Will Regeneron (REGN) Disappoint Investors In Q4 Earnings?

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is scheduled to release fourth-quarter 2017 results on Feb 8, before the opening bell.

Last quarter, Regeneron beat earnings expectations by 1.53%. The company’s performance has been mixed so far. In the last four quarters, it surpassed earnings estimates on two occasions and missed in two, with an average positive surprise of 5.96%. Let’s see how things are shaping up for this quarter.

Regeneron’s stock has lost 3.9% in the last 12 months as against the industry ’s gain of 3.8%.

Factors Influencing This Quarter

Regeneron’s key growth driver, Eylea, is likely to continue to contribute to the company’s top-line growth. In January 2018, the company stated Eylea net sales were approximately $3.7 billion in the United States in 2017 and expects $2 billion of sales from outside the United States.

We note that Regeneron has a global development and commercialization agreement with Bayer (DE:BAYGN) AG (OTC:BAYRY) outside the United States for Eylea. Product revenues from ex-U.S. Eylea sales are recorded by Bayer.

Meanwhile, Regeneron is working on expanding Eylea label into additional indications. While a phase III study (PANORAMA) is evaluating Eylea for the treatment of moderately severe to severe non-proliferative diabetic retinopathy in patients without DME, another phase III study (in Japan) is evaluating it for neovascular glaucoma. Label expansion into additional indications would give Eylea access to higher patient population and increase the commercial potential of the drug. The FDA has accepted for review the company's supplemental Biologics License Application (sBLA) for the label expansion of Eylea Injection. The company is seeking approval for a 12-week dosing interval of Eylea Injection in patients with wet age-related macular degeneration based on physician's assessment. The action date set by the FDA is Aug 11, 2018.

Apart from Eylea, investors will remain focused on the uptake of new drugs — Kevzara and Dupixent. Kevzara (sarilumab), an anti interleukin (IL)-6 receptor monoclonal antibody was approved in Canada for the treatment of adult patients with moderately to severely active rheumatoid arthritis who have an inadequate response to or intolerance to one or more biologic or non-biologic Disease-Modifying Anti-Rheumatic Drugs and was approved by the FDA in May 2017.

The FDA also approved Dupixent (dupilumab) Injection for the treatment of adults with moderate-to-severe atopic dermatitis. The initial uptake of the drug is encouraging. The drug was approved in Europe also. The company is also evaluating the drug for treating asthma in adults (LIBERTY ASTHMA QUEST study). A phase III study of Dupixent in pediatric patients (6-11 years of age) with uncontrolled persistent asthma was initiated in second-quarter 2017 an sBLA has been submitted to the FDA.

Hence, focus will be on the company’s performance, particularly Eylea and Dupixient uptake during the fourth-quarter earnings call. Investors are also expected to await updates on the company’s pipeline.

Meanwhile, Regeneron and partner Sanofi (NYSE:SNY) have been allowed to continue to sell their PCSK9 inhibitor, Praluent, in the United States by the Court of Appeals for the Federal Circuit following a favorable ruling. This bodes well and we expect the management to throw more light on the upside if any. However, sales of the drug have failed to impress so far. The company expects top-line data from ODYSSEY OUTCOMES in first-quarter 2018.

We expect investors to keep an eye on pipeline updates as well.

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Earnings Whispers

Our proven model does not conclusively show that Regeneron is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP Filter .

Zacks Rank: Regeneron currently carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) before going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Regeneron Pharmaceuticals, Inc. Price and EPS Surprise

Regeneron Pharmaceuticals, Inc. Quote

Stock That Warrants a Look

Here is a health care stock that you may want to consider instead, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Anthera Pharmaceuticals (NASDAQ:ANTH) is expected to release fourth-quarter results on Feb 26. The company has an Earnings ESP of +20.47% and a Zacks Rank #2. You can see .

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Written By: Zacks Investment Research