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

Good morning, everybody. Thanks for joining us. I'm Terence Flynn, the U.S. biopharma analyst at Goldman Sachs. We're very pleased to have Regeneron this morning. From the company, we have Israel Lowy, who is Senior Vice President, Translational and Clinical Sciences, Oncology; and Andres Sirulnik, who is Senior Vice President, Translational and Clinical Sciences, Hematology. Before we get started, I'm going to turn it over to Justin Holko from the IR team, and then we'll dive into Q&A.

Thank you, Terence. Before we begin, I'd like to remind you that remarks made on today's event will 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. A 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. Terence, thanks for the invitation. We think this is a great opportunity, having just come off our ASCO event yesterday, to go a little deeper with Andres and Izzy today, so we appreciate the opportunity.

Great. Looking forward to it. So thanks so much, everyone, for joining. Justin, as you mentioned, on the heels of ASCO here, so very timely. Maybe to start, I think this is a question for Izzy. Just give us an overview of the company's strategy in immuno-oncology here, and really what differentiates you from some of the other established players, as I know this is a newer -- relatively newer area for Regeneron.

Okay. Well, thank you, and thank you for having us. And it's really a pleasure to share our continuing progress that we're making across the board in oncology as a key component of Regeneron's efforts. So our strategy has been consistent. We want to develop a combinatorial approach built upon Libtayo as an initial foot forward. And with Libtayo, our approach is to compete, to find tumors where we can get an indication, which we've done to enhance and look for areas where we can augment the activity of PD-1 because it's not a cure all. And finally, to extend, to develop a whole new array of combinatorial agents that we can combine with PD-1 that can stand alone by themselves or in combination with other agents. And we're moving forward on that front.

Great. And maybe I know another big effort is just the early models, the animal models that you guys have leveraged successfully here. And so how much of an advantage is there? And how much translatability are you seeing from those preclinical models through the clinical data thus far on the cancer side?

So thank you. That's actually something that isn't always picked up. We routinely use our engineering prowess with mice to create humanized models for the targets that we are pursuing. And in this way, particularly in immuno-oncology, it's important to have intact immune systems in the mice to really try to interrogate the activity of the agents. So we're able to test our clinical candidates in the mouse models that have been humanized for the targets. And in the case of Libtayo, it looked very promising. In the case of our CD3xCD20 and our CD3xBCMA, they look very promising, and they're doing well. And in our case of our other bispecifics and our LAG3, those have all looked promising, and we are beginning to see data that is consistent with those predictions. So we routinely ask for 5 humanizations, CD28, CD3 and the tumor target. And it's like, it's routine for us, whereas other companies, it's not so routine. That's another little under-the-hood strength that we have.

Great. And I think that's a good segue to my next question or next topic is LAG3. It looks like there's building clinical data here that this might be an opportunity to target on top of a PD-1. So maybe you could just walk us through the key takeaways for your LAG3 from ASCO, kind of what you saw, what are the next steps here for the program? And then how do you think about any areas of differentiation maybe versus some of the other LAG3 compounds?

So we were really pleased to be able to share our data on the combination of LAG3 and Libtayo, LAG3 -- fianlimab is the name of the antibody in melanoma patients, advanced melanoma who are PD-1 naive and who have progressed on prior PD-1. And what we were able to show was a really striking response rate of nearly 67% by investigator assessment, a durability of response and progression-free survival that is quite impressive, although still early. But given what we have, we know we're better than a year for durability and 80% progression-free survival at 1 year. So we see this. And when we look at other data that was released, we think we compare quite favorably. And therefore, we are moving forward with the Phase III in advanced melanoma in the coming year. We look at that also as a nice way for us to round out our presence in dermato-oncology as we have been leaders and first movers in nonmelanoma skin cancers, so CSCC and BCC. And now we're happy to also get our -- get involved in melanoma. In addition to this activity that we saw that is very compelling, we also saw very acceptable safety and essentially no real added safety issues on top of Libtayo alone. Certainly much, much better safety profile than the combination of PD-1 and CTLA-4, which -- where the efficacy we saw rivals that, and the safety was completely different. So we're very excited about that. We continue to explore in our first -- in our early studies other indications. We're not ready to really read out on those yet. We don't know what other tumor indications we'll find that look good, but we're looking hard. But certainly, we have enough information at our -- in our hands now to warrant going forward with the Phase III in advanced melanoma.

Okay. Great. Maybe 2 follow-ups there. One is just how do you think about the ability to enroll these studies? Because obviously, there's a lot of competition there. Do you think that will be a challenge, particularly in melanoma, given an increasing number of these IO agents? And then the second one is, again, as you think about the translatability of animal data to the clinical data, any other indications that stood out for LAG3 beyond melanoma that kind of caught your eye as you think about the forward opportunity?

So I don't really have much to say about the second question. We see -- we -- on the tumor models that we use, they aren't all melanoma. So it really was more a test of the activity of the molecule. And we went into melanoma first because that's where the current sort of corpus of data suggests that LAG3 is an important mechanism in the clinic there. So it remains to be seen. I can't really give more -- flesh that out more. In terms of enrollability, we've asked that question and investigators are hungry for something other than PD-1, CTLA-4. And they recognize that PD-1 is great. But there's a lot of room for improvement, and the kind of data we're showing certainly gets their appetites whetted and want to go forward with doing that. In terms of competition, competition is good for business. Competition is good for patients. We have a compelling molecule so far. So we're going to go forward and we think we can do this.

Okay, great. Obviously, the other big effort at the company on the IO side is your bispecific antibodies. And again, you have a building body of clinical data here across both heme malignancies and solid tumors. So maybe just to start at a high level, remind us here about differentiation because we hear again about a lot of kind of up-and-coming companies who are working on bispecifics. But I don't hear a lot about the CD28 costim, I hear a lot about the CD3s. So maybe just help us think about those areas of differentiation for your program, and then we can dive into some of the more specific clinical programs.

So work at Regeneron for a long time has been exploring the potential of bispecifics. And without being too glib, any high school students can make a bispecific in the lab, stitch this together and that together and clone it and express it in bacteria. So the issue is, can you make something that is a drug? And to make something that's a drug means it has to have really good features that allow it to be stable, nonimmunogenic, good properties, easy to manufacture. So we spent a lot of time working on such a platform, and we believe we have an elegant platform that allows us to make antibodies that are essentially human antibodies that bind 2 different antigens. And there are no extraneous sequences involved, no -- they -- we selected right out of the cell. We don't have to do any other trickery in terms of purification afterwards. And we use standard manufacturing techniques. So we can make these with our eyes closed. And what we do with our eyes open is pick the targets. And so the first round were CD3 bispecifics. That made sense. And we have some -- and we think our initial data in that validated our platform as well as being useful for agents in their own. And then we look to see what else can we do. So we did a serious preclinical exploration of what kind of other engagers on T cells do we need to approach in order to further activate the T cells. And what stood out was CD28, which is a costimulatory signal, Signal 1, CD3; Signal 2, CD28. Some people, in car metaphor, turn on the ignition, push on the gas. And what we have shown is that if you push on the gas alone without turning on the ignition, not much happens. And what we've done is designed our molecules so in fact that -- they don't do much. We don't have the CD28 super agonism that scared everybody from approaching this target from the disaster of years ago. And we've made a big -- based on our preclinical data, we've made a big push in this area. We have 3 CD28 costims in the clinic, a PSMAxCD28, a MUC16xCD28 and an EGFRxCD28. Each of these can be paired with Libtayo. The MUC16 and the PSMA can be paired with CD3 complementary bispecifics. We also will be planning to develop hematology CD28 costims. So we believe this is -- again, it's the same basic technology, human antibodies, good pharmacokinetic properties, good manufacturability. And we're very excited about this, particularly in solid tumors, where we think the lack of easy costimulation might be a component of why the CD3 bispecifics and the CAR-Ts so far to date have not been that active in solid tumors. There's not as much natural costimulation going on in these tumors as opposed to B cells, which naturally make the ligands that engage CD28. So in a broad stroke, those are 2 of our approaches to bispecifics. We have a third approach to bispecifics, which is novel agents that don't necessarily focus on engaging T cells but target tumor antigens in different ways. And we've presented some data on MET X MET in trials in progress. And we're also announcing that we're advancing our first antibody drug conjugate attached to a MET X MET bispecific into the clinic, too. So that's the overview of it. And from the outset of our getting involved in cancer, we took the long view saying, we need to have the ability to drive multiple combinations to effectively engage the immune system. And so by having these different pieces that we can mix and match, we're assembling them. And they're coming into place. They're in the clinic. They're being tested.

Great. Well, I'll come back to some of the solid tumor bispecifics in a minute. But Andres, maybe we could shift over to hematology because this was really the first clinical data that we saw from the program, both in B-cell lymphomas and then also multiple myeloma. Maybe, again, on the program in NHL, just give us an update on kind of where things stand. I know you guys had worked through a partial clinical hold. You're off now in some of the indications. Give us kind of an overview of what the changes were that were made? And then how has enrollment been here post coming off hold?

Yes. Thank you so much for your questions. So in terms of what we have done to mitigate CRS, I want to highlight that we introduced some changes that we believe will be very impactful in terms of reducing the risk and the numbers that we have observed, which, by the way, were not considerably high and significantly lower than what you would have seen in some indications compared with CAR-T therapies, for example. We have introduced additional prophylaxis steroids, as an example, and also looked at update to the guidelines in the treatment of CRS and approach to CRS with early introduction of, for example, tocilizumab, an anti-IL-6 antibody. Also importantly, we looked at the step-up regimen that we are using. As you probably know, the most of the CRS occurs early on if -- in the first 1 to 2 weeks and having any CRS beyond 2 weeks. And what we have done is we introduced smaller doses or reduced doses in the step-up and ramp up that we do and getting to our doses as expected. So we believe that the introduction of these mitigation strategies will have a major impact on the overall rate of CRS. Now you asked about approval. We are restarting enrollment across the program, where we are focusing, as you probably know, particularly in follicular lymphoma and diffuse large B-cell lymphoma. And we will provide further updates as enrollment speeds up and progresses. But we are very confident on where we are today.

Okay. And again, remind us, you guys have said that this Phase II is potentially pivotal in nature. And so is that still the case here post these changes? And then what's the bar from a regulatory perspective in terms of these kind of single-arm studies typically?

Yes. As you mentioned, we believe that the study that is ongoing, the Phase II study could support an accelerated approval in patients with this great unmet need. So that's the key point. Now if we look at the response rates that we observed in the initial Phase I study and the durability of those responses, we think that if the data that emerges from these pivotal Phase -- potential pivotal Phase II study holds and have similar levels of both durability and response rates, we think that based on accelerated approvals in the same line of therapy with other agents, I think we will be in a very competitive space and potentially allow for approval with the single-arm, single-agent study.

Okay. Okay. Great. And I guess one other aspect of the program I know you guys have talked about is the subcutaneous formulation is another way to maybe mitigate some of the CRS. So again, what's the latest on that? And again, when could that be in clinical studies?

So we -- for us, subcutaneous is key to the strategy, both actually for this program as well as for the BCMA program. And we will be certainly in a place to initiate our subcutaneous studies for both in this second half of the year. And we will be updating you, hopefully, early next year or next year.

Yes. Okay. Great. And maybe just one last one before I go back to Izzy is just on the BCMA program, this is an area where, again, a lot of competition. Obviously, it's one of the most exciting targets in myeloma. And so as you guys think about differentiating your strategy here, what are the key components of that? Because, again, some of your competitors have other assets that they're combining together. So as you think about driving differentiation in that multiple myeloma area, what are you thinking about on the forward here post this -- wrapping up this initial study?

Yes. So I just want to mention that we are very confident in our platform. So no bispecifics are the same. And I think that the fact that we have a fully human IgG4 structure that as Izzy mentioned, really we dose these antibodies with characteristics that are very much in line with conventional monoclonal antibodies with all the advantage that you could see in that. We are also very encouraged by the depth and the durability of the data that is emerging. But to your point, where are we going from there? I think that one of the key aspects is the exploration of subcutaneous formulation, which we'll enter the clinic very soon. So we believe that, that will be very important. The other is the potential that we have with a very active drug to combine with standard-of-care drugs in earlier lines of therapy. We also think that the level of activity that is emerging could potentially propel these drugs as monotherapy earlier on. And in addition to that, based on what you just heard from Izzy, we have the opportunity to combine with other assets in our own pipeline. That being the costims, which are, we think, foundational to the strategy and the combination strategy that we will move forward across the portfolio. We also have an opportunity to explore combinations with cemiplimab, and I think that the fact that we have this depth in our pipeline puts us in a unique position to remain very competitive in this space.

Okay. Great. Maybe back to Izzy, just on the CD28 costims. Again, I mean, some of the pushback we get from investors is, again, the likelihood of success of these bispecifics in solid tumors. Obviously, we've seen very exciting data in the heme malignancy space. But thus far, we haven't seen overly impressive data in solid tumors. It's still relatively early, but there have been some pieces of data for CD3 bispec. So what gives you confidence here that we will see striking activity like we're seeing in the heme malignancy side here in the solid tumor space, whether that's MUC16 or PSMA or EGFR, which I know is the latest solid tumor target that you guys are going after? What really drives that confidence level there in this approach?

Well, the confidence is driven by superb and rigorous preclinical data and scientific rationale. Of course, whether that plays out in the clinic, we'll have to see. But we are not just throwing stuff at the wall to see what sticks. This is -- makes a lot of sense. So when you explore and ask the question, why is it that the CD3 bispecifics or the CAR-Ts have not been as active in solid tumors as they have been in hematologic malignancies, there are a number of possibilities. And we believe one important differentiating factor is that the targets themselves in hematologic malignancies do express molecules B7 family or CD80, CD86, which naturally engage CD28 on T cells. So when you think about T cell activation, you need Signal 1 via the T cell receptor associated with the CD3 complex. And you need Signal 2, which is the costimulatory signal for which CD28 is the most potent. And it's those 2 together that result in productive T cell activation expansion and effector cell activity and long-term memory. So we think that in solid tumors, these are derived from different tissue types that don't normally express B7. And what we're doing with our costim bispecifics is we are basically telling the T cells that, look, here's something that will activate your CD28. Instead of using a natural B7 molecule, we're using a tumor antigen that is on the T cell to cross-link and activate that CD28. So we -- our preclinical data is quite compelling that we can combine this with PD-1 to release the brake on the car. We can combine this with CD3 molecules to put the gas after you turn on the ignition. And so there are a number of approaches that we have put into the clinic to validate this. And the first is PSMAxCD28, currently in dose escalation with Libtayo. We will shortly be bringing forward a PSMAxCD3 to be used in combination as monotherapy and in combination with Libtayo, in combination with the CD28 PSMA. Similarly, our MUC16 program, CD3 is already showing some evidence of activity. And we have just started our MUC16xCD28 program. So we believe we are the first company to have both costimulatory and CD3 targets targeting a solid tumor in the clinic. And that's beginning, and that will be, again, the costim MUC16 will be with -- in combination with Libtayo and then subsequently with CD3xMUC16. So -- and then finally, as you mentioned, the EGFRxCD28, which we have high hopes for because EGFR is expressed on multiple tumor types. And it has potentially the capacity to be a coactivating signal, a costimulatory signal to augment PD-1s or CD3 bispecifics across a broad range of tumor types. So this is the fundamental difference and complementarity between CD28 and CD3 bispecifics. We think people shied away from CD28 targeting because of the disaster that happened in that Phase I study years ago. But we convinced ourselves that this is indeed the most important molecule to target for this effect, and we were very careful in our development to make sure that our bispecifics that engage CD28 only activate in the context of bridging to a tumor cell, not out there in the periphery by itself. No CRS seen in our preclinical models. And to date, knock on wood, so far, very well tolerated in patients. No CRS, like what we see with CD3 bispecifics.

Great. Well, very exciting. I guess the other question on this topic is just timing of the data. I know it's a little bit hard because you guys are going up pretty slowly on the dose escalation side. But as we think about kind of how much data is enough, should we look at kind of your disclosure approach to the hematologic malignancy side, where, again, once you had kind of a few cohorts of patients, you were able to kind of disclose some data? Or is there something different in terms of your approach to the solid tumor side, just timing of data? And then how do we think about how much data is enough to share maybe?

Again, in these early stages, things necessarily have to be very deliberate and careful because we do not want to compromise patient safety. We're trying to do this as quickly as we can with that in mind. And we are hoping that within the next year, 12 to 18 months, we will be able to share data from this, and say, "Hey, this isn't just a great preclinical concept. It's got some legs, guys." So we're going to -- we got -- we're playing -- working with some real stuff.

Yes. Okay. Great. Maybe just the last topic I wanted to dig into a little bit is Libtayo. Obviously, you guys have brought this to market now for a number of different indications. There's more work going on. But maybe, again, the one thing that I think some people debate is just differentiation of these different assets. And we're seeing more and more companies now, kind of the multinationals, partner with ex U.S. companies for PD-1s as maybe part of the view is this is a key asset you need to combine with your other cancer assets. Maybe part of this is there's a differential commercial strategy in terms of price point, et cetera. But as you think about the differentiation of your asset in your approach, we hit on some of this already, maybe you could just elaborate with respect to Libtayo.

We thought years ago that with our long-term plan for immuno-oncology, we needed our own PD-1. So everybody else realizing that now, it's -- okay, we feel like we've been -- we were correct. In terms of ultimate pricing, I'm not going to go into that. It's not -- it's outside my area. But what is it that Libtayo affords? Not every antibody is the same. Not every antibody is the same. We put our antibodies through super rigorous screening. I mentioned before, we have our fully humanized mice that we target our clinical agents with. We do not take something into the clinic until we are confident that it is really -- that we're putting our best foot forward. And the data to date with Libtayo prove that. We have outstanding data in CSCC, BCC. And in first-line lung cancer monotherapy in the setting of PD-L1 greater than 50%, we are only the second PD-1 after all these years of other agents to get a positive study. And the data look as good and some people say a tick better than the competition. Now we don't have the durability of follow-up, et cetera, et cetera. And it's not like we're trying to -- we expect to displace the market leader. But our point is that when we put this forward, we wanted to have as good a candidate as possible to facilitate our combinations. And in terms of utility, investigators, lung cancer docs have been very enthusiastic about the data that they've seen. They like choice. People like choice. And we're offering them a choice, and we're offering them a choice with an agent upon which we will be building additional agents. So we talked about the potential of EGFRxCD28 to be active in lung cancer. Our Libtayo chemotherapy combination study across all levels of PD-L1 in lung cancer will be reading out in the second half of this year. And based on the fact that we're 4 for 4 in monotherapy studies, we have high hopes that, that too will be positive. What -- we have another couple of agents that we talked about, that we disclosed a little bit at ASCO that are relevant to lung cancer. And that's the third class of bispecifics, the MET X MET. So this is an unusual bispecific in that it's targeting 2 different epitopes on the MET receptor. MET receptor is very important for driving tumor growth in those tumors that are driven by MET. And the challenge in developing antibodies that block MET to date has been they have not been able to block to -- no one has been able to develop antibodies that interfere with the binding of the normal ligand, HGF, but that still don't activate just by binding to the MET X MET -- the MET receptor. And our MET X MET bispecific is cool in that by binding to different epitopes, it prevents the dimer from dimerizing the signal, holds them separate and locks them there and promotes rapid internalization and degradation. So if you require signaling through MET, we block that. And if you are overexpressing MET, we now have something to target that rapidly internalizes. And so this is going to be our first foray into an antibody drug conjugate. We've been working in the background on developing new approaches to developing linkers and payloads. And we feel that this molecule is actually the best place to bring that -- to bring -- to test this approach in the clinic. So ultimately, this may be, as a chemotherapy essentially, may be combinable with Libtayo also. So what you have -- and we have collaborations with other companies developing oncolytic viruses, vaccines. So we're not just about having Libtayo competes in lung cancer against other agents. If it's -- if you want to focus on that first level, our data stands up to anybody's. It's as good as anybody's. It's better in some aspects. Our study in monotherapy was positive despite allowing for crossover. We had a 70% crossover, and we included in that study patient subtypes that are normally excluded from registration studies but which are part of everyday practice, namely 25% of advanced lung cancer patients have brain mets, and they're typically excluded from these studies. We allow them in, and we allow them in under settings in which they're typically managed in the clinic, not waiting an additional 6 to 8 weeks to make sure that after they were radiated, they're stable. If they look clinically stable, they could come in. And at ASCO this year, we showed a posthoc analysis that showed that those patients with the brain mets did just as well, if not better, than the overall population. So like I said also, I think competition is good for business. Competition is good for patients.

Yes. Maybe just the last question in the last couple of minutes is you mentioned your ADC platform, and it sounds like this was all internally developed. So is this kind of a beachhead for you guys where you're going to push this more broadly into other relevant tumor types? Or is this kind of a -- because of the uniqueness of MET and the internalization, this is kind of a one-and-done opportunity? Are you going to pivot more broadly here with ADCs?

So certainly, this is a beautiful place for us to test this. We have -- this antibody rapidly internalizes. We've developed a payload that is noncell permeable, which means that once it gets into cells, it doesn't leak out until it kill the cells and bound to the target in the cell. And so we hope there will be relatively little off-target toxicity, which is basically the chemotherapy toxicity. As to what we do next with it, we're going to have to see. We're not -- we don't view ourselves as an ADC company today, but we can do it if we have the right target. There are other things we can think about conjugating. It doesn't always have to be chemotherapy agents. It can be other things. So for us, developing this fundamental technology that allows us to conjugate molecules of interest to augment the activity of antibodies, we view as a first step towards a broad array of other approaches. They don't have to be antibody drug cytotoxic agents.

Great. Well, thanks so much, Izzy, Andres and Justin, really appreciate the time and insights today. Obviously, lots of exciting stuff going on, and looking forward to seeing some more clinical data here, and stay safe, everyone.

Thank you.

Thank you, Terence.

Thank you.