Welcome to the afternoon of the first day of the B of A Healthcare Conference. My name is Geoff Meacham. I'm the Senior Biopharma Analyst. We're excited here to have Regeneron. Bob Landry, CFO, is with us and Ryan's on stage too. Forward-looking statement, and then we'll get into.
Yeah
... prepared remarks and then Q&A. Does that work?
It does.
Okay.
Thanks, Geoff. We're excited to be here. Before we get started, I just wanna remind you that remarks made today may include forward-looking statements about Regeneron, and each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in such statements. A description of material risks and uncertainties can be found in Regeneron's SEC filings. Regeneron does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. I think Bob's gonna make some opening remarks, and then we'll jump back to Geoff for questions.
Hi, Geoff. Thanks for the invite. We've kind of been a regular here the last couple of years, always good to get to Las Vegas, get good weather. We had our earnings on May fourth, which was last Thursday. I figured I'd, you know, in case you didn't listen or you didn't hear the transcript, I'll give you just kinda highlights, then we'll jump right into Q&A with Geoff. Top line revenues, we did increase 7% compared to Q1 2022, that was a positive. In DUPIXENT and LIBTAYO for the quarters, we actually hit all-time highs for both DUPIXENT and LIBTAYO. If you're following DUPIXENT, I'm sure we'll talk about it's doing fantastic on that end. We had six new FDA and EC approvals across five medicines.
For us, that's pretty active with regards to getting more kinda DUPIXENT indications approved and stuff like that. Our regulatory team has been very busy. With regards to EYLEA, we were actually down 6%. You know, we talked about competitive pressures. We talked about we went against an inventory build that was worth about $70 million, and we had pricing pressures also involved with that. Despite all of that, you know, we have our PDUFA date coming for 8 mg aflibercept. It's coming on June 27th, which is roughly seven weeks away. We're very much looking forward to that. You know, I guess the only positive thing for the quarter for DUPIXENT is that demand increased, right?
We kept the demand sequentially and we kept the demand year-over-year with regards to more patients, more vials being sold, which is important because as we obviously switch to the 8 mg, you know, it helps to already have patients on 2 mg when you make the switch. That was a positive. With regards to DUPIXENT, just to put the numbers out there again, as you know, we co-partner this with Sanofi, our good friends in Paris. The product for the quarter did roughly $2.5 billion, which is an all-time high. When you think about it too, in the first quarter, you know, there's always kind of a lot of gross to net pressures in the US.
DUPIXENT feels the same gross to net pressures that I'm sure that you saw across your investor base. Other highlights on DUPIXENT. Leading... Again, we're in five approved indications. We're actually leading an NBRx share across all five indications. With regards to TRx, we are leading in four of the five. The only one we're not leading in is asthma. Again, it's on full cylinder thrust. We announced, in the first quarter on COPD, which is our next big DUPIXENT indication that's coming. We have two phase IIIs that are coming. BOREAS, which I'm sure we'll get into with Geoff, is the first phase III. We had a readout on that. Again, we look forward to the other phase III, which continues to enroll.
With regards to DUPIXENT in Europe, I mentioned this, but we did get EOE approval in Europe. That's a fairly large indication. For AD, we often talked about the safety of AD in atopic dermatitis with regards to DUPIXENT. We have approval in the U.S., but actually in the EU, we also got approval down to six months of age, which again, you know, really speaks to the safety of this biologic. CSU, which will be our sixth indication, is coming. We have a PDUFA date on October 27th. Finally, an area that I'm concerned about is the DUPIXENT margins, right? We've been getting, obviously each quarter, we're selling more and more. I mentioned the $2.5 billion. We're actually really beginning to get great DUPIXENT margins.
This is a product that we share with Sanofi, and we're full disclosure. You can look at our MDA and see the margin expansion that we're getting. We do expect that to come. We've gotten kind of really good yield improvement in a new cell line for our drug substance product, which should only help going forward. Geoff, with that, I will turn the call over to you.
Yeah. Perfect. Perfect. Well, let's start off with EYLEA and the high-dose PDUFA. Bob, I guess I'm just trying to get a good sense for kind of the positioning here. You know, when you think about the commercial rollout, you know, what's the priority? Is it switching current patients? Is it trying to, you know, maximize share and sort of new to VEGF patients? Is it taking it from, you know, from Avastin? It's probably all the above, but.
Yeah
I wasn't sure like how you guys are thinking about the market...
No, I mean-
... in the first day, six-12 months.
It's important. You know, I mentioned with EYLEA that we do have competitive pressures coming, so it's important that we get to the market as soon as possible. Again, I mentioned the June PDUFA date. We do expect, which was really kinda quite positive news, we do expect with the June PDUFA date to actually be able to apply for the J-code for reimbursement under Part B. We'll do that by July 1, which will have us, you know, that product will be fully approved under the J-code by January 1, which does make a difference. Obviously, if we had an August PDUFA date, it would have pushed it back a little bit. Geoff, it's exactly like you said, it's going after all of them. I mean, we expect to be aggressive and we expect to switch-
Yeah
... as many patients as we can. We do think we have the standard product. It's the best standard of care that's out there, given the data that's been put forth. Again, we are in the kinda prime time of prepping for Marion McCourt, Head of Commercial, to have a great launch.
Okay. Perfect. Let's talk a little bit about, you know, about before we go to DUPIXENT, LIBTAYO. LIBTAYO has had stronger, you know, OUS sales, of late, but wanted to get, you know, your perspective about, you know, you guys' commercial success.
Yeah
in different geographies. Are you starting to see some pull-through, in either geography and, you know, in the lung market? That's obviously the biggest of all them, but it's not necessarily your historical, you know, revenue base.
A Q1 surprise, you know, I mentioned LIBTAYO having good numbers. We did $183 million for the quarter, which I think was up 49% in constant currency. That's both the U.S. and the ex-U.S. Again, as Geoff said, I mean, we hadn't beaten consensus in a long time, so it was kind of refreshing to finally beat consensus, primarily on the ex-U.S. side. You know, where we're seeing great pull-through is with our CSCC indication. You know, we continue to be the leader in the spot. Then we actually did get in June of 2022, we got approval in BCC, and we got approval in mono non-small cell lung.
As, you know, and Sanofi continues to commercialize this for us, and I'll get into that in a minute, you know, we continue to do new indications in new markets, and with that you get kind of, you're able to beat consensus and put forth the number that we did. I think ex-US we did $73 million, which was kinda even above my expectations. You know, we feel like we're in a good spot with that. We just got, in March of 2023, we just got the important EU approval for chemo combo for non-small cell lung, and again, that's in first line. Again, that should continue to help with that. For those that are not familiar with LIBTAYO, so in back in July of 2022, we bought back the rights we didn't own.
This was a 50/50 shared product with Sanofi. The U.S. has been kinda easy integration. We were recording the sales in the U.S., so that's fully integrated. Where we sit right now is we're in a transition service agreement with Sanofi, where they continue to market the products. They're roughly in 35 countries, and we have to take that over by June 30, 2024. Behind the scenes in Tarrytown, New York, you know, the teams are actually standing up affiliates. We don't expect to be in 35 affiliates. We're gonna pick obviously the larger markets that Sanofi was in, and we're gonna, you know, begin to commercialize ex-U.S. That's something that's gonna be new to us in the IO space, but we look forward to it and we think we have a great brand.
Again, you know, the key for us on LIBTAYO is that it is foundational to everything that we do, and hopefully we'll get into it. We have a bunch of combinations that are coming with LIBTAYO, which why it was so important for us to buy back the 50% rights. You know, we'll probably talk about the bispecifics in LAG-3, which is coming, which we think will really be the thrust forward in the IO space for Regeneron.
Bob, when you think about the LIBTAYO and the investment that you're making, you know, commercially, in Europe, but more near term, in different combinations, is there a different allocation of priorities or a different allocation of, you know, of spend to some of the combos today versus when you know, when you split it with Sanofi? In other words, have your kind of priorities changed with regard to maximizing LIBTAYO value?
Ryan, you wanna take this?
Yeah. Sure. Thanks, Geoff and Bob. I think LIBTAYO's always been foundational for our oncology strategy. It dates back probably 10 years when we started this journey to be a player, to eventually become a global leader in oncology. We felt that really owning and controlling LIBTAYO was critical to success there. I'd say it was probably the last step in a slow divorce from Sanofi in the oncology space, where We originally started with several assets in the immuno-oncology agreement, including fianlimab, our LAG-3, including ubamatamab, our CD, our MUC16 x CD3 antibody, which they opted out of. This was sort of the last step in dissolving that agreement for all intents and purposes.
What we've been able to do with LIBTAYO even since then is have more mature data with a lot of these combinatorial elements that has really, I think, furthered our confidence that eventually our goal of becoming that global leader is achievable. We've seen data in the early promising data, early data, across these different platforms that we believe has validated them. I mentioned the CD3 antibody MUC16. We had initial data for that at ESMO last year. We're gonna build on that hopefully in the second half of this year with combination data with LIBTAYO. Of course, fianlimab, the LAG-3 antibody, is another important oncology opportunity for us.
We're studying in melanoma, where we have phase I data that has been confirmed with two cohorts, really impressive response rates in PFS, and ultimately, perhaps into lung cancer, where we have some small data sets that are suggestive of really great efficacy. Finally, the costimulatory platform that really differentiates Regeneron's oncology pipeline, the CD28s. We had data last year as well as earlier this year with the PSMA x CD28 in combination with LIBTAYO. We hope to present more data for that either later this year or into early first half of next year. Same with the EGFRx CD28, which we're looking at in a variety of solid tumors, as well as MUC16x CD3 in combination with LIBTAYO.
Those are just the beginnings for us, and I think we're gonna build on that. We have many other antigens that we intend to target with either the CD3 platform or the CD28 platform that we think can work really well with LIBTAYO. That was really the thrust for us to take back the asset and own it outright.
Gotcha. Over the course of this year, so you have ASCO coming up and then, you know, ESMO, maybe just give us the cadence of, you know, of what data we could see mature, and that'll help obviously, validate kind of the commercial piece to the hemonc business?
Yeah, I'll comment on ASCO since the titles are out.
Yep.
linvoseltamab, which I didn't mention in that, in that little narrative I just had, we'll have linvoseltamab data, but that's a BCMA x CD3 antibody in multiple myeloma. It will build on the initial data set that we presented at ASH last year with additional patients with additional follow-up. What we've seen with this class has been better response rates, better complete response rates with the additional maturity of the data and longer follow-up. We're hopeful that the same data, that same trend follows for our, for our opportunity at ASCO. I mentioned fianlimab in melanoma.
We'll have another cohort that's actually gonna look at fianlimab in combination with LIBTAYO in patients with metastatic melanoma that were treated in the adjuvant setting with a PD-1 antibody to see what the response rates look like with PD-1-experienced patients. We're excited to share that. Then further into the second half, I mentioned MUC16 x CD3 in combination with LIBTAYO. We'll certainly have that and hopefully some CoStim data as well. I'll leave it at that for now since we don't have accepted abstracts at all of these second half conferences right now, we're very excited about the future for oncology at Regeneron.
Yep. Yeah, one of the questions we get a lot is on the bispecific platform, and, you know, what I would say is the speed that you guys can go from sort of preclinical to starting a phase I is actually pretty, industry leading. There are a lot of companies that say, "Well, we also have bispecific." Maybe just for the audience, like what, what would you say is probably the better points of differentiation between your, you know, your platform and other, you know, broad bispecific platforms? The CoStim obviously is a big, big component of that.
I mean, the VelocImmune platform, which a lot of our science is based on, enables us to rapidly produce antibodies kind of, that are fully human, which bodes well for its tolerability and its efficacy. It also allows us to target various different antigens and really take a look at what might work best for a certain tumor type. There's certainly advantages, and I'd say the biggest advantage is it's combinatorial, and we know that they're all gonna complement each other because they all come from the same platform. Really it goes back to what George Yancopoulos has been working on since the founding of the company, mouse genetics, the ability to build antibodies with a fully human antibodies with the VelocImmune platform.
Gotcha. Okay. Last question, when you think about some of the opportunities in liquid tumors for your bispecific platform, you know, there have been some debates even here. You know, I just had a session with a cell therapy, a gene editing company.
Mm-hmm.
Everyone says that, you know, "Well, you know, we're gonna own the dominating share," you know. I wanna get your perspective about how you could kind of sequence the share or, you know, how you think it could play out between, let's say an allo CAR- T.
Mm-hmm
... cell therapy, and then a bispecific platform for some of these like higher value liquid tumors.
Yeah, I mean, look, I think that the CAR- T, autologous CAR-0 Ts have obviously presented a lot of compelling data. We think the bispecific approach can actually be a better one because it's scalable, it's off the shelf, and you can really address the tumor when it presents, as opposed to having to wait to reengineer T-cells and then reintroduce them. We certainly acknowledge the progress that's been made on CAR- Ts, but we think bispecifics will certainly have a role in the treatment of heme malignancies. I think our BCMA antibody, as the data matures, will continue to show that it'll be competitive in this space.
Gotcha. Okay. Let's switch gears to DUPIXENT. COPD, you know, you have a meeting coming up for DUPIXENT, ATS, the full BOREAS data set. Maybe just help set the stage for kind of what new information we're gonna learn. You guys did talk a lot, you know, did discuss a lot when you know, when you initially disclosed that data set.
Yeah, you know, on conference calls, we hear whether or not, you know, people tell us, "Are you enthused or not?" I mean, on that, we're certainly enthused about with regards to that coming, right? I mean, we jumped right. We're in the process of doing two phase IIIs, like I said in my opening remarks, BOREAS read out. Sanofi actually is going to be presenting at ATS. It became a late breaker. They actually announced that on their earnings call a couple of weeks ago, which we actually thought was pretty exciting, in which they'll go through the BOREAS data. Then actually they're having a separate IR event the next day in which they'll go through it. Geoff, it's like, you know, when the data comment came, it was the trifecta for us, right?
You know, people were estimating in terms of what the kind of exacerbations would be. You know, we ended up being 30%, you know, which is a really, really strong number relative to what's currently out there in the marketplace. Obviously on lung function, right, like with FEV1 against placebo, you know, it was a significant improvement. Certainly that's a significant improvement with regards to quality of life, right? We couldn't have scripted it any better with regards to what we were able to achieve on that. Again, you know, we have another phase III that's ongoing called the NOTUS trial. That's gonna be currently enrolling. We expect that to be fully enrolled in data readout by the middle of 2024, and we expect to file in the second half of 2024.
Again, jointly, this is a product that we are joint with as part of our antibody alliance with Sanofi. To kind of size the prize, right, with regards to kind of Type 2 COPD, you know, eosinophils greater than 300, you know, 300,000 patients in the U.S., that are on, currently on like triple therapy. I would say those are potential patients. You talk about the G7, you know, it goes up to 500,000 patients, and that specific kind of Type 2-
You know, eosinophils greater than 300, which is, you know, what we studied. Again, you know, at the Sanofi event, you know, they'll, and I'm assuming at the ATS event where we're presenting, they'll get into kind of subgroup analysis, you know, smokers, former smokers, and actually get into the duration of response and the, how quick it was to respond. There'll be a lot of additional information. Again, if you have availability, I would really encourage you to look at that data on that front.
Okay. That makes sense. Just on that point, Bob, when you think about the eosinophil counts, you know, the clinical benefit, you know, looks well ahead of, you know, what.
Yeah.
-expert was saying. In practice though, I think you're talking about transitioning, you know, a patient from, you know, COPD where eosinophil counting wasn't historically used to something sort of, you know, now that you're gonna have to implement that. I wanted to know, like, what sort of, are there investments that you'd have to make commercially? Do you think guidelines would help accelerate that? Like, what are the kind of the gating factors to kinda maximize that indication?
I can take that. I think, you know, guidelines always help inform treatment decisions. The fortunate thing for eosinophil count is that it's a pretty routine test, and there's a pretty quick turnaround to get results. I don't envision that being a significant barrier. I'd add that there's a lot of overlap in the prescribers for asthma as there will be for COPD, assuming we can follow through with an approval. They already have a lot of experience with DUPIXENT. They know the drug, they know the FC profile in asthma. As we're able to get sales force allocated to specifically detail this potential future indication, I think there's a really big opportunity there without much more incremental investment to get us there.
Gotcha. Okay. Just along the same lines of COPD, can you talk a little bit about the, you know, the IL-33 combo opportunity and maybe how that could be, you know, an even larger bandwidth of patients?
Yeah. It, itepekimab was another antibody that we are co-developing with Sanofi. It is, it inhibits interleukin-33. We have some confidence in this antibody for a couple reasons. I'd say first, we know that there's genetic data that shows that loss of function in IL-33 leads to a reduced risk for COPD. There's genetic data to support this approach. We also have phase II data that suggested that patients that are former smokers can reduce exacerbations by 42%. That's a really impressive number. Also saw about 90 milliliters of lung function improvement in FEV1. Really a compelling profile that we had in phase II that we are hoping to replicate in the AERIFY-1 and AERIFY-2 phase III studies, which will read out in 2025.
This would be a bit of an overlap with DUPIXENT in terms of the former smokers, but this would address patients that don't necessarily have high eosinophil counts. There's a cohort around 350,000 patients that are former smokers with in the G7 with Type 2 phenotype. There's another 600,000 that wouldn't have this Type 2 phenotype that would potentially be eligible for itepekimab treatment as a former smoker. A bigger population, somewhat overlapping with DUPIXENT, but still a really meaningful opportunity for the collaboration.
Gotcha. Okay. Well, let's take a higher view here from a pure CFO kind of perspective, Bob. You guys have a lot of, you know, cash. Your cash balance is pretty robust coming off of the, you know, COVID. You know, I wouldn't expect you to, you know, to start talking about, you know, a dividend, I just wanted to know sort of capital deployment, maybe just remind us of your, of your priorities. You haven't done historically a lot of, you know, M&A, you know, or large scale BD, you know, is that cash burning a hole in your pocket, I guess is the question.
Thanks, Geoff. To kind of frame, you know, frame the numbers, right? At the end of March, we were $12.3 billion of cash and marketable securities, less debt, is currently where we sit. I mean, obviously that's a great position that provides a ton of optionality to kind of go which way we want to go. You know, and to refresh everyone on capital, you know, capital priorities, you know, they've kind of remained the same, and then I'll give you a snapshot of what we did in the first quarter, which kind of echoes it, right? First and foremost, you know, you heard from Ryan, I mean, there's no shortage of what we can invest in. We have a great organic pipeline. You know, our kind of preclinical discovery, area is kind of best in class.
We get really good validated targets coming out of RGC and our mouse technology. There's no shortage. There's just no shortage of what to invest in. First and foremost, we're gonna kinda invest in ourselves. We think that that's the best return. It's proven to be the best return on investment. Secondly, we're not blind to what else is out there, right? We're great in the antibody technology, but there are other great modalities that are out there that kind of, you know, our RGC, Regeneron Genetics Center, would scream that, you know, here are targets that are validated, but antibodies may not be the approach, right? You need other modalities. You know, that's why we do deals with Alnylam on the siRNA or Intellia with CRISPR and other gene editing type stuff. We need other tools in the tool chest.
We could probably get there eventually, but it will take a while for us to get it. Then thirdly, and we've been somewhat active in this, is actually a share repurchase program. I think last year we bought back something like, you know, $2.3 billion of stock. We bought it back at great levels. We're very pleased on the levels we bought it back. First quarter, we bought back $700 million, so we are kind of active in that space. The reason I made that comment at the beginning, kind of the first quarter of 2023 is really like a prototype of it. You know, we had heavy spend with regards to R&D. That's capital allocation. That's our number one priority. You know, we did R&D on a non-GAAP basis, 30% of total revenue.
That's a lot higher than our peer group. We're comfortable playing in that space because like I said, we believe we have a lot of investable assets. Then we did a deal with Sonoma, a $75 million deal, part equity, part upfront, you know, to kind of get into T cell technology that we think would be a great add with our antibodies in kind of the inflammation space. You know, that like, take that each of the quarters, I'd be pretty pleased with the approach going forward. We never say never with regards to B&D transformation. B&D is kind of something not in our playbook. We are not a one-hit wonder product. We're not looking for kind of the Teslas of the world, you know, to kind of solve problems that are out there.
We think that what we have coming up through the pipeline is going to be more than sufficient. We do, just in case opportunities are there, we do have, you know, a big swath of available cash that we can put to use, and we can put to use fairly quickly on that front. Geoff mentioned dividends. I'd like to say we're a growth company. We're not in that space yet with regards to needing dividends, you know, it's my job to kinda, you know, continually test the pressure. We probably do have enough, you know, cash and our cash flow is kind of, you know, good enough to support a dividend, it's just kind of not the time.
You know, I'm a big believer that if you can't pay something meaningful, you know, I don't think 100 basis points is kind of a meaningful yield to investors on that. It's not gonna move the needle, and if you can't do something meaningful, then you're better off kind of reallocating it and wait until you can do something meaningful for the investor base. Geoff, that's kind of our thinking in that space.
That makes sense. Yeah, just to follow up on that, Bob, when you think about the, you know, potential for BD, you know, what's sort of the waterfall there? Is it, you know, as you mentioned, adding new tools that weren't existing at Regeneron or you could add more value, or do you want to diversify further from a therapeutic, you know, focus, right? There are a lot of companies take two different angles on that, and I wasn't sure, you know, if getting into a new therapeutic category was, you know, was sort of an intended way to use capital.
You know, we have investors, they either hate the fact that we're agnostic to disease states or they love it. I mean, we are fairly agnostic. We kinda go where the science goes. You know, we can't call up the R&D and say, "You know, I need another inflammatory product, guys, start working on it." It's, you know, we have just a total different mentality at Regeneron on that front. We do like franchises. You know, I mentioned one-hit wonders we don't like, again, this may be stating the obvious. We like franchises where we can add something to it. You know, our CSO, George Yancopoulos, needs to add value to deals. We just don't wanna kinda take something cold that we just don't have any familiarity to. It needs to be synergistic.
We need to add value either through, you know, having the validated targets through RGC and through the VelocImmune technology that Ryan hinted to. We like franchises. We like things that kinda will spit out multiple opportunities. I think our deal with Alnylam, you know, if you've been following that on the ALN-APP that just got announced by them, we're very, very excited about that with regards to, you know, what you can do on silencing the genes that are actually going to CNS, you know? Sure, you know, the early indication is Alzheimer's, very exciting, very sexy in the front.
You know, in terms of what that's gonna open up on CNS opportunities, whether it be, you know, Parkinson's or SOD1 or Huntington's, I mean, it's a whole list of potential targets that we have with Alnylam that are coming right behind Alzheimer's disease. You know, being able to kind of stop the gene that's making the amyloid, not clearing it, but stopping the gene early on. I mean, it's really quite fantastic stuff. You know, kudos to the team in doing this deal in 2018, seeing that this is the path forward, making sure that, you know, we get with Alnylam in the siRNA space with regards to CNS targets. It was really positive news that came out.
Would you say that CNS or neuroscience in general, is that sort of a, you know, a new growth vertical for you guys or is it, you know, TBD on the Alnylam progress?
I think, Geoff, I mean, you've been with us a long time. We kinda started as
Yeah.
a neurodegenerative company. It's funny that we're coming back to it. Again, you know, I mean, we'll go where the science takes us. The science is taking us to CNS, so we will open up a vertical in that area.
Fantastic. Okay. Well, Bob, Ryan.
Yeah.
Thanks a lot, guys.
Thank you.
Appreciate it.
Thank you, everybody.
Yep.
Thanks, Geoff.
Thank you.