock and Class A Stock outstanding. For the quarter ended March 31, 2004, the weighted average number of shares outstanding (basic) increased to 55.3 million shares compared with 44.3 million shares in the same period last year, due primarily to the sale of 7.5 million and 2.8 million shares of the Company's Common Stock to Novartis and Aventis, respectively, in 2003. Current Business Highlights Regeneron has a diversified diversified (di·verˑ·s pipeline of clinical programs. In the first quarter of 2004, Aventis and Regeneron expanded the VEGF Trap clinical development program to include the potential treatment of eye diseases. The initial phase 1 trial is a randomized ran·dom·ize tr.v. ran·dom·ized, ran·dom·iz·ing, ran·dom·iz·es To make random in arrangement, especially in order to control the variables in an experiment. , placebo-controlled, dose-escalating study in patients with the neovascular or "wet" form of age-related macular degeneration Age-related macular degeneration (ARMD) Degeneration of the macula (the central part of the retina where the rods and cones are most dense) that leads to loss of central vision in people over 60. (wet AMD (Advanced Micro Devices, Inc., Sunnyvale, CA, www.amd.com) A major manufacturer of semiconductor devices including x86-compatible CPUs, embedded processors, flash memories, programmable logic devices and networking chips. ), a major cause of severe vision impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and blindness in adults over 55. This trial is designed to assess the safety and tolerability tol·er·a·ble adj. 1. Capable of being tolerated; endurable. 2. Fairly good; passable. See Synonyms at average. tol of the VEGF Trap and to obtain a preliminary assessment of the potential effect of the VEGF Trap on visual acuity visual acuity n. Sharpness of vision, especially as tested with a Snellen chart. Normal visual acuity based on the Snellen chart is 20/20. Visual acuity The ability to distinguish details and shapes of objects. . Patients will receive treatment via intravenous intravenous /in·tra·ve·nous/ (-ve´nus) within a vein or veins.intrave´nously in·tra·ve·nous adj. Abbr. IV Within or administered into a vein. infusions. The companies expect to expand the ocular ocular /oc·u·lar/ (ok´u-lar) 1. of, pertaining to, or affecting the eye. 2. eyepiece. oc·u·lar adj. 1. Of or relating to the eye or the sense of sight. program to include additional indications, such as diabetic retinopathy diabetic retinopathy n. Retinal changes occurring in long-term diabetes and characterized by punctate hemorrhages, microaneurysms, and sharply defined waxy exudates. (DR), where the excess growth of blood vessels Blood vessels Tubular channels for blood transport, of which there are three principal types: arteries, capillaries, and veins. Only the larger arteries and veins in the body bear distinct names. can cause blindness in diabetic patients. They also plan to study use of the VEGF Trap utilizing direct eye injections, the route of delivery used with other treatments. Aventis and Regeneron also initiated a phase 1 clinical trial phase 1 clinical trial Phase 1 study. See Phase study. of the VEGF Trap in cancer by intravenous infusions. The initial phase 1 trial in cancer of the VEGF Trap delivered by subcutaneous injection Noun 1. subcutaneous injection - an injection under the skin injection, shot - the act of putting a liquid into the body by means of a syringe; "the nurse gave him a flu shot" is nearing completion. The maximum dose in the initial trial was limited to 1.6 mg/kg (milligram milligram /mil·li·gram/ (mg) (mil´i-gram) one thousandth (10-3) of a gram. mil·li·gram n. Abbr. mg A metric unit of mass equal to one thousandth (10-3) of a gram. per kilogram kilogram, abbr. kg, fundamental unit of mass in the metric system, defined as the mass of the International Prototype Kilogram, a platinum-iridium cylinder kept at Sèvres, France, near Paris. of weight) per week, and there is no indication to date that a maximum tolerated dose has been reached. Intravenous infusions will allow the companies to assess even higher doses to obtain higher plasma levels of VEGF Trap than could be achieved in the earlier trial. Regeneron also announced in the first quarter that it plans to initiate a phase 2b trial of the IL-1 Trap in rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. later in 2004. The decision was made based on the recommendation of a panel of experts in rheumatoid arthritis who had examined the results of the phase 2 trial, which was completed in the second half of 2003. The phase 2b trial will be conducted in a larger patient population, testing higher doses over a longer period of time than in the phase 2 trial. The Company also plans to begin evaluating the IL-1 Trap in a number of other inflammatory conditions where interleuken-1 is believed to play an important detrimental det·ri·men·tal adj. Causing damage or harm; injurious. det  ri·men role.The phase 1 trial for the IL-4/13 Trap in patients with mild to moderate asthma completed. The IL-4/13 Trap was generally safe and well tolerated at the doses tested in this trial, and there were no indications that a maximum tolerated dose had been reached. The results of the trial will be reported at the American Thoracic Society American Thoracic Society (ATS ), established in 1905, is an independently incorporated, international, educational and scientific society, serving its 18,000 members world-wide who are dedicated in respiratory and critical care medicine. meeting in May 2004. The Company's proprietary Trap program has been the principal source of the therapeutic candidates being examined in clinical trials. These molecules have been designed to block specific cytokines Cytokines Chemicals made by the cells that act on other cells to stimulate or inhibit their function. Cytokines that stimulate growth are called "growth factors. and growth factors in the blood stream that, in excess, have been shown to cause harmful biological activity. In addition to the Traps in clinical studies, Regeneron has other Traps in preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. development. About Regeneron Regeneron is a biopharmaceutical company that discovers, develops, and intends to commercialize therapeutic medicines for the treatment of serious medical conditions See carpal tunnel syndrome, computer vision syndrome, dry eyes and deep vein thrombosis. . Regeneron has therapeutic candidates in clinical trials for the potential treatment of cancer, eye diseases, rheumatoid arthritis, asthma, and obesity obesity, condition resulting from excessive storage of fat in the body. Obesity has been defined as a weight more than 20% above what is considered normal according to standard age, height, and weight tables, or by a complex formula known as the body mass index. and has preclinical programs in other diseases and disorders. This news release discusses historical information and includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. about Regeneron and its products, programs, finances, and business, all of which involve a number of risks and uncertainties, such as risks associated with preclinical and clinical development of drugs and biologics, determinations by regulatory and administrative governmental authorities, competitive factors, technological developments, the availability and cost of capital, the costs of developing, producing, and selling products, the potential for any collaboration agreement to be canceled or to terminate without any product success, and other material risks. A more complete description of these risks can be found in Regeneron's filings with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities and Exchange Commission, including its Form 10-K/A for the year ended December 31, 2003. Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events, or otherwise unless required by law. Additional Information about Regeneron and recent news releases are available on Regeneron's Worldwide Web Home Page at www.regeneron.com.
REGENERON PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
March 31, December 31,
2004 2003
------------------------
ASSETS
Cash, marketable securities, and restricted
marketable securities $351,378 $366,566
Receivables 59,882 15,529
Inventory 9,098 9,006
Property, plant, and equipment, net 77,616 80,723
Other assets 8,204 7,731
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Total assets $506,178 $479,555
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $18,947 $18,933
Deferred revenue 83,009 109,003
Notes payable 200,000 200,000
Other liabilities 116 13,976
Stockholders' equity 204,106 137,643
------------------------
Total liabilities and
stockholders' equity $506,178 $479,555
========================
REGENERON PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
For the three months
ended March 31,
2004 2003
-----------------------
Revenues
Contract research and development $41,610 $9,213
Research progress payment 17,770
Contract manufacturing 2,610 712
-----------------------
61,990 9,925
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Expenses
Research and development 32,181 34,390
Contract manufacturing 2,225 666
General and administrative 3,790 3,459
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38,196 38,515
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Income (loss) from operations 23,794 (28,590)
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Other income (expense)
Other contract income 42,750
Investment income 1,124 1,208
Interest expense (3,136) (2,939)
-----------------------
40,738 (1,731)
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Net income (loss) $64,532 ($30,321)
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Net income (loss) per share:
Basic $1.17 ($0.68)
Diluted $1.06 ($0.68)
Weighted average shares outstanding:
Basic 55,283 44,309
Diluted 63,620 44,309
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