Regeneron(REGN) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section provides unaudited financial statements and management's analysis of financial condition and operations Item 1. Financial Statements (unaudited) This section presents Regeneron Pharmaceuticals' unaudited condensed consolidated financial statements for Q2 and H1 2025, including balance sheets, statements of operations, stockholders' equity, and cash flows, with accompanying notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and marketable securities | $17,527.8 | $17,912.6 | | Accounts receivable, net | $5,610.0 | $6,211.9 | | Total current assets | $16,859.5 | $18,660.9 | | Total assets | $38,219.2 | $37,759.4 | | Liabilities & Equity | | | | Total current liabilities | $3,667.0 | $3,944.3 | | Long-term debt | $1,985.1 | $1,984.4 | | Total liabilities | $8,280.3 | $8,405.8 | | Total stockholders' equity | $29,938.9 | $29,353.6 | Condensed Consolidated Statements of Operations and Comprehensive Income This section details the company's financial performance, including revenues, expenses, and net income for the three and six-month periods ended June 30, 2025 and 2024 Q2 2025 Statement of Operations Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $3,675.6 | $3,547.1 | +3.6% | | Net Product Sales | $1,631.0 | $1,918.6 | -15.0% | | Collaboration Revenue | $1,860.7 | $1,524.0 | +22.1% | | R&D Expenses | $1,421.7 | $1,200.0 | +18.5% | | Income from Operations | $1,079.5 | $1,069.6 | +0.9% | | Net Income | $1,391.6 | $1,432.3 | -2.8% | | Diluted EPS | $12.81 | $12.41 | +3.2% | H1 2025 Statement of Operations Highlights (in millions, except per share data) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $6,704.3 | $6,692.1 | +0.2% | | Net Product Sales | $3,046.6 | $3,679.9 | -17.2% | | Collaboration Revenue | $3,391.9 | $2,790.8 | +21.5% | | R&D Expenses | $2,749.1 | $2,448.4 | +12.3% | | Income from Operations | $1,671.2 | $1,821.0 | -8.2% | | Net Income | $2,200.3 | $2,154.3 | +2.1% | | Diluted EPS | $20.02 | $18.68 | +7.2% | Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in stockholders' equity, reflecting net income, share repurchases, and dividends for the period - Total stockholders' equity increased from $29.35 billion at year-end 2024 to $29.94 billion as of June 30, 2025, primarily driven by net income of $2.20 billion[13][12] - During the first six months of 2025, the company repurchased 3.4 million shares of common stock for a total cost of $2.12 billion[13][45] - The company declared and paid dividends totaling $192.0 million in the first six months of 2025[13] Condensed Consolidated Statements of Cash Flows This section summarizes cash inflows and outflows from operating, investing, and financing activities for the six-month periods ended June 30, 2025 and 2024 Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,189.5 | $1,866.5 | | Net cash used in investing activities | ($446.5) | ($2,244.3) | | Net cash used in financing activities | ($2,217.4) | ($431.0) | | Net decrease in cash | ($473.4) | ($809.6) | - The significant decrease in cash used in investing activities in H1 2025 compared to H1 2024 was mainly due to lower net purchases of marketable securities[16] - The increase in cash used in financing activities in H1 2025 was driven by higher common stock repurchases ($2.1 billion vs. $895.2 million in H1 2024) and the payment of dividends ($186.4 million)[16] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and breakdowns of significant accounting policies, product sales, collaboration revenues, and legal proceedings Net Product Sales for Three Months Ended June 30 (in millions) | Product | 2025 | 2024 | | :--- | :--- | :--- | | EYLEA HD (U.S.) | $393.2 | $304.2 | | EYLEA (U.S.) | $754.3 | $1,230.5 | | Total EYLEA & EYLEA HD (U.S.) | $1,147.5 | $1,534.7 | | Libtayo (Global) | $376.5 | $297.4 | - Regeneron's share of profits from the significant collaboration with Sanofi for Dupixent, Kevzara, and itepekimab was $1.28 billion in Q2 2025, up from $988.3 million in Q2 2024[21][23] - The collaboration with Bayer for EYLEA outside the U.S. generated $383.4 million in profit share for Regeneron in Q2 2025, compared to $353.0 million in Q2 2024[24][25] - The company is involved in numerous legal proceedings, primarily related to patent litigation for its key product EYLEA against several companies developing biosimilars, including Mylan, Celltrion, Samsung Bioepis, and Amgen[53][54][55] - The company is also involved in matters with the Department of Justice concerning allegations of violations of the federal Anti-Kickback Statute and False Claims Act related to EYLEA[75][77] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q2 and H1 2025 financial performance, highlighting strong collaboration revenue growth offsetting declining U.S. EYLEA sales, alongside updates on product performance, clinical pipeline, and liquidity Overview and Products This section provides an overview of Regeneron's business model and presents global net product sales for its key discovered products - Regeneron is a fully integrated biotechnology company focused on inventing, developing, manufacturing, and commercializing medicines for serious diseases across multiple therapeutic areas[91] Global Net Product Sales of Regeneron-Discovered Products (in millions) | Product | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total EYLEA HD and EYLEA | $2,125.2 | $2,442.5 | (13%) | | Dupixent | $4,344.6 | $3,556.4 | 22% | | Libtayo | $376.5 | $297.4 | 27% | | Praluent | $222.0 | $191.9 | 16% | Clinical Development This section details regulatory updates, clinical trial results, and upcoming milestones for the company's pipeline products - Regulatory approvals for pending EYLEA HD applications are expected to be delayed due to FDA inspection observations at a third-party filler, Catalent[116] - The FDA issued a Complete Response Letter (CRL) for the BLA for Ordspono (odronextamab) in relapsed/refractory follicular lymphoma, also impacted by the Catalent site inspection[119] - A Phase 3 trial (AERIFY-1) for Itepekimab in COPD met its primary endpoint, but a second trial (AERIFY-2) did not, with the company discussing next steps with regulators[117] - Key upcoming milestones include an FDA decision on the sBLA for Libtayo in adjuvant CSCC in October 2025 and results from a Phase 3 study of Fianlimab in first-line metastatic melanoma in Q4 2025/Q1 2026[108][109] Results of Operations This section analyzes the drivers behind changes in revenue, research and development expenses, selling, general and administrative expenses, and the effective tax rate - U.S. net product sales of EYLEA decreased significantly in Q2 and H1 2025 due to competitive pressures, loss of market share to compounded bevacizumab, and patient transition to EYLEA HD[136][137] - Sanofi collaboration revenue increased by $298.0 million in Q2 2025, driven by higher profits from Dupixent sales[134][139] - R&D expenses increased by $221.7 million in Q2 2025, primarily due to higher clinical manufacturing costs and increased spending on various clinical programs like Lynozyfic and Trevogrumab[142][145] - SG&A expenses decreased by $124.6 million in Q2 2025, mainly due to lower charitable contributions to an independent patient assistance organization[142][148] - The effective tax rate for Q2 2025 was 8.4%, down from 12.0% in Q2 2024, partly due to the release of liabilities for uncertain tax positions following an IRS audit settlement[152] Liquidity and Capital Resources This section assesses the company's financial position, including cash, marketable securities, working capital, and capital allocation plans Financial Position (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,995.8 | $2,488.2 | | Marketable securities | $15,532.0 | $15,424.4 | | Working capital | $13,192.5 | $14,716.6 | - The company expects to incur capital expenditures of $880 million to $950 million for the full year 2025[157] - As of June 30, 2025, $2.814 billion remained available for share repurchases under the authorized programs[159] - The company initiated and paid quarterly cash dividends of $0.88 per share in Q1 and Q2 2025[160] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risks or its management of such risks as of June 30, 2025, compared to what was disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no material changes to the company's market risks or its management of such risks as of June 30, 2025[164] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[165] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[166] PART II OTHER INFORMATION This section covers other important disclosures, including legal proceedings, risk factors, equity security sales, and exhibits Item 1. Legal Proceedings This section incorporates detailed legal proceedings from Note 12, primarily concerning EYLEA patent litigation against biosimilar developers and Department of Justice investigations - Information regarding legal proceedings is incorporated by reference from Note 12 to the Condensed Consolidated Financial Statements[167] Item 1A. Risk Factors This section outlines significant risks, including dependence on key products, intense competition, pricing pressures, development uncertainties, intellectual property litigation, and reliance on third-party collaborators - The company is substantially dependent on the success of EYLEA, EYLEA HD, and Dupixent, with U.S. EYLEA sales declining due to competition and patient transition, and future sales likely impacted by biosimilar competition[179][180] - Sales are dependent on coverage and reimbursement from third-party payors, and the Inflation Reduction Act (IRA) and other drug price control measures pose a significant risk to future profitability[187][197][199] - Drug development is costly and uncertain, with serious side effects or efficacy failures potentially leading to program delays or discontinuation, and regulatory approval is not guaranteed, as evidenced by recent CRLs due to third-party manufacturing issues[218][241][228] - The company faces significant intellectual property risks, including ongoing patent litigation for EYLEA and the potential for biosimilar competition to erode market exclusivity[252][258][264] - The company relies on limited internal and contracted manufacturing capacity, where failures at its own facilities or those of third-party suppliers could disrupt product supply[270][275] - The company is subject to government investigations and legal challenges under healthcare laws like the Anti-Kickback Statute and False Claims Act, which could result in significant penalties[283][287] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, Regeneron repurchased approximately 1.93 million shares, with $2.81 billion remaining available under authorized share repurchase programs as of June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 2025 | 615,505 | $577.66 | 609,388 | | May 2025 | 552,495 | $574.98 | 552,495 | | June 2025 | 767,705 | $510.97 | 763,732 | | Total | 1,935,705 | | 1,925,615 | - As of the end of June 2025, approximately $2.814 billion remained available for purchase under the company's share repurchase programs[351] Item 5. Other Information This section discloses that during the second quarter of 2025, Director Bonnie L. Bassler, Ph.D., adopted a Rule 10b5-1 trading plan for the potential sale of 5,121 securities, scheduled to end on May 1, 2026 - On May 2, 2025, Director Bonnie L. Bassler, Ph.D., adopted a Rule 10b5-1 trading plan for the sale of 5,121 securities[352][353] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Restated Certificate of Incorporation, an amendment to the collaboration agreement with Sanofi, officer certifications, and Interactive Data Files (Inline XBRL) - Exhibits filed include officer certifications (31.1, 31.2, 32), an amendment to the Sanofi collaboration agreement (10.1), and Inline XBRL data files (101, 104)[354]