All right. Good afternoon, everybody. Thanks for joining us. I am Terence Flynn, Morgan Stanley's U.S. biopharma analyst. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Very pleased to be hosting Regeneron this afternoon. Joining us from the company, we have Chris Fenimore, EVP Finance and CFO, Marion McCourt, EVP and Head of Commercial, and Ryan Crowe, SVP, IR and Portfolio Strategy and Intelligence. I am going to turn it over to Ryan for his disclosures, and then we will get started. Thanks so much for being here.
Terence, thanks for having us. Always a pleasure to be here at the Morgan Stanley Global Healthcare Conference. I have a quick disclaimer to read as well, and then we will get started. I would like to 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. With that, Terence, let us get started.
Great. Again, thanks so much for joining us this afternoon. I figured we would start with Dupixent, which has become one of the company's most important growth drivers. Sanofi, your partner, recently raised their 2030 guidance to EUR 25 billion from EUR 22 billion. I think sales this year are expected to be, on our model, is about $22 billion U.S. dollars. Maybe high level, you could talk about some of the key drivers to achieve that new guidance, and then we will dig in from there.
Happy to, Terence, and I will share. We share a great ambition for Dupixent. The EUR 25 billion was obviously independent guidance given via Sanofi. But to the opportunity to bring Dupixent to so many more patients worldwide, that growth opportunity is driven by the amazing results that patients are seeing across now nine indications in the U.S. marketplace. Certainly, all the indications are growing. Our very first launch was in atopic dermatitis, as all of you know. Continues to grow across the range of indications that we have in market today, which include various age groups, various geographies. Certainly, the trajectory of performance going forward is very strong, and we share that view.
Great. On atopic dermatitis , I know that's the largest indication, and again, you were the first company to bring a biologic to that market. How much headroom is left in that area? Then as you think about treatment duration, where does that stand now? That's another question I think we get frequently.
Sure. On atopic dermatitis, certainly tremendous advances for patients with Dupixent, but still the market has only penetrated to about, in the U.S. as an example, high teens, maybe 20%. So there's so much unmet need still in the marketplace. So we see an opportunity to help many more patients with Dupixent. Adherence to product is also very strong. If patients who are being treated for atopic dermatitis or the host of Dupixent indications, they will feel the disease coming back. Often atopic dermatitis patients talk about itch returning, lesions returning. Adherence to therapy is very high. I would also point to the fact that with Dupixent, there are situations where people have comorbidities because of type 2 disease. So they might benefit in atopic dermatitis, but they notice, for example, their asthma is better, or the asthma patient that also has nasal polyps or chronic rhinosinusitis.
It's the combination of indications to treat the individual condition, but then the host of other problems the patient might be experiencing as well. So adherence tends to be very high.
I know, again like I said, you guys had blazed the trail in atopic dermatitis . There is some competition. So as we think about the breadth of label, how important is that as we think about the competitive landscape here?
Sure. So often our key opinion leaders share with me, unlike other categories where you see advances come along with Dupixent and atopic dermatitis, they often refer to it being first and best. I would share the competition coming into the marketplace is always something we as Regeneron highly respect and recall when the JAK inhibitors came into atopic dermatitis as an example. There have been other companies more recently. But I do think it is helping a lot with educating and bringing more patients into the care continuum, where Dupixent can be selected as the option for them or for another reason, another product. But certainly, we have seen the overall trajectory of Dupixent performance in atopic dermatitis is very strong.
It is about half of overall Dupixent net sales now in atopic dermatitis, but also pleased to say we have many other blockbuster indications across the nine approved indications.
Great. If you had to pick some of those where you think there is the most potential upside, can you point to some of those outside of atopic dermatitis ? Or maybe what are the key growth drivers within the subset of indications?
Yeah, I am very happy to. Dupixent has done very well in crowded markets like biologic asthma. More recently, we also launched in COPD, which has been actually our most successful respiratory launch for Dupixent. The various teams, Len's words were correct when he talked about a portfolio and a product, and the teams really pride themselves in helping patients correctly and quickly with market education and customer-facing activities. CSU is a newer indication. It is probably our second-best trajectory with dermatologists, but certainly across all the indications. I do not want to neglect any because they are all important, but you see people who are not able to, or children, eat correctly with eosinophilic esophagitis or patients who have struggled with problems with skin lesions from bullous pemphigoid, prurigo nodularis.
Each of the indications is really helpful and important in helping patients that often previously did not have an opportunity for care.
It brings more patients into the fold and certainly creates a bigger opportunity for Dupixent on a worldwide basis. As I share often, even for our patients who have indications that tend to more frequently be in older age groups, they really so appreciate hearing that Dupixent is a self-administered biologic that can be used in children as young as six months in atopic dermatitis or one-year-olds in eosinophilic esophagitis. So the combination of efficacy, safety, ease of use, reimbursement is really important.
Great. Maybe you guys could elaborate on just the status of the Sanofi collaboration. I think given kind of commentary from both of the companies' second quarter calls, it seems like there is a willingness to find some common ground here on kind of the forward state of that. What would be the timing of a potential update there?
Terence, again, thanks for having us. As you heard from Marion, there's been a tremendous amount of value built by both companies in terms of what both teams have been able to do in terms of building Dupixent and all the approved indications. Just think about the relationships with providers, payers, as well as the reputation with patients and consumers, that we want to do all that we can on a combined basis to leverage that value that's been created. We continue to make progress with our colleagues at Sanofi. There's just certain aspects of a transaction where two parties need to get together and basically come to a resolution where they both feel they got something out of that transaction.
There's certain aspects from both an economic perspective that we'd like to see in a new agreement, and there's certain aspects operationally that Marion and her team would like to see, and we're continuing to have dialogue. In terms of timing, I don't think there's much we can say as of right now. Other than that both teams are working extremely hard, and as soon as we have more to communicate, we'll obviously communicate that out at the appropriate time.
Yep. As we think about it, obviously, the Dupixent line extension strategy is a pretty important piece of that, and you guys have outlined the four different programs you have there. How important is it to have more scale in immunology? When I think about some of your peer companies, again, a J&J or an AbbVie, they have a lot of scale in immunology, and so where does that fall in kind of priorities of the collaboration?
I think part of our goal is to maintain, sustain leadership in I&I. We have a pipeline in the type 2 diseases beyond Dupixent, including a long-acting IL-13 antibody that is currently being dosed in healthy volunteers, soon to be atopic dermatitis patients. We have a longer-acting antibody that targets the same receptor as Dupixent that we are excited to be hopefully bringing to the clinic by end of year or in early 2027. A couple after that in 2027, entering the clinic targeting the IL-4 ligand, as well as a bispecific to the ligands for IL-4 and IL-13. We feel that between those four antibodies, an ability to really cover most, if not all of the ground that Dupixent currently does, as well as potentially some other indications we have in mind for these programs.
Beyond that, we have an antibody for which the target has not yet been named, but we believe could address several genetically linked diseases that have significant comorbidities across them, including diseases like primary biliary cholangitis, systemic lupus, ulcerative colitis, Sjögren's disease. There are about seven or eight of these that we have found a pretty strong genetic linkage, and we are excited to advance that. It is currently dosing in healthy volunteers and hopefully advance that into phase II study sometime in 2027. I&I leadership is certainly front of mind for us. We think Dupixent has helped us get to that point, and we believe we can build from there, and certainly, that is one of the company's goals.
Yep. What about, Ryan, you mentioned you see. Is IBD another priority? Because I imagine you have the whole derm focus already, obviously, that you can leverage the pulmonology, but it seems like IBD is one where maybe there is not much of a presence right now on the Dupixent footprint.
Yeah. We have not had a lot of success with Dupixent in ulcerative colitis. There is an ongoing phase II program for select patients, I believe, with certain biomarkers. I would not say there is any particular goal to enter the IBD space. We are a company that really follows the science, and should one of our mechanisms take us to an IBD condition, we would pursue it aggressively. It just has not happened yet.
Yep. Okay. Maybe it is a good segue to a more strategic business development question. I think there is a perception, at least based on some of my conversations, that the company typically will only consider kind of platform or early-stage deals when we think through that business development lens. But obviously, the company has matured in terms of a diversified portfolio. You look at your cash on the balance sheet, paying a dividend, much different situation now. As you think about the flavor of types of deals that you guys consider, how is that evolving?
Yeah. I would say, the word you used, "only" is probably not the right way to characterize it, Terence. We definitely think there is an advantage, right, to the extent that you can acquire an asset that can generate more than one product because it is a platform that is obviously helpful and justifies the value that you are willing to pay rather than just one product that you are acquiring, and if that doesn't work out, then you don't have any other shots on goal. With that being said, we will look at other opportunities that makes sense. We have got a very active business development team. They are constantly out there scouring the landscape and looking at things that are out there.
We have kicked the tires on, and we have talked about this publicly, several opportunities that were later stage in nature that weren't necessarily platform types of transactions.
Our big thing is we are very disciplined in making sure that we ascribe appropriate value where we see value, and sometimes we just can't get there in terms of where others have a willingness to pay for certain assets. I would say we are extremely disciplined. We are open to those areas that make sense. We are not limited by any therapeutic area. We are not limited by any modality within reason, things that are complementary to what we do, and we continue to look, and we are not afraid to put capital to work if and when it makes sense.
You mentioned that you had looked at some later-stage assets. It is probably hard to characterize, but if you had to bucket it, is it more so getting over the hurdle of implied POS, or is it more about the commercial opportunity when you think about what I know you guys are being disciplined, which of those two is more likely going to the higher hurdle?
I think, if you think about Regeneron in totality, science really drives our business. You hear that from Len and George all the time. Fundamentally, it's what do we think about the science? How likely do we think it's going to work, to your point? But then also it's heavily weighted, I would say, by what do we think the commercial opportunity is, and what is it going to cost to develop it, and how quickly can we get it to market? Marion is, as we look at various opportunities, is the first one to say, the faster we can bring something to the market, the more excited we would potentially get about an opportunity. But it all depends. It all depends on what we're looking at and evaluating.
Okay, great. Maybe one more for you, Chris, is just on what's the latest on rate of dividend growth and then outlook for share repos. I think you did about $2 billion in the first half of the year. So maybe just how do you balance both of those and then also preserve some capital for the deals?
Yeah. When we talk about our capital allocation priorities, they haven't changed. It's first and foremost investment in our internal R&D capabilities and George and his team, and we've obviously just talked about external opportunities, which we don't limit them to just M&A opportunities. We obviously have done a fair number of, I would say, more traditional business development collaboration types of arrangements. We'll continue to look at those. When looking at returning capital to shareholders, I'll start with the dividend first. The dividend was always intended to be a way to access additional shareholders that had a dividend mandate. It was not about dividend yield. If you look at basically when we started the program in 2025, it was $0.88 per share. We increased that thus far in 2026 to $0.94 a share, total annual payouts in the neighborhood of $400 million.
It's not a major component of how we view our return on capital to shareholders, and I wouldn't expect there to be much change in that philosophy, and it's not really going to be, at least in the short and medium term, a dividend growth story. In terms of share buybacks, we bought back roughly $2 billion of our shares in the first half of the year, $1.2 billion alone in the second quarter, reduced the shares outstanding in the first half of the year by something like 2.4 million shares. And we've got $2.5 billion of authorization remaining. So we continue to be opportunistic buyers of our shares. It's a grid that we put in place that's valuation sensitive. So when the stock is lower, we're out there buying more, and when it creeps up, there's a certain point where we take our foot off the accelerator.
But we continue to view share buybacks as a way to return capital to shareholders.
Okay, great. Maybe just moving on to one of the pipeline assets that I think is coming more in focus now is cemdisiran in MG. You have an upcoming PDUFA date in November. So maybe, Marion, you could just talk about confidence in the approval decision, but also expectations for the label. I think that's a question we get more frequently now as we approach this decision.
Sure. Very helpful, and we do look forward to November. The team will be launch-ready, and certainly with an FDA approval, we'll be set to go. Pleased to share with you that we've built out the neurology business unit. We've had some talent for years at Regeneron. In fact, some origins, as you know, of Regeneron in neurology. So we've had some individuals become part of this new business group and also been very successful in attracting new talent to our headquarter team and to our field team. So we look forward to the launch. In terms of cemdisiran and this competitive market that we'll be entering, we're really excited about it. The market opportunity is a large one. There have been products that have helped patients a great deal.
We believe with cemdisiran, we'll be able to pick up on some of that incremental opportunity, not only with our clinical profile, our mode of action, our safety profile, dosing frequency, which is every three months, which is highly attractive to patients. So we'll be launch-ready and ready to participate.
I think, the label is one question. I get some questions on is it possible that you guys have a more favorable vaccination requirement versus some of the other C5 agents?
Yeah. I would keep the base case of what we have typically seen for C5, but I do think we have different design in our clinical studies and different opportunity potentially to look at. So that would be an interesting point of potential discussion. But I think it's early to define, and I also believe there are other characteristics of cemdisiran that are just so attractive to patients in terms of the level of efficacy, safety, and convenience of dosing.
Okay. As we think about the potential commercial opportunity is ULTOMIRIS the best analog, or are there any other good analogs when we think about the peak sales opportunity, the ramp, what that looks like? How are you guys framing the-
So we go through, and at Regeneron, we've had a lot of launch experience over many years now. So we look at the range and certainly inclusive of products and category today, when they launched, how they launched, what the trajectory was. So I wouldn't limit it to one product, but to share with you that we look in a very comprehensive way across launch readiness and how to participate in a new marketplace to make sure that we're meeting the needs of the physicians and the offices that are treating these patients and the patients themselves, and some of the experiences they're having today and what they'd like to see in new therapies that maybe they don't have today.
Is the strategy more about the newly diagnosed patients, about switch patients? How do you balance the near-term dynamics of the launch?
We're looking across. I will be delighted to share launch strategy with you as we get to an approval and entry into the marketplace. There are a range of opportunities, and we want to be very thoughtful about how we direct our strategies as we launch into the market. Certainly, our final label will be helpful to us as well in determining that.
Anything you can share about the kind of talent you guys have hired? You mentioned the neurology business unit that you guys built out. Any more details you can provide there?
I would share that they're very excited about the potential approval. Obviously, it's coming soon in the U.S., November. We also look to second half of 2027 for some of the European markets and potential EMA approval. We'll be ready to go.
Okay, great. The other, I think, interesting angle of the asset is that you have other indications that are going to be reading out. You have some PNH data later this year, phase III, and then some interim data for GA. Obviously, you guys know the retina space very well. Maybe just talk to us about expectations for both of these readouts. What are you guys hoping to see? What's a win look like?
Sure, maybe I'll take that one, Terence. Starting with PNH, this is a study that will evaluate the combination of two assets, cemdisiran, the siRNA to C5, as well as pozelimab, an antibody specific to C5. It'll be compared against eculizumab over 26 weeks. This dual co-primary endpoints, one is disease control using LDH as the measurement, as well as transfusion avoidance. They both need to hit in order for us to have a positive study. We certainly are looking forward to seeing the data sometime in the fourth quarter. I think the disease control, we have a lot of data from previous studies that suggest that patients can reach normalization on this combination. Transfusion avoidance is a trickier endpoint.
Of course, there's many reasons one can receive a transfusion, some of which are driven by intravascular hemolysis, which would be on mechanism for C5, but then there are other reasons for transfusions that you wouldn't expect a C5 blocker to stop. We'll see what we have in a few months in the fourth quarter here on PNH. Certainly are looking hopeful for a positive readout there. Regarding GA, we've designed our clinical program for systemic administration, and this is actually a three-arm study that looks at cemdisiran monotherapy, the combination I just mentioned between cemdisiran and pozelimab against placebo. This is, again, systemic, not intravitreal, which is what the approved GA agents are in the U.S. The interim time point will evaluate the first 225 patients enrolled in this program.
We will, at 26 weeks, evaluate the slope of GA lesion size and also evaluate secondary endpoints as well as safety. This is a very early time point to be evaluating a GA medicine. This is a very slowly progressing disease, but our goal with this is to show that we are on trend with the approved intravitreal GA agents at their time point in their respective clinical studies. The results of this interim will inform what we do with the registration-enabling cohort, which basically began at patient that was enrolled number 226. We have the same three arms. We're going to enroll 750 patients across those three as part of the registrational cohort, and that enrollment's already underway. But this interim analysis that we'll conduct in the fourth quarter should inform the next steps for that program.
We will see what we have in a few months.
I think pretty clear in PNH in terms of either it is a positive study, looks better than Soliris, or it does not, and again, you do not move forward. I guess on the GA side, what is the span of outcomes there? Is it the same? Is it very binary, or are there shades of gray in between?
I think especially because of the timing of our analysis, there is going to perhaps be some gray. It could not work at all. Let us be very clear. Systemic approaches in the past have failed. We are optimistic this one may work because we have demonstrated over 99% knockdown of CH50 in our gMG pivotal study. We know this combination is very effective at blocking C5. Whether that manifests into slowing of lesions remains to be determined. One other analysis that we will conduct is one of the active arms outperforming the other active arm, and could that lead us to dropping that arm in the registrational cohort? That is something we intend to learn. It could not work at all. It could be a huge success.
We really are going to have to wait for the data to make any determinations. Of course, safety is another important thing to look at.
This is an especially vulnerable population being at advanced age, and of course, blocking C5 can lead to infection risk. We will be looking at a lot of things from this interim analysis that should inform our next steps.
Okay. Maybe the other one is some of these are combinations. Then again, cemdisiran for MG as a monotherapy. How does that inform, I guess, pricing decision? I know you're not going to guide on pricing. That's not what I'm asking. But how do you think about the optionality around having either monotherapy versus combination, again, across multiple different diseases? It seems like it makes it maybe a little bit more complicated from a pricing decision.
I think there's tremendous opportunity in the various indications, some mono, some combination product. I welcome that problem with clinical success across all the indications so we can bring them into the marketplace.
Certainly the fact that the monotherapy cemdisiran worked in myasthenia gravis, and we will find out if the combination works in PNH, would allow us some price discrimination between those two indications. Then with GA, we haven't disclosed dosing, so there may be an ability to have a third price for a third brand, depending on results.
Okay. Maybe just talk to us about what the commercial build would look like on the PNH side, because I imagine in GA, very straightforward, you have the EYLEA infrastructure already in place. You just talked about the neuro side for MG, but in PNH, what does that look like?
That would be a launch into hematology. We have seen hematology, obviously with a product in hematology oncology. We see this as different, and it is certainly potentially something we could combine into our neurology business unit. There are a couple of different options. We also have a rare disease group, but I think most likely we would want to keep the combination product with cemdisiran and understanding similarity in competition as well. We never want to be redundant in how we build our business units or build our expertise. But very much look forward to it.
It sounds like there is a lot of leverage from that. It does not sound like it would be a totally new build per se.
Correct. It would not need to be an entirely new build, which is good.
Okay, great. Maybe moving on to EYLEA, again, which well-established franchise, been switching it over to the high-dose formulation now, some really nice momentum in the second quarter. Maybe just talk about the puts and takes here, not only for back half of this year, but also as we go into 2027.
Sure, very happy to. Thank you, Terence, and we are pleased to report the uptake of EYLEA HD in our second quarter results. Certainly second quarter, you come off generally in the anti-VEGF category, a lighter first quarter because of patient reauthorizations. But beyond that, EYLEA HD performed very well in the innovative branded category. The product that, pleased to share on behalf of my team, grew more than other brands in category in that window of time. Certainly, we feel that the label enhancements of November, late November last year, with the Q4W dosing RVO indication, more recently, the Q20W weekly dosing for greater durability. That combination of factors gives us the broadest label in the anti-VEGF category.
We see physicians across large practices, mid-size, small, using more EYLEA HD, and it's the experience that they have with patients and the meaningful clinical results, the safety that's known with Regeneron. Then also this notion of durability is really, really important. We still have a lot of work to do, but see EYLEA HD becoming the next standard of care in the anti-VEGF category. Today, or as I reported in the second quarter, EYLEA HD makes up about 60% of overall EYLEA and EYLEA HD franchise net sales. It was about 50% in the first quarter, so we continue to make inroads, and I think also we showed that our overall EYLEA HD and EYLEA performance was strong in the second quarter.
There will be more competition in the second half of the year, so we guided appropriately based on a variety of different factors, but still feel we'll be bringing forward some important growth with EYLEA HD.
Okay. Got it. What-
Terence, you asked about next year too.
Yeah.
I always like to get a little further into this year before we start
Sure
talking a lot about next year, but I just would flag that over that course of time, just for fair balance, we would be expecting to see potential additional 2 mg biosimilars coming into the marketplace, creating additional pricing pressure on EYLEA.
Yeah. Okay. Understood. The other thing we're waiting on is still the prefilled syringe, so maybe just any update provided there or still just kind of waiting by year-end?
On our second quarter call, we basically stated that we are expecting to have approval for the prefilled syringe by the end of the year.
Yeah
One or more CMOs. That has not changed. We are still sticking to those timelines and once again, once we have more information, we will update The Street accordingly.
I know you guys have worked on internal fill finish as well. I know that is another area where you guys have been building out and scaling. Any progress or updates on that side to share?
Yeah. We are expanding manufacturing in Upstate New York , right outside of Saratoga, as well as on our existing campus outside of Albany in Rensselaer, New York. In Saratoga, that is actually going to be more bulk manufacturing capacity to be able to meet the demands of our pipeline. With regards to the fill finish capabilities that you asked about, it is a facility that has the first line that will be up, will be a smaller scale line that is designed for doing more clinical types of runs and capacity. Then we have several lines beyond that that would be for more larger scale commercial fill finish capabilities.
Team continues to work very, very hard on that, and hopefully by the end of the year, we'll start to be able to make some product out of that smaller scale line. Then obviously continue to work on that in 2027 and beyond and getting those larger scale facilities up and running. With that being said, we will always continue to have relationships with CMOs just for risk and diversification purposes.
Okay, great. Maybe just the last one I had on EYLEA is just how to think about competition from high-dose biosimilars. I mean, that's another question we get increasingly going into next year.
High-dose biosimilars? Okay. Timing for a potential biosimilar for the 8 mg version of aflibercept is very difficult to predict, and I'm not going to speculate on that today. I would say that next year is very unlikely considering no one has
completed any clinical programs for that. But we have a very broad and growing intellectual property estate around the aflibercept 8 mg, its formulation, its methods of treatment, its manufacture. There is an ongoing review of that patent by the patent office via the post-grant review process. There was a petition filed by Alvotech, and that process is playing out now. We're currently in the deposition phase of this with experts on both sides that will culminate in oral arguments that will be held on December 4th, with a decision by the PTAB on early March. I think there's three outcomes here. One is that the entire patent is upheld. The other is the entire patent is invalidated, and then there's sort of the mixed opinion where certain claims are upheld and found to be valid, while others are invalidated.
We'll let the process play out and see where it lands. I would add that it's not the only patent in the estate that's been issued. We have another patent related to aflibercept 8 mg formulation that also expires in 2039, as well as patents that we have filed for and are expecting to be issued over the next months and years. So, strong patent estate. We think it'll be important for biosimilar manufacturers to consider the entire estate when looking at the biosimilar launch timing. We'll take it from there.
Okay, great. Maybe just in the last minute, Marion, back to you. So linvoseltamab for multiple myeloma, again, another important new product launch for you guys. Maybe just tell us what you're seeing, kind of current competitive dynamics here in late line, and then how to think about moving this to earlier lines, because that's where I think the bigger opportunity is.
Absolutely. I appreciate the question on oncology, hematology, and to the prior discussion share. This is part of our overall Oncology business unit where we have LIBTAYO now a multi-billion dollar product on a worldwide basis. But the Oncology group has done a really nice job with launching linvoseltamab. The feedback I get from the physicians, key opinion leaders when I meet with them is the product profile in terms of efficacy, safety, ease of use, lower hospitalization requirement is really important for these late-stage patients. But to your point, the thing I also hear most often is the importance of our completing the clinical studies so we can apply for indications to move to earlier lines of therapy. So that will be an important opportunity to unleash more use of linvoseltamab.
But early days in the heavily pretreated population, fourth line plus, where we have an indication today, the feedback has been very, very strong. Obviously, this market becomes increasingly competitive, but look forward to moving to potentially earlier lines of therapy with linvoseltamab.
Great. Well, I think we're up against time, but really appreciate it.
Okay. Yeah.
Thank you.
Thank you, Terence.
Thanks, Terence.