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

Okay, everyone, good morning. Welcome to the virtual Vegas conference at Bank of America. This is our first session this morning. We're really happy to have Regeneron this morning presenting. Speaking on behalf of Regeneron is Marion McCourt, who is Senior Vice President and Head of Commercial. Marion, you there?

I am, Geoff, and hello to everybody. Pleasure to join you today.

Okay. Great. So we'll do a Q&A here with the team, and there is an ability to ask a question online as well, if listeners want to do that. So Marion, let's talk post the first quarter. So it looked like EYLEA sales held up probably a bit better than people thought in the first quarter. Looking to 2Q, what's your expectation for the persistency rates in the dynamics as we move through the quarter? I know you guys had talked about April, the end of the month, looking a lot more of a rebound phenomenon. But I wanted to kind of get into a little bit more on that.

Sure. So let me take you through what we're seeing. Obviously, really important for patients, who are being treated with anti-VEGF therapy and specifically EYLEA, to stay on their schedules. And obviously, if they miss medication, it's going to have profound impact on their visual acuity. But we did have a first quarter performance that was robust. As reported in our earnings, U.S. sales grew by 9% over the prior year in the first quarter. And as we wanted to very transparently describe to everyone, we had seen a decline in overall demand that was significant in the last 2 weeks of March and the first 2 weeks of April, but that was followed by this sharp rebound in the last 2 weeks of April. With everything we're looking at now, we continue to share that the impact to the month of April was approximately 15% lower than the same period last year. That said, as we go through April and now May, we are starting to see patients start to return to visits with their physicians. The retinal community has done an amazing job of building in procedures in offices that are open so that patients can practice proper distancing, not come in from their transportation until the staff is ready to see them, things of that sort that allows continued treatment in certain areas where appropriate and starting to get back to a patient flow to protect their patients and to treat them. We also are working to support offices as best we can, being very conscious of their access policies in terms of virtual engagement. Our team is working virtually right now. Appropriate support to the offices and doing what we can. Obviously, Regeneron has a really strong history and relationship with being in the market with EYLEA for over 8 years. So we know our customers well, and we're looking to support them every way we can. As we start to think about the future, while I'm encouraged by the trends at the end of April and into May, we'll have to see how the world sorts out as it relates to the pandemic over the next weeks and months. But right now I see and we continue to see what I had reported in the earnings call a week ago.

Okay. That's helpful, Marion. And when you think about the new start dynamic, I know for a lot of different therapeutic categories, new starts are affected. Wet AMD, to me, seems to be mostly about persistence. But when you look to new starts, though, when would you expect a return to a more normal situation? And obviously, this is going to bode well for you guys when it comes to Bayview and their share there. I wanted to see if that -- was there any sort of amplified effect on the market share with respect to new starts in the near term?

Right. So when we first -- when we start talking about kind of the new start dynamic, the first thing that I would say is that, as I mentioned, we did see more of an impact related to patients being treated for diabetic eye disease in terms of more profound impact on decline in prescribing. For the Wet AMD patients, as you mentioned, the persistency and the continuity of treatment and therapy is really, really important. But obviously, in the windows of time where we saw a decline, those patients were not coming into the office as readily either. As we start to go into the more recent weeks, as I described, we see patients coming back in. And it's hard to define for you exactly what's happening with new starts. More of it anecdotally would be continued treatment of patients who are already on a regimen, but in instances where someone is noticing visual decline in need of treatment, we'll start to see some new starts coming in. And I would imagine that if things continue to be improving on a national and local scale in terms of starting to return to normal activities in this new normal, we would expect to see patients continue to come in, not only for continued treatment, but start to sprinkle in more new starts. Then it leads to kind of the next point that you were alluding to, profile of product becomes more important than ever before. So the obvious clinical benefits of EYLEA and the confidence in the product's efficacy and impact on visual acuity is paramount. But safety is incredibly important as well, and I'll talk a little bit more about that as you related to a competitor in a moment. A dosing interval and the ability to extend patients out to 12 weeks with confidence with EYLEA for the appropriate patients, where treat and extend is being practiced. And then also, I think who knew how important the convenience of the prefilled syringe would be, which we launched towards the end of last year and brought into the market in rather a staggered way. But this combination of breadth of indications, efficacy, safety established over 8 years with over 32 million patients, and then convenience and efficiency all comes together to what we hope is supporting our practicing retinal specialists and injectors in a way that was making a really important contribution to their practices. So that's a bit of how we're seeing it. To your point of safety, we really do believe with our medical experts and our customers sharing this with us at every turn, never will anyone take for granted safety of a product that doesn't have an established track record in the marketplace as a given. And specifically, as you allude to some of what we've seen in terms of the competitive space with a new competitor in market towards the end of last year, this issue of a high frequency of troubling adverse events of intraocular inflammation with retinal artery occlusion or retinal vasculitis for a new anti-VEGF competitor not seen with EYLEA reinforces our belief that EYLEA sets a high bar for any potential future market entrants.

Okay. That's helpful. Let's switch gears to the DUPIXENT franchise. And you guys have had very, very strong growth with respect to the core atopic dermatitis indication as well as asthma. But I want to ask you, just on AD, what's your sense in terms of if there was still ground to gain in the adult AD population? Obviously, you guys are going to launch soon in the P population. But I want to get a sense for the share in the existing adult AD population. And then where would you say most of the franchise growth is coming from with respect to indication and geography, et cetera?

Sure. Sure. Happy to take that. So let me take the first part. We continue to see atopic dermatitis for adult patients, but there continues to be opportunity for continued penetration in the marketplace, which is quite significant. So as well as DUPIXENT has done in terms of launch and uptake for atopic dermatitis, and I'll comment first on adult patients, that target group of patients in greatest need is about 300,000 to 400,000 patients in the adult market. And probably, at this point, we've penetrated about 20% or so, maybe a little over 20% at this point. But there continues to be significant opportunity to grow that area of the marketplace. And we continue to see really for every metric on DUPIXENT, expansion of prescribing, depth of prescribing, frequency of prescribing for both moderate and severe disease. As you know, it did not surprise us in any way that dermatologists and allergists first in atopic dermatitis use DUPIXENT on their patients with most severe disease. But then with that confidence of what they saw in terms of the clinical benefits for these patients, remarkable improvement in their lives and ability to go about meaningful activities, coupled with a safety profile that gives great confidence, we continue to see uptick in prescribing, but we also see great responsiveness of DUPIXENT to a host of promotional activities. So whether it's our field force or web-based educational tools or online support, on air, TV, DUPIXENT is highly responsive because there's so much unmet need in the marketplace. So the adult population continues to show opportunity and potential. Obviously, we've launched with the adolescent population last year, and that launch went very well. There was a rapid uptake. There were instances where there was a wait among practices treating adolescents for the approval so that they could initiate therapy. We see the adolescent populations probably about half the size of the adult population. And while we've made inroads that show uptick that is positive, we have a long way to go when we have a tremendous responsibility to -- with this brand to get it to all the patients who need it. And certainly, to your point, that leads us to this very exciting upcoming launch with, we hope, FDA approval at the end of the month based on our PDUFA date to launch for these pediatric patients who are in such incredible need, the 6- to 11-year-old group, where their disease is horrific and horrendous for these little tiny patients, but also their whole family is impacted. So we look forward to the possibility of launch with approval for this group of patients. And in terms of kind of quantifying the market size for you on that, probably about 80,000 patients or so in the U.S. marketplace in that range. It's hard to give exact numbers, but we do see that as a meaningful indication and one where we can make a tremendous contribution. We look forward to it. We're prepared to launch and make sure we get the word out if and when we get approval.

And Marion, just one -- just on that latter point. When you look at the success in the adolescent population, was there sort of a pent-up demand kind of captive audience with that on the back of the adult indication? And then would you expect the same phenomenon in the pediatric, the 6 to 11 population? Obviously, you're benefiting from great awareness, right?

Right. And Geoff, there was some, for sure, as I mentioned, in the adolescent population. It's hard to give you the analytics to support it because, in part, it's based on what practices are telling us and how the uptake went and how communication might have been coordinated to the families, parents. The other thing that's always very interesting about an adolescent population or this pediatric population is that parents are speaking out aggressively what will help their children. So we would expect to see some. I can't fairly quantify it for you in terms of what happened in adolescents except that I'm certain that it existed. And there were practices that proactively reached out to patients who they had been treating and had been hopeful to be able to treat them with DUPIXENT when approved. We would expect to see some of the same in the pediatric patient population. But then also, we do realize that with any launch, we'll have to use our energies from the standpoint of medical education, proactive commercial activity in the marketplace when the time is right to make sure that we spread the word. We also realize that sometimes with all patients with atopic dermatitis, sometimes they're being seen by general practitioners first. And we have to make sure that we perfect and make sure that patients are being appropriately referred into specialist population so that they can be treated, so that we look to support the entirety of the medical community in an appropriate way, the patients come into the care continuum, and if they should be on DUPIXENT based on the view of their prescriber, they're able to have access to the medication. So we look forward to supporting this new audience and the stories of these little patients, adolescents and adults come to us every day in terms of the meaningful impact that DUPIXENT has made on these patients' lives and their families.

And then just moving across the different indications. I wanted to get a sense for you for -- what are your expectations for the EE readout and what the path to market there looks like.

Great. So I've had incredible enthusiasm for the eosinophilic esophagitis indication since first starting to understand it and being involved with gastroenterologists, which is a specialty that I've worked with a lot in past lives. So we're very, obviously, optimistic the clinical trials will have to be completed. So we'll have to be patient in terms of when we have approval for this indication and when we actually could come into the marketplace. But certainly, there is tremendous need for patients who are suffering with this really difficult indication within this cascade of type 2 disease and look forward to when the time is right bringing, hopefully, another approved indication into the gastroenterology community.

Okay. That's helpful. And then the last one is just with respect to the synergies of the indication. So if you have -- you have EE, you have asthma and you have atopic derm. And so is there a commercial synergy to be gained from having multiple indications? We see that, obviously, in the TNF class, right, with all the different I&I indications, and these are somewhat unique, but they're obviously related.

Right. So I think that we will continue to make sure that we are appropriately getting to specialists based on specific indication and their specific patient needs. Having said that, as we look at the breadth of indications across atopic dermatitis, asthma, chronic rhinositis (sic) [ rhinosinusitis ] with nasal polyps, future indications, the understanding of product efficacy, safety, ease of use, at-home administration become really, really important. And they are synergistic in terms of, as you mentioned in other categories, a product really becoming known for the whole host of indications that it supports and then with a profile that provides ease for the patient in terms of administration and ease of prescribing and access for the physicians. Those elements do come together in a synergistic way. So we obviously look forward to the full potential of what DUPIXENT can bring to patients and prescribers and do see a level of synergy there. Perhaps one of the most important relates to not just the efficacy of the product and, as I mentioned, ease of patient in use and prescribing, but also the safety and the specificity of the mechanism of action of DUPIXENT is very, very important in terms of doing what we needed to do to be highly efficacious, but in every indication to date and, obviously, most important in our youngest patients this pronounced and remarkable safety profile coupled with the efficacy that we see. We're excited as well with DUPIXENT, obviously, to keep adding more in terms of indications, but we also expect approval of our auto-injectors in June. So that will provide an additional convenience for patients who elect to use the auto-injectors. So we're excited about that. The expected approval timeframe is towards the end of June.

That's helpful. And let's switch gears to Libtayo. So when you look at the most recent data set, you guys have had positive data in non-small cell lung as well as basal cell carcinoma. Just give us a general sense for the market plan. When you look at lung, for example, you have some pretty entrenched competitors, and so differentiation is key. And I know we haven't seen full detailed data, but I wanted to get a high-level view from you about how to tackle this.

Sure. So first, I think it's important for us to reflect on what we've done so far with Libtayo. And while our launch was in a smaller indication, it's an important indication and one where there was little for these patients with locally advanced CSCC and metastatic disease that no longer was treatable through radiation and surgeries and other means of treatment. So in short order, our team has made Libtayo the #1 systemic treatment for advanced CSCC. And now nearly 90% of new PD1 patients with cutaneous squamous cell carcinoma are receiving Libtayo, which if I consider a lot of work in oncology over the years, this really is a strong showing in terms of our oncology team's commercialization capability in very short order. We've been consistent in share uptake within this category and the ability to create a very important alternative for these patients and establish ourselves at the same time in the oncology community and oncology offices. And I mentioned this because I think it bodes well for when we built the oncology team and our commercialization abilities, we were always doing it with the future in mind, not just indications for Libtayo, but also future products that we're very excited about that, obviously, currently are involved in clinical trials and evaluations that will determine their profile in terms of efficacy and safety and the whole host of indications where they may be used. But we always built with the future in mind. And even to the depths of experience of our oncology team, it's really quite substantial. I'm really proud of what the organization has done. But I know that we've built a team that is at the ready and prepared for future launches, and I'm really encouraged by the sophistication and the caliber of the team. Having said that, as we talk about potential future indications for Libtayo, for example, in lung cancer, we realize that there is one very large competitor that has made a tremendous contribution to the area. However, we do feel that there's room for additional products. Lung cancer is a disease where, sadly, every year there's more than 200,000 new diagnoses just in the U.S., and we do think it will be a wonderful opportunity, potentially, as we have more clinical data and we work towards approval of future indications, for oncologists to have a choice in treatment will be really important. And obviously, we've seen in the oncology marketplace new products coming into the marketplace and potentially being something that becomes a very important alternative for prescribing physicians. So we're pleased. We'll have to be patient as we work forward with the additional clinical trial results and submissions to the FDA. But certainly, we think this is really important work, and we're optimistic based on what we see so far certainly in lung cancer and also in basal cell carcinoma.

Okay. I think Alec from the team had a follow-up on Libtayo. Alec?

Thanks, and thanks, Marion, for participating in our conference. We really appreciate it. One more question on Libtayo. So longer term, how do you plan to combine Libtayo with the other bispecifics and costims? Are you viewing this in terms of achieving better tumor shrinkage and durability than other CPIs like KEYTRUDA or OPDIVO? Or is it more treating patients that would otherwise not respond to monotherapy? Or is it both? And what do you think you would need to show, data-wise, to change the narrative with physicians in saturated indication?

So -- and thank you for the question. So first, the first overall survival result in lung cancer is important, but it's an early step as we think about our overall oncology strategy. We will compete in this very large market. But over time, we hope to have chemotherapy combination as well as novel combinations with bispecifics in our own pipeline to enhance and extend the benefits of I/O to more patients with more cancer types. As you know, currently less than half of patients with I/O-responsive cancers benefit from I/O treatment. So it leaves a lot of room for improvement. There's still a lot of cancers that do not respond to anti-PD-1 treatment. Examples would be prostate, non-Hodgkin's lymphoma, other solid and liquid tumors. So we're excited about the opportunity. And we see a lot of potential ahead for Regeneron's contribution in this space.

That's helpful. This is Geoff again. So we have a little bit of time left. But Marion, I want to ask you just on the topic -- on the COVID-19 antibody cocktail. Obviously, you guys have to check the box on manufacturing scale-up and the trials are being worked out. But how do you think so far, based on what you've seen, the neutralizing antibodies could stack up with others from a number of different companies? And maybe just give us a sense for the guide points of data that we could see late summer and going into the fall.

Sure. No, it's very exciting to do so. And we're hopeful that there are going to be many different approaches that could provide treatment for COVID-19. But we are confident and we're hopeful to the greatest extent, obviously, on the work that our teams are doing. And it's based on not only the approach being taken, but also Regeneron's track record in this area. So we are using our robust end-to-end antibody technologies to discover and fully develop human antibodies from our, as we've described, genetically humanized mouse model as well as from recovering humans. We've selected the best neutralizing antibodies that are recognizing the receptor binding domain of the viral spike protein from thousands of antibodies that the team looked at. We've selected the several that looked best, and we created our primary cocktail and a backup cocktail, just in case. You mentioned the manufacturing scale-up, and we will be making certain that we're able to move into testing in June and certainly have a track record in terms of being able to make sure that product is ready for this testing to begin in June. We plan to scale production to have hundreds of thousands of preventative doses or tens of thousands of treatment doses by the end of the month of August. We've heard Len and George repeatedly give updates and, obviously, in our earnings call just last week confirmed that we're working to clear manufacturing capacity in our New York manufacturing plants so that we can make the antibody cocktail at a large scale. So we're already moving forward with confidence on the importance of that work and expect, as I mentioned, to be manufacturing hundreds of thousands of doses by the end of the summer. We are also in negotiations with other biologic manufacturers that could potentially help us flex manufacturing should we need it and, obviously, as well discussions with BARDA are ongoing with respect to what ultimately becomes the program for bringing the product into the marketplace. So we're excited to contribute, have tremendous confidence in our clinical and our scientific teams to help the world in this area and certainly look forward to providing future updates, Geoff.

Okay. Yes. And just on that, Marion, I wanted to ask you, when do you think you'll have a better sense for kind of the business model and the strategy? I know Len essentially said on the call, let's wait to have data. But there are a lot of things today being thrown in the mix such as the ICER analysis of Gilead's remdesivir and lots of discussions about access and number of doses. Is it post data, maybe later on this fall that we'll get a little bit more granularity on maybe pricing and access and strategy?

We will certainly be prepared to provide that as soon as appropriate. Right now, as Len indicated, our focus is on the clinical program and making sure we are putting every energies into application of our science and technologies and manufacturing. Certainly, we're doing a lot of work as a commercial team to be prepared, but it would be premature to comment on our strategy, except to say that we do view this as a tremendous responsibility in terms of commercialization and also making sure that what we do with access is such that patients are able to gain access to important medication. And certainly with the pandemic that is -- has hit everyone in such a difficult and, in many instances, awful way, we'll continue to take Regeneron's very high road towards responsibility of making sure we do the right thing in terms of having a medicine that's available to patients. So we look forward to that. And obviously, for our COVID-19 cocktail, there are 3 really important populations that we're seeking to address. It's in the prevention setting. It's also in the high-risk early symptomatic patients that are diagnosed, but not hospitalized. And then as well, it's the possibility of patients where we're looking at prophylaxis and prevention based on their exposures. It could be first responders, individuals who are trying to help others. So there are several population of patients that we are seeking to assist.

Got you. Okay. And just on the implications of COVID, I wanted to ask you, what you thought the long-term implications are? Is there anything just broadly, not just on your antibody cocktail, but is there anything that you guys, Regeneron, could do in the way of changing business or the way people access your medicines that could persist even after things return to normal?

It's a great question. And we think about that all the time. And certainly, we'll do our very best to be on the forefront of making sure that we're adopting programs and policies that help patients broadly and are part of what we always deem the most important doing the right thing and making sure we apply our science in all the places where it will help so many.

Okay. And then just a final question. When you think about the impact on your commercial business today, if there is a risk to getting a second wave of infections later on in the year, are there lessons to be learned from what has happened over the past few months that could be better implemented?

Yes. I think we're learning every day. And as an example of that, the learnings that we have on how to help our offices and help patients in a virtual environment is something that we are obviously seeking to perfect and learning as an organization out of necessity. We're looking for innovative approaches and for some that we will apply and use even when we return to the new normal. But having said that, to your question, Geoff, if there is another spike nationally or locally, we'll be prepared to address that. And perhaps none of us would have wanted to have had this learning and experience, but we'll apply everything we learned as we address the first wave or waves, depending upon how you look at it and make sure we're at the ready for future situations. We all hope that, that won't be the case, but we have to be prepared for it. It's a potential reality that we'll have to face.

Got you. Okay. That's helpful. With that, we're out of time. So Marion, thanks so much for the dialogue here. It's been really helpful.

Thank you, Geoff, and everyone. Very good talking with you today. Appreciate it, everybody. Stay safe and be well.

Okay. Talk soon. Thank you.

Okay. Talk to you soon. Bye now.