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

Hi. My name is Kennen MacKay. I'm one of the biotech analysts here at here at RBC, and it's my great pleasure to be kicking off our 2021 Virtual Healthcare Conference with Regeneron Pharmaceuticals. From Regeneron, we have Dr. Neil Stahl, the Executive Vice President of R&D; Jamie Orengo, the Vice President of Research, Allergy and Immunity; and Justin Holko, who heads up Communications and IR. And Justin, I'll pass it to you, before jumping in, to give some of your prepared statements. Go ahead.

Great. Thank you, Kennen. Before we begin, I'd just like to remind everybody that remarks made on today's webcast will include forward-looking statements about Regeneron, including those related to R&D, in particular. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that 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. Kennen?

Okay. Thanks, Justin. So with that said, Dr. Neil Stahl, as I mentioned, is the Executive Vice President of R&D; and Dr. Jamie Orengo is the Vice President of Research, Allergy and Immunity. And from my understanding, this is one of her first investor-facing events. So we're thrilled to have us -- have her with us today. She's one of the mothers of Dupixent at Regeneron. And maybe Dr. Stahl, Dr. Orengo, I'll just have each of you give a quick introduction on your role at Regeneron, and then we can dive into what's most exciting and some Q&A here.

Okay. Jamie, go ahead, you start.

Okay. Great. Thanks, Neil. Thanks, Kennen. It's great to be here. Currently the Vice President of Allergy and Immunity at Regeneron. I've been at the company for 13 years. I've overseen the delivery of preclinical packages for several INDs and BLAs that you may be aware of, including Dupixent, Kevzara, etokimab, our anti-IL-33 program, our antiallergen approaches for cat and birch allergy; and most recently, an anti IL-2R gamma program for aplastic anemia. In my role, I have the opportunity to input on clinical and preclinical strategy within the portfolio, and I lead a highly productive research team working on various immunology programs that specifically focus in Type 2 immunity, respiratory biology, b-cell and plasma cell biology and inflammation. It's great to be here. Thank you.

And I'm Neil, I've been here for 30 years at Regeneron. I get to do a little bit of everything. I did develop the whole preclinical development group at Regeneron. I actually started the infectious disease group about 12 years ago, thinking that antibodies could be useful for infectious disease, knowing that someday there would be a pandemic, just didn't know it would happen so quickly. And so I'm sure you're all aware that we used our rapid response technology and was able to come up with an antibody cocktail in really record time, that has now got EUA and helping tens of thousands of people. So it's great to be here, and we look forward to talking to you about all this great stuff we got going on and the stuff you don't even know about yet.

And just to kick things off, we're coming right off of the ATS conference. Obviously, a lot of discussion of inflammation in the lungs, both COVID-related and infectious disease as well as inflammatory. And so Jamie and Neil, I'd love to just get your perspectives on some of the most exciting data that's been going on there. And maybe we can use that as sort of a segue into the asthma space and some of the novel targets that are out there as well.

Sure. Jamie, go ahead.

Sure. Well, I can start with Dupixent, which began in our labs, and it's been really incredible to watch conferences like ATS, where we get to see our work translate into clinical benefit in a wide variety of diseases. It's truly transformed the lives of patients. And I think as a scientist, it's really enhanced our understanding of the central drivers of Type 2 diseases, specifically IL-4 and IL-13. A lot of the research that we conduct every day is to really further our understanding of IL-4 and IL-13 and better understand the mechanism of disease. And as of now, Dupi is in several new Phase III studies beyond atopic dermatitis and asthma. I'm also really excited about our anti-IL-33 program or REGN3500, where we're doing some really interesting work preclinically. We have some exciting proof-of-concept data in asthma and COPD. And we also have this whole antiallergen approach, which is really novel, and we have 2 programs, one which is for cat allergy, and the other is for birch allergy. And in this, we've demonstrated, both preclinically and clinically that if you know the offending allergen, we can generate monoclonal antibodies that bind to it and simply prevent it from initiating an immune response. It's really precision medicine at its best, I think. And so it's exciting to watch those programs advance as well. And I have to say, I really think that the future is bright in allergic and respiratory disorders we're -- at Regeneron, we're very research based -- a research-focused company, and we're working hard to further understand a lot of these diseases and the drivers of the diseases so that we could potentially prevent and treat and hopefully, even cure them at some point. So I think there's a lot of excellent things happening.

To your point on Dupixent in asthma as far as our script tracking has gotten, it looks like it is now one of the preferred agents of choice or for new patients getting treatment. Obviously, a huge amount of switching as well but incredible. And as you mentioned, a number of new targets that happen, incredibly exciting in asthma. IL-33 has had fits and starts, certainly. Would love to get your perspective on TSLP as well. That's been a hot topic of conversation as one of the sort of emerging competitive targets to Dupixent. So I guess coming out of ATS, any perspectives on TSLP as a target and tezepelumab as a competitor potentially?

Yes. I was able to catch a little bit of the presentations at ATS, and TSLP is definitely an interesting target. They've presented some of their latest data at the meeting. It will be interesting to see what the regulators think of their package as they submit it. I think there's still quite a bit that we don't understand about TSLP and the mechanism of how it's driving the disease. For example, lung function in lower eosinophil group. How are we actually -- it doesn't seem to work there, but it does impact exacerbation. So it would be really good to understand more about the biology of TSLP and also with respect to other Type 2 diseases, they're seeing positive effects in asthma but not in things such as atopic dermatitis. So It would be good to get some more information and understand how it's working, whereas obviously for Dupixent, it's working on many Type 2 diseases. And many patients have multiple Type 2 diseases. So they have asthma, they have atopic dermatitis, so there could be benefit across broader patient populations.

Dr. Stahl, anything to add there on TSLP?

Right. Well, I think Jamie covered it really well. I mean the amazing thing about Dupixent is that it does appear that IL-4 and IL-13 are the drivers of Th2 disease across so many different settings. Now TSLP probably works in some settings through IL-4 receptor with the same pathways, but there's obviously other ways to set off those pathways that TSLP is not involved with, hence its lack of activity in atopic dermatitis. And so I think we've seen a few of these other targets that show bits and pieces of activity in one setting or another, but nothing with the breadth of Dupi across so many different settings, including like pure allergic disease and esophagitis in a lot of different settings. So we're happy that we have Dupi as a target, and we respect all these competitors, and we certainly tried -- Jamie has done a lot of work on TSLP herself. So yes, we always have our ear to the rails on all of these things.

Maybe then circling back to IL-33. You mentioned Dupixent's targets being really some of the primary drivers of certainly Th2 disease in this inflammatory cascade. I always sort of thought of IL-33 as being sort of the snowball a bit, almost the top of this allergic inflammatory feedback event, this feedback loop and amplification cascade. But so far hasn't necessarily panned out in asthma. It didn't necessarily add too much to Dupixent when the two were combined. Would just love to get an understanding of sort of where IL-33 is in some of these other Th2 diseases like asthma, like atopic dermatitis, and then maybe we can segue to COPD.

Sure. So as you know, and mentioned, REGN3500, our anti-IL-33 program, it was the first biologic targeting IL-33 to show activity in humans in a randomized placebo-controlled study. But as you mentioned, when this was added to Dupixent, there was no added benefit in asthma. But as a monotherapy, there was clinical benefit. And based on our preclinical work and even this clinical work, we know that IL-4 and 13 and IL-33 can both drive different pathways that lead to airway inflammation. And given the heterogeneity and the complexity of these diseases, such as asthma, and I know we'll talk about COPD in the future, we think there could be a place for each of them, depending on the patient population. And we've actually published a lot of our preclinical work for REGN3500 and how we think it's working and driving airway inflammation. It has profound impacts on remodeling, inflammation in general, it inhibits mucus production, changes in ciliated cells and normalizes the lung to bring it to a more healthy state. So we think that there is a place for IL-33. And you mentioned COPD, which is also a very heterogeneous patient population. And we're excited to see how things work out with our Phase III study that's currently in progress with Sanofi. We have 2 Phase III studies that are currently enrolling.

And so Jamie, to your point, as that AERIFY-1 and 2, those trials kicked off, I think, at the end of last year -- the tail-end of last year, has to be an incredible time to be initiating trials. But maybe before just jumping into a discussion of that, we can talk a little bit more about REGN3500 and sort of the IL-33 pathway, because this is really an incredible example of some very elegant, very highly controlled biology from where this nuclear interleukin is released upon cell damage and starts this inflammatory cascade. So this targets IL-33 itself. And maybe can we go into even sort of where that epitope sits? Does it specify sort of the active versus inactive form?

Yes. So you're correct, REGN3500 binds to IL-33, the ligand itself, and inhibits its activity. So it neutralizes IL-33 activity. And with respect to IL-33 biology, it has been reported that once IL-33 is released from cells, it's rapidly transformed into a reduced or an active form, right, to the oxidized state in the tissue. We know that our antibody inhibits IL-33 activity as we see profound impacts on airway inflammation and remodeling in our animal models. And we also see the clinical benefit in patients, right, in both asthma and in COPD. So preclinically, we've published that how this is working, at least in animal models of IL-33, where we believe that IL-33, upon continuous exposure to allergen or other insults, it accumulates in the tissue, and other people have reported this as well. And what happens is, once there's additional damage to the cells, it's released and can drive inflammation. And we know that our antibody prevents any of the subsequent inflammation. And we've looked at things like changes in ciliated cells, we've looked at airway remodeling, changes in lung function, and REGN3500 is able to reverse all of these. So we think it could have a lot of clinical benefit.

And for every program, Kennen, we always evaluate antibodies against receptors and the ligands and try to figure out what the best approach is. And so for Dupi, it was really evident that targeting the receptor was by far the best approach because of the immunological synapse. But here, targeting the active fraction of IL-33 turned out to be incredibly effective, and it also makes a drug that lasts longer, too. So it turned out to be the way to go.

Yes. [ It's all good ].

So there's obviously the half-life of the antibody itself, and then sort of the biological half-life. And the amount of IL-33 that actually is in the tissue, I would think, would be incredibly, incredibly miniscule. So from an activity standpoint, what kind of dosing can we achieve here? Can you maybe talk a little bit about what's being used in the Phase III trial and how you settled on that?

I'm not actually sure about the dosing regimen that we're currently using.

I think that there was monthly dosing. But -- well, we can...

Yes.

Certainly circle back to that. But...

Yes.

No, I do think it's monthly dosing.

Oh. For sure, it's monthly. It's monthly, but I don't know how much.

And at one point, there were nearly half a dozen anti-IL-33 or anti-IL-33 receptor antibodies that were out there, many of them pursuing asthma. Some of those, as you mentioned, were targeting the receptor, their decoy receptors. There are a number of problems with that. But what -- do we really know what happened with these? We don't necessarily hear about trials that didn't work. Sometimes they aren't even presented. But are those sort of out of contention now? Or I guess from insiders in the field, where is the competition there in IL-33?

Yes. So I mean we know from experience, obviously, not all antibodies are created equally, right? And some antibodies could be deemed to have potential success. But in patients, there's poor bioavailability, poor PK, things like that lead to these approaches not being taken forward. For the receptor antibodies, I think there could be -- again, there could be an antibody issue. We don't know. A lot of things aren't published. A dosing issue because there's way more receptor, as you hinted out before, than there would be ligand, right? So that could be an issue as well.

Sometimes the differentiator is just how fast the antibody will bind to the target.

Right.

And so IL-33 is already in the tissue and the receptor is right here next to it. So you need the antibody to come in and very rapidly get to the ligand before it gets to the receptor. So these are parameters that we always try to optimize in all of our programs.

That's a good point.

So maybe, again, just sticking with IL-33 and moving to COPD. There are, similar to asthma, atopic forms of disease and nonatopic of disease. Obviously, some triggered by smoking. Is there sort of a subgroup of patients where we think original REGN3500 might have the most benefit? Is there...

Yes. So we are looking at REGN3500 in COPD, as you mentioned, across eosinophil levels. So it's not restricted based on whether there's certain level of blood eosinophils. And we're specifically focusing on the former smokers, because in our Phase II study, we did find that there was a profound impact in patients that were former smokers. I believe there was like a 40% reduction in exacerbations in that patient population. We think that, that's the spot that we're targeting because we can have real clinical benefit for patients.

Several studies that had suggested some of these patients with eosinophilic asthma also had higher levels of IL-33, not necessarily that's what is driving it, but is actual IL-33 a potential biomarker here?

I think it's a disease driver based on our Phase III data, right -- Phase II data, I'm sorry, where we actually show that if you block it, you can see a benefit, right? If it was a biomarker, I would imagine that maybe it's just changing and you're not necessarily seeing the clinical benefit that you would expect.

But it doesn't seem to drive any pathways independent of the IL-4 receptor pathways, right, because -- that's why we tested it with Dupixent and it didn't have any add-on benefit suggesting that there's no unique pathway for IL-33 that's not already covered by Dupixent.

So why not pursue Dupi in COPD? Is that sort of a business development perspective? Or again, completely independent pathways, this is sort of earlier than where Dupixent is coming into this inflammatory [ testing ]?

No, we are actually looking at Dupixent in COPD, in Type 2 COPD or eosinophilic COPD. We have 2 Phase II trials that are currently ongoing. So that sort of differentiates the 2 in that REGN3500 or anti-IL-33 could be, regardless of eosinophil level, specifically former smokers; and Dupixent is more of the Type 2 higher eosinophilic COPD patient population.

Got it. Okay. No, thank you for clarifying that. Anything on COPD, on IL-33, we spent a lot of time on that, that we haven't talked about that you did want to mention or anything around these trial designs?

I would just add that I think we all know that the unmet need in COPD is really high. So even if you have a drug that makes an incremental benefit against COPD, it's still a big deal because there's really not very much. And so that's why we're testing both IL-33 and Dupixent and so forth. So far, we have some very optimistic results that suggest that we might have a benefit. So we're really looking forward to getting the data and seeing how much we can help that population.

Yes, exactly.

Well, let me just take this opportunity. We're coming up towards the end of our time here. I just want to mention to all those who are tuning in on the webcast, feel free to type in any Q&A using the Q&A function there, and I'll be happy to ask a question anonymously on your behalf. Maybe while we are waiting to see if there's Q&A out there, again, just want to get your perspective on sort of what you see as some of the most exciting advancements, either across the board, Jamie, throughout the entirety of the R&D platform or -- I'm sorry, Neil and Jamie, specific to the I&I platform at Regeneron.

Neil, you want to give a broader sense?

Well, in the big picture at Regeneron, we were, I think sort of deemed to be the EYLEA company, but we have spread out so much since then with all of our different platforms and bispecifics, across oncology and I&I and a lot of other settings. And I have to say that even though we had the pandemic last year and the labs were only partially full, it was one of the most productive years we've ever had, which maybe makes a case for some remote working after this is all over. But we have so many exciting things coming up that we actually haven't even talked about with you guys yet. I mean Jamie has been -- she's got some publications that you should look at on how IgEs are actually made by the human body and by mice. And the -- she made, along with one of her post docs, a fundamental insight that nobody had ever made before. And they've been talking about it at allergy meetings now for a few years and dominating this discussion with that. So we do think that it has the potential for clinical impact. And so that's something that you can wait with bated breath for.

Yes. Thanks, Neil. No, it's true. One of the things I love as a research scientist being at Regeneron is that we really are focused on the technology and the biology. So trying to understand how the diseases are working, what's driving the different diseases and then think about how can we intervene to show help for patients, right? So we did this work trying to uncover what is the source of IgE. And for allergy, IgE is the pathogenic molecule, right? So we have figured out that long-lived plasma cells, and this is published in Science Immunology, is really the reservoir for these IgE cells or IgE producing cells. You're avoiding your allergen, yet you still have IgE in circulation. Where is it coming from? Why is it there? So now knowing this, we could think about different interventions and approaches that we can use to really have a big impact.

That sounds like a perfect place to leave it there. We did have one question that had come in. The question is, you mentioned IL-33 as a disease marker in COPD. I had maybe incorrectly mentioned that. It sounds much more like a driver, at least in these patients. The question is, is there a clear biomarker in the Phase III AERIFY trials in either the former or current smokers beyond IL-33, which it sounds like isn't being measured there.

Right. We do look at other peripheral markers to see impacts in circulation. I think that the team is actively looking at that. We've seen in the asthma studies, for example, that there were changes in circulating eosinophil levels. And together with a series of other biomarkers in COPD, we'll be looking in at that as well.

Yes, correct. Just looking at the inclusion-exclusion criteria on clinicaltrials.gov that is posted. I'm not seeing a biomarker, but maybe we can circle backwards on that. Also just wanted to mention I had some -- pulled that up. It looks like 2, 2-week and 2, 4-week dosing in those -- in the Phase III trial so...

Great. Thank you.

Thanks, Kennen.

Quite extensive. Then -- maybe just separately, I just wanted to thank...

We're in research.

Yes. Exactly. No, that's where I always was. Well, it's been an absolute treat having you, Dr. Orengo. This is an awesome conversation. I currently don't have REGN3500 in my -- or in my models, nor COPD. So something I'll have to revisit, sounds incredibly exciting. And I want to thank you, Jamie as well as Neil, for your time this morning, and Justin for enabling all this to happen. Thank you very much, and thank you, everyone, for joining.

Thank you.

Thanks for having us, and for your time. Take care.

Thank you. Bye. Take care. Bye.