Regeneron (NASDAQ: REGN) lifts third-quarter revenue 36% to $5.1 billion as Dupixent payback ends

Regeneron reported third-quarter total revenues of $5.12 billion on 30 October, up 36% from a year earlier, and non-GAAP earnings per share of $20.07, up 70%. GAAP earnings per share rose 35% to $18.45. RBC Capital Markets said revenue had come in well above the $4.61 billion to $4.65 billion expected, and the shares rose about 12% during the session.

The largest single driver was contractual as much as commercial. Sanofi collaboration revenue climbed 68% to $2.72 billion, which accounts for roughly 81% of the $1.36 billion increase in group revenue. Regeneron's share of antibody profits rose to $2.58 billion from $1.46 billion, helped by Dupixent sales that Sanofi reported in euros and Regeneron puts at $6.5 billion, up 35%. But the Sanofi Development Balance was fully repaid by the end of the second quarter and no longer reduces collaboration revenue. Chief financial officer Christopher Fenimore described this as an anticipated step-up. It is a durable gain in income, but a one-time gain in growth rate.

The ophthalmology franchise looks more stable than strong. US Eylea HD sales rose 62% to $699 million while older Eylea fell 41% to $400 million, leaving the combined US total down 1% at $1.10 billion. The newer formulation now makes up about 64% of that total. Regeneron attributed Eylea HD's growth to volume, partly offset by a lower net selling price, and Eylea's decline to competitive pressures and the transfer of patients to the higher-dose product. Holding the franchise roughly flat is an achievement, but it is defence rather than expansion. Bayer collaboration revenue fell 23% to $267 million.

Libtayo was the cleaner commercial result. Global sales rose 51% to $550 million, with the US up 81% to $396 million, a record for the immunotherapy. Praluent grew 21% to $81 million and Evkeeza 28% to $55 million, while Lynozyfic contributed $19 million. Total net product sales rose 14% to $1.81 billion, a far more modest figure than the headline revenue growth and arguably the better gauge of the portfolio Regeneron controls directly.

Earnings quality also deserves attention. GAAP other income fell because of lower net gains on marketable and other securities, while the non-GAAP measure adjusts for changes in the fair value of equity investments, which helps explain why non-GAAP EPS grew at twice the GAAP rate. Non-GAAP research and development rose 23% to $1.65 billion, against a 9% rise in selling and administrative costs to $588 million. For the full year Regeneron raised non-GAAP research and development guidance to between $6.05 billion and $6.15 billion, cut selling and administrative guidance by $100 million to between $2.40 billion and $2.50 billion, and lifted non-GAAP gross margin on product sales to about 86%.

The balance sheet leaves plenty of room. Cash and marketable securities totalled about $18.9 billion at the end of September, $2.3 billion of stock was repurchased in the first nine months and $2.2 billion of authorisation remains. The fourth quarter will be flattered by the $1 billion upfront payment from the expanded Sanofi alliance, which will be recognised as collaboration revenue. Management said it is open to deals at all stages, and guidance excludes any transactions not yet completed.

Catalysts are close. An FDA decision on cemdisiran in generalised myasthenia gravis is expected this month, which management says would be the first siRNA therapy for the disease and the only one dosed quarterly by subcutaneous injection. Ordspono has a target action date in February 2027 and a Libtayo dosing change one in March. Interim data in fatty liver disease and Phase 2 results in postural tachycardia syndrome follow this month, while trevogrumab and olatorepatide support an obesity strategy that remains unproven outside early or regional studies. On pricing, April's agreement with the US government brought three years of tariff relief and protection from future pricing mandates in exchange for most-favoured-nation Medicaid prices, though some terms remain confidential.

The investment question is what remains once the Sanofi comparison normalises. The step-up will flow through the next three quarters and then drop out of growth rates, leaving Regeneron even more dependent on one antibody whose profits it shares. A record quarter does not change that concentration. Approval of cemdisiran and evidence that Eylea HD can do more than offset Eylea's decline would matter more to the durability of earnings than this quarter's beat.