Welcome to Regeneron Pharmaceuticals Q4 2019 Earnings Conference Call. My name is Sophia, and I'll be operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session.
Please note that this conference is being recorded. Will now turn the call over to Justin Holcomb. Justin, you may begin.
Thank you, Sylvia. Good morning, good afternoon, and good evening to everyone listening around the world. Thank you for your interest in Regeneron Pharmaceuticals, and welcome to the fourth quarter 2019 conference call. An archive of this webcast will be available on our website. Joining me today are Leonard Schleifer, Founder, President and Chief Executive Officer George Yankopoulos, Founding Scientist, President and Chief Scientific Officer Marion McCourt, Scientific Senior Vice President And Head of Commercial, and Bob Landry, Executive Vice President And Chief Financial Officer.
After our prepared remarks, we will open the call for Q And A. I would also like to remind you that remarks made on today's call include forward looking statements of Iragenon, Such statements may include, but are not limited to, those related to Regeneron and its product and business, financial forecasting guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement issues intellectual property, pending litigation, and other proceedings and competition. Each forward looking statement is subject to risk and uncertainties that could cause actual results and events to differ materially from those projected in that statement. 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, including its Form 10 K for the year ended December 31, 2019, which you are planning to file with the SEC tomorrow. Regeneron does not undertake any obligation to update publicly any forward looking statements, whether as a result of new information, future events or otherwise.
In addition, please note that GAAP and non GAAP measures will be discussed on today's call. Information regarding our use of non GAAP financial measures and a reconciliation of those measures to GAAP is available in our is also available on the Investor and Media section of our website. Once our call concludes, Bob Landry and the IR team will be available to answer further questions. With that, let me turn
you to everyone for joining our call today. The 4th quarter capped off a strong 2019 for Regeneron. Our 3 growth drivers, Eylea Dupixent and Libtayo, drove double digit growth on the top and bottom lines, while we continued to make sales grew 11 percent to $2,000,000,000, including U. S. Eylea net sales growth of 13 percent to 1.22000000000 even with the launch of a new competitor.
For the full year, global net sales of Eylea grew 12 percent to 7.5000000000 We remain confident as we expand our leadership position in wet AMD and diabetic eye diseases. Dupixent sales are now annualizing at $3,000,000,000 as we expand our footprint in the retreatment of type 2 inflammatory diseases. Global net product sales grew 136 percent to $752,000,000 in the 4th quarter. And just last week, we announced that the FDA accepted for priority review our filing in pediatric atopic dermatitis. Which if approved will represent a breakthrough for children six to eleven years old suffering from this debilitating disease.
We are still in the early days of Dupixent with many global launches just starting and several potential new indications in late stage development. As expected, the profits from our antibody collaboration with Sanofi continue to increase, creating further revenue and earnings for Regeneron. On the strength of Dupixent, we generated profits of $104,000,000 for the fourth quarter $209,000,000 for the full year. Despite the losses associated with Praluent and Kevzara. To that end, we have been working hard to address and Kevzara performance to further enhance profitability of the collaboration.
In December, we incentive fee announced a major restructuring of the alliance that will improve profitability, increase efficiency, and enhance focus on Dupixent. We remain on track to close the transaction in the first quarter. In Oncology, we continue to make progress both commercially and in R&D. Sales for Libtayo, our anti PD-one therapy, grew to $75,000,000 in the 4th quarter. In the U.
S, we extended Libtayo's leadership position as the number 1 systemic treatment in cutaneous squamous cell carcinoma. As we look to 2020 for Libtayo, we're excited about the late stage data readouts in beta cell carcinoma, and the interim analysis for our pivotal monotherapy study in non small cell lung cancer. We are also making significant progress on our bispecifics program in We had a strong showing at the American Society of Hematology meeting in December where we presented initial data for our BCMA by CD3 antibody, as well as updated data for our CD20 by CD3 antibody. While each of these programs could be important individual treatments over time, they also represent validation of our bispecifics program, which, along with Libtayo, form a diverse and powerful toolkit to potentially address malignant diseases. Regeneron has a track record of tackling some of the world's most challenging health issues, while creating long term value for shareholders.
Looking back at 2019, We achieved 6 important regulatory approvals across our growth drivers of Eylea Dupixent and Libtayo. Beyond these approvals, we made significant advances in our pipeline, which George will discuss. Additionally, I would like to call your attention to the global health crisis on coronavirus. We have answered the call for help and are responding diligently with HHS to develop potential treatments. George will also further outline this effort.
Regeneron is ending 2020 from a position of financial strength. We have the necessary capital to advance and expand our wholly owned R and D pipeline. Additionally, we continue to seek value creating business development with a focus on technologies that enable and accelerate our own technologies in drug discovery and development. And when market conditions create opportunity, we will continue to buy back shares under our share repurchase program. Where we continue to see continued operational and financial execution that is creating near and long term value.
We are entering 2020 with strong momentum and we remain confident in our strategy and in our business. Now I'll turn the call over to George.
Thank you, Lynn. Technologies that allow us to rapidly identify and validate genetic targets and go quickly and efficiently to turnkey therapeutic solutions. Whether through internally developed approaches, such as Velasogene, Velas immune and the Regeneron Genetics Center, or important new collaborative capabilities, such as those with Alnylam, Intellia, Bluebird and others. Starting with Eylea. This weekend at the Baskin polymer angiogenesis meeting, we will present the 2 year data for the Panorama study in non proliferative diabetic retinopathy which showed a market reduction in for clinical testing of high dose EYLEA, currently in a phase 2 trial in wet AMD that will provide initial safety and efficacy data.
A Phase III trial in DME will begin midyear, closely followed by a Phase III study in wet AMD. Moving on to Dupixent, our dual blocker of both the interleukin-four and interleukin-thirteen pathways, which is changing the lives of so many people suffering from allergic diseases such as asthma, atopic dermatitis and chronic rhinosinusitis with nasal polyps, with more than 125,000 patients treated globally since launch. Just last week, we announced that the FDA is undertaking a priority review to extend approval of Dupixent to children aged 6 to 11 years, suffering from moderate to severe atopic dermatitis, with the target PDUFA date of May 26, 2020. If approved, this will be the 1st biologic indicated for these children. The remarkable efficacy and safety profile of Dupixent, as evidenced by the absence of a black box warning or any associated serious infection risks, which are often seen with other immunomodulatory biologics and kinase inhibitors.
While Marion will update you on quarterly performance, I would like to highlight other near and long term opportunities for Dupixent. Eosinophilic esophagitis or EOE is a currently under diagnosed, but increasingly recognized serious allergic condition with limited effective treatment options. Following up on our promising proof of concept study, we will read out on the phase 2 portion of our phase 2three study in adults and adolescents might mid year. While the phase 3 portion continues to enroll. Additionally, we are studying a phase 3 study in pediatric EOE patients in the second half of the year.
On a related front, we are excited about our collaborator, Amien's recent approval for Palforia. An oral immunotherapy for peanut allergy, but there is still an enormous need for therapies for the treatment of food allergies. As many of these patients are at risk for EOE and other allergic conditions. We think Dupixent studied in combination with Palforzium has the potential to further improve the outcomes for these patients. I'm also pleased to share and the new indications we announced last November are kicking off.
Studies for chronic spontaneous urticaria, prurigot Nadulares and Bullis Pemphigoid have already started. The study in allergic bronchopulmonary aspergillosis will commence in the first half of this year. Now let's turn and spend a few moments on immuno oncology, where we are strategically positioned to compete, enhance and extend the benefits of immunotherapy to many more patients than are currently benefiting today. Opportunity to compete in including bispecific antibodies. We are looking to enhance responsiveness for the more than half the patients that do not respond to PD-one therapy alone.
Moreover, such combinations have the potential to extend our reach to patients with cancers such as breast. Colon, pancreatic and prostate, which show very limited response to checkpoint inhibition at this point. For Libtayo, in addition to being foundational to our combinatorial approach in oncology, we're expecting some near term milestones. Later this year, the Independent Data Monitoring Committee will conduct pre specified interim analysis assessing overall survival for the pivotal Libtayo monotherapy study in non small cell lung cancer. Of the first three sixty one randomized patients.
The confirmed objective response rate as determined by investigators was 42% for Libtayo versus 22% for chemotherapy. Although promising in terms of indicating profound clinical activity for Libtayo and lung cancer, Objective response rate is not a validated endpoint for regulatory approval in this setting. Our other pivotal lung cancer study which Libtayo is being tested in combination with KML Therapy is more than 50% enrolled and is expected to fully enroll by mid year. While we are investigating different combination approaches with libtayo and melanoma skin cancers, we're less than half the patients benefit from PD-one therapy alone, we believe patients with non melanoma skin cancers still remain underserved. And we are working to expand the available treatment options for these patients.
Libtayo remains the 1st and only approved therapeutic in advanced squamous cell carcinoma of the skin or CSCC with the safety profile that is similar to that of the other approved PD-one or PD L1 inhibitors. Following on recent promising results with Libtayo in neoadjuvant setting, as well as a follow-up neoadjuvant's CSCC study. We're also looking forward to the potentially pivotal data readout for basal cell carcinoma of the skin in mid-twenty 20. And we continue to make exciting progress with our bispecific antibody platform. At the American Society of Hematology or ASH meetings, We presented data from our 1st class of these antibodies.
The CD3 bispecifics that are designed to bring a killer T cell to a tumor and trigger the so called signal 1 in the T cell activation process, leading to tumor cell destruction. For Regeneron 1979, our CD20 by CD3 bispecific, we reported 95% overall response rates with 77 complete response rates in 22 late stage follicular lymphoma patients in late stage diffuse large B cell lymphoma We observed 71% overall response rates, all of which were complete responses in 7 CAR T naive patients. Moreover, and quite remarkably, we saw a 50% overall response rates in 12 patients who had failed CAR T therapy with 3 of these patients achieving a complete response to treatment with Regeneron 1979. Clearly, this bispecific has demonstrated promising single agent clinical activity in late stage patients and supports initiation of potentially pivotal Phase II program for a general 1979 in several monotherapy studies. Including relapsed refractory follicular lymphoma, relapsed refractory DLBCL as well as several other non Hodgkin's lymphoma subtext.
We are also planning to initiate chemotherapy combination studies At the same ASH meeting, we presented preliminary data for our second CD3 bispecific, Regeneron 5458 our BCMA by CE3 bispecific in late stage multiple myeloma. Remarkably, the first patient in this program was dosed at the beginning of 2019 and we were able to show initial efficacy and safety data at the ASH meeting later the same year. In the higher of the 2 initial doses, objective responses were observed in 3 out of 4 patients, 2 of which achieved MRD negativity. These were all very advanced patients who had failed a median 7 lines of prior systemic therapy, including anti CD38. We are currently enrolling higher dose escalation cohorts.
This year, we also advanced our novel 2nd class of bispecifics into the clinic. These bispecifics are referred to as CD28 or Co stim bispecifics. Because they activate the CD28 mediated cost inventory signal, also known as signal 2 that is normally required to optimize cell killing by T cells. Researchers have avoided targeting this T cell activation pathway for almost 15 years ever since the disastrous clinical trial involving a CD28 super agonist, which indiscriminately activated T cells in the bodies of healthy volunteers, leading to cytokine storm and severe toxicity. In contrast, our CD28 bispecifics are designed to avoid this problem by locally engaging T cells only at the tumor site, as validated by our preclinical studies, some of which were published a few weeks ago in Science Translational Medicine, and which demonstrated synergistic activity when co stems were combined with Libtire or with other bispecifics.
Even for tumors historically unresponsive to PD-one blockade. At the end of last year, we enrolled our first patients in the clinical trial of our first co stim PSMA by CD28 in combination with Libtayo in advanced prostate cancer patients. We expect additional customs to enter in the clinic in 2020. Now I'd like to move on to the rest of our pipeline. With the C5 blocker pozellumab, our goal is to achieve a more complete blockade of inappropriate complement activation compared to the currently available therapies and to do this with a more convenient self administered subcutaneous dosage form.
Results from an initial 6 patient cohort of our phase 2 study in paroxysmal Nocturnahemoglobinuria patients announced in December showed that our subcutaneous weekly regimen of pozilumab maintained lactate dehydritis a biomarker for red blood cell damage at normal levels at week 8. Importantly, we are uniquely positioned test a novel approach by combining pizelumab with our partner Alnylam's anti-five anti C5 siRNA. Which has the potential to maximize efficacy, while further significantly reducing dosing frequency. This will be the first in a series of opportunities for combination of our antibodies with siRNA. We will be initiating our potentially pivotal program with Pizelimab as well as combinations with the siRNA this year.
I'd like to provide an update on a few other late stage programs. Earlier this year, we've top line results of the Phase 2 study of GARITASMAb, our active NA antibody for fibrosisplasia ossificans progressiva. A devastating orphan disease in which patients muscles, tendons, and ligaments are progressively replaced by bone, forming a second skeleton that traps them in their own bodies, often leading to asphyxiation. In the 44 patient study, GARitasMAb demonstrated a nearly 90% reduction in formation of new bone lesions compared to Placebo. This treatment has the potential to transform the course of this disease.
We plan to discuss the data with the regulators as well as initiate a study in pediatric patients. In 2020, we are also planning A regulatory submission for Evinacumab, our ANGPTL3 antibody for homozygous familial hypercholesterolemia patients. We're also anticipating readout of the Fasinumab or anti NGF studies in osteoarthritis pain, including the long term safety study as well as Phase III studies comparing into net proxy and NSAIDs. Finally, I'd like to finish by discussing our partnership with BARDA. Part of the Office of Preparedness and Response for the Department of Health And Human Services.
Together, we hope to exploit We initially built this program and work with BARDA to address the 2012 MERS epidemic. MERS is a coronavirus closely related to the Wuhan virus that is causing the current global public health emergency. Then in 2014, we turned our rapid response capabilities to focus on Ebola, working together with BARDA And the World Health Organization, progressing therapeutic candidates in just 6 months and resulting in the potential cure, even for the sickest Ebola patients, as was recently published in the New England Journal Medicine. And allowing for an ongoing rolling submission to the FDA for approval of our lifesaving antibody cocktail. As BARDA announced just this week, We are now extending our collaboration with them to address the Wuhan coronavirus.
We're already scaling up one set of potential antibody treatments that could be available for testing or for compassionate use in patients within a few months as well as a new set of treatments that could be available soon thereafter. With that, I will turn the call over to Marion.
Thank you, George. We closed out 2019 on a high note with continued commercial execution across our portfolio. Ferrone's commercial presence in oncology. Starting with IDEA, in the 4th quarter, we recorded our best performance in terms of volume and net sales since launch in 2011. Global net sales grew 11% year over year to more than $2,000,000,000 and U.
S. Net sales grew 13 driven by increases to both market share and market expansion. Eylea's sales grew in diabetic eye disease and in wet AMD despite a new anti VEGF market entrant. Also, while not a material driver of performance in the quarter, We introduced the Eylea pre filled syringe in mid December and anticipate full market supply in March. The overall anti veggies market continues to grow at a steady mid to high single digit pace underpinned by the aging population and increasing prevalence of diabetes.
Our renewed strategy and incremental 2019 investments enhanced wet AMD leadership and drove further penetration in diabetic eye disease which has EYLEA growing faster than the market across all indications. As we've seen for the last several quarters, the growth rate in diabetic eye disease exceeds the growth rate in wet AMD. Accordingly the wet AMD business represents less than 60% of total US EYLEA net product sales. In 2020, we have significant opportunities to advance EYLEA's leadership position. In wet AMD, we are executing initiatives designed to position Eylea as the preferred first line treatment.
Beyond wet AMD, we see tremendous opportunity in diabetic eye disease as patients remain largely under diagnosed and undertreated. We're investing in targeted initiatives with physicians and consumers to increase diagnosis and treatment rates, as well as applying technologies to support screening and diagnosis. The totality of our clinical give us confidence in the future for Eylea. Turning to Libtayo. 4th quarter global net sales were $75,000,000 in the U.
S. Where sales were $61,000,000, we've quickly established Libtayo as the leading system treatment for Givans cutaneous squamous cell carcinoma or CSCC. Approximately 60% of CSCC patients now receive anti PD-one therapy and in the NCPD-one class, Libtayo has nearly 90% share of new patients. In 2020, we're investing to increase our commercial presence including expanding our field force to strengthen Libtayo's position as the standard of care in CSCC. Additionally, launch preparations for a potential approval in basal cell carcinoma are underway.
Outside the U. S. Initial CSCC launches, our ongoing and led by our collaborator Sanofi, we're encouraged by early prescribing trends and continue to see progress with access and reimbursement Overall, we're very pleased with the early impact we have made with Libtayo. And finally to Dupixent, global net sales in the fourth quarter were $752,000,000. In the U.
S, net sales reached $605,000,000, representing 134% growth as compared to the prior year. We continue to see strong prescribing trends across all indications with total prescriptions growing approximately 18% compared to the 3rd quarter, weekly new to brand prescriptions at quarter end were approximately 1500 patients per week. Atopic dermatitis remains a significant growth driver for Dupixent The brand continues to outpace other biologic launches in dermatology and there is significant room for further penetration. We're expanding the market through increased prescribing across both moderate and severe disease. Additionally, the recent adolescent launches contributing to growth eated by physician experience and comfort with Dupixent's efficacy and safety profile.
As Len mentioned, we eagerly await the potential FDA approval in six to eleven year olds, where there is significant disease burden for young patients and their families. And asthma Dupixent is outperforming other recent biologic launches with nearly 80% of Dupixent asthma patients being new to biologic treatment We continue to demonstrate that our strategy to grow and compete in this market is working. There's significant opportunity to advance Dupixent's market position with less than 15% of eligible patients currently receiving biologic treatment. We recently began the rollout our asthma direct to consumer TV campaign, although early, our companion is generating positive results from leading indicators. Finally, our launch in chronic rhinosinusitis with nasal polyps is off to a strong start.
Patients are initiating on Dupixent, regardless of prior surgery, Prescribing is being driven by both allergist and ENTs, including many new Dupixent prescribers. We see tremendous growth potential with Dupixent and remain committed to advancing Dupixent prescribing to many more patients by way of expanded indications, age groups and geographies. In closing, we delivered strong growth across our core commercial franchise in the fourth quarter and throughout 2019, we are entering 2020 with significant momentum and confidence to drive the future. I'll turn the call over now to Bob.
Thank you, Marion. For the fourth quarter 2019, Regeneron delivered another quarter of strong revenue and EPS growth. 4th quarter 2019 revenues grew 13 percent to $2,170,000,000, driven by continued growth of our core brands EYLEA Libtayo into Pixon. Non GAAP diluted net income per share grew 10% year over year to $7.50 on non GAAP net income of $858,000,000. Let me remind everyone when comparing to the prior year, fourth quarter 2018 revenues included $149,000,000 catch up benefit related to the modification of the IO discovery agreement with Sanofi.
Which makes this quarter's growth even more impressive. Since Marion Discuster U. S. Eylea results, I will start with our Bayer and Sanofi collaborations. Starting with the Bayer collaboration, ex U.
S. EYLEA net product sales, which are reported to us by Bayer were 783,000,000 representing growth of 8 dollars year over year to $321,000,000, of which $298,000,000 was derived from our share and net profits from Eylea sales outside the U. S. Total Sanofi collaboration revenue in the fourth quarter was $427,000,000, Generon recognized a profit of $104,000,000 from the commercialization of non IO antibodies compared to a loss of $44,000,000 in the prior year period. Increases were driven primarily by higher Dupixent net sales, partially offset by the rollout of the Dupixent asthma DTC campaign as well as incremental cost to support ongoing global Dupixent launches.
Moving to our expense base, starting with R&D. Non GAAP R and D expenses were $581,000,000 for the fourth quarter of 2019, an increase of 9% compared to prior year. Non GAAP unreimbursed R and D expense, which is calculated as the total non GAAP R and D expense less reimbursements from our collaborators, was $393,000,000 for fourth quarter 2019, an increase of 13% compared to the prior year. Higher R and D expenses result from broadening and advancing our pipeline of wholly owned drug candidates, particularly in oncology. We are also funding jointly developed molecules with strategic external partners.
In November, we announced a research collaboration with Viread focusing on the development new oncolytic virus based treatments for cancer. Taken together, we continue to expect 2020 R and D expenses to increase. Next, non GAAP SG and A expense was $446,000,000 for the fourth quarter of 2019. This represents a 9% year over year increase driven by higher headcount and related costs in commercialization expenses related to both Eylea and Dupixent, We expect non GAAP SG and A expenses to increase in 2020 as we invest for further growth in our 3 core brands, Eylea Dupixent and Libtayo. In the fourth quarter of 2019, combined non GAAP cost of goods sold and cost of collaboration and contract manufacturing were 208,000,000 compared to $109,000,000 pay Sanofi its share of Libtayo U.
S. Gross profits, 3rd party royalties on Libtayo U. S. Sales and higher inventory reserves and write offs. The year over year increase in cost of collaboration and contract manufacturing was primarily due to recognition of manufacturing costs associated with higher sales of Dupixent, shifting to cash flow in the balance sheet.
For full year 2019, Regeneron generated $2,000,000,000 in free cash flow. We ended the year with cash and marketable securities of nearly 6,500,000,000 Recall, last November, we announced a $1,000,000,000 share repurchase program. In the fourth quarter, we repurchased approximately $215,000,000 worth of shares in discuss the restructuring of our antibody agreement with Sanofi. As we previously disclosed, the anticipated benefits of this proposed restructured agreement are improved profitability increased efficiencies and simplification. Upon closing of the deal, we expect this transaction to be immediately accretive to Regeneron.
We are working diligently to ensure an expedient close to the transaction this quarter As such, we will provide annual guidance by the end of the first quarter to account for the various line items impacted by the restructuring antibody agreement. Given the expected timing of the transaction closing, continue to model Regeneron's financials for the first quarter as you have historically. Note that our first quarter non GAAP EPS results are typically lower than the fourth quarter of the prior year due to trends in tax rate and other seasonal market dynamics. We are generally comfortable with consensus non GAAP EPS estimates for the full year. However, our quarterly reported increases from the beginning of the year to the end of the year will be more pronounced than what current consensus reflects.
In conclusion, the 4th quarter capped off a strong year for Regeneron, We are pleased with our financial results and operational performance. We look forward to providing more details on the restructuring antibody agreement in 2020 annual guidance later this quarter. With that, I'd like to turn the call back to Justin.
Thank you, Bob. We'd now like to open the call for Q and To ensure we are able to address as many callers as possible, please limit your questions to 1 or 2 questions. Please go ahead, Sylvia.
Thank you. You. And our first question comes from Terence Flynn from Goldman Sachs.
Hi, good morning. Thanks for taking the questions. Maybe just 2 for me. 1 on the first is with respect to bispecifics, maybe George, what gives you confidence that these will be successful in solid tumors I know you guys have a number of different targets you're going after and waiting to see the data, but just maybe remind us what gives you confidence there. And then just on Dupy, can you give us the sales split by indication or maybe the prescriber mix?
Thank you.
George, why don't you start and then Marion, you can take the dupi question?
Okay. So first of all, we have no reason to think that they wouldn't be. I know that there's a lot of speculation, but it hasn't really been tested. With reagents like our bispecifics to see whether solid tumors are indeed more resistant or not. But that notwithstanding.
In case single agent therapy is not as effective solid tumors. That is why we are preparing for that possibility with our various combinations. And our combinations include both combinations with these new classes of bispecifics called co stems, which dramatically increased responses, at least in preclinical models, in the solid tumor setting, but also combinations with Libtayo and other kinds of checkpoint inhibitors and immunomodulatory agents. So the notion is, is though we're hopeful for single agent activity, we are prepared that just like in many other cancers, in many other treatment settings that combinations are going to be the key to success. And we have a real exciting set of combination opportunities in the solid tumor space setting, as I said, particularly with our co stim bispecifics added to our CD3 bispecifics as well as our PD-one but other additional immunomodulatory agents.
I'll turn the next question over to Marion. About the Dupixent.
Oh, sure. Happy to churn. And this relates to your question on the breakdown of sales and performance for Dupixent. First, I just comment that we're seeing strong performance and sales growth and NBRx across all the indications, we haven't specifically given a breakdown by indication Again, I confirm strength and strong performance and competitive performance in areas where we have competitors, but I can give you a little bit of in terms of how we're seeing the majority of our sales in NBRxs in atopic dermatitis That's then followed by asthma. And then 3rd would be the nasal polyps where we're also seeing encouraging performance.
Next question.
Our next question comes from Geoff Mehta from Bank of America.
Hey, guys. This is Alec on for Jeff. Thanks for taking our questions. I have 2 one on EYLEA and 1 on Pryolan. So for EYLEA, how are you guys thinking about the ongoing boohoo launch?
Specifically do you view the earlier 12 week dosing as driving drug choice by prescribers? And any color you can give on ongoing or anticipated impact to rebates you provide for Eylea to maintain formulary status. And then on Praluent, we've noted that the price reductions for the PCSK9 class have had an outside benefit to Repatha volumes. Could you talk about the sales efforts you and Sanofi have been taking in the U S? And what was the feedback from physicians and payers?
And I guess ultimately, how do you hope bringing these efforts entirely in house will help drive volumes for Pryolan? Thanks.
Marion? Sure. So let me first comment on Eylea performance. And certainly, we worked very hard and have been in a competitive market with Eylea for many years and certainly have established a very strong market leadership position. It's very early days for the newest competitor in the marketplace, but what I will affirm is that Eylea has a profile list and injectors.
Specifically, it's things like the clinical profile, as it relates to impact on visual acuity, multiple indications experienced not only clinically, but with an established safety profile, reimbursement, dosing flexibility, and also now dosage delivery with the pre filled syringe. So Eylea has an incredibly compelling profile. As to competition, both competition historically and future competition, it becomes a matter of physicians determining what is the risk benefit of using a different product and certainly there will be ample opportunity for retinal specialists to make the choice in prescribing that's best for them. But to date, we hear very, very positive feedback and EYLEA. Certainly, our most recent indication in diabetic eye disease, diabetic retinopathy is very important.
As we described, we did put forward earlier in 2019 a new strategy to make sure that we were making very our position in the wet AMD marketplace and then also expanding in diabetic eye disease. So I think we feel really good about the performance that we saw in 2019. We also see an awful lot of work ahead because as I mentioned, there's tremendous unmet need in disease burden and diabetic eye disease that we have not impacted yet So a lot of work going forward. You also asked a question related to pricing in EYLEA. We don't give information on our pricing strategies.
But I will say that we are very committed to physicians having choice of prescribing in all the categories in which we have competition. And it's really important that doctors make the right choice for their patients. So we'll continue to take that position in the marketplace. I'll move over to Prowley with quickly as was announced in the restructuring of our arrangement with Sanofi, Regeneron is now very pleased to be running the Praluent business in the U. S.
It's early days in the future. Certainly, we'll have more to say about our positioning the market and our strategy in the marketplace. But I think at this point, it's probably best that we let it go till the, the end of the restructuring agreement and the finalization of that transaction.
And just to add to Marion's points, she mentioned benefit risk for EYLEA and also safety for EYLEA. I think it's very important to mention that physicians, of course, very sensitive to this. And in settings, we are efficacy and durability are considered, similar. They're going to pay very close attention to things like inflammation. And then certainly in the head to head studies, EYLEA was shown to have about 4 fold lower levels of inflammation.
And these are the sort of things that physicians pay close attention to when efficacy and durability are considered rather similar.
Great. Next question.
Our next question comes from Chris Raymond from Piper Sandler
Yes, thanks. Just a couple. So just maybe first, maybe continuing on the EYLEA front. I think I heard you guys say that there was no stock benefit in Q4 from the availability of the prefilled syringe. So maybe can you talk about does this mean there's a tailwind potentially in for the first quarter.
And maybe if you can put some brackets around that, that would be helpful. And then maybe for Bob, I think I heard you say Bob in your prepared remarks that you were comfortable, with 2020 EPS can and so I know you guys are still in the process of trying to figure out how you're going to guide in the parameters, etcetera. But Should we view this as a signal that maybe you guys are comfortable guiding to EPS at some point? Thanks.
So let
me take the first part on Eylea. And yes, you did hear me correctly that while we introduced the prefilled syringe for Eylea, in mid December, it did not have an impact, a material impact. And certainly, we were at normal stock levels, days on hand, in the fourth quarter. One thing I'll describe to you is we very deliberately have introduced the prefilled syringe in a staggered way. And this was obviously was such a large product so that there would be market experience and we would have a gradual introduction.
We do plan to have availability of full market supply by decision as to whether they choose to use the prefilled syringe, which does have tremendous convenience, and has had very positive early market feedback but the vial will be available as well if there are instances where an office or a physician would like to use the vial. We do anticipate, however, though, that the prefilled syringe will be, very popular in the marketplace and over time will be the majority of our use, but it has been a staggered introduction.
Chris, with regards to your question on guide, we are in a unique situation. By now, we given guidance at JP Morgan, we would have reconfirmed it on this call. And we just wanted to give you a sense, a little bit direction, instead of everyone driving blind with regards to where 2020 is expected to come. So again, we did our analysis and determined that we are comfortable with current consensus as as it exists for full year EPS and we are not envisioning to give full EPS guidance at the end of the quarter. We will give other guidance as been typical with maybe a little a few enhancements included.
Our next question comes from Evan Sigerman from Credit Suisse.
Hi, all. Thank you for taking my questions and congrats on the progress last year. So on Libtayo non small cell lung cancer, what gives you confidence that this trial will hit on the OS interim in high PD L1 patients? And if successful, would you file on this data and how would you potentially position Libtayo versus other checkpoint inhibitors?
George, why don't you start?
Yes. So as we said, response rates are not a regulatory approval endpoint. However, historically, they've been shown to be a very good indicator for the activity. And in the setting of checkpoint inhibitors they tend to correlate pretty well with what you see in terms of overall survival. And so our already reported response rates where We've almost doubled the response rate.
Certainly suggest profound clinical activity and is a real positive indicator. Of course, until we see the interim data, we won't know. But I think that that would put Libtayo in a very small space of agents that are now showing profound monotherapy activity in PD L1 positive settings. So it would be a very exciting position to be in on top of this already demonstrated, impressive best in class activity in
Our next question comes from Geoffrey Porges from SVP Leerink.
Thank you very much. Bob, just on the comment about accretion, could you just give us a sense if the status quo prevail would your operating margin be consistent, with last year or better? And then presumably the intention of the agreement is to we would see operating margin improvement and that's how you get to it being accretive. So could you just comment on that? And then just a second question for George, You mentioned the Co stim program, and I think we're all interested in seeing the first clinical data from that.
That's not on your 2020 highlights So should we be assuming that we don't see any clinical disclosure on the PSMA program until next year?
Want to start? So, George, Jeff, I would concur with the assumptions that you made. I mean, certainly, We've mentioned that Kevzaur and Praluent have been a sizable drain with regards to the alliance profitability that we've shown. So certainly the changes that are going to be made and coupled with the incoming royalties that we expect to get will certainly help are going forward margins.
And George?
Well, as Jeff, you probably followed closely. With our 1st class of bispecs. Whenever you have a new class of agents and you're working with the FDA, of course, the first purpose is to be moving as carefully and as safely as possible. And so for our 1st bispeck, it took a long time to get to efficacious dose levels. When we finally got there, we had actually shown that we have gotten there with a pretty safe approach, which now other people are trying to emulate.
And then we were able to pretty rapidly, as I described, with our second dose level, get to efficacious dose levels with our second CD3 bispecifics. So now this CD28 class represents once again a new class. We are hoping that we're going to repeat that sort of experience and the timing of it, of course, is dependent on so many factors. So depending on how it goes, we may reach effective dose levels sooner rather than later and get data sooner rather than later. But the major point is that we're working with the FDA and with our collaborators to make sure that we use this innovative new approach as safely as possible.
So it all depends on how the dose escalation goes and when we get to what we think are the effective dose levels and it could be sooner or it could be a little later. And all we're hoping is that we're going to see the same sort of profound activity that we saw with our 1st class of bispecifics, which is really suggesting that they may be best in class. And if we can now layer on a completely new class that has synergistic activity. I think that'll be very exciting and important for patients for all these settings where they're not responding right now to immunotherapy or where their responses are not as optimal as we would want.
Great. Thanks for the question, Jeff. Next question.
Our next question comes from yatin Suneja from Guggenheim Partners.
Good morning, everyone, and congrats on a very good quarter. Just a question on a C5 antibody that you have. Give us a little bit more insight into how you are thinking about broadening the development? Are there disease indication that you could potentially prioritize, which might not be as competitive and might be a little bit broader? And then a quick one for Bob on the Sanofi collaboration relative to Q3, are there factors that might have impacted the results in Q4?
Thank you.
Thank you. George, why don't you start and see 5? And then, Bob?
Yes. As you said, We agree with you. We believe that there are a lot of settings for C5 beyond the PNH setting. I think that what we've closed so far and what we're talking about right now is the PNH. Why?
Because the data are so clear cut, in terms of what the high bar that we have to reach to believe that we have something that could be a real improvement for patients for the class. And so once we hit that bar there, we would be pretty confident then that it would also continue to maybe be a real advance for patients in best in class in all these other settings that you're referring to. So we're certainly not ignoring those But what we're talking about and focusing about right now is the really well understood space of PNH.
The question with regards to whether or not the Sanofi deal has given us benefit versus in Q4. I would say we continue to go after operating expenses for Praluent and Kevzara and we did see some of that in Q4. Again, this is this is an issue that we've been going after and we've had some success in terms of lowering the operating expenses associated with that We did take a restructuring charge in Q4 and you'll see that outlined in our earnings announcement that was issued earlier this morning. And the big benefits, you will begin to see will take place kind of effective Q1, where as we speak right now, we're changing the operations of the businesses that come through.
I just want to add to my comments on the C5. As I said, we set a pretty high bar for ourselves with just our antibody. And as we've announced, the data suggests that that antibody is meeting that high bar by itself on its own, which I think puts us in a very, very exciting position because now we have the opportunity to even take it to a completely new level with this exciting collaborative opportunity with the Alnylam si RNA. So the fact that our antibody by itself is looking like might be meaning this high bar of being a best in class agent providing big advantages to patients on its own, having the opportunity to then combine it with the SRNA really, I think, is very exciting for the field and for patients.
Again, let me just clarify one other thing. With regards to Q4, on the alliance profitability, we were we did incur significant expenses associated with the asthma DTC campaign which had a rollout effective in Q4. And I'm sure a lot of people have seen that throughout
the quarter. Great. Thanks for the question, John. The next question.
And the following question comes from yaron Werber from Cowen.
Yes, hi. Thanks for taking the question. So I have a couple of questions. The first one is, George, maybe for you on Libtayo, and Maybe help us understand a little bit. As you think about the hazard ratio versus what keynote showed and if you recall correctly, KEYTRUDA was able to get stopped early.
Obviously, there was no PD-one approved in and that study had about 305 patients. The hazard ratio was 0.5 Do you think you got sufficient power with a bigger sample to essentially match or beat that hazard ratio? And then maybe, Bob, for you, just it sounds like you're comfortable with consensus you mentioned for this year. When we're looking at consensus non GAAP is around 25 90 in earnings. Are you comfortable with that including the restructuring or are you comfortable with that even excluding the restructuring?
Thank you.
Go ahead, George. Yes. Well,
as you said, we have the power and the X invitation is that if we were to hit an interim, we would have a hazard ratio that would be comparable analogous to those seen by, Keytruda in its monotherapy first line lung studies. So that is the expectation the power is there to potentially see that in the interim analysis. Bob?
To the question on comparability in the restructuring, we are comfortable with the consensus with the restructuring built into that. And again, let me remind you, As I stated on the call, the first quarter non GAAP EPS results are typically lower than the fourth quarter of the prior year. Due to trends in tax rate and other seasonal market dynamics.
And maybe George, just for you, when the the interim initially in that study was based on 361 patients, Keytruda stopped with the same response rates based on 305. So you're thinking that the next 240 patients are going to have a better response than the first three sixty one in the study to be able to match the hazard ratio? Or is there it depends on how many patients are in that analysis and there could be another one.
One second, George, before you get into it, I just wanted to comment. So there's no misunderstanding. You cited a, a, a, hazard ratio of 0.5. And I think that was for the chemo combo therapy. In 24, the overall survival hazard ratio was 0.6 And in 42, just to double check, it was, a point 6, 9.
So I
just want to make sure we have the right hazard ratios up there. Sorry, go ahead, George.
Well, yeah, I was going to say, well, the hazard ratio actually was 0.63 Keno24 and 0.69 for Keno42. But you also mentioned the ratio. So the first one in 61 patients in that interim analysis, what we announced was the response rates. And our ratio for response rates in those patients was actually better than the ratio of any response rates that have been reported by KEYTRUDA and 1st line lung setting. However, the data was immature.
That's response rate data. The hazard ratio that you're referring to is overall survival. That requires much more mature data where you're following patients out for obviously survival. So the early data, it was that, obviously, we're reporting on the more mature response rate data, which are pretty close or should reflect what the ultimate data will look like The survival data, we have to wait and see for those events to start accruing. And what we said is the ratio of the response rates is very favorable when you compare that because in all the studies that have either succeeded or failed, the response rate data ends up being pretty predictive of the overall survival hazard ratio.
And what we are saying is that as the data is maturing now, we have the power if we have overall survival hazard ratios akin to those sorts of between 0.6to0.7 numbers that as the data matures, we will have the power to see that.
Great. Thanks for the question, Yaron. We have several colors still in the queue. I'm going to ask that each color, ask one question. We'll try to get to 2 or 3 more if we can.
Our following question comes from Mohit Bansal from Citigroup.
Great. Thanks for taking my question. And it's pretty amazing that, to see double digit growth in EYLEA after so many years, Could you please help us characterize this growth a little bit further in terms of AMD versus non AMD indications? I know you have been putting more effort in the diabetes IDC. So as we go forward, how do you envision that segment growing over time actually.
Thank you.
Sure. So I'm happy to comment. As I mentioned, the overall market is growing. Obviously, driven by demographics and then also the diabetic population sadly is growing as well. I really don't have, specificity to give you on market growth, particular by indication, but I can give you some of the trends that I think will be helpful.
We are seeing greater growth in our EYLEA business coming from diabetic eye disease while still growing and performing very competitively in wet AMD, not only in fourth quarter, but through the entirety of last year. In terms of going forward though, as I mentioned before, the source of business is shifting somewhat. So as we looked at the 4th quarter performance, I shared with you that our EMEA business for wet AMD is just under 60% of the business. So that's a migration to a greater source of business coming from diabetic eye disease. And then if we looked at the the overall business, I would also add in probably, if you do the math that leaves maybe about 30% of business coming from diabetic eye disease, and approximately 10% of business coming from retinal vein occlusion.
Great. Next question.
Our final question comes from Cory Kasimov from JP Morgan.
Hey, good morning. Thanks for taking the question. Another one for Marion Can you just talk about how the commercial approach for Dupi for kids aged 6 to 11, with atopic derm might be different than the older population currently serve and what your market research suggests about the potential pent up demand in the segment?
Sure. So, as I reflect on atopic dermatitis for adults adolescents first, I share with you that we're in the early days. For atopic dermatitis with adults, we've only really captured about 20% of the population of moderate to severe patients that are in need. Adolescents obviously has been a more recent launch. The adolescent population is approximately maybe half or so of the adult population for atopic dermatitis.
As we come into pediatrics, obviously, we don't have an indication there. We're doing our final preparation work for the launch. We're very excited about this population because these very young patients are suffering tremendous as is their entire family. I think the experience that we've had with adults and adolescents bodes well for our ability to be very success with the pediatric indication as soon as we have the approval. So we'll look forward in the future to giving more insight and more content on our strategy, size of population and our go to market profile.
But we feel very, very, very positively about what happen to date in atopic dermatitis and where we're going in the future. Frankly, we, you know, FDA willing, we cannot wait for this indication so we can help more patients.
Thank you. We're bumping up at the top of the hour. We're going to go with one more question.
Our final question comes from Hartaj Singh from Oppenheimer Company.
Great. Thank you for the question. I just wanted to ask Bob one question, Bob. I know you had indicated that for 2020, you would see increases in the non GAAP SG and A and R and D. And I think you've already given some sort of guidance, thinking about consensus earnings.
But could you sort of flush that out a little bit as to whether, you know, you expect that to grow below, I guess, revenue and sort of, differentiate between the 2? Thank you very much.
Yes. Hi, Taj. Thanks for the question. I'm going to wait until we iron that out with regards to at the end of Q1 where we give our guidance related to that. There's a lot of moving parts associated with exactly what the Kevbs are and praluent responsibilities are going to look the deal closing timing associated with that and possibly the related modification of the agreement, which may allow us to change financial presentation associated with that.
So there's, again, a lot of moving parts. So if you can just kind of park that question until the end of into March. Thanks. Great.
Thanks Bob. Apologies to, folks in
the queue who we did not get to, and for running late here on the call this the IR team and Bob will be around after the call to take any of your questions. Thank you.
Thank you, ladies and gentlemen. This concludes today's conference. You for participating. You may now disconnect.