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

Okay. Great. Well, good morning. Welcome to day 2 of the Barclays Global Health Care Conference. I am Carter Gould, Senior Biopharma analyst here. I am pleased to welcome Regeneron to the next session kicking off day 2. Representing the company is Marion McCourt, she heads up the commercial effort. She's joined today by Justin Holko, who runs the IR squad. Marion and Justin are going to make some opening comments, and then we'll jump into questions. Justin you are on mute.

Well, thank you for that. Carter, thank you for the invitation. And before we begin, we'd like to remind you that remarks made on today's webcast do include forward-looking statements about Regeneron. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in the statement. More complete description of these and other material risks can be found in Regeneron's SEC filings. We do not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Marion?

Thanks, and good morning, everybody. We're off to an exciting start in 2021 with our growing competitive and differentiated core brands, Dupixent, EYLEA and Libtayo, and we have 3 new launches underway. Recent approval in HoFH with Evkeeza also has us entering the rare disease market. We're excited to bring this medicine to patients in need. We're experiencing early positive reception with physicians as patient identification and demand is initiated. We're also thrilled about recent approvals for Libtayo in basal cell carcinoma and lung cancer. Lung cancer, of course, represents a very significant growth opportunity for Libtayo and for Regeneron while early growth indications have confirmed patient initiations as many oncologists already have experience with Libtayo in CSCC. Physicians are telling us that the Libtayo lung data is competitive with other products in the segment, and they are most interested in trial and evaluation. Importantly, already, we've received NCCN category 1 on -- recommendation is preferred in lung cancer within the first weeks of FDA approval. And in short -- in summary, our 2020 results where we grew the top line and bottom lines by about 30%, coupled with our launch opportunities, including Regen-COV position us for continued strong and diversified growth this year and well beyond. With that, Carter, I will, of course, turn it to you, and thank you for the chance to give some introductory comments.

Perfect. Great. Thank you, Marion. I'd love to dive into here. I guess before we get started on the individual product questions, I just wanted to ask, you've got a good perspective across a number of different commercial franchises, all with very unique dynamics. And I thought you'd have a good perspective as we kind of transition back to reopening and how you sort of see that commercial effort evolving in terms of in-person sales force returning, the continuing role, if at all, for telemedicine and digital efforts. And to whatever extent that provides some efficiency in the commercial effort or just sort of the arms race continues across different venues?

Of course. And Carter, I think like many, we saw the opportunity during the pandemic to accelerate digital capabilities and technologies. Obviously, in a way that we hadn't anticipated, but one that we were ready for because we've been doing a lot of work in terms of how to perfect our ability to engage with customers to reach patients in new ways. And it also turned out that we were able to accelerate some of our programs so that during the period of time where things were significantly closed down and it wasn't appropriate for our field teams or for any of us to be engaging in person with customers, we were able to shift quickly both for individual engagement events, for office support, for office service. But also for large-scale congresses and technologies to make sure that at the national, local and regional level, we were highly engaged. We did a lot of work in our various specialty areas to make sure that we were reaching our physicians and patients in the way they wanted to be supported. And all of our therapy is very different in terms of the indications, age groups of patients, the specialties that we interact with. All have really important needs to continue on their medications so that their treatment courses aren't interrupted or worse still, they don't have a deterioration of condition. What I would say now is that we are starting to reengage in a very deliberate and appropriate way and a way that customers want to see us. But we will keep a lot of the digital and technology platforms in place to accelerate what we're able to do live and in person. So I think that it was the time of consideration, a time of a lot of work from home, which isn't ideal for a lot of us, but it's kind of 24/7, and I think the team came together in a very powerful way to make sure we performed really well last year going into this year, and we accelerate our portfolio and our many launches for the future. We will be a strong commercial organization because of our ability to apply technologies, digital, on platforms to really make an impact. So that won't go away, but we will never replace the live activities. That interaction is key.

Okay. Maybe jumping into some products it's -- maybe just jumping into COV2 here and sort of there was initial utilization issues, both you and your competitor in the space faced a lot of the same challenges here. Can you talk about some of the tangible efforts to improve that and kind of how things have, I guess, started to evolve over Q1?

Sure. So I think there was a varying degree of impact to patient flows and office practices. I'm very pleased now. I think the world is pleased that we're seeing recovery in many, many areas. It happened in different shapes and forms. I think many of our products have continued to perform, obviously, really well. But I would say that at this point if I go through the various specialties for you, we certainly are seeing a return for the ophthalmology and specifically for EYLEA eligible patients, a return to normal levels of patients in offices. The most profound impacts, as you know, occurred towards the end of the first quarter last year, beginning of the second quarter. But certainly, patient flow is back to normal and offices and specialties are able to put precautions in place, have protocols in place for patient flow. As it relates to Dupixent and dermatologists, they probably saw a dramatic early impact, but then recovered during the pandemic period to pre-COVID patient volumes certainly fairly quickly. There was some impact, maybe the allergists and ENTs rebounded a little bit more slowly, but certainly now are approaching normal levels. And I think for pulmonologists, probably the most profound impact took place because they have been on the front lines of the pandemic. But that specialty too is approaching pre-COVID levels in terms of patient treatment. The use of telemedicine, as you asked earlier about, is interesting. We see in some places, that will be an acceleration to care or check in of care, but obviously not replacing the importance of in-person visits, which are so critical for so many of our therapeutic areas. I would comment that we did see in areas of oncology, such as patients coming in for diagnosis of skin cancers or even in some instances, other indications like lung cancer, there may have been delays during the pandemic. Reluctance to seek treatment. Diabetic eye disease is another area that probably had more delay of patients coming in for care, and we look forward to supporting the medical community, our specialists and patient needs as we go forward.

Maybe just jumping into the last point you made, and it's a good segue to move into EYLEA. Is the expectation then that we could see sort of a catch-up dynamic over the course of 2021, 2022. I mean, clearly, this is an indication that's already growing pretty rapidly anyway. How do you see that piece, sort of, evolving?

Well, I think our performance for EYLEA as we looked at last year, certainly showed that we were able to perform very well in a market that actually was shrinking. And I'm very proud of the team that we were able to accelerate our performance. EYLEA now captures 75% of the branded marketplace, we've grown share as well versus our non-branded competition. But I think that we saw that through last year and certainly have every intent to continue to commercialize effectively as we go through this year and beyond. I would give a lot of praise to the ophthalmology community, and in particular, retinal specialists and injectors that are seeing patients who are candidates for anti-VEGF therapy that they so quickly put protocols in place so that patients -- efficiencies with precautions and even prior to what now is becoming -- we all hope more individuals, obviously becoming vaccinated. But so that they didn't run into deterioration in vision and complications that for our patients who need to be on EYLEA and anti-VEGF therapy can be catastrophic in terms of their vision.

And the obvious question that always comes up when we talk -- least recently when we talk about EYLEA is sort of emerging competition, and we were talking before we got started. I feel like the EYLEA obituary has been written at least 4 or 5 times. And yet here we are again. Yet faricimab did have good data, and Roche is a credible player in the space. Can you just talk about how you see EYLEA sort of continuing to maintain that dominance in the face of emerging competition? And could these products coexist? Or how do you see the competitive dynamics really sort of playing out?

They are very happy to -- I start with the obvious recognition that we are always going to monitor and to be very thoughtful about competition, and we participate in a highly competitive market place today quite successfully. So we're no stranger to competition with EYLEA. And the bars really high when you think about it now in terms of the established clinical efficacy. Even as demonstrated in times of the pandemic, where there was an interest in making sure that people could be treat and extend dosing often out to 12 weeks. In some cases, were appropriate for patients after obviously shorter intervals of treatment to start. The breadth of indications, we launched our prefilled syringe last year, which has a tremendous efficiency aspect to it. And then, of course, beyond clinical efficacy, no one will ever assume safety in a product being launched into the marketplace until it has extensive clinical evaluation and also the real-world dynamics. So in short, while I always take competition very seriously. It makes us better, for sure. We did not see anything in the recent data on faricimab that would cause us to believe that it will be something we should be concerned about competitively for EYLEA. We obviously talk to our KOLs and hear from the experts with frequency, I was educated on many by the fact that the trial design in that particular study with faricimab actually favored faricimab over EYLEA and pretty much the review I got is that the data was not such that any new improvements or even potentially -- I think the question is, is the product even as good as EYLEA in terms of efficacy and safety overall. But we will continue to work hard in the marketplace and make sure we're supporting our customers and keep an eye to competition, but I would not be writing obituary, by a long step.

Maybe one follow-up there. I guess just when we think about the individual nuances in DME versus AMD. First off, they're starting from very different points and different shares. And so I guess when you think about some of these longer-acting competitors, is there one -- when I think about it, I think you can argue it either way that DME is better protected or potentially more susceptible. When you consider the nuances, is there one that you think is better protected?

In terms of -- I'm not sure I'm getting your question.

So we think about -- yes, sorry. So when we think about longer-acting agents moving into DME, relative to AMD, do you think that's a more protective space, less protected? Just your consideration of some of the nuances there.

Yes. I think that it really is the combination of characteristics that's important for all the indications, but what I would share with you is in terms of our own profile, we have a lot of work still to do, obviously, across all indications, but especially in diabetic eye disease. There is still a profound under diagnosis and under treatment that is really catastrophic for patients if they start to lose vision. And for whatever sets of reasons, diabetic patients do not monitor or engage in their eye care the way they do in their blood pressure or other aspects of their care. And we have to really work as an organization to change that. Some of our initiatives related to diabetic eye disease were delayed because of the pandemic. Consumer education was not something that would have been as meaningful when it was in the zone of our most challenging times, but it is something we'll work on in the future. I don't see a vulnerability for any of our indications based on our EYLEA's profile. But I will tell you for the future, I'm very excited about 1 day having a high dose EYLEA that potentially takes everything we know about EYLEA today and potentially extends the dosing interval because we do think that could be really important for patients. And who better than our scientists at Regeneron to lead the charge in that area. So our commercial team is really excited about that future potential.

Great. Maybe switching gears to Dupixent, which has just been a runaway success story at this point. Maybe just high level first. When we think about the growth across the various indications, or the contribution across the various indications. Can you maybe talk about how we should think about that split? And then in addressing that probably a good segue to talk then about -- again, some of the emerging competition in asthma and how you think Dupi will be able to defend itself.

Sure. So we launched first, obviously, in dermatology and atopic dermatitis is a very, very large indication, one with tremendous unmet need in the early days. Probably we saw dermatologists now are just treating their most difficult, severe patients. And certainly, now that dynamic moves us into the moderate patients as well. At the same time, our launch is into respiratory, both for asthma and also the chronic rhinosinusitis with nasal polyps. So the respiratory indications have met with a lot of success, both growing the markets and bringing more patients into the care continuum. So roughly now, probably about, I guess, estimate for about 75% of the business is in dermatology, maybe 25% is in other indications. But that will -- both will grow. And I think the most important thing to realize in the U.S. marketplace is for the currently approved indications, we are only penetrating about 6% of the eligible patients. So there's a long way to go, a lot of work to do. And while we're pleased that we've been able to help so many patients and the stories of transforming patients' lives and adolescents. And children who were being home schooled because they were so ill with their dermatology condition with atopic dermatitis that they couldn't go to a school day. Or individuals who couldn't engage in activities, so many of us take for granted because their asthma was so severe. To have an alternative like Dupixent that has this remarkable type 2 inflammatory impact from multiple diseases really is very, very important. In terms of competition, let me take that question or subset of your question. The one thing to realize, as we start thinking about some of the potential asthma competitors, Dupixent is the only agent that's approved for both moderate to severe asthma. And it can be prescribed to patients who either have the eosinophilic phenotype or patients who are OCS dependent. And that is a broadly recognized benefit. I think for some of the newer competition, the item I hear most often is there's some confusion on what's the niche, what's the patient type. So as I always say, I've got the greatest respect for competitors, but I think that we obviously have a lot of work to do on Dupixent. But already 75% of our Dupixent growth has come from new to biologic patients. And our penetration levels in asthma are actually even a bit lower than they are in the overall marketplace that I was mentioning.

You and your partner have outlined a pretty aggressive and robust set of follow-on indications to go after. And I think when we -- when investors look at this slide, cumulatively, they add up to some pretty big numbers. But a lot of them are indications in which there are -- either investors are not familiar with or we haven't had to really think about highly efficacious therapies before. So when you, sort of, tier those in your mind, I guess, how should we think about, which of those could be the most commercially relevant? Or maybe those areas that might see faster adoption than others based on some of the nuances there -- indications?

Right. Of course, we look forward to really optimizing the more recent indications we have in germ with pediatrics the adolescent patients as long as well as the adults, we haven't reached yet. And I mentioned the peds and adolescents because it is so compelling to the safety profile of Dupixent. And we can help these younger patients in such remarkable ways. In asthma, obviously, we have the indication now for 12 and up. I look forward to the pediatric population. FDA approval, hopefully coming in the latter portion or second half of this year to coincide with our PDUFA date will be really, really important. And then for future indications, one that caught my attention years back, several years now when I joined Regeneron is this incredible opportunity in -- when we start to think about patients in the gastroenterology area for EoE, where there's just been so little for patients who are suffering from such a difficult potential situation where they're having difficulty with eating and sustainability. As the first potential biologic entrant in the EoE marketplace, we probably have a patient population of about 160,000 patients, about 50,000 of whom who failed other treatments. So we definitely look forward to supporting the EoE patient population and engaging with gastroenterologists as that data comes together. And opportunities are to submit the data package and achieve an FDA approval, but that will be another important audience for us to explore and optimize. Where there's substantial unmet need, and there's been so little for so long that the thought is that for patients with eosinophilic esophagitis, their patient populations might even be a bit higher than we believe. Not dissimilar to what happened when we launched in the chronic rhinosinusitis patients with nasal polyps, it was such an area of unmet need for ENTs and for allergists and prescribing physicians that the populations ended up being even a little larger than we thought.

And maybe to bring Justin in here, too, depending on who wants to take this one. I guess, how should we then think about the regulatory strategy here in EoE? Your Phase III has seen the trial size reduced, which seemed to indicate maybe FDA and you have been having some conversations after the original Phase III data set read out positively. How should we think from here on in sort of around the path to filing?

Happy to let Justin take it.

Yes. I'm happy to take that.

So now I'm not doing all the talking. You will hear from Justin.

Well, thank you. So we're currently carrying in terms of our corporate guidance, so to speak. We're currently carrying a 2022 submission date for EoE. Now that is based on the assumption that we pull together a complete data package of at least 2 parts of the study, Part A and Part B, and then perhaps even some supplemental longer-term data that comes from Part C of that study. I think to the point that Marion spoke to, there's such unmet need there, and we had such dramatic data that we showed from Part A last year. That it allowed us to achieve a breakthrough designation with FDA as we know, that leads to more frequent conversations, and it allows us to open the door to having the opportunity to perhaps move a little more quickly or on an accelerated path with regards to maybe smaller data sets with follow-on at a future point in time. Part B, think of that as really the confirmatory part of this study. Again, that was -- the intent was to file based upon that. We did fully enroll that part of the study within the last several weeks. We do expect that data to read out towards the end of the year. But again, to the extent that we're able to accelerate that as a result of the data we've already shown, we're certainly looking for opportunities to do that.

Perfect. Maybe quickly moving to Libtayo, so much to talk about, but Marion you had some good anecdotes upfront around the launch. As you think about moving into this market, which you've got a number of well entrenched competitors here. How do you think about, sort of, that education hurdle to drive awareness of Libtayo. And a reason to prescribe Libtayo versus maybe more, I guess, there's that dynamic as well as how you think about segmentation within your current label and opportunities to put up some wins here in terms of market share.

Sure. Obviously, we're very excited about the launch first. I'll come in lung. It only been a couple of weeks, but the initial feedback from the community has been positive. That's most important to us. They found the data, as I mentioned in my introductory comments to be compelling of high interest. The notion of being able to have choice in prescribing is very important to oncologists. And of course, recall that many of our -- both community and academic oncologists have already had experience with Libtayo in CSCC, where we became the standard of care. So I think this expansion into new indications has been exciting. And certainly, we were really pleased to see the recent NCCN update in the cancer guidelines so quickly after launch. Obviously, we have a lot of work to do in the market in terms of proper education, support and experience. But our clinical profile is compelling. Oncologists are familiar with and have been prescribing Libtayo. The durability of the profile in cutaneous squamous cell carcinoma has been very, very compelling, and we'll look forward to additional experience in lung. The comment I hear most frequently is interest in evaluating and trialing the product, and that's what we're looking for right now, experience in getting started. In basal cell carcinoma, obviously, we've had experience with our other derm indication. So it stands to reason that there's been excitement in this area. Certainly for basal cell carcinoma patients. A smaller indication than lung, but a really important one. And certainly, for some patients who progress after being on hedgehog inhibitors or frankly, just can't tolerate them because it is a difficult category. We're really excited about this early experience, and I certainly can say in both indications, both recent launches, just weeks old, we certainly are seeing patient initiations. So that's a good sign that we're headed in the right direction.

Great. Well, we've come to the end of our lot of time. We could have easily spent twice this amount and still barely scratched the surface. But Marion and Justin, thank you very much for your time today and good luck on the rest of 2021.

Thank you so much, Carter, good to see you. Appreciate it.

Thank you.