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

All right. Welcome, everyone, for the Regeneron session at Evercore ISI Healthcare Conference. I think Mark is going to kick us off with some quick commentary, and we are going to dive into a bunch of exciting topics, cover as much ground as we can in 20 minutes.

Great. Thanks, Josh, and it's great to be here. And good morning, good afternoon, everyone, joining us on today's webcast. So I'm Mark Hudson from the IR team. And joining me today is Neil Stahl and Jamie Orengo, both key scientists and R&D leaders here at Regeneron. So Neil is our Executive Vice President of R&D and one of the founding fathers of Regeneron with nearly 30 years plus at the company. And he's instrumental in some of the key technologies and ultimately, some of the drugs discovered and developed in our labs in New York. And Jamie is a VP of Research of Allergy & Immunity and one of the lead scientists and researchers across our I&I platform, including Dupixent, our anti-IL-33 antibody program and other various allergy programs, including Birch and CAT. So before we get started, we will be making some forward-looking statements about Regeneron, and those forward-looking statements are 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 in Regeneron's SEC filings. So before we get into it, Josh, I just want to highlight that we did come off a very strong third quarter with both strong top line and bottom line growth. Our core business is executing well and that it was also boosted by deliveries on another government contract for REGENCO, our antibody cocktail against COVID-19. Our pipeline continues to advance across many therapeutic categories. And we have several upcoming catalysts coming up and into 2022. So lots of excitement here that Neil and Jamie will discuss. So I'll kick it back to you, Josh, to begin.

Super. It's great to have the team with us. I think Omicron is the word of the day, the word of the week Regeneron put out a very, very helpful update about kind of the steps you're taking to evaluate the antibody cocktail and optimize if needed. I guess the question that I have is, are there ways to streamline this so that we can get an online optimized cocktail to the market faster and kind of learn the lessons from the original strain to save time and get the product available to patients?

Yes. So first, I would say that I think we put out that some of the changes are likely to affect our current cocktail, but that has not been proven yet by any neutralization studies or anything like that. So we hope to get that data in the next couple of weeks. And the second thing about that is that the doses we give are very high. So even if there is some hit on mutualization, it's still quite feasible that the doses we get will still block Omicron if it does indeed take over a spread. I think it's a great question, Josh, and we had worked with the FDA very closely the first time around. And I think we learned a lot and they learned a lot about having streamlined this our next-generation antibodies, of which we have a very large stable that are designed to, again, make cocktails and work together either as a twosome or a threesome. They're selected, and we've also done some preliminary point mutation analysis of the RBD. And we are reasonably to be optimistic, I think, with Omicron although we haven't gotten the real neutralization data yet, which will take another couple of weeks. I think the flexibility of the FDA about providing the EUA will depend on how Omicron turns out to be, whether it takes off here, whether it really is a super spreader and how serious of an illness it causes but we plan to work together very carefully. We learned a lot from the first time around about how to look at viral neutralization both in vitro as well as in patients, viral clearance in patients. And so of course, we'll start with that to see what are the doses we have and whether the antibodies we picked are effective and as a cocktail. So I'm optimistic that we can move faster than even the last time.

Got it. I guess there's a little bit of complexity we'll have to work through, particularly for the treatment application and whether we'll need to sequence and identify patients before identifying which which cocktail to use? Or do you kind of see it more as just a wholesale switch like if we need Omicron you just swap out everything and put the new one -- the new product in the system?

If we have the new antibody product and if it is effective against Omicron, it was selected to be effective against every known variant that already existed. So if we do end up having to switch to that, we're confident that at least for the existing variants until a new one comes that it should cover the spread.

So there's potentially a very large unmet need for the immune-compromised patient population. How are we thinking about how one defines immune compromised, especially as what it might be for a package insert and then addressing that very large patient population?

Yes, there's about 7 million people in the country here in the U.S. that have been given a diagnosis of immune compromise. And about 2 million of those are serious enough not to be able to mount elude immune response on their own. And so that's our core population, I think that we would target, which is a really sizable population with a huge unmet need. And certainly, for both COVID as well as in the future, a lot of other infectious agents that we might be able to help them with in addition to COVID. But it's a pretty substantial population. And right now, the unmet need is so high that multiple opportunities might exist for different cocktails as well. So we'll have to see how that all turns out. We have a study ongoing.

And how are you kind of specifically defining immune compromised because ultimately, I guess, we're going to need to like need to have the definition again for the label for hunting in on the right patients?

Sure. I'm not sure we're at the point of writing a label yet. But certainly, people that have certain background diseases or have had transplants or have certain cancers where they've taken drugs suppress their immune system would all qualify for the treatment. So those are the ones we're targeting right now. And then once we get some good data, we can decide whether or not to expand out of that.

Got it. And are you expecting this will be part of the kind of the government purchasing program that the government will purchase beyond behalf of all immune-compromised patients in their countries?

Mark?

Well, I think what we said is that there's a lot of options for us from a commercialization standpoint if we get approved and we have a PDUFA date in April for treatment and certain prevention and settings. In terms of the prep setting, we do have the data down with the FDA, and we submitted that last April, and we've recently submitted some of the long-term data as well. So we're in constant communication with the FDA, who is obviously very inundated with all the requests and vaccines and everything else around COVID. So we're optimistic that we'll be able to come to some sort of agreement with the FDA in terms of the potential opportunity. And when it is eventually approved, we will explore multiple different scenarios from a commercialization standpoint, whether or not it's more government contracts or whether or not it's under a typical traditional commercial operation.

And then, Neil, I guess as we're thinking about how long immune compromised patients may need to be prophylaxed with antibodies. How do you think about answering that question? Is this life long? Is it just we have to wait and see? What are the markers that will tell us it's safe to drop prophylaxis?

Well, if we think just about COVID to start with, I do not think that COVID is going away, right? So should we be lucky enough to finally get out of the pandemic phase, we're going to be entering an endemic phase, which like flu, certain people are going to be exposed and sick every year. And those that are immune compromised and can't protect themselves, I think, will at least need seasonal, if not continuous protection against COVID. And then as I mentioned before, there's a lot of other infectious agents that can attack them that one could think about antibody therapies for. And so I think now that we're in the mode of antibody therapies for this population that it will potentially expand. But I think it could be lifelong, yes.

Yes. Got it. And I saw Regeneron centering in the vaccine space. Mark, I think we had even talked about this and speculated whether it's a field Regeneron could actually weigh into with your biology power. Neil, just kind of conceptually, how are you thinking about your form into vaccines?

Yes. So we have always had a very strong presence in interest in immunology. We're not going to be like competing with worldwide vaccines. Our vaccines, I think, are going to be much more targeted at certain infectious agents and also at very specific and also at oncology opportunities. And so we test them in conjunction with existing therapies we have to see if we can get a better response either for a greater fraction of individuals or a greater breadth of indications, potentially by giving a vaccine.

Maybe we can turn to Dupixent, product that's obviously just shown remarkable, steady growth. I know an area that's starting to get some early attention just because this could be a major expanding for us is the COPD opportunity. And it feels a little complicated, right? These are patients with probably more comorbidities, during polypharmacy. I'm not sure we've seen as much data in COPD to kind of help physician Dupixent's efficacy profiles. So may be you can help frame what you're seeing about Dupixent in COPD that gives you enthusiasm and what the next steps are going to be?

Great. So I can start with some of the information that we have disclosed so far with Dupixent and COPD. Obviously, we think there's a large opportunity there. There's need for patients to have these therapies. And we announced this year that we had a stringent go-no-go assessment for the first trial, which is called the [ BORIS ] trial. And this was surpassed and it triggered the start of a pivotal -- the second pivotal COPD study, which we call [ Novartis ]. And this prespecified endpoint by the IDMC, which is the independent data monitoring committee they required that we achieved a certain threshold of exacerbations. So we obviously met that and triggered the second study. I want to point out that we stated that a 15% reduction in exacerbations demonstrated by competitors, for example, doesn't necessarily translate to clinical significance. So we set our bar much higher. We're really looking forward to these data -- this data reading out. We're not -- we don't have access to the data right now. and it's expected to be revealed sometime in 2023.

There was a comment from the IL-33 program, I believe, there's a signal primarily in former smokers. Any reason to think that that signal will also the same for Dupixent? And how are you thinking about honing in on really for the most optimal patients who can benefit from therapy?

Right. So I can help frame how the 2 therapies work in these different patient populations. So for Dupixent, the study is focusing on Type 2 COPD in a greater than 300 million blood eosinophil population. And this is looking at it in both current and former smokers. So we're currently running those trials that can hopefully give us some answers of how it's going to work in these different populations. For the anti-IL-33 program, itepekimab, we recently published the results in Lancet Respiratory Medicine. And we showed that there was a greater increase in exacerbations in the former smokers, right? So it was actually a 40% reduction in the former smokers. And this -- we were really excited about these data. So obviously, we're in -- currently in Phase III studies to try to look at this. So for itepekimab, there's no eosinophil stratification for those patients. It's really just looking at the former smokers and we're honing in on that, whereas dupilumab It doesn't matter if you're a former or current smoker, but we're really honing in on patients with a higher eosinophil population.

And one of the key advantages we saw in asthma was exacerbations and FEV1 benefit. Should we expect an FEV1 benefit in the smoking population? Or do they tend to have less reversible airway disease?

It's true that it tends to be less reversible, although specifically with the itepekimab data that we published, we did see a change in FEV1.

Got it. And then how important is that FEV1 benefit in terms of gaining adoption for the population? Again, with what might be a polypharmacy type setting and multiple comorbidities adding a biologic may be difficult. So what's your kind of early read in terms of receptivity for for a product that may be very good on exacerbations, but maybe not quite as good as we saw in asthma on FEV1?

I think the fact that we're seeing a signal is promising right? As you mentioned, that exacerbations are really what are driving approval and how people look at COPD protection, right? And so to have this added benefit of prevention of lung function improvement, I think, adds a lot of value potentially for patients.

If you kind of had to rank order some of the key growth drivers, the biggest growth drivers for Dupixent, where does COPD fall? I mean you've got ongoing penetration into your current indications. You've got a number of new indications that are coming along, such as CSU and prurigo nodularis, which is kind of an interesting condition. So where does COPD ranking? What else is kind of up on that list of things that are going to really move the needle for a product that increasingly looks like it could hit it -- hit 20 billion peak sales?

Yes. No, we share the enthusiasm, right? We're really excited about all of the opportunity and the benefits that Dupixent is having in patients for sure. I think it's almost a pipeline in a product. right, where we are seeing these great benefits. It does have a tremendous growth trajectory. I think that we're just touching the surface of market penetration for all of these indications, right? And we're really -- there's a lot of room for growth. I think the asthma space, atopic dermatitis were approved a little bit earlier. But these new indications, there are very limited treatment options for patients. So I think that it will be really interesting to see where it goes for things like eosinophilic esophagitis, prurigo nodularis and even chronic spontaneous urticaria, which we recently announced positive data as well. I think it's a little hard or me to bucket it where COPD is going to fall into this, and it depends on the data and how it looks, but we're really excited and looking forward to seeing those results when they come available.

Yes. So our goal is to have a greater fraction of patients be able to go longer between administrations. So with EYLEA itself, about 50% can go for 12 weeks in AMD before they need us for another injection, and that's with 2 mgs. And so we really understand a lot after all these years about the PK and effectiveness of EYLEA in AMD and DME. And so we can model out how long we think it should last. And so we are for 12 weeks and even in a fraction of patients, substantial traction going for 16 weeks. So in the Phase II study we've already done, we had some data consistent with that where the 8 big provided trying for a longer interval greater fraction in patients will drive for 16 weeks compared to the 2 mg dose. And right now, obviously, the other really important thing was that there was no new safety signals there. So we're administering a lot more protein injecting it into the eye. So you have to check and see whether there's inflammatory events from the larger protein going in and also maybe even systemic blood pressure changes because it's more going into the blood. And we didn't see any signals in the current study we've done. So I think all of that is good news, and we're cautiously optimistic about the eventual rollout of high dose and the data that we're going to get in the second half of next year. The studies are fully enrolled, and we're just waiting for a time to go by to get a good data set.

So Neil, you kind of highlight or put the emphasis on extending from 12 to 16 weeks. When we talk to specialists, their focus is more on those patients who are at -- stuck at 1 month or even more frequent and they can't get dry enough. So how do you think about addressing that population with this trial? Is that something we'll be able to kind of gain insights into?

Yes. It's actually a very small fraction of the total patient population that really has that need. But it is a high unmet need, and we are in discussions about looking at a higher dose for those patients and just seeing whether it can be effective to get them to go longer and may be more effective.

Would that be higher than 8 milligrams or that would be the 8 milligram ...

No, I think that would be the 8 mg dose, yes.

And now it would be a separate trial, though?

Sure. Yes. For sure.

Any ...

They are fully enrolled and not going. So yes,

And any sense if high-dose EYLEA is a new BLA versus an SBLA? And what might determine that?

Yes. I don't think we've given any guidance to that yet. I think in terms of the patent space, we probably can't get continued matter patents, but we can get one on formulation, we believe, because it's very challenging to formulate EYLEA to high concentration like this. and had the discussion be low enough to be able to inject it in the eye and to have the inflammatory events low so that it's safe. And so we think we've got some really great insights into that. And so far, it's been working really well. And so we expect some new patent protection on that area.

But there's a lot more going on at Regeneron. I want to squeeze in one more question because this is a program that I'm really keen to see involved that's the net bispecific because I feel like we're starting to see some exciting results for kind of 2 epitope targeting bispecifics in oncology. When might we get early results from that program? And what are you looking for to kind of show its differentiation?

Yes. So it's a really cool molecule that we have great structural data which shows that by buying into 2 separate epitopes on men and prevents it locks the receptor and prevents it from activating and it also drives internalization very fast. So it doesn't matter what kind of problem if you have mutation on the inside or mutation on the outside or whatever overexpression, we can drive and get rid of it. And so we're very excited. That is obviously a very highly validated target. So we're very excited to get that data, which we should have next year.

Super. We are at a time short and sweet, so much going on at Regeneron just scratching the surface, but at this service one could be some really important value drivers going forward. So thank you so much to the team, and thanks, everyone, for tuning in.

Thanks.

Thanks, Josh.

Yes. Thank you.