Regeneron's Q3 profit beat snaps bad news streak, but Praluent's still lagging

Regeneron

Regeneron capped a rough four weeks last Friday with news that sarilumab, its anti-inflammatory blockbuster hopeful, had been knocked aside by the FDA. But this Friday, it gave investors something to cheer about with Q3 profit that beat expectations.

The biotech turned out a non-GAAP diluted EPS of $3.13, shattering analysts’ $2.74 consensus estimate. Lower-than-expected operating expenses did the trick, with R&D and SG&A spends each coming in well below where Wall Street predicted.

The downside? Sales didn’t hit their mark, missing by 5%. Anchor med Eylea, which netted $854 million in U.S. sales, did its part in Regeneron’s home market. But Regeneron’s collaboration with French pharma giant Sanofi--which partners with the Tarrytown company on PCSK9 med Praluent--was a big reason for the miss: The partnership generated about $75 million less than analysts forecast, although as Evercore ISI’s John Scotti wrote in a note to clients, the collaboration revenue is “difficult to model and interpret.”

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Speaking of Praluent, the med’s uptake “remains slow,” Leerink Partners analyst Geoffrey Porges wrote in his own note to clients. And what’s more, fellow PCSK9 contender Repatha from Amgen topped Praluent for the quarter, generating $40 million to its rival’s $38 million.

“Implied commercial spending by the two partners in support of Praluent”--as well as pipeline candidates sarilumab and dupilumab--came out to $262 million for the quarter, Porges noted, “which supports our notion that the collaboration is likely to be loss-making for several years to come.”

Regeneron has faced a streak of setbacks recently, beginning with a failed combo trial in which candidate rinucumab plus Eylea failed to outperform Eylea on its own in treating patients with wet age-related macular degeneration. Then came an FDA clinical hold on pain prospect fasinumab, followed by the sarilumab complete response letter, which came as a result of manufacturing issues at a Sanofi fill-and-finish plant.

The company is “preparing to engage in meaningful discussions” with U.S. regulators to make sure the highly anticipated product starts adding to that collaboration revenue column as soon as possible, CEO Len Schleifer told investors on a conference call. And on the bright side, Regeneron doesn’t think the setbacks will impact atopic dermatitis up-and-comer dupilumab, another closely watched prospect.

In the meantime, the company hiked the bottom end of its growth range predictions for Eylea, which Regeneron now thinks will post expansion between 23% and 25% for the year. The powerhouse has already raked in $2.5 billion through three quarters, the company said. 

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