UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 7, 2006
(November 6, 2006)
REGENERON PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Charter)
| New York | 000-19034 | 133444607 | ||
| (State or other jurisdiction of Incorporation) |
(Commission File No.) | (IRS Employer Identification No.) |
777 Old Saw Mill River Road, Tarrytown, New York 10591-6707
(Address of principal executive offices, including zip code)
(914) 347-7000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial
Condition.
On November 6, 2006, Regeneron Pharmaceuticals, Inc. issued a press release announcing
its financial and operating results for the quarter and nine months ended September 30, 2006. The
press release is being furnished to the Securities and Exchange Commission pursuant to Item 2.02 of
Form 8-K and is attached as Exhibit 99.1 to this Form 8-K.
Item 9.01 Financial
Statements and Exhibits.
(d) Exhibits
99.1 Press Release dated November 6, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 7, 2006 | REGENERON PHARMACEUTICALS, INC. |
|||
| By: | /s/ Stuart Kolinski | |||
| Name: | Stuart Kolinski | |||
| Title: | Vice President and General Counsel | |||
Exhibit Index
| Number | Description | |||
| 99.1 | Press Release dated November 6, 2006. |
|||
Exhibit 99.1
FOR IMMEDIATE RELEASE
REGENERON REPORTS THIRD QUARTER
FINANCIAL AND OPERATING RESULTS
FINANCIAL AND OPERATING RESULTS
Tarrytown, New York (November 6, 2006) — Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) today
announced financial and operating results for the third quarter of 2006. The Company reported a
net loss of $27.4 million, or $0.48 per share (basic and diluted), for the third quarter of 2006
compared with a net loss of $34.7 million, or $0.62 per share (basic and diluted), for the third
quarter of 2005. The Company reported a net loss of $71.4 million, or $1.25 per share (basic and
diluted), for the nine months ended September 30, 2006 compared with a net loss of $65.8 million,
or $1.18 per share (basic and diluted), for the same period in 2005. Results for the first nine
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 September 30, 2006, cash and marketable securities totaled $289.6 million compared with $316.7
million at December 31, 2005. On October 18, 2006, the Company entered into a collaboration
agreement with Bayer HealthCare, as described below, and Bayer made an up-front payment to the
Company of $75.0 million. The Company’s $200.0 million of convertible notes, which bear interest
at 5.5% per annum, mature in October 2008.
Current Business Highlights
In the third quarter of 2006, Regeneron reported expanded clinical development
programs for its
lead product candidates in oncology, eye disease, and inflammatory indications. In oncology,
Regeneron’s Vascular Endothelial Growth Factor (VEGF) Trap is being developed in collaboration with sanofi-aventis. The development program in oncology is
expected to total over $400 million over the next several years, which will be funded by
sanofi-aventis. In eye disease, the Company recently announced a collaboration with Bayer
HealthCare for the development of the VEGF Trap-Eye, a specially purified and formulated form of
the VEGF Trap for use in intraocular applications. The development program in eye disease is
expected to total over $250 million over the next several years, with the Company and Bayer
HealthCare sharing the costs. The Company is independently developing the Interleukin-1 Trap (IL-1
Trap) for certain inflammatory indications.
Regeneron and sanofi-aventis recently expanded their Phase 2 single-agent program for the VEGF Trap
in cancer patients. Currently, sanofi-aventis and Regeneron are conducting three Phase 2 studies,
with patient enrollment underway in advanced ovarian cancer (AOC), non-small cell lung
adenocarcinoma (NSCLA), and AOC patients with symptomatic malignant ascites (SMA). In addition,
four new Phase 2 single-agent studies are beginning in conjunction with the National Cancer
Institute (NCI) Cancer Therapy Evaluation Program (CTEP) in metastatic breast cancer, metastatic or
unresectable kidney cancer, recurrent ovarian cancer, and recurrent malignant gliomas. The
companies are working to finalize plans with NCI/CTEP for at least six additional trials in
different cancer types.
Sanofi-aventis and Regeneron intend to conduct three Phase 3 trials evaluating the safety and
efficacy of the VEGF Trap in combination with standard chemotherapy regimens in specific cancer
types, the first of which is planned to begin in early 2007. Five safety and tolerability studies
of the VEGF Trap in combination with standard chemotherapy regimens are in progress in a variety of
cancer types to support the planned Phase 3 clinical program. The companies have previously
summarized information from two of these safety and tolerability trials. One study is evaluating
the
VEGF Trap in combination with oxaliplatin, 5-flourouracil, and leucovorin (FOLFOX4) in a Phase
1 trial of patients with advanced solid tumors. Another study is evaluating the
VEGF Trap in combination with irinotecan, 5-fluorouracil, and leucovorin (LV5FU2-CPT11) in a Phase
1 trial of patients with advanced solid tumors. 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 is continuing.
In October 2006, Bayer HealthCare and Regeneron announced that the companies had entered into a
collaboration agreement for the development and commercialization of the VEGF Trap-Eye outside the
United States. Under the agreement, Bayer and Regeneron will collaborate and share the costs of
development of the VEGF Trap-Eye through an integrated global plan that encompasses the neovascular
form of age-related macular degeneration (wet AMD), diabetic eye diseases, and other eye diseases
and disorders. The companies will share equally in profits from ex-U.S. sales of the VEGF Trap-Eye.
Within the U.S., Regeneron has retained exclusive commercialization rights in all indications and
will retain 100% of all profits from any such sales. Regeneron can earn up to $110 million in
total development and regulatory milestones related to the development of the VEGF Trap-Eye and
marketing approvals in major market countries outside the U.S. Regeneron can also earn up to $135
million in sales milestones if total annual ex-U.S. sales of the VEGF Trap-Eye achieve certain
specified levels starting at $200 million. If a VEGF Trap-Eye product is granted marketing
authorization in a major market country outside the U.S., Regeneron, from its 50% share of VEGF
Trap-Eye profits outside the U.S., will reimburse Bayer for 50% of the development costs that Bayer
has incurred.
In the clinical development program for the VEGF Trap-Eye, the companies currently are recruiting
for a 150 patient, 12 week, Phase 2 trial of the VEGF Trap-Eye in wet AMD. 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 (ARVO) and recently updated at the American
Society of Retinal Specialists (ASRS) annual meeting in Cannes, France. The Phase 2 trial is evaluating the safety and biological effect
of repeated intravitreal (ITV) 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.
In October 2006, Regeneron announced positive data from a Phase 3 clinical program designed to
provide two separate demonstrations of efficacy for the investigational drug IL-1 Trap (rilonacept)
within a single group of patients suffering from a rare chronic disease known as CAPS
(CIAS1-related autoinflammatory periodic syndromes). The Phase 3 program of the IL-1 Trap included
two studies (Part A and Part B). Both studies met their primary endpoints (Part A: p < 0.0001
and Part B: p < 0.001). The primary endpoint of both studies was the change in disease
activity, which was measured using a composite symptom score composed of a daily evaluation of
fever/chills, rash, fatigue, joint pain, and eye redness/pain.
Regeneron plans to submit a Biologics License Application (BLA) with the U.S. Food and Drug
Administration (FDA) for CAPS in the second quarter of 2007, following completion of a 24-week
open-label extension phase. The FDA has granted Orphan Drug status and Fast Track designation to
the IL-1 Trap for the treatment of CAPS. Regeneron also is evaluating the potential use of the
IL-1 Trap in other indications in which IL-1 may play a role. In particular, based on preclinical
evidence that IL-1 appears to play a critical role in gout, the Company is preparing to initiate an
exploratory study in gout in early 2007. In an ongoing pilot study in systemic juvenile idiopathic
arthritis (SJIA), we observed evidence of biological activity and clinical response, but also noted
clinical variability across the SJIA patients. While we continue to evaluate the IL-1 Trap in
these patients, no new studies in SJIA are currently planned.
In September 2006, the Company was awarded a five-year grant from the National Institutes of Health
(NIH) as part of the NIH’s Knockout Mouse Project. The goal of the Knockout Mouse Project is to
build a comprehensive and broadly available resource of
knockout mice to accelerate the understanding of gene function and human diseases. Regeneron will
use its VelociGene® technology to take aim at 3,500 of the most difficult genes to
target and which are not currently the focus of other large-scale knockout mouse programs. Under
the NIH grant, Regeneron will be entitled to receive a minimum of $18.9 million over the five-year
period.
VelociGene, along with VelocImmune®, Regeneron’s novel technology for producing fully
human monoclonal antibodies, are part of the Company’s suite of proprietary, inter-related
technology platforms that is designed to provide Regeneron with its next generation of therapeutic
drug candidates. Regeneron plans to move two new antibody candidates into clinical trials each
year going forward beginning in 2007.
Financial Results
Regeneron’s total revenue decreased to $15.6 million in the third quarter of 2006 from $16.2
million in the same quarter of 2005 and increased to $53.1 million for the first nine months of
2006 from $48.8 million for the same period of 2005. 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 related to Regeneron’s long-term manufacturing
agreement with Merck & Co., Inc., which expired in October 2006.
Regeneron recognized contract research and development revenue of $10.0 million in the third
quarter of 2006 and $38.7 million for the first nine months of 2006 related to the Company’s
collaboration with sanofi-aventis, compared with $11.2 million and $30.4 million, respectively, for
the same periods of 2005. Contract research and development
revenue from the sanofi-aventis
collaboration consisted of reimbursement 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 decreased to $7.0 million in the third quarter of 2006 from $8.9 million in the comparable quarter
of 2005, but increased to $29.6 million in the first nine months of 2006 from $23.4 million in the
same period of 2005, principally because costs related to the Company’s manufacture of VEGF Trap
clinical supplies were lower in the third quarter of 2006, but higher for the first nine months of
2006, compared to the same periods of 2005, respectively. With respect to the up-front payments
from sanofi-aventis, $3.0 million was recognized in the third quarter of 2006 compared to $2.3
million in the same quarter of 2005, and $9.1 million was recognized in the first nine months of
2006 compared to $7.0 million in the same period of 2005.
Sanofi-aventis also incurs VEGF Trap development expenses directly and these expenses 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, Regeneron, from its 50% share of VEGF Trap profits,
will reimburse sanofi-aventis for 50% of the VEGF Trap development expenses previously paid by
sanofi-aventis.
Total operating expenses for the third quarter of 2006 were $43.9 million, 13 percent lower than
the comparable quarter in 2005, and $127.3 million for the first nine months of 2006, 11 percent
lower than the same period in 2005, due, in part, to lower Company headcount. Average Company
headcount declined to 574 in the first nine months of 2006 from 728 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) 123 in
2005, and in accordance with SFAS 123R (which is a revision of SFAS 123), effective January 1,
2006. Operating expenses in the
third quarter of 2006 and 2005 include a total of $4.7 million and $5.5 million, respectively, of
Stock Option Expense, as follows:
For the three months ended September 30,
| (in millions) | 2006 | |||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | ||||||||||||
| Expenses | Option Expense | Stock Option Expense | Expenses as Reported | |||||||||
Research and development |
$ | 32.1 | $ | 2.7 | $ | 34.8 | ||||||
Contract manufacturing |
3.0 | 0.1 | 3.1 | |||||||||
General and administrative |
4.1 | 1.9 | 6.0 | |||||||||
Total operating expenses |
$ | 39.2 | $ | 4.7 | $ | 43.9 | ||||||
For the three months ended September 30,
| (in millions) | 2005 | |||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | ||||||||||||
| Expenses | Option Expense | Stock Option Expense | Expenses as Reported | |||||||||
Research and development |
$ | 37.8 | $ | 3.3 | $ | 41.1 | ||||||
Contract manufacturing |
3.0 | 0.3 | 3.3 | |||||||||
General and administrative |
4.3 | 1.9 | 6.2 | |||||||||
Total operating expenses |
$ | 45.1 | $ | 5.5 | $ | 50.6 | ||||||
Operating expenses for first nine months of 2006 and 2005 include a total of $13.2 million and
$16.2 million, respectively, of Stock Option Expense, as follows:
For the nine months ended September 30,
| (in millions) | 2006 | |||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | ||||||||||||
| Expenses | Option Expense | Stock Option Expense | Expenses as Reported | |||||||||
Research and development |
$ | 94.0 | $ | 7.3 | $ | 101.3 | ||||||
Contract manufacturing |
7.4 | 0.3 | 7.7 | |||||||||
General and administrative |
12.7 | 5.6 | 18.3 | |||||||||
Total operating expenses |
$ | 114.1 | $ | 13.2 | $ | 127.3 | ||||||
For the nine months ended September 30,
| (in millions) | 2005 | |||||||||||
| Expenses before | ||||||||||||
| inclusion of Stock | ||||||||||||
| Expenses | Option Expense | Stock Option Expense | Expenses as Reported | |||||||||
Research and development |
$ | 107.6 | $ | 10.1 | $ | 117.7 | ||||||
Contract manufacturing |
7.1 | 0.3 | 7.4 | |||||||||
General and administrative |
12.8 | 5.8 | 18.6 | |||||||||
Total operating expenses |
$ | 127.5 | $ | 16.2 | $ | 143.7 | ||||||
Research and development (R&D) expenses decreased to $34.8 million in the third quarter of
2006 from $41.1 million in the comparable quarter of 2005, and to $101.3 million in the first nine
months of 2006 from $117.7 million in the same period of 2005. In addition to the impact of lower
Company headcount, as described above, in the first nine months 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 and VEGF Trap-Eye.
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 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, which was adopted effective January 1,
2005. 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
nine 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. Regeneron has therapeutic
candidates in clinical trials for the potential treatment of cancer, eye diseases, and inflammatory
diseases, and has preclinical programs in other diseases and disorders.
This news release discusses historical information and includes forward-looking statements
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 agreements with the sanofi-aventis Group
and Bayer HealthCare, 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
Securities and Exchange Commission (SEC), including its Form 10-K for the year ended December 31,
2005 and Form 10-Q for the quarter ended June 30, 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.
###
Contacts:
|
||||
Investors:
|
Media: | |||
Charles Poole
|
Lauren Tortorete | |||
914.345.7640
|
212.845.5609 | |||
Charles.Poole@regeneron.com
|
ltortorete@biosector2.com | |||
REGENERON PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)
| September 30, | December 31, | |||||||
| 2006 | 2005 | |||||||
ASSETS |
||||||||
Cash and marketable securities |
$ | 289,597 | $ | 316,654 | ||||
Receivables |
7,940 | 36,521 | ||||||
Property, plant, and equipment, net |
51,035 | 60,535 | ||||||
Other assets |
6,614 | 9,791 | ||||||
Total assets |
$ | 355,186 | $ | 423,501 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 19,054 | $ | 23,337 | ||||
Deferred revenue |
73,659 | 86,162 | ||||||
Notes payable |
200,000 | 200,000 | ||||||
Stockholders’ equity |
62,473 | 114,002 | ||||||
Total liabilities and stockholders’ equity |
$ | 355,186 | $ | 423,501 | ||||
REGENERON PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
| For the three months | For the nine months | |||||||||||||||
| ended September 30, | ended September 30, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues |
||||||||||||||||
Contract research and development |
$ | 11,448 | $ | 11,533 | $ | 41,026 | $ | 38,580 | ||||||||
Contract manufacturing |
4,176 | 4,661 | 12,075 | 10,189 | ||||||||||||
| 15,624 | 16,194 | 53,101 | 48,769 | |||||||||||||
Expenses |
||||||||||||||||
Research and development |
34,808 | 41,116 | 101,290 | 117,670 | ||||||||||||
Contract manufacturing |
3,054 | 3,246 | 7,716 | 7,412 | ||||||||||||
General and administrative |
6,019 | 6,219 | 18,264 | 18,581 | ||||||||||||
| 43,881 | 50,581 | 127,270 | 143,663 | |||||||||||||
Loss from operations |
(28,257 | ) | (34,387 | ) | (74,169 | ) | (94,894 | ) | ||||||||
Other income (expense) |
||||||||||||||||
Other contract income |
30,640 | |||||||||||||||
Investment income |
3,858 | 2,746 | 11,023 | 7,515 | ||||||||||||
Interest expense |
(3,011 | ) | (3,011 | ) | (9,033 | ) | (9,035 | ) | ||||||||
| 847 | (265 | ) | 1,990 | 29,120 | ||||||||||||
Net loss before cumulative effect of a change
in accounting principle |
(27,410 | ) | (34,652 | ) | (72,179 | ) | (65,774 | ) | ||||||||
Cumulative effect of adopting Statement of
Financial Accounting Standards No. 123R
(“SFAS 123R”) |
813 | |||||||||||||||
Net loss |
($27,410 | ) | ($34,652 | ) | ($71,366 | ) | ($65,774 | ) | ||||||||
Net loss per share amounts, basic and diluted: |
||||||||||||||||
Net loss before cumulative effect of a
change in accounting principle |
($0.48 | ) | ($0.62 | ) | ($1.27 | ) | ($1.18 | ) | ||||||||
Cumulative effect of adopting SFAS 123R |
0.02 | |||||||||||||||
Net loss |
($0.48 | ) | ($0.62 | ) | ($1.25 | ) | ($1.18 | ) | ||||||||
Weighted average shares outstanding, basic
and diluted |
57,011 | 55,978 | 56,884 | 55,903 | ||||||||||||