Regeneron Reports Second Quarter Financial and Operating Results; BLA Filing for Auto-Inflammatory Diseases Planned for Early 2007; Two Antibody Candidates from VelocImmune(R) Program to Enter Clinical Trials Each Year Beginning in 2007.TARRYTOWN, N.Y. -- Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) today announced financial and operating results for the second quarter of 2006. The Company reported a net loss of $23.6 million, or $0.41 per share (basic and diluted), for the second quarter of 2006 compared with a net loss of $27.0 million, or $0.48 per share (basic and diluted), for the second quarter of 2005. The Company reported a net loss of $44.0 million, or $0.77 per share (basic and diluted), for the six months ended June 30, 2006 compared with a net loss of $31.1 million, or $0.56 per share (basic and diluted), for the same period in 2005. Results for the first six months of 2005 included other contract income of $30.6 million resulting from one-time, non-recurring payments of $25.0 million from the sanofi-aventis Group and $5.6 million from The Procter & Gamble Company in connection with amendments to the Company's collaboration agreements with sanofi-aventis and Procter & Gamble. At June 30, 2006, cash and 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 totaled $304.1 million compared with $316.7 million at December 31, 2005. The Company's $200.0 million of convertible notes, which bear interest at 5.5% per annum Per annum Yearly. , mature in October 2008. Current Business Highlights In the second quarter of 2006, Regeneron reported clinical development progress for its lead product candidates in oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. , eye disease, and inflammatory indications. In oncology, Regeneron's Vascular Endothelial Growth Factor Vascular endothelial growth factor (VEGF) is an important signaling protein involved in both vasculogenesis (the de novo formation of the embryonic circulatory system) and angiogenesis (the growth of blood vessels from pre-existing vasculature). (VEGF VEGF vascular endothelial growth factor. ) Trap is being developed in collaboration with sanofi-aventis. The Company is independently developing the VEGF Trap-Eye, a specially purified and formulated form of the VEGF Trap, for use in intraocular intraocular /in·tra·oc·u·lar/ (-ok´u-lar) within the eye. in·tra·oc·u·lar adj. Within the eyeball. Intraocular Literally, within the eye. applications, and the Interleukin-1 (IL-1) Trap for certain inflammatory indications. In the second quarter of 2006, Regeneron and sanofi-aventis expanded their phase 2 single-agent program for the VEGF Trap in cancer patients. Patient enrollment is now underway in studies in advanced ovarian cancer ovarian cancer Malignant tumour of the ovaries. Risk factors include early age of first menstruation (before age 12), late onset of menopause (after age 52), absence of pregnancy, presence of specific genetic mutations, use of fertility drugs, and personal history of breast (AOC AOC, n an acronym for the Aromatherapy Organizations Council. ), non-small cell lung adenocarcinoma adenocarcinoma: see neoplasm. (NSCLA), and AOC patients with symptomatic malignant ascites malignant ascites Excess peritoneal fluid evoked by malignancy, which causes subdiaphragmatic lymphatic obstruction–eg, of the thoracic duct and ↑ intraperitoneal fluid production Etiology Ovarian, breast, gastric, pancreatic, hepatic, colorectal CA, (SMA (1) See SMA connector. (2) (Shared Memory Architecture) See shared video memory. (3) (Software Maintenance Association) A membership organization that began in 1985 and ended in 1996. ). In addition, the companies intend to conduct three phase 3 trials evaluating the safety and efficacy of the VEGF Trap in combination with standard chemotherapy regimens Chemotherapy regimens are often identified with acronyms, identifying the agents used in combination. Unfortunately, the letters used are not consistent across regimens, and in some cases (for example, "BEACOPP") the same letter is used to represent two different treatments. , the first of which is planned to begin in late 2006 or early 2007. The companies are working to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... plans with the National Cancer Institute (NCI See Liberate. ) Cancer Therapy Evaluation Program (CTEP CTEP Cancer Therapy Evaluation Program CTEP Community Transportation Enhancement Program (Montana) CTEP Chartered Trust and Estate Planner CTEP Community Technology Empowerment Project CTEP Collaborative Teacher Education Program ) to conduct at least ten other cancer trials, several of which are planned to initiate in 2006. Currently, sanofi-aventis and Regeneron are conducting five safety and tolerability tol·er·a·ble adj. 1. Capable of being tolerated; endurable. 2. Fairly good; passable. See Synonyms at average. tol studies for the VEGF Trap in combination with standard chemotherapy regimens designed to support subsequent phase 3 clinical trials phase 3 clinical trial Phase 3 study. See Phase study. in a variety of cancer types. At the annual meeting of the American Society of Clinical Oncology American Society of Clinical Oncology, or ASCO, is an organization that represents all clinical oncologists. Every year, ASCO holds a large symposium where physicians and researchers meet to convey and discuss research and ideas. (ASCO ASCO American Society of Clinical Oncology ASCO Association of Schools and Colleges of Optometry (since 1941; Rockville, Maryland) ASCO Australian Standard Classification of Occupations ASCO Automatic Switch Company ) in May 2006, the companies reported abstracts summarizing information from two of these studies. The first study is evaluating the VEGF Trap plus oxaliplatin, 5-flourouracil, and leucovorin (FOLFOX FOLFOX 5-Fluorouracil, Leucovorin and Oxaliplatin (chemo treatment) 4) in a phase 1 trial of patients with advanced solid tumors. The second study is evaluating the VEGF Trap plus irinotecan, 5-fluorouracil, and leucovorin (LV5FU2-CPT11) in a phase 1 trial of patients with advanced solid tumors. In both trials, patients have been treated in combination with chemotherapy in doses ranging up to 4.0 milligrams 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. (mg/kg) of the VEGF Trap. The abstracts, published in the 2006 ASCO Annual Meeting Proceedings, reported that the VEGF Trap could be safely combined with either FOLFOX4 or LV5FU2-CPT11 at the dose levels studied. The maximum tolerated doses in these studies have not yet been reached, and dose escalation es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. is continuing. In the clinical development program for the treatment of eye diseases, the Company has initiated a 150 patient, 12 week, phase 2 trial of the VEGF Trap-Eye in the neovascular 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. ). This trial follows positive results from the phase 1 study, which were presented at the May 2006 Annual Meeting of the Association for Research in Vision and Ophthalmology ophthalmology (ŏf'thălmŏl`əjē), branch of medicine specializing in the anatomy, function and diseases of the eye. Ophthalmologists specialize in the medical and surgical treatment of eye disorders, vision measurements for (ARVO ARVO Association for Research in Vision and Ophthalmology. ). The phase 2 trial is evaluating the safety and biological effect of repeated intravitreal (ITV (1) See interactive TV. (2) (iTV) The code name for Apple's video media hub (see Apple TV). ) administration of the VEGF Trap-Eye using different doses and different dosing regimens. A phase 3 trial of the VEGF Trap-Eye in wet AMD is planned to begin in early 2007. Regeneron recently completed enrollment in the pivotal study of the IL-1 Trap in adult patients with CIAS CIAS Center for Integrated Agricultural Systems (UW-Madison) CIAS Changi International Airport Services (Singapore) CIAS Canadian International Air Show CIAS Canadian International Auto Show 1-Associated Periodic Syndrome (CAPS), a spectrum of rare auto-inflammatory diseases associated with mutations in the CIAS1 gene. Interleukin-1 (IL-1) appears to play a significant role in these diseases. Participants in the trial are receiving a 160 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. dose of the IL-1 Trap once a week through subcutaneous subcutaneous /sub·cu·ta·ne·ous/ (sub?ku-ta´ne-us) beneath the skin. sub·cu·ta·ne·ous adj. Abbr. s.c., SQ Located, found, or placed just beneath the skin; hypodermic. self-administration. The six-month placebo-controlled, double-blind, efficacy phase of the study is expected to be completed and preliminary data available by the end of 2006. The efficacy phase will be followed by a six-month open-label extension phase. The Company plans to file a Biologics License Application (BLA BLA abbr. Bachelor of Liberal Arts ) for CAPS in early 2007. Regeneron also has ongoing proof-of-concept studies in other indications in which IL-1 may play a significant role, such as systemic juvenile idiopathic arthritis
Juvenile idiopathic arthritis (JIA), formerly known as juvenile rheumatoid arthritis (JRA),[1] (SJIA SJIA San Jose International Airport (California) ). The U.S. Food and Drug Administration has granted Orphan Drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the and Fast Track designations for the IL-1 Trap in CAPS. The Company has made significant progress in its VelocImmune(R) program, Regeneron's proprietary technology platform for producing fully human monoclonal antibodies This is a list of monoclonal antibodies, antibodies which are clones of a single parent cell. When used as medications, the generic names end in -mab (see "Nomenclature of monoclonal antibodies"). . Based on the strength of the VelocImmune platform; which, in conjunction with Regeneron's other proprietary technologies accelerates the development of fully human monoclonal antibodies, the Company plans to move two new antibody candidates into clinical trials each year going forward beginning in 2007. Financial Results Regeneron's total revenue increased to $19.3 million in the second quarter of 2006 from $16.4 million in the same quarter of 2005 and to $37.5 million for the first six months of 2006 from $32.6 million for the same period of 2005 due to increases in contract research and development and contract manufacturing revenue. Contract research and development revenue in 2006 principally related to the Company's VEGF Trap collaboration with sanofi-aventis in cancer indications. In 2005, contract research and development revenue related both to the Company's collaboration with sanofi-aventis and the Company's collaboration with Procter & Gamble, which ended in June 2005. Contract manufacturing revenue relates to Regeneron's long-term manufacturing agreement with Merck & Co., Inc., which will expire in the fourth quarter of 2006. Regeneron recognized contract research and development revenue of $14.8 million in the second quarter of 2006 and $28.7 million for the first six months of 2006 related to the Company's collaboration with sanofi-aventis, compared with $9.4 million and $19.2 million, respectively, for the same periods of 2005. Contract research and development revenue from the sanofi-aventis collaboration consists of reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. of VEGF Trap development expenses plus recognition of amounts related to $105.0 million of previously received and deferred up-front, non-refundable payments. Reimbursement of expenses increased to $11.8 million in the second quarter of 2006 from $7.1 million in the comparable quarter of 2005, and to $22.6 million in the first six months of 2006 from $14.5 million in the same period of 2005, primarily due to higher costs in 2006 related to the Company's manufacture of VEGF Trap clinical supplies. With respect to the up-front payments from sanofi-aventis, $3.0 million was recognized in the second quarter of 2006 compared to $2.3 million in the same quarter of 2005, and $6.1 million was recognized in the first six months of 2006 compared to $4.7 million in the same period of 2005. Sanofi-aventis also incurs VEGF Trap development expenses which are increasing because of the growing number of clinical trials sanofi-aventis is overseeing in the VEGF Trap oncology program. During the term of the collaboration, sanofi-aventis pays 100% of agreed-upon VEGF Trap development expenses incurred by both companies. Following commercialization of a VEGF Trap product by the collaboration, the Company will repay out of VEGF Trap profits 50% of these VEGF Trap development expenses previously paid by sanofi-aventis. 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 second quarter of 2006 were $43.5 million, 10 percent lower than the comparable quarter in 2005, and $83.4 million for the first six months of 2006, 10 percent lower than the same period in 2005, due, in part, to lower Company headcount. Average Company headcount declined to 583 in the first half of 2006 from 731 in the same period of 2005, primarily as a result of workforce reductions made in the fourth quarter of 2005. The Company recognized non-cash compensation expense related to employee stock option awards (Stock Option Expense) in accordance with Statement of Financial Accounting Standards No. (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ) 123 in 2005, and in accordance with SFAS 123R (which is a revision of SFAS 123), effective January 1, 2006. Operating expenses in the second quarter of 2006 and 2005 include a total of $4.6 million and $5.3 million, respectively, of Stock Option Expense, as follows:
For the three months ended June 30,
-----------------------------------
(in millions) 2006
--------------------------------------------
Expenses Expenses before
inclusion of Stock Stock Option Expenses as
Option Expense Expense Reported
-------------- ------- --------
Research and development $31.8 $2.6 $34.4
Contract manufacturing 2.7 0.1 2.8
General and administrative 4.4 1.9 6.3
--- --- ---
Total operating
expenses $38.9 $4.6 $43.5
===== ==== =====
For the three months ended June 30,
-----------------------------------
(in millions) 2005
--------------------------------------------
Expenses Expenses before
inclusion of Stock Stock Option Expenses as
Option Expense Expense Reported
-------------- ------- --------
Research and development $37.3 $3.3 $40.6
Contract manufacturing 1.6 0.1 1.7
General and administrative 4.3 1.9 6.2
--- --- ---
Total operating
expenses $43.2 $5.3 $48.5
===== ==== =====
Operating expenses for first half of 2006 and 2005 include a total of $8.5 million and $10.7 million, respectively, of Stock Option Expense, as follows:
For the six months ended June 30,
---------------------------------
(in millions) 2006
--------------------------------------------
Expenses Expenses before
inclusion of Stock Stock Option Expenses as
Option Expense Expense Reported
-------------- ------- --------
Research and development $61.9 $4.6 $66.5
Contract manufacturing 4.5 0.2 4.7
General and administrative 8.5 3.7 12.2
--- --- ----
Total operating
expenses $74.9 $8.5 $83.4
===== ==== =====
For the six months ended June 30,
---------------------------------
(in millions) 2005
--------------------------------------------
Expenses Expenses before
inclusion of Stock Stock Option Expenses as
Option Expense Expense Reported
-------------- ------- --------
Research and development $69.8 $6.7 $76.5
Contract manufacturing 4.1 0.1 4.2
General and administrative 8.5 3.9 12.4
--- --- ----
Total operating
expenses $82.4 $10.7 $93.1
===== ===== =====
Research and development (R&D) expenses decreased to $34.4 million in the second quarter of 2006 from $40.6 million in the comparable quarter of 2005, and to $66.5 million in the first six months of 2006 from $76.5 million in the same period of 2005. In addition to the impact of lower Company headcount, as described above, in the first half of 2006, the Company incurred lower development expenses for the IL-1 Trap and other clinical development programs, which were partly offset by higher development expenses for the VEGF Trap. Effective January 1, 2005, the Company adopted the fair value based method of accounting for stock-based employee compensation under the provisions of SFAS 123, Accounting for Stock-Based Compensation, using the modified prospective method described in SFAS 148, Accounting for Stock-Based Compensation - Transition and Disclosure. As a result, in 2005, the Company recognized compensation expense in an amount equal to the fair market value of share-based payments (including stock option awards) on their date of grant over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period of the awards using the multiple-option approach. Under the modified prospective method, compensation expense for the Company is recognized for (a) all share-based payments granted on or after January 1, 2005 and (b) all awards granted to employees prior to January 1, 2005 that were unvested on that date. Effective January 1, 2006, the Company adopted the provisions of SFAS 123R, Share-Based Payment, which is a revision of SFAS 123. SFAS 123R requires companies to estimate the number of awards that are expected to be forfeited for·feit n. 1. Something surrendered or subject to surrender as punishment for a crime, an offense, an error, or a breach of contract. 2. Games a. at the time of grant and to revise this estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Prior to the adoption of SFAS 123R, the Company recognized the effect of forfeitures in stock-based compensation cost in the period when they occurred, in accordance with SFAS 123. Upon adoption of SFAS 123R effective January 1, 2006, the Company was required to record a cumulative effect adjustment to reflect the effect of estimated forfeitures related to outstanding awards that are not expected to vest as of the SFAS 123R adoption date. This adjustment reduced the Company's loss by $0.8 million and is included in the Company's operating results for the first six months of 2006 as a cumulative-effect adjustment of a change in accounting principle. About Regeneron Pharmaceuticals 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, and inflammatory diseases Noun 1. inflammatory disease - a disease characterized by inflammation disease - an impairment of health or a condition of abnormal functioning NEC, necrotizing enterocolitis - an acute inflammatory disease occurring in the intestines of premature infants; , and has preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. 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 our drug candidates, determinations by regulatory and administrative governmental authorities which may delay or restrict our ability to continue to develop or commercialize our drug candidates, competing drugs that are superior to our product candidates, unanticipated expenses, the availability and cost of capital, the costs of developing, producing, and selling products, the potential for any collaboration agreement, including our agreement with the sanofi-aventis Group, to be canceled or to terminate without any product success, risks associated with third party intellectual property, and other material risks. A more complete description of these and other material 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 (SEC), including its Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005 and Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2006. 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.
REGENERON PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
June 30, December 31,
2006 2005
------------ ------------
ASSETS
Cash and marketable securities $304,083 $316,654
Receivables 12,141 36,521
Inventory 2,128 2,904
Property, plant, and equipment, net 53,854 60,535
Other assets 6,126 6,887
------------ ------------
Total assets $378,332 $423,501
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $16,466 $23,337
Deferred revenue 78,099 86,162
Notes payable 200,000 200,000
Stockholders' equity 83,767 114,002
------------ ------------
Total liabilities and stockholders'
equity $378,332 $423,501
============ ============
REGENERON PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
For the three months For the six months
ended June 30, ended June 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues
Contract research and
development $14,991 $13,545 $29,578 $27,047
Contract manufacturing 4,267 2,821 7,899 5,528
--------- --------- --------- ---------
19,258 16,366 37,477 32,575
--------- --------- --------- ---------
Expenses
Research and development 34,398 40,642 66,482 76,554
Contract manufacturing 2,810 1,675 4,662 4,166
General and administrative 6,299 6,216 12,245 12,362
--------- --------- --------- ---------
43,507 48,533 83,389 93,082
--------- --------- --------- ---------
Loss from operations (24,249) (32,167) (45,912) (60,507)
--------- --------- --------- ---------
Other income (expense)
Other contract income 5,640 30,640
Investment income 3,684 2,539 7,165 4,769
Interest expense (3,011) (3,011) (6,022) (6,024)
--------- --------- --------- ---------
673 5,168 1,143 29,385
--------- --------- --------- ---------
Net loss before cumulative
effect of a change in
accounting principle (23,576) (26,999) (44,769) (31,122)
Cumulative effect of adopting
Statement of Financial
Accounting Standards No. 123R
("SFAS 123R") 813
--------- --------- --------- ---------
Net loss ($23,576) ($26,999) ($43,956) ($31,122)
========= ========= ========= =========
Net loss per share amounts,
basic and diluted:
Net loss before cumulative
effect of a change in
accounting principle ($0.41) ($0.48) ($0.79) ($0.56)
Cumulative effect of adopting
SFAS 123R 0.02
--------- --------- --------- ---------
Net loss ($0.41) ($0.48) ($0.77) ($0.56)
========= ========= ========= =========
Weighted average shares
outstanding, basic and diluted 56,915 55,917 56,821 55,866
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