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

Hi, everybody. It's Alethia Young here. I cover large cap, small mid cap biotech at Cantor. Obviously, this company needs no introduction, but Regeneron. We're actually going to be having a very specific conversation with Regeneron today around their Regeneron Genetics Medicines. I'm very happy to have the RGC leader, Dr. Aris Baras. He's SVP, General Manager at Regeneron Genetic Center and, of course we don't -- Justin doesn't need an introduction, with Justin Holko, he is VP of IR at Regeneron. So we are going to do a fireside chat and we'll just dive right in, so --

Alethia, maybe before we jump in, if I could just give the quick forward-looking statement. And then I think Aris has a couple of points, he'd probably like to jump in with.

Sure.

No, thank you for the opportunity. We're happy to join you again this year. I would like to remind you that remarks made today do include forward-looking statements about Regeneron and 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. A more complete description of these and other material risks can be found on Regeneron's SEC filings. Aris, you want to go ahead and make a couple of points and we can jump in.

That'd be great. Thank you, Justin. Yes, I would love to do a brief intro here. Let me jump into the discussion. So Regeneron has become one of the world's preeminent biotech companies really based upon our groundbreaking trap and antibody technologies. These technologies are best known for creating medicines like EYLEA, Dupixent, Praluent, Libtayo and of course our COVID antibody cocktail. Built on the same principles of genetics and developing turnkey therapeutic platforms that led to these earlier technologies, we've been reinventing Regeneron yet again and we're excited to tell you more today about the Regeneron Genetics Center, as well as these new breakthrough technologies and modalities that we're using to build genetics medicines on and for the future. Since launching the RGC in 2013, we've made a number of discoveries with the goal of accelerating the journey from genetics to impactful therapeutics. We've created one of the world's most useful and diverse genetic datasets sequencing the exomes and genomes of nearly 2 million consented participants linked to their electronic medical records to fuel these breakthroughs. The most recent example was a discovery of protective genetic variance in the target gene GPR75 associated with reduced body weight and reduced risk of obesity. We have many other findings in protective genetics, implications for treatment of chronic liver diseases, heart disease, asthma and COPD and even cancer, and we have therapeutic candidates in development from preclinical to late clinical stages. In addition to novel target discovery and genetics guided development of existing programs, with our partners, we're developing novel modalities that are an important addition to our tool kit at Regeneron. With Alnylam, we're working on siRNA gene silencing with C5 and HSD17B13 currently in the clinic and more programs to come. With Intellia, we're collaborating, of course, on CRISPR/Cas9 based knock out and knock in gene insertion technologies and had the recent landmark proof of concept clinical data presented in transthyretin amyloidosis. We're also investing in gene therapy efforts and in addition have a small molecule collaboration on the previously mentioned GPR75 target with AstraZeneca. There is a lot going on at Regeneron in addition to our antibody programs and specifically in genetics and genetics medicines and really looking forward to our discussion today.

Awesome. Thank you. So maybe just talk a little bit about the history of RGC and more specifics of kind of how that came about and then also you talked about some of the novel modalities, but I'm sure there is more, even more. So maybe just kind of talk about even some of the more work you're doing in different modalities.

Yes, absolutely. The Genetics Center is something that we started 7, 8 years ago and really trying to address a critical bottleneck in drug discovery and development. And that was genetically validated targets. It's kind of blown up since then and we've had much broader reach and use of genetics and the resource. But again, at high level, we really needed things like more validated targets like PCSK9. We've got large human genetic studies, not preclinical models. And these human studies are telling us, hey this target, activating this target, inhibiting this target should have a really beneficial effect in [indiscernible] heart disease, eye diseases, neurologic disorders, cancers, so that was really the motivation, we had to go big, had to sequence lots of individuals to find these things and it's really panned out. Thinking about the modalities now, yes, we've run that same timeframe the last five plus years, we've been investing heavily, both with our partners and internally and a whole suite of new technologies that we're dubbing genetics medicines. And simply put, these are really about gene knock down or gene insertion and these involve RNAi, great technologies, really have reached prime time in certain areas like liver, but trying to expand the power and reach of those into other tissue and cell types. And then of course the CRISPR revolution and working on both knock out and gene insertion strategies. And lastly, we also have AAV or kind of viral vector-based technologies and I just want to highlight that the strategy is really core to what's been Regeneron for decades. It's genetics focused. It's looking at turnkey platform, so it's not a one trick pony or a onetime target therapeutic really looking for platforms that can deliver on multiple targets, multiple programs. And the last thing, I guess I would say is also that, it's quite unique to have a bunch of these different technologies under the same umbrella, because as I'm sure, we'll get to in this discussion, there is constant debate in our industry around, hey, what's the right technology, what's the right modality for this target, for this disease? And it's really nice to have different options and be able to pursue the best for the given target and indication.

Yes. And so you know, it's interesting, I remember when you guys started this and it's like, it was just genetic medicines were just like the glimmer in people's eye. People talking about RNA working or not. And now, it's like kind of really blooming, so maybe just talk about what challenges still need to be overcome and where do you see this field going in the next 5 to 10 years?

You're exactly right. It was absolutely a glimmer in the eye back in just those 5 to 10 year time range we're talking about. They're incredibly exciting, because of the power of what they enable in terms of therapeutic design and targets that can become tractable. I'd say, where we are right now is a really exciting inflection point. We have in fact a couple approved therapies through these modalities. We've got a couple of RNAi -- not, we, Regeneron, the industry -- and a couple gene therapies in the eye in the CNS. But there are -- there is kind of an explosion of activity in this space and I think what we're seeing is the first generation has had a lot of promise and delivered in this way. But as you said, there's a lot of challenges, so we have to continue to reinvest in these technologies, in these platforms. One of the key areas is delivery. This has worked out, for example, right, in the liver, is one of the most tried and true places to go for a lot of these technologies. Obviously, a lot of disease is happening outside of the liver. So we've got to address this delivery challenge, and we and others certainly have a lot of efforts ongoing there. We can certainly point targets to Alnylam in the CNS and in the eye, for example. Another thing I'd say is a lot of these technologies have first gone in terms of gene knock down or silencing and we can point to some of Alnylam's programs and certainly our partnered programs have generated clinical data. They are looking quite good in terms of gene knock down or silencing. And of course in the CRISPR/Cas9 world, that's also been a place that had success first. So another challenge is, how do we think about correcting, restoring gene function or inserting genes. So that's going to be a challenge that we're working on, other people are working on that we need to tackle next. And lastly, of course, we have to continue to work on safety, immunogenicity, immune responses to some of these agents. So I think those are a couple of the areas. But looking out 5 to 10 years or so, we see the potential for a lot of progress and a lot of solutions on these. I think, it's certainly plausible that there'll be not just a few approved therapies, but a dozen or more across these different modalities, and there'll continue of course to be a lot of, first, just like we had first with CRISPR/Cas9 in vivo, a demonstration with TTR and transthyretin amyloidosis, I think we'll see first for gene insertion and repair. I think, we'll also see first in going beyond the liver and into the CNS and beyond. So certainly, a really exciting field and a big future of drug discovery and development.

Okay. So we're -- it's only just beginning. Make the list. Okay, let's talk a little bit about maybe just Alnylam collaboration just to level set. Just can you walk us through the economics of that partnership you have with Alnylam and what Regeneron's role is in the collaboration?

That's a big partnership. It's one we're tremendously excited about. We wanted to invest big in that partnership. So by all metrics, I think that's the case. This started out pretty focused and getting back to, we talked a little bit about the motivations for Regeneron and certainly one of those was the stream of new genetically validated targets coming from our genetics activities. And the fact that also we had done so well with antibody and protein therapeutics, we had -- just being honest -- some limitations in terms of what we could pursue. Those protein therapeutic platforms can really get at secreted gene products and targets, things on the cell surface. But boy, that leave a lot of space inside the cell that we couldn't get out really well with antibodies or at all. And so we had a great target like HSD17B13 for example that was a huge motivation, and I think happened to be highly expressed in the liver for NASH and chronic liver diseases, so it was actually our first partnership with our great partners Alnylam. And then of course we expanded to another fantastic opportunity where a marriage of technologies, antibody technologies and siRNA technologies and of course getting at the complement C5 strategies we have in particularly the combo programs of the antibody and the siRNA. And then that of course got into our large, broad partnership with them, which is a partnership that's exclusive in the CNS and in the eye as well as many additional programs in the liver. And we get to the larger partnership not those initial target and program focused ones, this is initially a 5-year partnership and we're now 3 or 4 years into that. It is up to 30 targets, which is obviously a big deal, I mean, a substantial amount of investment as these things are now reaching the clinic, quite a few of them. And it's a joint kind of 50-50 development and commercialization partnership in the CNS and the liver and in the eye, it's more of a milestone royalty structure back to Alnylam. And I think, I can phone a friend here in terms of Justin, but I think, we announced back in 2019, some of the additional kind of upfront economics and some of the renewal and things like that and I remember that was in the -- we talked about 400 and $800 million over time and things like that. So not only substantial investment in the upfronts and the continued R&D, but obviously, a huge number of programs, as I mentioned again, up to 30 and us being joint development and commercialization partners on those programs.

Awesome. So talk a little bit about kind of the challenges of siRNA outside of the liver maybe into the CNS or into the retina and like, what kind of preclinical work have you done and -- to generate? I know you don't want to give away all the secrets, but just how you're thinking about trying to attack this, because something that is the next frontier of RNA interference.

Absolutely, yes. So we'll just give away a few of the secrets, not all of them. You're right, obviously we want to -- so the liver is a fantastic place to go. It's been incredibly fruitful with Alnylam. We were really excited to -- together with them develop and advance this technology, so that hopefully we can have the same reach in application in other target tissues, CNS where there's enormous opportunity -- we can all think of many targets and indications -- and the eye. Of course, we know that very well, Regeneron, but even beyond Regeneron, right there's huge appreciation for the opportunities in the eye. So where the technology is, obviously took multiple generations of the Alnylam, RNAi technology to get to where they are in terms of performance in the liver and obviously the GalNAc conjugations and get into the second and third gen platforms where they are now, it's kind of the best-in-class technology for targeting the liver with RNAi. And so you've got to do all that work for the CNS and for the eye. You've got to think about how am I going to target if I need to and get really good uptake in the cells, engage that whole mechanism of RNAi and the risk complex and basically in a nutshell, get really deep knock down, can you get 80%, 90%, knock down, like is routinely achieved now in the liver for RNA -- Alnylam's platform, and can you get that long duration, which is really, I think kind of magical about their platform, 3 to 6 month type of dosing? That combination is fantastic and of course, the safety profile that now consistent with Alnylam's technology in the liver. So it takes some time to achieve that, but we've made tremendous progress, so let's take them in turn. If you look at the CNS, we've talked about publicly and Alnylam is going to say -- has been giving updates and is going to say a good bit more coming up in October, they have their RNAi roundtable where they're going to be talking about CNS and outside of the liver pipeline that they have a lot of that of course in partnership with us. So we've achieved together a very robust protein knock down for the first program APP, which is going into the clinic next year. They have given some guidance on CTA filing planned and Phase I starts over the next year or so. We have preclinical data in non-human primates in the brain, in the spinal cord, where a single intrathecal administration of that Alnylam APP program, a molecule, give substantial knock down and with great durability in around the 6-month timeframe or so. And then pivoting over to the eye, we've got similar type of progress. So now, of course, we're thinking about different target tissue and cell types, looking at the retina and other targets in the eye and making a lot of good progress there in terms of some of our first programs being quite far advanced preclinically and achieving very good target knock down with good durability and good safety profiles. So a lot more to come there and we're really excited about the potential of these targets and the program and platform in general, outside of the liver and particularly in this case, in CNS and the eye.

And that's going to get really interesting, really quickly. Another probably an interesting program, which you referenced earlier was obviously the C5s and just around complement. So maybe just talk about the use of the C5 siRNA to improve the current C5 inhibitors, we have on the market. And do you think like the combination is kind of the Powerball here?

We hope so. So there's a couple of things in this game. So obviously, there is proof of concept. There is validation that C5 is really important for a few diseases, and what the opportunity is here is using the combo of these technologies to get near complete inhibition of this target and for a lot of these diseases, the hemolytic diseases PNH, aHUS, one of the things you're really trying to address here is breakthrough hemolysis and even with some of the approved therapies, you still have that problem for a certain proportion in the patient population. So we're not sure that an siRNA approach alone for example is going to be sufficient because you've got to get complete knock down of that target. On the other hand, a lot of these patients have been stuck to IV administration for their life and so you can see that some of the competitors have been obviously advancing new antibody formulations, trying to move to subcutaneous more favorable dosing intervals for their patients and so we really hope that the combination here is going to be able to achieve complete target knock down inhibition, achieving that one objective, and also extending substantially that dosing interval to weeks, months and in a subcutaneous formulation. So those studies are ongoing now and we'll see, but we certainly hope that they'll approve that we can check the box on those two objectives and have a fantastic therapy in a very large market.

And so there are lot of programs you're looking at including myasthenia gravis, so have you kind of seen any kind of -- talking about the evidence for C5 and MG and what we've seen there and then what an approval pathway might look like based on others?

Yes, great question. So we talked about, and there's a lot of focus on those hemolytic disorders, but of course, there are other opportunities. And you're right, we're pursuing myasthenia gravis, so have others. And there's other exciting things we're doing. We can point you to rare diseases like CHAPLE syndrome and others have also gone in NMO. So coming back to myasthenia gravis. There's a lot of evidence here and there's a lot of precedent here. So some of the early programs, Soliris has an approval there, so there has been success in the clinic and also their follow-on program, earlier this year, I believe is this summer also reported Phase III data that was positive. So that again is validating the target and the pathway and yet another disease and so the same principles, we just walk through in terms of the strategy, the design, what we're trying to achieve in a target product profile with our combo is what we would hope for as well in myasthenia gravis and it's really just kind of the timing of how those things shook out, so we have starts -- a Phase III for myasthenia gravis happening this year and then starts for PNH for a combo program quickly thereafter, right. I think, we've given guidance for starts next year for those Phase IIIs.

And when you were thinking about like kind of what program to go with first, why did you select myasthenia gravis versus like potentially like a PNH?

Yes, I wouldn't say, I wouldn't read in too much to that. Obviously, there is just a little bit of time in between those and it was really just how things unfolded. So we would say most accurately, we're pursuing both, right with equal investment and speed and priority, all the above. Again, it just happened that that's how the timing shook out and yes, there may be a faster or earlier path to myasthenia gravis, but we're full throttle on both opportunities.

That makes sense. Let's move to CRISPR and Intellia. You guys announced the first proof of concept data for NTLA-2001, I mean, which is kind of groundbreaking, again another one of those ones, it was a glimmer in people's eye and a lot of hope and now, you've seen some in vivo delivery. So just talk about what this groundbreaking data means into the field of CRISPR?

Wow, right.

Yes.

Who would have thought? I mean, there's so many thoughts. It's a remarkable -- it always seems to be when you're in this field, but I can tell you as someone in the front row here, it's pretty remarkable to see these first, whether it's looking at right before our eyes, novel genetics discoveries on protective findings for fatty liver disease, right, a graveyard of drug discovery and development, and within a matter of just a few short years, we're in the clinic, and we're seeing the field demonstrates an interesting proof of concept data or whether it's this amazing technology of RNAi and all the sudden, are you kidding me? We're able to achieve 90% target knock down for 6 months. I mean, this is game changing for so many different target, so many different indications and talking about potential historic first in the brain and all that kind of stuff. And this may have been icing on the cake in 2021 to talk about. Obviously, a lot of excitement and fanfare appropriately so around CRISPR based technologies. But until having this Phase I, first in human in vivo proof of concept, everyone's kind of holding their breath, so this is a very big deal for the field, so hats off to our colleagues and Intellia, and obviously the whole collaborative partnership team between Regeneron and Intellia. It is a very big deal and in many ways, it's kind of a beachhead and opens up the floodgates now. So what did we learn from this? We learn people get substantial target knock down. That study showed, I think near 90% target knock down for TTR. It also showed that there is not any acute toxicity that we could see in that small, short term study, but that's incredibly encouraging and exciting. And what we need of course are some longer-term safety and got to develop -- this is the first, right, as with any first, you need more experience, more studies to be sure of things, but this is a technology, at least for that application in the liver target knock down, but it's essentially plug and play, right? It's the same delivery systems. This is the same CRISPR/Cas9 and you are changing out the guides for different targets. So this is a first with a lot of rapid follow-up coming.

Definitely. I think everybody is excited to see some more data there and see if it holds. Can you talk a little bit about genome editing, insertion program and what indications you plan to test and any kind of pre-clinical evidence you have so far there, which I feel like is the next thing that you are all getting excited about?

It's the next thing, absolutely. So as I talked about earlier, this is one of the challenges. It just panned out that it was a little easier to do target knock down but the promise of CRISPR in thinking about correcting and restoring genes, it's been a little more challenging, but there is equal enthusiasm and hope after that approach and one of the most recent iterations has been a joint technology development effort between Regeneron and Intellia, where we've got CRISPR/Cas9 with AAV providing a template for your gene insertion. And this is -- Intellia has given a lot of nice presentations on this as have we recently and this is what we're using that albumin locus as kind of the first approach and there's lots of other things, we're also doing in more target locus specific strategies. But a little frame setting, we should be brief on this, albumin, of course is expressed by the liver. It's one of the most, if not the most abundant protein expressed by the liver. And so you have huge quantities of this and you can hijack just a little bit of this to produce enough protein, enough for the gene product for so many different gene deficiencies. And we talked recently and as has our partner Intellia about some of our hemophilia program, so Factor 9 and Factor 8 and there's great progress there in terms of preclinical work showing that we can get good target gene insertion, it can be safe and we're not having off target effects that are appreciable and we can also get sustained levels of therapeutic levels of that target gene. And for those following the field, obviously there has been success with gene therapy approaches, right, not CRISPR insertion approaches in the hemophilias. And you're getting restoring therapeutic levels, which is huge for these patients and getting them off of lifelong treatment and transfusions. The real differentiation and advantage of this is that simply those gene therapy AAV approaches, they're not integrating into the genome, and giving you one and done kind of permanent cures. They are giving you this episomal integration and it peters out and dilutes over time. If you think about kids, for example, that doesn't work, because they're going to lose effectiveness and then these gene therapies have immune responses against them, so you can't re-dose effectively afterwards. So this is huge and we can certainly point you to recent data, where we showed great preclinical evidence for insertion, sustained delivery and a fantastic liver regeneration growth model, where we prove that those gene integration events get propagated and they maintain over time as opposed to for example AAV gene therapy approach.

Maybe 2 or 3, 4 more for me in the 3 minutes we have. But one, I just -- I'm curious about this myself. Does your view on the role of safety and programs like these, and like, how long does it take to get safety that, #1, scientifically, you guys are comfortable with but also you think that the public would be comfortable with these novel technologies?

Safety is critically important, right? And I think one just need to look at the recent run of news around AAV and other gene therapies, where there have been certain safety events here and there and of course the FDA has held advisory panels and is preparing guidance around that. It really depends on the technology and the platform. I mean, first and foremost, it's critical, right? So we have to develop the safety and the comfort around these platforms. Amongst the very different things, we're talking about, we talked about something like the RNAi platform. That's more established. That's been around longer. There are approved products. There have been many more trials, many more years of safety around that platform, right? So you're at a different point there. With gene therapies, those have been around for a very long time as well and lots of safety issues have popped up and we think to a large extent, we understand a lot of those around dosing and you have to address those. And also with CRISPR/Cas9, we're now getting into the first, as we just talked about, sets of clinical data. So it's hard to say exactly you need this large of studies or this many years, but it's very clear that we're going to need a lot more safety data than we have now and certainly Regeneron and our partners are committed to generating those data sets and also working of course with the regulatory bodies to bring only the most safe and effective therapies to patients.

So you have identified, I think over 10 novel drug targets from genetics-based research. Obviously, one of them which is really interesting to me is -- was HSD17B13 with Alnylam. Just talk a little bit about that target, how you identified it? Why is it implicated in NASH? And do you think that it could be really kind of the truly modifying rather than kind of some of the -- I feel like some things in NASH are kind of band-aidy, but kind of going to the core of the disease itself?

Yes, we hope so. I love your verbiage there around really disease modifying and not a band aid. The first part of your story, this is one of our favorite examples of protective genetics. And we think about how genetics can inform drug discovery, development. And we simplified and we say, there are mutations like TTR or sickle cell that cause disease. And for rare populations like that, you create therapeutics that try to correct or restore the proper function. This is totally different. This is more down the path of something like PCSK9, where you find rare individuals out there that don't have disease, right? They have -- is almost, we like to have fun, we can call them, it's like superhuman powers, where they're protected from disease. And so once you find those things, you want to create therapies that mimic those powers. So we want to create therapies that will inhibit this target, and hopefully have the same types of beneficial effects on fatty liver disease. And yes, that in a nutshell, the thing we're really excited and hopeful for the potential of this target is that there is human data from human genetics, where you have a dramatic reduction in clinical outcomes of NASH. And we know we can pinpoint it to inflammation and fibrosis, which is really the hallmark of end stage disease of clinically meaningful disease, liver failure, liver cancer, transplants, death. And that's where this gene, this target is having its big punch in reducing those disease processes. We're in the clinic now. We've guided that we'll see some Phase I data by the end of this year and more to come next year in NASH patients. So we'll hope we're really excited about this target.

Awesome. We're at time, and congratulations on all the progress. And Aris and Justin, thank you for joining us today.

Thank you so much.

Thank you, Alethia.