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

Great. Thank you, Andrew. Really appreciate it. Thanks for helping set this up and making it so easy. Hi, everybody. We're getting to the middle or close to the middle part of the day in the first day of the Oppenheimer Healthcare Conference. We have Regeneron also presenting at this fireside chat. Representing Regeneron is Dr. Izzy Lowy, who is the Head of Translational and Clinical Oncology at Regeneron. I'm sure quite a few have heard him speak before at various investor events. I have also. So it's a real pleasure to have you with us today, Dr. Lowy. Really appreciate it.

Well, thank you very much. It's a pleasure to be here, and I hope I can answer your questions and give information that's useful for investors for understanding our pipeline at Regeneron.

Yes. That's fantastic, Izzy. It's interesting because we've seen the oncology pipeline kind of grow out over the last couple of years. I believe we might have even written a note as early as like second half 2018 on it, and it's something that we've been following very carefully. Maybe we can just take a step back and talk about the sort of, I would call them, the very deep and kind of thought-out efforts of Regeneron in oncology and then maybe get more granular as we go later into this discussion. Maybe we can just talk a little bit about what are the specific Regeneron technologies that kind of underpin your oncology efforts? And how is Regeneron differentiated, even though some might consider that it's arriving a little bit later to the game, how to think about that, Izzy, from a broader perspective?

Sure. So that's -- you've asked a lot. So give me a couple of minutes to answer.

No, no, take your time.

Okay. So the approach that Regeneron has taken to oncology has been a long ball kind of view and a recognition that an integrated approach to developing multiple therapies that can be combined is ultimately going to be a key differentiating factor in our ability to really advance the field forward for the care of patients with cancer. So a little over 10 years ago when I first arrived at Regeneron, I convinced Len and George that immuno-oncology was a real field. At the time, there still were some skeptics. Hard to believe nowadays, but that was the case then. And Regeneron had a wonderful research infrastructure and immunology with immunologists that develop drugs like Dupixent, but who weren't that sophisticated in oncology, and also had a wonderful oncology and angiogenesis group, who developed drugs such as VEGF Trap, which ultimately became EYLEA as well as ZALTRAP. But because of the models that were being used of human xeno transplants line in immunodeficient mice really weren't that attuned to the role of the immune system. And so what we did at the beginning, because one of the major strengths of Regeneron's scientific engine is its profound collegiality, we were able to all sit together and brainstorm and plan a future. And the future meant really building all the models so that we could actually look at tumor models and immunocompetent mice that we could start interrogating, what are the actual levers that move the immune system so that the immune system can aid in controlling tumors. And in that sort of discussion, we envisioned multiple different technologies that might come to bear over time. And I think what you see today is the -- just the beginning of the fruition of this effort and long term sort of, if you build it, they will come kind of approach. So as a first element in our portfolio, we decided that we did need to have an anti-PD-1, because anti-PD-1 was already demonstrating a profound powerful presence as a lever that could move the immune system in many different settings, well-tolerated, and one could imagine that it would be an important component of any comprehensive immuno-oncology strategy. So we set out to develop one. And in true Regeneron fashion, we screened many, many antibodies to identify an antibody candidate that we felt performed in a multitude of assays as well as or in some cases, even a little better than the leading competition out there, which still remains pembrolizumab and nivolumab. And we took it into the clinic. So we took that into the clinic in 2015. And by 2018, because of some smart clinical development insights that we had, we got an approval in cutaneous squamous cell carcinoma. I think that's one of the fastest approvals for any PD-1 or PD-L1 around. It was an indication that people didn't really appreciate. They didn't appreciate it because it was a tumor that really -- wasn't really -- for which there really weren't effective therapies. And so as a consequence, patients with this didn't really come forward. They weren't present. But what we've seen is that with the recognition that we had, the first and major therapy to bring to bear here, that there's actually a very respectable market coming close to $0.25 billion on its own between -- in our non-melanoma skin franchise within a couple of years. We then took that PD-1 and applied for PD-1, an approach of where we would say, "Well, look, this is going to be the mainstay, the foundation of all of our future work, but it's a great antibody. So let's make the best use of it as we can while we're developing our future pipeline." And so we developed this sort of approach we call Compete, Enhance, Extend, where we look to be able to compete in indications where either we're the first or where we have a niche that we can feel we can contribute. So as an example, in first-line lung cancer, we are only the second PD-1 that has been able to have successful studies as monotherapy and as in combination with chemotherapy across all histologies and regardless of PD-L1 status. The other one only being pembrolizumab. So we feel that coming out of nowhere, we've established ourselves as having a really first-class PD-1. I'm not going to -- you're not going to hear me say that I think it's better than any of the other ones, but it stands up to any of the other ones, and it's in a rarified class in terms of the types of studies that it's been successful in. When we talk about enhancing, we talk about combinations with other therapies like chemotherapy and radiation. And so we have actually a fairly respectable portfolio of studies that have already won approvals or that are on their way to getting approvals. Cutaneous -- advanced cutaneous squamous cell carcinoma, I mentioned, advanced basal cell carcinoma for patients that have failed or can no longer tolerate hedgehog inhibitors, first-line lung cancer for patients with PD-L1 greater than or equal to 50%, these are all approvals as monotherapy. We are waiting for -- we are under review with the PDUFA in September. It's our first-line lung cancer study in combination with chemotherapy. We also have a second-line cervical cancer study that had a positive outcome and that is under review at a number of regulatory authorities around the world. So -- and we have an ongoing Phase III study in adjuvant cutaneous squamous cell carcinoma that we think will broaden the group of patients that will -- if successful and approved, will broaden the group of patients with cutaneous squamous cell carcinoma that can have access to this potent therapy. So that's the PD-1 story, and we think it's a nice package, we think it's growing. It's main -- our commercial colleagues are working hard to main -- to get it, appreciate it in formularies and use. But the data is there that it is a potent anti-PD-1. And as a consequence, it is a wonderful molecule to be used as a combination with our expanding pipeline. So what does our pipeline look like? Our pipeline looks like -- has several different buckets, and we keep expanding the number of buckets as our researchers get all excited and come up with innovative new ideas. So the first bucket is other canonical antibodies. So we have an antibody to anti-LAG3. We have an antibody together. Our anti-LAG-3 antibody, fianlimab, is in the process of setting up a registration-intent Phase III study in advanced melanoma. We're aware that there's only one other one that is about to be probably approved. That's the BMS nivolumab and relatlimab. We are coming fast on its heels. We are planning to start an adjuvant study in melanoma as well. That will be pretty much contemporaneous with the BMS study. And we're exploring the combination of LAG3 with Libtayo cemiplimab in a number of other indications to identify other places where that combination can work. LAG3 is an interesting molecule because most people recognize that its activity requires the presence of anti-PD-1 in order to see that activity. It doesn't have that much activity on its own. Our GITR antibody, we feel is a differentiated antibody from other GITR antibodies that have been out there. GITR is a target that belongs to a class of molecules called TNF receptor family, and there are other molecules in this family such as 4-1BB and OX40 and GITR. And that family has been challenging so far to really turn into a success in the clinic. We feel that the antibody we have identified and the properties that it has in comparison to our -- to what we think are the comparators bodes well. And it is currently in early clinical trials and dose escalation, making its way through that, again, in combination with cemiplimab. So you'll hear a recurrent theme almost all that we do, unless it's an unusual molecule that has monotherapy activity that is, we think, can be very robust, everything is in combination with anti-PD-1. And even the ones that have monotherapy activity, we expect that it's worthwhile to see what it would do in combination with anti-PD-1. The next major sort of innovation and class of buckets that Regeneron is developing are bispecific or perhaps in the future, multispecific antibodies. And these are antibodies that are full-length antibodies, and as a consequence of being full-length antibodies have favorable pharmacokinetics. When you have -- as opposed to, let's say, like blinatumomab, which is the approved BiTE CD20 -- CD19xCD3, that molecule has a very short half-life because it's a small molecule that was basically stitched together by combining 2 different pieces of antibody combining regions. The bispecifics that we make are built on the base -- on the backbone of a structure of a full-length antibody. And because of that, they have antibody-type pharmacokinetics, which means off the shelf, they can expect to have a 2- to 3-week half-lives. So the first class are the bispecific antibodies that actually engage CD3, and these antibodies that engage CD3, we believe, are an off-the-shelf equivalent to CAR T cells. And the -- have the potential for taking a patient's own T cells in the body and bridging the TCR, the CD3 aspect of them to a tumor antigen of choice and activating the T cells right there. It's an alternative to CAR T cells, where one takes the patient's T cells, takes them out, expands them and transduces in a new recognition molecule to redirect the T cells. So we redirect the T cells with a biologic that's off the shelf as of -- which is there and ready to go versus the need to generate either patient-specific autologous CAR T cells. People are trying now to develop the equivalent of off-the-shelf CAR T cells as well, and that's in its infancy and that will be an important advance. Now one of the striking things -- and we've proven success there. So 2 of the agents that have already shown significant success are in our hematologic malignancy space, the CD20xCD3 for lymphoma and BCMAxCD3 for multiple myeloma. These have both shown outstanding activity, a side effect profile that is readily manageable and are both involved in registration-enabling studies and are part of large development programs that will seek to bring these agents to patients with lymphoma or myeloma. The bispecific -- yes.

No, please go ahead Izzy. No, no, no. After you.

Yes. I'll talk for a couple of more minutes, take notes on what you want to ask me. And...

Yes. Yes. No, no, this is great.

Okay. I've just been reminded, and I'll just do this now to just say that this discussion may contain forward-looking statements about Regeneron, and any 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. And a more complete description of these and other material risks can be found at Regeneron's filings with the United States Securities and Exchange Commission. Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. So now we're all Kosher and I can continue. Okay.

You got to tell Bob that he's got to move his folks from the outside buildings closer to the heart of Regeneron. I'm just kidding.

Yes. No, they just came in, they said, "You got to remember to read this." Okay. Okay. So one of the striking things about both CAR T cells and CD3 bispecifics is they've had an enormous success in hematologic malignancies. And when we turn to solid malignancies, not so much. And we don't really understand the reasons why. And I'm going to come back to that in a moment. We do have a program -- a couple of programs for CD3 bispecifics and solid malignancies. We have one in ovarian cancer, MUC16xCD3. MUC16 is the molecule on the ovarian cancer surface that gives rise by proteolytic cleavage to the circulating CA125 antigen, which is often used as -- by clinicians as a way to noninvasively follow the tumor burden of patients with ovarian cancer. And we're seeing activity in that -- with that bispecific. We're seeing activity across a number of dose levels, and we're seeing activity also in combination with anti-PD-1. And we will be embarking on efforts to do a randomized trial to really explore some dose ranging as well as with PD-1 in order to really nail down exactly what the optimal activity -- what the actual activity is and the optimal regimen to take forward into potentially registration-enabling studies. So we're expecting by the end of the year to be able to share the data from at least our dose escalation experience with the MUC16xCD3 monotherapy, maybe some of the data in combination with PD-1 because it's lagging behind that one, and sort of give you an idea of how excited we are about it because we're planning to explore even further. We also recently took into the clinic PSMAxCD3 for prostate cancer. Now there, we're aware of several other molecules that have been in the clinic, that have shown some activity. They've also shown some safety issues, so we're doing the studies very carefully. We believe that the molecule we've picked may have some safety advantages by way in terms of the way in which it might activate T cells, but that remains to be seen. And that is a forward-looking statement as far as what I can tell. But that one is in much earlier dose escalation. So that's sort of, right now, the current suite of CD3 bispecifics that we have in the clinic, 2 in hematology and now 2 in solid malignancies. The next class of bispecifics that I want to talk about is our costim bispecifics. And we are really excited about these. And we think that if our science that we've shown in preclinical models is relevant to what goes on in patients, that this may help crack the nut of being able to bring the cellular or bispecific therapy to be successful in solid tumors. Costims are called that because they're basically the second signal, the costimulatory signal required to activate T cells. When T cells are activated, they receive a number of signals. And it's a very choreographed and regulated system because the last -- because what you want to do is you want your T cells and your immune system to react to what's foreign and what needs to be eliminated and not react to cells and cause autoimmunity. So Signal #1, which we also use in automobile analogy and say, Signal 1 is like the ignition. Signal 1 is the T cell receptor that recognizes a foreign antigen presented in the context of an HLA molecule. That signal by itself is not sufficient to optimally activate T cells. It's certainly not sufficient to -- it's not sufficient to educate and train lymphocytes when you're first developing them. They need a costimulatory signal, Signal 2, which is usually delivered by a molecule called CD28. CD28 is the canonical costimulatory antigen. CD28 has a checkered history. About 10 years ago -- or actually a little bit more than 10 years ago, I think it was almost 15 years ago, this company, TeGenero, tried to develop an anti-CD28 for immunologic -- as an immunologic therapy and took it through preclinical models, where it didn't see any worrisome issues and exposed healthy volunteers, half a dozen at the same time, and all of them became very sick, and they had severe cytokine release and several of them almost died. So as a consequence, people felt that you have to avoid CD28. It's like a third rail of immunology that you shouldn't touch. Our scientists sought out to determine, if you looked at the variety of other molecules and signals on the T cell surface, and there are many, that we believe also play costimulatory roles, which of the molecules is the most important. And repeatedly, they found that, indeed, it is CD28. So we decided to bite the bullet and say, "Okay, let's make a better CD28-engaging molecule." And what we did was create bispecifics that target a tumor antigen and then also target CD28, but that do not activate the CD28 pathway on T cells unless you have this three-part party going on: the costim bispecific, the lymphocyte and the tumor cell. If you just expose the molecule to T cells, it's essentially inert. So we felt that with that, we have a safe approach to do this. Now why is this important with regard to solid tumors versus hematologic malignancies? Well, the CD28 molecule interacts with the molecule on antigen-presenting cells called B7. And this B7 can be expressed on dendritic cells, macrophages as well as B cells. B cells can be antigen-presenting cells. And the lymphomas that we treat are B-cell lymphomas, DLBCL, follicular lymphoma, multiple myeloma is a B-cell malignancy. And so perhaps one of the reasons why the CD3 engagers or why the CAR-Ts have been successful is that they are getting some of this B7/CD28 costimulation just as a consequence of the disease that's being targeted. Solid tumors that are composed of epithelial cells, by and large, or epithelial derived from epithelial cells or adenomatous cells don't generally express B7. So they don't provide this costimulatory signal. And what our costim bispecifics do is essentially fake out the immune system and basically put the ability to engage CD28 on the tumor cell. So now you're making the tumor cell a more effective antigen-presenting cell. So you see -- you can combine this with either a CD3 bispecific that will engage Signal 1 and you can combine it with anti-PD-1, which will augment the signaling through the intrinsic TCR that of a T cell that already recognizes the tumor. And what we showed in preclinical studies that were very elegant, that the combination that the costim bispecific by itself is not very active. If you want to go back to the automobile example, it's like pressing on the gas. If you haven't turned the ignition on, pressing on the gas doesn't do anything. So we think that it has to be with a therapy that will turn the ignition on, and that can be either anti-PD-1 or a CD3 bispecific or in theory, all 3 together. So our -- when we've taken our costim bispecifics into the clinic, they automatically have to be paired with something. And the first one we took into the clinic is our PSMAxCD28 for prostate cancer. And that one is paired with anti-PD-1. Because of the concerns, even though we showed all of our preclinical data and our monkey data that there's no evidence of cytokine release syndrome, the FDA appropriately wants to ensure that we do not put patients at risk for another TeGenero-like episode. So a consequence of that is that the studies have to proceed rather slowly, much slower than I think investors want to hear about because they want to know when is the data coming out. And I keep having to explain that it's getting there. We're getting there. And in fact, we have dose escalated now multiple dose levels of our PSMAxCD28, and I can say that we're thinking we might be starting to see some activity. It's early days, but we're excited about it. We haven't seen any cytokine release toxicity to -- anything to make us scared that we were going to step on a land mine in terms of a TeGenero-like effect. So we're, again, hoping by the end of the year, to be in a position to share our dose escalation data with PSMAxCD28 in combination with cemiplimab Libtayo.

Izzy, actually, I just want to -- we're actually at the end of the time. I really dislike these 30-minute presentations because -- and no worries, no worries, because the analogy I want to use is the metaphor, it's sort of like you were Captain Kirk. We're on the Starship Enterprise, and we just went into warp speed, covered 4 universes and now we just arrived at the planet called Regeneron's current oncology, but you had to go through that, right? We had to go warp speed through those few galaxies to get to where we are now. I have one, maybe two questions here on the Internet. If you can answer those, and what we'd love to do is just keep the conversation going in the future because I -- we're really excited about the oncology approach and this multiple approach that Regeneron is doing. And hopefully, maybe as early as this year, really see some material catalyst. A couple of questions we have just quickly is, how do you expect Libtayo to expand its use? And another investor just wanted to know, do you think that with CAR-T, some KOLs think of it as being curative. Do you think there ever could be head-to-head trials of bispecifics versus CAR-Ts for Regeneron?

So both are excellent questions. I think we're working -- we think that our -- hopefully, we'll get an approval of the combination of chemotherapy with Libtayo in first-line lung cancer. And that will be another key transition point for us to be able to demonstrate that Libtayo is a viable choice for anyone who wants to try something different in this major field of first-line lung cancer. As I said, we are leading in the field of non-melanoma skin cancer. And I think the promise, why would somebody want to use Libtayo if there are others out there, because there's more coming. And I think it's important for people to get used to it because you're going to be using it in a very rich combinatorial universe. And I think you'll be -- try it, you'll like it, as the other ad goes. With regard to CAR-Ts and bispecifics, we are actually involved in collaborations generating cellular therapies as well. And we did that because while we are very much keen on the off-the-shelf approach of bispecifics, we can appreciate there are settings in which CAR-Ts might offer some advantages. What we are particularly excited about is the opportunity for us rather than head-to-head, the opportunity for us to combine some of our off-the-shelf biologics with CAR-Ts to actually augment their activity. So lots of people are trying to design all sorts of sophisticated new versions of CAR-Ts that have built in this gene, built in that gene. Every time you do it, it's a whole major development effort. It's a lot easier to just combine your effective vanilla CAR-Ts with a suite of biologic agents that may augment that activity as well. So I think we look at it as a great opportunity for us at Regeneron to, again, have this plug-and-play combinatorial approach. We know that combinations are what it's at in terms of really being able to move the lever and have the immune system get the upper hand over cancer. And as many ways as we can do that has been our focus, and that's what we're continuing to progress and develop. And I can talk for another 2 hours on everything else that we have, but...

And I could sit here for another 2 hours. Like I said, it's great stuff. That's why I was just writing, you're actually giving me [ writer's craft ]. I just want to let you know. So thank you. Really appreciate it. I'm not a typer. I know we went over. We really look forward to keeping this conversation going. I think it's going to be an exciting year for Regeneron oncology and going forward also. So just hope to keep the conversation going.

Great. Thank you very much. Glad to be back.

Great. Thank you, Izzy. Take care.

Bye-bye.

Stay safe.