Welcome to the Regeneron Risk Pharmaceuticals Q3 2018 Earnings Conference Call. My name is John, and I'll be your operator for today's call. At this time all participants are in a listen only mode. Please note the conference is being recorded. And now, I'll turn the call over to Renisha Sernestman, Head of Investor Relations.
Thank you, John. Good morning and welcome to Regeneron Pharmaceuticals' 3rd quarter 2018 conference call. An archive of this webcast will be available on our website under Events for 30 days. Joining me on the call today are Doctor. Lenich Schleifer, Founder, President and Chief Executive Officer Doctor.
George and Coppola's founding scientist, President and Chief Scientific Officer, Marion McCourt, Senior Vice President and Head of Commercial and Bob Landry, Senior Vice President And Chief Commercial 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 this call today include forward looking statements about Regeneron. Such statements may include: are not limited to those related to Regeneron and its products and business, financial forecasting guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, intellectual property, pending litigation and competition. Each forward looking state is subject to risks 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, or SEC, including its Form 10Q for the quarter ended September 30, 2018, which was filed with the SEC earlier today. 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 in today's call. Information regarding our use of non GAAP financial measures and a reconciliation of those measures to GAAP is available in our financial results press release, which can be accessed on our website. Once our call concludes, Bob Landry and the IR team will be available answer further questions.
With that, let me turn the call over to our President and Chief Executive Officer, Doctor. Lynch Schweifer.
Thank you. Well, Manisha does such a fabulous job and investor relations, we should at least get our name right. It's Manisha Narasimmon, Good morning to everyone who has joined the call. In the third quarter, we generally delivered record financial results and important pipeline progress. EYLEA sales continue to grow.
For the first time, U. S. EYLEA net quarterly sales surpassed $1,000,000,000. Also, for the first time, 3rd quarter worldwide Dupixent sales exceeded $250,000,000, and Dupixent was recently approved for asthma, its 2nd major indication. Additionally, we launched Libtayo, our first approved immuno oncology therapy.
For Eylea, expanded label for less frequent dosing and the potential for a new indication in diabetic retinopathy. And we expect to advance a high dose formulation of Fliverset into the clinic in the first half of next year. Libtayo, our first commercial entry into the exciting and fast evolving area of immuno oncology is the foundation upon which we intend to build with multiple additional agents and approaches in many different cancer settings. We have just go ahead and Dupixent as a pipeline in a product and it is living up to that potential. Compared to other approved biologics for asthma, Dupixent has a differentiated profile and label.
The recent asthma approval, together with the ongoing robust launch in atopic dermatitis, positive Phase III results in chronic rhinosinusitis with nasal polyps, and positive Phase II results in eosinophilic esophagitis validate the scientific hypothesis that the IL-four IL-thirteen pathway is responsible for a spectrum of allergic or type 2 diseases. You'll hear more from Marion about the launch of Dupixent asthma and atopic dermatitis, and George will update you on our clinical programs. We've continued to make steady progress with our other commercialized products. From Praluent, our LDL cholesterol lowering PCSK9 antibody, we anticipate that the U. S.
Treatment guidelines for lipid lowering will be updated shortly. We hope the updated guidelines will facilitate greater access and support increased use of the PCSK9 class Although it gets drowned out in the debate about drug prices, the fact remains that cardiovascular disease is the number one cause of death in the United States. And high LDL cholesterol is a major cause of cardiovascular disease. Our earlier pipeline continues to progress. At the beginning of the year, we set a goal of advancing 4 to 6 new molecules into clinical development.
I'm happy to report that to date, we have already advanced new molecules into clinical development. These include a bispecific antibody for ovarian cancer and new antibody for pain, a leptin receptor agonist and an antibody to CTLA-four. We also expect to advance into the clinic by year end a BCMA CD3 bispecific antibody for multiple myeloma. We now have 7 approved drugs and our clinical pipeline has 20 product candidates spanning a range of therapeutic areas. All of these molecules were discovered by our scientists.
With that, I will now turn the call over to George.
Thanks, Lian, and good morning, everyone. I'd like to begin with Eylea, In August, our supplemental biological application or SBLA was approved for EYLEA dose every 12 weeks after 1 year of effective therapy, in wet age related macular degeneration or wet AMD. EYLEA is now the only anti VEGF drug for the treatment of wet AMD that offers the flexibility to optimally treat patients, regardless of whether they require fixed interval dosing of 4 8 or 12 weeks. In September, the FDA accepted our SBLA for Eylea in diabetic retinostomy. With an action date in May 2019.
This SBLA was based on the data from the Phase III panorama study which investigated the use of Eylea in patients with moderately severe to severe non proliferative diabetic retinopathy without diabetic macular redeem. Positive 6 month top line results from Panorama were announced in March 2018. Just a couple of weeks ago, we announced positive data from the 1 year time point from the same study on the primary endpoint at 1 year after initial monthly dosing period filed by every 8 or every 16 week treatment, 80 65% of patients respectively experienced a 2 step or greater improvement from baseline. On the diabetic retinopathy severity scale compared to only 15% of patients receiving sham injections. The results were highly statistically significant with the P value less than 0.001.
Regarding the 2 key secondary endpoints, which achieved statistical significance based on the pre specified hierarchical analysis compared to sham injection treatment with EYLEA reduced vision threatening complications by 82% to 85% and the development of Center involved diabetic macular edema by 68% to 74%. Diabetic retinopathy is the leading cause of blindness in working age adults in the United States. What is perhaps underappreciated is the rate at which non symptomatic patients can develop serious complications that threatened their vision. Strikingly was in the 1st year of panorama, more than 1 third of previously asymptomatic diabetic retinopathy patients who treated with Eylea went on to develop vision threatening complications or diabetic macular edema. Eylea markedly reduced these complications and reverse the anatomic severity of the disease.
These results underscore the potential value of earlier intervention in diabetic retinopathy. In addition to data from our Panorama study, the government funded diabetic retinopathy clinical research network is conducting its own Phase 3 study by Lee and diabetic retinopathy. This study, known as protocol W, is ongoing. Turning to the competitive landscape, in our view, there isn't any product in the near term that can have a substantially different safety and efficacy profile compared to Eylea. Eylea is approved in a number of retinal diseases and has demonstrated safety and efficacy with over 20,000,000 doses administered worldwide.
It doesn't appear that any potential near term entrants can provide substantially different dosing flexibility, duration, were visual gains than are already achievable with EYLEADA. Nevertheless, we believe that higher dose formulations of aflibercept might provide additional or longer lasting benefit. And thus, we are advancing this program into clinical development in 2019. I'd now like to turn to Dupixent, a antibody that blocks the interleukin-four interleukin-thirteen pathway that we are investigating multiple allergic diseases. Just a couple of weeks ago, Dupixent was approved by the FDA for its 2nd major indication, asthma in adults and in adolescence.
Dupixent is approved for 2 important types of patients with uncontrolled asthma. Those with moderate to severe disease with an eosinophilic phenotype and those who require oral corticosteroids to manage their disease. With Dupixent, the newest biologics approved for the treatment of asthma we have demonstrated an unprecedented profile. As noted in our label, in our pivotal studies of patients with moderate to severe eosinophilic asthma, we reduced severe exacerbations by up to 67% compared to Placebo, an increased FEV1, a measure of lung function critical in asthma, by 29% to 33% compared to 14% to 16% for placebo. In addition, Dupixent is the only biological approved for oral corticosteroid dependent asthma regardless of eosinophilic type and the only asthma biological that offers patients self administration.
The U. S. Launch in asthma is underway as you will hear from Aaron. Regulatory application for asthma is currently under review by European Regulators. We expect a decision in the second quarter of 2019.
In terms of ongoing clinical development of Dupixent and asthma, we are currently enrolling patients between the ages of 6 11 years and are planning a separate Phase III study in patients aged 6 months to 5 years. In October, we announced that the 2 Phase III studies of Dupixent in chronic rhinosinusitis with nasal polyps Dupixent significantly reduced nasal polyps size, nasal congestion severity, and need for systemic corticosteroids and or surgery. Patients with inadequately controlled disease struggle with pain, nasal discharge, the inability to smell and difficulty breathing. The current standard of care, which includes the use of oral and intranasal corticosteroids, often, along with surgery, is often inadequate. These are the first pivotal trial results in chronic rhinosinusitis with nasal polyps showing that interleukin-four and interleukin-thirteen are key drivers of this disease.
Of note, more than 3 quarters of patients in these trials also suffer from other type 2 inflammatory conditions, including asthma, allergic rhinitis, and NSAID exacerbated respiratory disease. In a pre specified group of patients with comorbid asthma, Dupixent significantly improved lung function asthma control, providing the first evidence that Dupixent can treat inflammation from the upper to the lower airway in the same patient Detailed results for the nasal polyps studies will be presented at a future medical conference. We intend to make a regulatory submission to the FDA in this indication in the first quarter of 2019. Dupixent has now demonstrated late stage safety and efficacy in 3, allergic or atopic or Type 2 inflammatory diseases, atopic dermatitis, asthma, and now chronic rhinosinusitis with nasal polyposis as we have observed in our studies, patient with one such condition often suffer from allergic diseases as well. Other allergic diseases.
We are committed to extending Dupixent's approval into younger age groups and geographies and broadening it to additional type 2 allergic indications. In atopic dermatitis, we recently reported positive data from a Phase 3 study of Dupixent in adolescents with moderate to severe atopic dermatitis. These results were the basis of a regulatory submission in the U. S. For patients between the ages of 12 17 years.
This morning, we announced that the FDA has accepted for priority review the SBLA for Dupixent in adolescent patients 12 to 17 years of age with moderate to severe atopic dermatitis, whose disease was inadequately controlled with topical therapies or for whom topical treatment was medically inadvisable. Currently, there are no FDA approved systemic biologic medicines to treat adolescents with moderate to severe atopic dermatitis. The target date for the FDA decision is March 11, 2019. We're also currently conducting studies in younger patients between the ages of 6 months 5 years, as well as in patients between the ages of 6 11 years. In terms of other diseases, we initiated our Phase twothree study dupilumab in adults and adolescents with eosinophilic esophagitis.
We also recently started our Phase 2 study of dupilumab in peanut allergy. This program is being conducted in collaboration with Aimmune Therapeutics. Phase II study of dupilumab for grass allergy is currently underway and a Phase IIIII study in COPD is being planned. We view our interleukin-thirty three program as a complement to Dupixent. The Regeneron Genetics Center in collaboration with Geisinger Health System in the UK Biobank has confirmed and extended observations linking the interleukin-thirty three pathway to both COPD and asthma.
We are studying our interleukin-thirty three antibody, both as monotherapy as well as in combination with Dupixent and asthma, where we have 3 trials in progress and in COPD where we have won. We plan by year end to initiate 2 Phase II studies in atopic dermatitis. One will be anti IL-thirty three monotherapy and the other will combine anti IL-thirty three with Dupixent. I would now like to switch to the very exciting field of immuno oncology, which continues to be an area of focus for us and where we have recently made important strides. At the end of September, Libtayo, the brand name of Cimiplimab, RWLC, became not only the first PD-one antibody approved by the FDA for treatment of advanced cutaneous squamous cell carcinoma, or CSCC, but the first treatment of any kind ever approved for this cancer.
The response rates for this very high unmet need cancer setting were among the highest ever reported for a PD-one treatment in a solid tumor. Outside the United States, a regulatory application for Libtayo is being reviewed by the European Medicines Agency with the decision expected in the first half of twenty nineteen. There are currently no EMA approved treatments for advanced cutaneous squel carcinoma. As we have stated before, we considered non small cell lung cancer being an important potential new indication for Libtayo. Our Phase III program in non small cell lung cancer is enrolling as planned.
Based on our review of emerging data in this evolving field and as we had indicated on our last quarterly call, we have doubled the size of our trial comparing Libtayo monotherapy to chemotherapy in PD L1 high patients from 300 patients to approximately 700 patients. We are also conducting Phase III studies of Libtayo and second line non small cell lung cancer and in combination with chemotherapy, it was an anti CTLA-four antibody in first line. While these studies are being conducted with the commercially available CTLA-four antibody, I am pleased to report that our own CTLA-four antibody is now in clinical development. Turning now to our bispecific antibody platform. The leading program here is our fully owned CD20xCD3 antibody.
Next month at the annual meeting of the American Society hematology or ASH, we will be presenting additional data in B cell malignancies. Our second bispecific antibody entered the clinic targets MUC16 and CD3 for ovarian cancer. By year end, we expect our BCMA by CD3 bispecific antibody to enter clinical development for the treatment of multiple myeloma. We have also announced that we will be progressing an entirely new class of bispecifics into the clinic starting in the first half of twenty nineteen. Continuing on the theme of immuno oncology in the third quarter, we entered into a collaboration with Bluebird bio to discover, develop and commercialize new CAR T and other cell therapies for cancer.
This collaboration represents a great example of 2 companies with synergistic technologies, working together to try to make a significant advance in the field. Moving on, our late stage pipeline has made progress and I would like to focus on a few programs. In the third quarter, we announced positive top line efficacy data for Vicinumab, our nerve growth factor, or NGF antibody, in patients with chronic pain from osteoarthritis of the knee or hip. The study met both co primary endpoints and all key secondary endpoints at week 16. Showing that we can achieve efficacy with low doses that mitigate treatment associated arthropathies at least during the study period.
We have 3 Phase III studies with Vicinumab ongoing and osteoarthritis, including our long term safety study. As most of you know, pain represents an area of high unmet need. To that end, we have recently advanced another molecule for pain into clinical development. I'm fully human antibody to the G FR alpha-three neurotrophic Factor receptor. Our clinical programs in cardiovascular metabolism are moving ahead.
We're enrolling phase 3 studies of Pralient in that adults with homozygous familial hypercholesterolemia, in addition to pediatric studies in heterozygous and homozygous familial hypercholesterolemia. We recently received regulatory approval for PRALINU for the treatment of patients with parozygous familial hypercholesterolemia undergoing apheresis. And finally, the FDA has accepted for review and SBLA for pral units potential treatment to reduce major adverse cardiovascular events with the target action date of April 28, 2019. The monocumab, our ANGPTL3 antibody is in a Phase III clinical development study in homozygous familial hypercholesterolemia. Where it has received orphan and breakthrough designations.
We are also enrolling patients in a Phase 2 study of Evinacuvant in heterozygous familial hypercholesterolemia and refractory hypercholesterolemia and another Phase II study in severe hypertriglyceridemia. In terms of our other clinical programs in December, at the annual ASH meeting, we'll also be presenting additional data from our wholly owned C5 antibody program. We expect to initiate a Phase 2 study of the subcutaneously administered goal in patients with paroxysmal and maternal hemoglobinuria or PNH in the first half of twenty nineteen. Another exciting molecule in our pipeline is our active antibody, where we currently have a potentially pivotal Phase II study ongoing in a rare disease called fibrodisplasia ossificans progressiva. Finally, I would just like to highlight within the next three months, our Regeneron Genetics Center affects to hit the 500,000 mark of humans sequenced, a milestone few, if any, centers have ever achieved.
With that, I would now like to turn the call over to Mary.
Thank you, George, and good morning, everyone. I'd like to start with Aliyah global net sales in the 3rd quarter were $1,680,000,000, an increase of 11% year over year. US net sales of Eylea were $1,020,000,000, a 7% year over year increase. This increase was driven by overall market growth in both wet AMG and GME, physician preference, and the aging population as well as the increase in the prevalence of diabetes. Based on net sales, EYLEA currently holds about 70% of the overall branded U.
S. And anti VEGF market. In an effort to educate consumers and raise brand awareness and interest, we recently launched a pilot earlier DTC campaign for approved indications in select markets beyond the approved indications of wet AMD, DME, retinal vein occlusion and diabetic inopathy with DME, we see potential opportunity for Eylea in diabetic retinopathy. And you just heard from George, we recently reported positive data in this indication and expect a regulatory decision in the U. S.
In May of next year. Following this potential approval we plan to initiate a focused campaign to drive adoption in this large untapped indication. Additionally in August, we announced that the FDA approved an SBLA for Eylea for a modified every 12 week dosing schedule for wet AMD after one year of effective treatment. This makes EYLEA the only approved anti VEGF drug for wet AMD with 4 8 12 week dosing, specifically referenced in its label. I'd like to spend a moment discussing our prefilled syringe for EMEA As previously announced, we received a complete response letter from the FDA.
We remain confident that we will be able to satisfy the agency's request which included the completion of a usability study evaluating a single injection in approximately 30 patients. We plan to make a regulatory submission in the first half of twenty nineteen. Our launch timelines for the prefilled syringe have not changed and we continue to be on track feet were 263,000,000, including 220,000,000 in the U. S. Let me start with Dupixent in atopic dermatitis Underlying U.
S. Demand for Dupixent remains strong, with total prescriptions or TRx up approximately 17% quarter over quarter sequentially. Prescriber depth and breadth continues to improve with now over 12,300 healthcare providers having prescribed Dupixent to over 60,000 patients. Despite the strength of this launch, the vast majority of patients with moderate to severe atopic dermatitis have not been treated with Dupixent. Educating patients about Dupixent as a potential new treatment is an important area of focus.
To dissent, we recently launched a national branded television campaign and are encouraged by the early results. Outside the U. S, the ongoing launch of Dupixent in atopic dermatitis is progressing well. As George announced, the SBLA for Dupixent in adolescence with atopic dermatitis has been filed and granted priority review by the FDA with an action date in March 2019. If approved, this will allow the benefits of Dupixent to be extended to patients as young as twelve years of age We estimate that the number of adolescent patients is about half that of the adult atopic dermatitis population.
In addition, we have also submitted an application for a 200 milligram auto injector for Dupixent. Turning now to asthma, which is the most recently approved indication for Dupixent. As you heard from George, we believe Dupixent is a highly differentiated biologic for the treatment of asthma The launch is underway and feedback from physicians has been positive. We've only been in the market for a couple of weeks now, so it is too early to provide any detailed launch metrics. We estimate there are approximately 775,000 to 900,000 adult and adolescent patients in the U.
S. With moderate to severe asthma that have uncontrolled persistent symptoms that despite standard of care therapy may be suitable for treatment with a biologic therapy, currently only about 11% of these patients are treated with a biologic. One of the key considerations for physicians treating asthma patients is to limit or avoid the use of oral steroids to control the disease. We estimate that the oral corticosteroid dependent population represents approximately 25 to 30% of the approximate 775,000 to 900,000 patients with uncontrolled persistent asthma eligible for biologic Dupixent is a non steroid treatment option for these patients. With that in mind, we are optimistic about the asthma launch with the goal of making Dupixent the preferred first line biologic for indicated patients with moderate to severe asthma Early efforts to engage both allergists and pulmonologists are well underway and the reception has been positive.
Many allergists are already familiar with Hixent Natopic dermatitis and these doctors are also treating patients with asthma. We're actively working on educating and creating awareness of Dupixent's differentiated profile with pulmonologists. We look forward to providing further updates on the launch in the months ahead. I'd now like to turn to Libtayo, our PD-one antibody. On September 28, the FDA approved Libtayo for treatment of patients with metastatic cutaneous squamous cell carcinoma or locally advanced CSCC for not candidates for curative surgery or curative radiation.
We continue to expect a decision by the European Medicines Agency in the first and the first step in our goal of establishing Regeneron as a major player in the immuno oncology space. Upon FDA approval, the oncology sales force quickly mobilized to make Libtayo the standard of care for CSCC by engaging medical oncologists and motor surgeons targeting centers specializing in skin cancers. So far, feedback from the medical community has been positive. On October 24th, Libtayo was included in the updated National Comprehensive Cancer Network NCCN guidelines for CSDC. Libtayo received a 2A evidence rating, the only systemic therapy with an NCCN rating in CSCC.
From a payer standpoint, we've been successful in establishing broad access and reimbursement coverage so patients in need can get access to the treatment quickly. Recall that CSCC is the most common form of skin cancer and is responsible for an estimated 4 to 8000 deaths each year in the U. S. It currently accounts for approximately 20% of all skin cancers in the U. S.
With the number of newly diagnosed cases expected to rise annually, we look forward to providing further updates on the launch at a later time. Switching to Praluent, Global Net Sales in the 3rd quarter recorded by Sanofi were $80,000,000, representing a 62% increase compared with the third quarter of 2017. We have submitted data from the cardiovascular outcome study to regulatory agencies in U. S. And the EU and anticipated decisions in the second half of twenty nineteen.
We are also expecting that the lipid lowering treatment guidelines in the U S will be updated shortly. These updated guidelines may facilitate greater access and support increased use of the PCSK9 inhibitor class for continuing payer engagement and remain the exclusive PCSK9 inhibitor on the Express Scripts national commercial formulary. Based on net sales, our market share in the U. S. Has grown significantly since the addition steadily.
Moving to Kevzara, global net sales was recorded by Sanofi were $25,000,000 in the 3rd quarter as demand improved, Within the IL-six subcutaneous class, Kevzara now has 42% of dispensed NBRx share and 20% share of TRx. I'll now turn the call over to Bob.
Thanks, Mary, and good morning, everyone. I'm pleased to report both solid top line results and strong operational performance for the third quarter of 2018. We are encouraged by Eylea and Dupixent sales growth. Progress across our portfolio and improvements in our operating leverage as reflected in the reduction of our full year 2018 expense and tax guidance line items. For the third quarter of 2018, we earned $5.87 per diluted share on non GAAP net income of 675,000,000 These results represent a 47% 44% year over year increase in our non GAAP diluted EPS and net income, respectively.
Total revenue grew 11% year over year to $1,660,000,000, driven by performance of U. S. EYLEA, revenue increases for both the Sanofi and Bayer collaborations in growth within other revenue. EYLEA net product sales in the United States grew 7% to 1.02000000000 compared to $953,000,000 in the third quarter of 2017. U.
S. Eylea distributor inventory decreased in the quarter as compared to the second quarter of 20 yet remained within our normal 1 to 2 week targeted range. As disclosed in our last earnings call commencing in the 2nd week of June, We increased the existing Eylea discount that we offer to physician practices regardless of volume. As a result, there was slight degradation in EYLEA's gross to net percentage in the third quarter of 2018 compared to both the third quarter of 2017 in the first half of twenty eighteen. Effective October 1, 2018, we started shipping and recording U.
S. Net sales of Libtayo As a reminder, for Libtayo in the U S, we are the commercial lead and will record product sales Sanofi has exercised its option to co promote Libtayo in the U. S. Ex U. S.
EYLEA net product sales recorded by our collaborator there were $655,000,000 for the 3 months ended September 30, 2018, representing a 20% operational and 16% reported increase on a year over year basis. Total Bayer collaboration revenue for the 3 months ended September 30, 2018 grew 12% year over year to 264,000,000 of which $243,000,000 was derived from the share of net profits from Eylea sales outside the U. S. The $243,000,000, which represents year over year growth of 18% compares favorably to the $205,000,000 realized for the 3 months ended September 30, 2017. Total Sanofi collaboration revenue was $256,000,000 for the third quarter of 2018 compared to $245,000,000 for the third quarter of 2017.
The year over year revenue increase was driven by 3 factors First, we realized a $59,000,000 decrease in our share of losses in connection with the commercialization of Dupixent preluent in Kevzara. 2nd, higher Sanofi R and D reimbursement revenue associated with our increased investment in immuno oncology and third, higher Sanofi commercialization reimbursement revenue associated with increased investment in commercialized products. Offsetting these 3 factors is the 2017 expiration of the Sanofi antibody discovery and preclinical development agreement under which we recorded $38,000,000 of revenue in the third quarter of 2017 compared to no revenue this quarter. In the third quarter of 2018, we recognized a loss of $39,000,000 in connection with the commercialization of products from the antibody licensing collaboration agreement with Sanofi which compares favorably to a loss of The lower share and loss versus the third quarter of 2017 was primarily attributed to higher global net sales of Dupixent and Praluent and continued cost containment for Praluent, partly offset by an increase in Dupixent commercialization expenses. Despite incurring necessary launch expenses for new indications in new markets from a financial standpoint, the alliance had its best performing quarter, While we experienced improved operating leverage in the third quarter of 2018, we expect the Alliance's financial results to remain variable for the next few quarters as we continue to incur launch expenses for new indications in new markets compared to the third quarter of 2018 We are expecting a higher alliance loss in the fourth quarter of 2018 in connection with the commercialization of these antibodies.
Before turning to expenses, I wanted to briefly comment on our third quarter 2018 other revenue. In the third quarter of 2018, other revenue was 117,000,000 versus $62,000,000 in third quarter of 2017. This increase was primarily driven by the recognition of a higher amount of deferred revenue from Teva in Mitsubishi Tanabe, including amounts related to the recognition of a portion of the $60,000,000 20,000,000 development milestones achieved from Teva and Mitsubishi Tanabe, respectively, in third quarter of 2018. Other revenues also increased from the recognition of revenue to develop test and manufacture antibody therapy for the treatment of Ebola virus infection. As a reminder, you can find a summary of the components of other revenue in the MD and A of the 10 Q.
Non GAAP R and D expenses were $497,000,000 for the third quarter of 2018 as compared to $460,000,000 for the third quarter of 2017. The increase in non GAAP R and D expense was the result of an increase in Libtayo clinical costs and higher R and D headcount and facility related costs. Partly offset by a decrease in Dupixent development costs. Our non GAAP unreimbursed R and D expense, which is calculated as the total non GAAP R and D expense less R and D reimbursements from our collaborators was $311,000,000 for the 3 months ended September 30, 2018 compared to 227,000,000 for the 3 months ended September 30, 2017. As highlighted earlier, $38,000,000 of this increase is attributable to the expiration of the Sanofi antibody discovery and preclinical agreement at the end of 2017.
The remaining increases were driven by our share of higher immuno oncology clinical costs, and R and D activities associated with a growing number of wholly owned programs. Our press release includes the information required to calculate unreimbursed. Non GAAP R and D expense. We are lowering and tightening our full year 2018 guidance for non GAAP unreimbursed R and D expense to be in the range of $1,190,000,000 to $1,225,000,000 from our previous guidance of $1,210,000,000 Non GAAP SG and A expense was $326,000,000 for the third quarter of 2018 as compared to $259,000,000 for the 3 months ended September 30, 2017. The higher SG and A expenses in the third quarter of 2018 were primarily due to an increase in contributions to independent non for profit patient assistance organizations and higher launch expenses for Libtayo and Dupixent in adult and adolescent asthma.
We are lowering and tightening our full year 2018 non GAAP SG and A expense to be $1,330,000,000 to $1,370,000,000 from $1,340,000,000 to $1,390,000,000. Based on this revised guidance, we expect a higher SG and A spend level in the fourth quarter of 2018. This higher spend is driven by EYLEA expenses, including DTC in Dupixent expenses including DTC and patient support programs. Sanofi reimbursement of Regeneron Commercial is related expenses, a line item found within Sanofi collaboration revenue was $107,000,000 for the third quarter of 2018. We are lowering and tightening our full year 2018 guidance for reimbursement of Regeneron commercialization related expenses to $430,000,000 to $455,000,000 from $455,000,000 to $485,000,000.
For the 3 months ended September 30, 2018, as compared to the same period in 2017, Non GAAP cost of goods sold declined principally due to better core cost absorption at our Limerick, Ireland, Commercial Manufacturing Facility. Cost of collaboration and contract manufacturing increased due to higher sales volumes of both EYLEA outside the U. S. And Sanofi collaboration antibodies as well as the recognition of manufacturing costs associated with our agreement with BARDA. These increases were partially offset by lower validation costs.
At our Limerick facility. Turning now to taxes. Our effective tax rate in the third quarter of 2018 was 6.5% compared to 31.3% for the third quarter 2017, driven primarily by the enactment of the Tax Cuts and Jobs Act as well as one time tax benefits associated with tax planning credit for research activities, stock based compensation and income earned in foreign jurisdictions with tax rates lower than the U. S. The third quarter of 2018 also included a GAAP income tax benefit of $11,900,000 that was an adjustment to the provisional amount recorded as of December 31, 2017, for the U.
S. Tax Reform Act, which was related to the re measurement of the company's U. S. Net deferred tax assets. As we await additional regulatory guides and continue to assess the full impact of the new tax law, including some one time items we now expect our full year 2018 effective tax rate to be in the range of 11% to 13% from our previous guidance of 13% to 16%.
While our effective tax rate guidance has Turning next to cash flow and the balance sheet, Regeneron ended the third quarter of 2018 with cash and marketable securities of 4,100,000,000 and generated in excess of $1,100,000,000 of free cash flow from the 9 months ended September 30, 2018. We calculate free cash flow as net cash provided by operating activities less capital expenditures. Our capital expenditures for the 3 months ended September 30, 2018 were 106,000,000 in total $298,000,000 for the 9 months ended September 30, 2018. We are lowering and tightening our full year 2018 capital expenditure guidance to $360,000,000 to $390,000,000 from our prior range of $410,000,000 to $450,000,000. On the BD front, as George mentioned, we entered into a collaboration with Bluebird Bio in connection with the execution of the collaboration agreement, we also agreed to purchase 420,000 shares of Bluebird common stock for $100,000,000.
As part of the agreement, $37,000,000, the amount paid in excess of the fair market value of the shares purchased will be credited against our funding obligation for collaboration research. Before I hand the call back to Manisha to commence Q And A also wanted to highlight in an exciting announcement Regeneron made in September regarding a new agreement with the state of New York to support economic development in the capital region. Over the next 7 years, Regeneron has committed to investing $800,000,000 to expand facilities and create 1500 new full time jobs in New York State. This expansion will be supported by $140,000,000 in economic development incentives. From New York State.
With that, I would like to turn the call back to Manisha.
Thank you, Bob. John, that concludes our prepared remarks. We'd now like to open the call for Q And A. Thank
session. And our first question is from Geoff Meacham from Barclays.
Hi, this is Greg Harrison on for Geoff. Thanks for taking the question. Can you talk us through the trends you're seeing recently with payer access for Dupixent? Have asthma patients been able to get access and how is this prepared? How is this compared with the launch in atopic dermatitis?
So certainly it's early days, Greg, in the launch for asthma, but I can certainly report that with Dupixent for the new asthma indication, we are making steady progress and very pleased with initial dialogue with payers. But I'll just remind everyone that this is only our 3rd week in market with the asthma launch. Then as a comment, you alluded to a top dermatitis and payer coverage. Certainly we see the majority of the market with adequate coverage And of course, that reflects in the uptake we're seeing with Dupixent performance.
Our next question is from Carter Gould from UBS.
I guess, Lynn, given all the commentary coming out of the White House around Part B Proposals and HHS, just wanted to get your latest thoughts on sort of that messaging, anything that you guys can do to either mitigate that front on either on the, yes, leave it there.
Yeah, hi. Thanks for the question, Carter. Obviously, it's tough to know what's going to actually become policy given a lot of these announcements with pre election, I do think the administration is serious about trying to do something with drug pricing. But whether or not they'll be able to get in, in a demonstration project that covers a large fraction of the of the country starting in the year 2020, with international reference pricing, I think that's a wide, big, open, big question mark at this time.
Next question please.
Our next question is from Cory Kasimov from JP Morgan.
Hey, good morning guys. Thank you for taking my question. I'm curious how you're looking at the market opportunity for it to pick in the moderate eosinophilic asthma population when considering the low biologic penetration you referred to first severe asthmatics to date. So I guess given those historic dynamics, do you think you'll be able to penetrate much of the moderate patients in the 1st year or so of the products launch or should we really be focused on severe?
I'm going to let Marion answer that question after I just made one brief comment. The market has yet to see a self administered product. And it is penetration is expected to be exceedingly low for the moderate population when you have to get, to the doctor's office, either infusion or hang around there for half a day, etcetera, etcetera. Barian?
Yes. So I'd add to that, that it's not unusual that physicians, and in this case, it's pulmonologists and allergists, we'll often use a product Dupixent in this case for asthma on some of their tougher patients first. I'll share that anecdotally, the report forgetting, have been very, very positive. So over time, most definitely, I think we'll have success not only with severe, but also the moderate patients And I think that continuum will evolve over market experience, but there are really compelling reasons why. And that relates to the clinical profile of Dupixent in asthma, its overall efficacy, not only in exacerbations, lung function, OCS reduction and quality of life, but then also the broad category of patients that we achieved in our label.
Moderate to severe patients, of course, EOS greater than 150 OCS dependent regardless of phenotype or EOS. As Len mentioned, another element that we're hearing that is just so important is that we are the only asthma biologics to offer both at home, self administration. And when physicians want to, they can always start a patient in the office to help educate and train them. But this is a really important factor in the ability to have broader use. And then the other item I add is that of course with Dupixent, we're not launching a new product.
We're launching a new indication. So allergists have already had experience with Dupixent, and we already have shown an established safety profile. So we're really excited about the launch. It's very, very early days. I look forward to giving you reports in the future.
And this is George. I just want to emphasize about the clinical profile that mayorin brought up, which is that particularly for moderate patients, they still can have pretty substantial reductions in their lung functions. And when you're talking about a biological that maybe the first biological really can have clinically meaningful impact on lung function, that could really make a difference in patients' lives. And, that is something that, has a really potential to essentially have a real impact on patients' lives. And together with its safety profile, I think there's a lot of rationale for penetrating into the moderate population.
John, next question please.
Our next question is from Chris Raymond from Piper Jaffray.
Hey, thanks. Just a question on the Dupixent peanut allergy study or work that you're doing with immune. Can you maybe talk about a little bit in detail that the objectives of this work, maybe the strategy, even, I think you've talked about being able to potentially improve on Aimmune's experience in desensitizing kids during the up dosing period. But maybe just frame for us, what is there's obviously a lot of opportunity in food allergy, not just peanut allergy. What does success look like from this initial trial and And where do you think that could take you in terms of sort of penetrating that other market, that bigger market?
Just to get into the signs for a second, I think that everybody has to understand that the reason you have allergies is you have a certain of immunoglobulin known as immunoglobulin E that is bound to the surface of mast cells and basophils And once it interacts with Allergen, it clusters on the surface of these cells, resulting in degranulation, release of histamines and other allergic mediators. That's the fundamental basis of allergy. For those of you who don't know it, interleukin-four and interleukin-thirteen are VIE switch factors. When you try desensitization therapy, the whole goal of that therapy fundamentally is to reprogram the immune system and make the immune system make good antibody or immunoglobulin G as in George, instead of immunoglobulin, E as in Ellen. So, and when you are trying desensitization, you don't really have a natural way of actually impacting whether the cells that are involved in the response go to IgG or IgE.
IL-four blockade or IL-thirteen blockade are the fundamental drivers. So in any or drive exactly the kind of reprogram that you want that historically has been very difficult to achieve. And in animal studies, the results are pretty much black and white. So we believe that in almost any setting of desensitization, whether it be Peanut, grass, whether it be with any approach, the whole goal is to stop making IgE and to start making IgG that is exactly what Dupixent can do. So what we hope success in that study is faster ability to tolerate higher doses of the peanut during the whole desensitization decreased the number of patients who have allergy mediated side effects, mostly, GI side effects that limit their ability to take or stay on the treatment.
All of these will be indicators that, that Dupixent is doing exactly what we think it should be doing, which is driving more IgG and preventing the body from making the IgE. And thus, reprogram the body away from allergy. And this is just the beginning. If it works in peanut, and it has a signal here, it should be applicable to essentially every form of desensitization available by whatever modality.
Operator, next question please.
Our next question is from Jeffrey Porges from Leerink.
Thank you very much for taking the question. Just to follow-up on Dupixent a little bit. The adolescent indication and what your expectations are there, Mary, and you mentioned the, the, population, but would you expect adoption to be faster or slower there. And then just back to the asthma launch, could you comment on whether you think is going to be actively managed by payers, whether there'll be step edits and rebates involved, or do you think that, you're largely going to sort of be able to price more or less at the same price, as you have in AD and have unrestricted access? Thanks.
Jeff, before our married answers, we invite you to come by. We might have a antiviral antibody we can give you.
I appreciate that. So,
Jeff, addressing your comments first on Dupixent uptake in adolescence. Well, as mentioned, we very much look forward to the indication in helping this group of patients with moderate to severe disease and the agony that goes with for both them and their families. We would anticipate that the uptake should be, similar to potentially a bit faster than what we saw in adults atopic dermatitis. And I think it's for 2 reasons. I want to be a little conservative in saying similar But the reason why I think realistically it might be a little bit faster for these patients is that physicians now have experienced sense.
And the product is becoming well known, depth of prescribing is increasing. And for that reason, coupled with fact that this is an alarming disease for adolescents. We believe it's very important that we get the word out quickly and there's great excitement and enthusiasm in the market for this indication for this group of patients who are truly suffering. Your second question related to asthma and payer up take, it's very early days. This is our 3rd week of launch.
So things are going well. There's been great recent to the clinical profile of the product, but I think I'd rather come back and give more detail on payer specificity as we have more time in market.
Great. Thanks very much. I just wanted to add to the pediatric side of this, is that in that setting steroids, whether they're absorbed from lathering lots of it on or with systemic first treatment in adolescents during their growth about, spurts is a big deal. So I think, that's another reason why doctors might wanna move to early adoption. Next question please.
Our next question is from Matthew LaChaney from BMO Capital.
Hi, great. Thanks for taking the question. We've had the DTC campaign ongoing now for a little while. I was wondering if you could give us an update or your latest view on the patient mix that's currently receiving the drug for atopic dermatitis as well as perhaps your view on current persistent or refill rates? That's something that I don't think was mentioned in the, in the earlier remarks.
Thank you.
Sure. So let me take persistence and refill rates first. The persistency that we've commented on in the past at the 12 month point being approximately 80 So we see strong persistency with Dupixent. Similarly, on the first script refill is an important factor. We still see that at over 90%.
So these are indicators that when patients go on to pixent therapy for atopic dermatitis, they want to stay on therapy because their lives are better. The second piece you mentioned is a little bit on the DTC, I believe, was part of the question. And also the types of patients. So similar to the comment I made before, it's not unusual for physicians to start with their most severe patients, but clearly now we're getting penetration not only with severe, but also moderate patients. And we really thought it was part of our responsibility to for this disease and for patients who potentially previously had given up because therapies were not really helping them at all.
We thought that this product was absolutely ideal for an on air branded campaign. We're still only in months of that branded Dupixent TV campaign, it was preceded as some would recall by a disease awareness campaign and we thought that was the right order to do things. We've been in national broadcast mode with the Dupixent TV campaign now, since about the August timeframe. So we're several months in. The signs we see so far are encouraging.
Next question please.
Our next question is from Clarence Flynn from Goldman Sachs. Hi, thanks for taking the question. No, you are unlikely to give EYLEA guidance for 2019, but maybe you could just talk about the puts takes heading into next year. It looks like we're on track for another double digit year of branded growth here. So just wondering, if we think that, that should continue heading into 2019.
And then you mentioned this higher dose formulation of EYLEA. Maybe what have you learned here that drove decision and what would actually be required to bring that to market? Thanks.
So maybe George can take the higher dose and then we can comment about the market.
Well, in terms of the higher dose, I guess the point is that we remain impressed with the fact that EYLEA has stood up to so much competition in that, no one has really been able to come up seemingly with a fundamentally different profile in terms of, benefit, effects on vision or duration of treatment. And so we thought that it was time, especially because we've been working on this in the labs for a while to see whether, just giving a higher dose of EYLEA. Can actually take EYLEA pass what is now, we think, the gold standard in the field and see if we could either improve the benefit and or extend the duration of the interval. And so we're poised. We've been working on this for a while and we're going to be putting in the clinic this year.
Thanks, Jim. 2019. Sorry, 2019. Right. So, and then I'm already operating in 2019.
In terms of the market growth, we see nothing that will change the underlying demographics for the increase in diabetes and the increase in AMD continuing to grow the market somewhere in the mid to high or low double digit growth over time. Those demographics do not seem to be letting up at all. Obviously, where we fit in there based on competition and what have you, we'll have to see how well that plays out. But I echo what George says. We haven't seen anything that's disruptive.
We certainly haven't seen a drug even the most touted drug by the sponsor, RTH, it seems to me they have forgotten that the retinal specialist some of the smartest guys out there as physicians. And they can do math and they can multiply 75% times about 50% and come up with a lot lower number than 75%. So it seems to me that, EYLEA has a really good profile. In addition, what we saw in the diabetic retinopathy studies was we think quite remarkable. I think it was startling to many how frequent it was that people, untreated, with asymptomatic diabetic retinopathy, given placebo watch for a year and what a large fraction of them about a third actually developed vision threatening complications.
And this can be dramatically prevented and reduce not only improve the diabetic retinopathy, but prevent the progression of the diabetic retinopathy. And we think that that's a big deal. It's going to take some reeducation, out there of both patients and physicians But we think that's a fundamental advance. Remember that diabetes and diabetic eye disease is one of the leading still causes leaving positive blindness in adults.
Operator, we have time for one last question, please.
And our last question is from Ying Huang from Bank of America.
Hi, thanks for taking the question. I have one for NGS. In the recently released Phase III top line, you saw the placebo adjusted rate of adjudicated arthropathy at about 2%. And then we saw the Pfizer tanezumab at AACR showed definitely a 1.5% incidence of RPOA. Just wondering whether you think this kind of safety is acceptable for the FDA and for the treating physicians and what's the gating factor?
For the long term safety, in your Phase III trial? And then next, if you could give us a little bit more color on the collaboration with Bluebird, exactly what kind of target, so we'll kind of sell the therapy of folks here. Thank you.
Thanks, Jean. Let me just comment on the Synuum and then maybe George can comment on Blue or answer the senior. But I have to say that I think we know that in any drug dosing any drug development program, getting the dose right is really, really important. And that becomes super important when you have a very steep dose response curve for side effects. And we think that our approach has been to really try and get that dose right.
And we're hopeful that the very low dose that we got that is still able to produce, what's basically so far at least best in class efficacy results an outstanding course, study comparisons and all that, but really good efficacy results thus far. But perhaps, as George said in his prepared remarks, mitigating the safety. In terms of safety, I don't think, it's just going to be the adjudicated autopsies. Which that probably would be an acceptable level. But I also think there's a question of whether or not on these events, this treatment will lead to more or less joint replacements.
There's some evidence, I believe, with seen in the other development program, certainly in hours at higher doses that you would see more joint placements. And that probably would not be acceptable. Our program is very carefully monitored, by an independent DSMB, which has met recently and advised us to continue development at these low doses where we've demonstrated the efficacy. So we hope that we've got the dose right. Being 1st here may not be nearly as important as being right, because there's not room, as much room for error in this program as there might be in others.
To which you can talk about Bluebird.
And just to add to that, as you know, we are continuing our long term safety study with NGF. And as Len said, I mean, the most important data is to see what the benefit will be compared to adverse events with, we believe, at this point, since we seem to have mitigated against at least the arthropathies, the total joint replacements numbers are going to be very important. And certainly with the competitors program, that is a concern, and we'll have to see whether our dose gets around that. In terms of Blue Bird, I think for us, this is a very exciting collaboration. Clearly, they've demonstrated and they've developed their technologies and abilities to, to develop these CAR T therapies.
What we bring to the table is we bring new targets, and new reagents, whether they be antibodies or T cell receptor related reagents that can target new targets that can be put into and made into chimeric antigen receptors by Bluebird, to be put into their cells and used, via their therapeutic approach. So we're very excited about putting together our ability to bring new targets and, new ways to make these chimeric antigen receptors together with their ability to take those forward and deliver them to patients. And we think this is a real synergistic collaboration between 2 companies with very complimentary capabilities. And We're hoping to be able to change the future there. Thank you, George.
That concludes our prepared our call today. I know we weren't able to get through all your press but please send me an email and we will schedule a follow-up call with you.
Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. And you may now