Regeneron Pharmaceuticals, Inc. (REGN) Earnings Call Transcript & Summary

Is this on? No? Oh, there it goes. Now we're on. So thanks, everybody, for joining us. I'm Geoff Porges, Director of Therapeutics Research, and I'm delighted to welcome Regeneron to our Global Healthcare Conference. Regeneron is represented by Marion McCourt, who's Senior Vice President and Head of Commercial at Regeneron. Thanks, Marion, for coming; and Justin Holko to her right, who's Vice President of Investor Relations. And other members of the IR team are also here. So thanks again for coming.

Wow, lots to talk about, Marion. What's going on with Beovu? What happened over the weekend? It was like the weekend that just keeps on giving, isn't it?

It's good to be here, Geoff. Thank you. Am I on? Can folks hear me? I don't -- I'm not sure the mic is on. Is it on? Can you hear me okay? Okay. That's a little bit better. But no, I mean, I think there obviously have been a lot of very important developments over the last couple of days related to the anti-VEGF category. Certainly, I would be first to say that, and probably a lot of the news is related to Novartis' product brolucizumab and probably some of the items that's handled by Novartis. And having said that, I do think that it's important for us to give a characterization on EYLEA and also reflect that we know many of you have seen the announcement from ASRS over the weekend. But I think most important to share with you is that when we consider EYLEA and we look specifically at the profile, we look at EYLEA as a product that's been in the marketplace for 8 years, in fact, over 8 years. We've treated over 30 million injections, or have had over 30 million injections. And as you know as well, we, at Regeneron, have a rigorous and ongoing pharmacovigilance, and we've not shown any signal with EYLEA an inflammation-mediated retinal vasculitis. And we know how important the safety profile is. And one of the things that many of us have talked about over months and in the time I've been at Regeneron, is we've participated in a competitive anti-VEGF marketplace for years, and what I'd obviously like to do is to talk about EYLEA and talk about the efficacy across multiple indications, the safety profile that's demonstrated and so important to the care of these patients. Additionally, our label, which provides not only the breadth of indications that I mentioned but flexibility on dosing, 4-week doses, 8-week doses, and 4-week doses, so that the retinal specialist can make the right treatment choices for the patient. And then, of course, we have confidence related to our reimbursement. And beyond that, we're very excited to recently bring into the marketplace in a staggered fashion our prefilled syringe. So we have a lot of confidence in EYLEA and certainly our opportunity in the marketplace.

Okay. Justin, so what do you think? Do you think that Beovu is toast? I mean...

Not for me to say. But honestly, as you heard from Marion, safety matters. And I think that sounds very clichéd, but we shouldn't take for granted how difficult this particular therapeutic area is. You're injecting eyes. Physicians are going to be very sensitive to things like safety, and I think we should all pay attention to that in terms of not only this particular announcement but on the go forward as more investigative products enter the space.

Marion, what are your key accounts telling you about how they're going to respond to this notification from the retinal specialists?

So it's very early days. But the -- is this better now? Okay. I don't think the mic is working. But it's very early days. And obviously, for our commercialization and market, our organization is focused on opportunity in the wet AMD marketplace about -- approaching 60% of our business is now wet AMD. We see a greater source of business coming from diabetic indications, while we certainly anticipate there'll be continued growth in the marketplace, which has been running based on demographics and the incidence of diabetes in the range of mid- to high single digits. So we're going to continue to focus on what we do with EYLEA with our customers, with our key accounts to your question and certainly provide them, in EYLEA, the profile of a product that has become standard of care for the indications in the anti-VEGF category.

Now Marion, you recently changed your field organization and perhaps your promotional strategy for EYLEA. You went after both the diabetic population separately and -- diabetic indication at least separately to the wet AMD. Could you talk a little bit about that, how you're structuring the field now and how you're continuing to invest in EYLEA?

Certainly, very happy to. And we saw an opportunity, and this goes back months and was part of our strategy last year. But we saw an opportunity to really make certain that we were looking not only at the opportunity within wet AMD but also diabetic eye disease. So we reframed the strategy and the commercialization platform that allowed us to do more for both indications. Wet AMD, of course, the more established indication but a competitive marketplace. On the diabetes side, I'd like to say a little bit more there about the pronounced undertreatment of patients with diabetic macular edema and also diabetic retinopathy, and for diabetic patients who tend to be much more attuned to other aspects of their care related to A1C or lipid levels or wound care have really not adopted eye care at the standards that they should, with grave consequences of vision loss that could be prevented. So we do have now a diabetes-focused team as well as a wet AMD team. But it's not just about the sales force activity, although I'm very proud of our sales force and we have a really talented group. It's a small sales team for both of the indications and both of the teams, but it's a very experienced, very sophisticated group. But beyond that, we're also looking at opportunities to bring in consumer education, best practices that we've seen in other disease areas where there's undertreatment and there's a need for screening and diagnosis. We're looking at application of technologies. We're looking at partnerships with organizations that are like-minded and want to make a difference for these populations of patients.

Okay. So could we talk a little bit about the implications of this disclosure from Novartis about the feasibility of developing a biosimilar? Because, of course, a biosimilar is just another type of anti-VEGF, and it's going to have its formulation optimized for delivery in the back of the eye in the same way, presumably, that Beovu was optimized for delivery in the back of the eye. Regeneron has been, I would say, fairly cautious about -- not cautious but realistic about the timing for the biosimilar. But what does this remind you or make you think in terms of the feasibility of a biosimilar for EYLEA coming to market?

Sure. I think that based on the events of the last weeks and months, it raises the standards and the concerns of safety for all products but certainly for products that we would be injecting in the eye. But having said that, I want to say a few more words about a biosimilar you mentioned, Lucentis. And we, today, are in a marketplace where there is a low-cost alternative with unapproved Avastin. So certainly, as EYLEA has established the profile of standard of care based on efficacy and safety and indications and robust experience, certainly, we've been in an opportunity to compete effectively in the marketplace. But to the core of your question, I think the standards of safety, I think more physicians are going to want to wait and see when products do come into this particular area of indications understandably so, because it's not easy to meet the standards and the quality to have safety in a way that absolutely is achievable in the marketplace based on the alternatives that are available like EYLEA.

Okay. A couple of last questions on EYLEA. You've disclosed some innovations, both the prefilled syringe and now you're working on the high-dose formulation. Could you give us a sense of the physician response to the prefilled syringe? And then talk a little bit about what the high-dose formulation might do and what the timing potentially for introducing that could be.

Sure. Let me take the first part, and then Justin, if you don't mind taking the latter portion. I'd like to talk about the prefilled syringe. We're really pleased to be able to bring the prefilled syringe into the marketplace at the end of last year. As you know, these retinal specialist office practices are busy. Efficiency, time-saving, effectiveness is really, really important to them. And the prefilled syringes seem to be kind of an item that had been long-awaited in the marketplace for EYLEA. So we have brought the prefilled syringe into the marketplace, as many of you know, in a staggered fashion. We wanted to introduce the product, gain some experience and then move towards full market supply, which will be achieved in March. We do anticipate that the prefilled syringe will become the lead form of delivery in the marketplace, and vials will be used to a lesser extent, although we will make vials available. But to the question of feedback we're getting, we're hearing a lot of comment about the sophistication of the prefilled syringe, the fact that it's being very well received in the marketplace, that offices that had started to use it wanted more. Some wanted to wait until we could supply them in full with the prefilled syringe before making the conversion, but all has been positive. And I've also heard a lot of comments related to a highly responsible approach in terms of how we introduced the product. EYLEA being so large, the gradual introduction was felt to be a very appropriate way to bring such an important product in the marketplace.

Sure. And on the high dose, just to reiterate where we've been, EYLEA 2-milligram today is at the very high standard. And what we're looking to do with the 8-milligram formulation is to determine if there's a way to increase the interval of injections for patients. There's a Phase II in AMD that has been recently started, and then we as well as our partners at Bayer, will be starting Phase III studies in the next few months: 1 study in AMD, 1 study in DME. They're 52-week studies. Obviously, timing depends on enrollment rates, but you can imagine, those are studies that we're certainly excited to enroll and learn more about.

Okay. And you have some other products -- you have some other products. Perhaps we could talk a little bit about DUPIXENT. Your partner recently gave guidance that was well above prevailing consensus at the time. Is your assessment of those 5 new indications consistent with the forecast that your partners provided?

So we have great, great ambition for DUPIXENT. We don't give forward guidance, but our level of ambition and enthusiasm for DUPIXENT is very, very high. In terms of the current indications in the marketplace, we're really pleased with the performance that we've seen in atopic dermatitis adults; and then adolescents is a new indication that was introduced last year. We're looking forward to, later this year, FDA willing, our PDUFA date for the pediatric indication for DUPIXENT is on May 27. All this is really important in terms of the efficacy that DUPIXENT offers for patients with atopic dermatitis. It is also very significant that the safety profile is so robust that we're able to provide DUPIXENT not only to adults but adolescents and pediatric patients if, in fact, we get the pediatric approval. I think the other point in terms of ambition is that with all we've seen to date with DUPIXENT in adults, we are still only treating about 20% of the population of adults that have moderate to severe atopic dermatitis. In adolescents, a more recent launch, there was a lot of pent-up demand for adolescent patient treatment, and we're hearing amazing stories of the life-altering change that's being made for these younger individuals, many of whom weren't even able to participate in normal routine activities. The percentage, for example, of these children who are home-schooled because of the degree of disease they had interfered with their daily activities, it really will be amazing for our team to be able to introduce DUPIXENT to the marketplace, hopefully for the pediatric patients, if, in fact, we have the FDA approval, which we hope to have in the midyear time frame, May time frame.

The early signals, Marion, for the adolescent and then ultimately, the pediatric population that, that treatment penetration is likely to exceed the treatment penetration in the adult population? Or do you think it's going to be similar?

I think it will be similar. The only thing that does happen in many disease areas where adolescents and children are involved is that their parents and their families are really advocates for making sure that they get into the care continuum very, very quickly. That's not always as obvious with adults, although atopic dermatitis is a disease of younger age groups for adults, and some of these adults have been struggling with the disease for years and years. And in the case of atopic dermatitis, there weren't effective treatment. It's one of the reasons that, in addition to our commercialization, more traditional approaches of field force activity and some of the promotions, it's one of the reasons why we thought having the TV campaign for atopic dermatitis was so important for adults, so that for those who had stopped trying to get relief of their disease, it was another means to try to reach them and educate them. I'll also comment, back to the notion of our ambition with DUPIXENT, certainly, now we've been in the marketplace with asthma for, obviously, the 2019 period of time. We're pleased that DUPIXENT not only is growing the asthma biologics market, but early days, we've shown to have a very competitive profile versus the IL-5s and Xolair. So whether we look at growth of the overall biologics category or our penetration versus competition, DUPIXENT is showing that this efficacy profile, reduction in exacerbations, the breadth of our indication, improving lung function for these patients and all the while doing this with a product that is proven to be very safe now, very targeted in its effect and also allows for self or at home administration. Obviously, the additional indication we brought into the marketplace last year was chronic rhinosinusitis with nasal polyps. There too -- this is a population of patients, about 90,000 in the U.S., about 55,000 of these patients have had a prior surgery. What we're finding is that with patients being treated by their ENTs and their allergists for nasal polyps, about half have had prior surgeries, half had not. But the level of relief these patients are getting from sinus pain, the difficulty smelling, tasting food, we've had numerous reports come back into just how effective the product is. And as many know, patients with chronic rhinosinusitis with nasal polyps often also have asthma. That's 30% to 40% of the time, they also have asthma. So the other thing to keep in mind with DUPIXENT in terms of the product profile is its ability to treat broadly type 2 disease. Usually a single indication, a problem with asthma or atopic dermatitis in a moderate to severe fashion brings the patient into a doctor's office. But we hear reports all the time of patients who may have come in for one treatment condition, but their asthma is better, other aspects are better in their life as well because they're being treated with DUPIXENT.

Okay. And could you talk a little bit about -- I know there's incremental investment in DUPIXENT commercialization this year, and that's part of the company's commentary about the outlook for this year. Can you talk about what you're investing in, what the additional activities that you're engaged in this year to support the trajectory of DUPIXENT?

Sure. So I think we have a very robust and strategically aligned commercialization plan for DUPIXENT that takes us across the breadth of indications that we currently have in the marketplace. We're looking at appropriate and targeted activities, certainly, in the field. We're looking at other elements of commercialization that we know are very important in terms of the marketplace and bringing patients into the care continuum. There's also opportunities for us to continue to work forward with consumer education. TV is but one example. Obviously, a lot of these patients seek online, ways that they can go through digital means and technologies to become educated on their disease, bring them into the care continuum and let them know that DUPIXENT is a product that is a potential opportunity for them in helping their disease.

Okay. Now atopic dermatitis wasn't really an indication for systemic medicines until you kind of pioneered it. And now virtually every pharmaceutical company on the planet seems to have a development program for atopic dermatitis. Could you talk about how -- what you're finding in your market research about the relative attractiveness of DUPIXENT compared to what are after all a lot of different alternatives that are mostly in development?