Regeneron's stock climbs 4% as analyst look past earnings miss to focus on pipeline

By Ciara Linnane

Executives report positive findings in treating muscle-mass loss from wegovy. The data is due next year.

Regeneron Pharmaceuticals Inc.'s stock reversed early losses to trade higher on Thursday, as analysts looked beyond a first-quarter earnings miss to focus on some of the biotech's pipeline products.

The board also approved a $3 billion share buyback program.

The Tarrytown, N.Y.-based company (REGN) had net income of $722 million, or $6.27 a share, in the quarter, down 12% from $818 million, or $7.17 a share, in the year-earlier period.

Adjusted per-share earnings came to $9.55, below the $10.20 FactSet consensus.

Revenue fell 1%, to $3.145 billion from $3.162 billion a year ago, also falling below the $3.225 billion FactSet consensus.

The revenue shortfall was partly due to a decline in sales of the company's blockbuster eye drug Eylea, which it co-developed with Bayer. Sales of Eylea were 2% to $1.402 billion. The company attributed the decline to changing market dynamics leading to lower volumes and a lower net selling price. Sales were also hit by about $40 million due to a sequential net reduction in wholesale inventory.

Sales of the company's Dupixent treatment for allergic diseases such as atopic dermatitis and asthma rose 24% to $3.08 billion.

On a call with analysts, Chief Executive and co-Founder Leonard Schleifer said the U.S. Food and Drug Administration has requested more data from trials of Dupixent as a treatment for adults with uncontrolled chronic obstructive pulmonary disease, or COPD, with type II inflammation.

The FDA accepted for priority review the supplemental Biologics License Application for that indication in February.

The regulator is now looking for data to be submitted by the end of May, although Regeneron plans to submit it sooner. The company, and partner Sanofi (SNY), are confident the data will support the approval of Dupixent in eosinophilic COPD, he said.

"If the FDA determines that they need additional time to review these analyses, a decision on the sBLA could be delayed for up to three months," he told analysts, according to a FactSet transcript.

A three-month delay for the much-anticipated review would hurt the stock, said Cantor Fitzgerald analysts, " unless there's a chance it means a broader label."

The Cantor analysts welcomed an update on the company's obesity program, which is focused on addressing the muscle loss that can occur in patients using GLP-1 receptor agonists, the popular class of drugs that includes Wegovy, Ozempic and Mounjaro, which have been approved in injectable form for diabetes or weight loss.

Regeneron is developing antibodies that may prevent that side effect, which is concerning for older, obese patients.

George Damis Yancopoulos, co-founder and chief scientific officer, told analysts that data in obese nonhuman primates had shown that combining semaglutide, which is marketed as wegovy, with Regeneron's antibody trevogrumab had shown a comparable reduction in body weight at week 20 as semaglutide alone, "but with improved quality of weight loss resulting in more fat loss while preserving or even increasing lean mass."

The company is expecting to report data in the second half of 2025.

"A lot of interest in this program: how much do we think is in the stock for it?" the Cantor analysts asked.

Regeneron is now expecting its full-year R&D costs to range from $4.920 billion to $5.170 billion, up from prior guidance of $4.820 billion to $5.070 billion. That's mostly due to the inclusion of operating expenses associated with the acquisition of 2seventy Bio's development programs, which closed on April 1.

The company expects capex to range from $780 million to $880 million, compared with prior guidance of $850 million to $950 million.

The stock is up 2.9% in the year to date, underperforming the S&P 500 , which has gained 5.2%.

See also: Regeneron accused of 'fraudulent' drug-pricing reporting for eye drug Eylea

-Ciara Linnane

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05-02-24 1349ET

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