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

Okay. Good morning, and welcome to Day 2 of the Barclays Global Healthcare Conference. My name is Carter Gould, Senior Biopharma Analyst here at Barclays. I'm pleased to welcome Regeneron Pharmaceuticals on the stage. It's been a while since we've seen you guys in person, really glad to have you. We have both Marion McCourt, EVP of Commercial; and Bob Landry, CFO. Before we jump into the questions here, Bob is going to make some opening remarks and some forward-looking statements.

Yes. Great. Carter, thank you for inviting us. And again, a little surreal for Marion and myself to be on stage after 2-plus years. Thanks just to certainly give it a go and get into Q&A. So from a forward-looking statement point of view, I'd like to remind everybody that the statements Marion and I will be making today about Regeneron contain risks and uncertainties. And again, I encourage everyone to go to our February filing of our 10-K to see a full listing of our risks and uncertainties that are outlined within that SEC document. So a 1 minute or 2 before Carter jumps into Q&A, which is why everybody is here, obviously. So 2021, a little dated now, but we filed our results in the first week of February and no bones about it. We had an excellent year for Regeneron. We enjoyed really remarkable growth from EYLEA. Again, on the market, put on the market since 2011, I believe we did 17% growth in the U.S. after 10-plus years. Dupixent continued to do great with our collaborator, Sanofi. And REGEN-COV, we were happy to help with regards to the COVID pandemic, and we feel like we played our role and we had the tools and everything necessary to assist in. We're very, very pleased to do it. As we kick off 2022, so within the first 2 months, what's happened? Well, we finally read out our Phase II Week 44 data for wet AMD. We were very happy with the results on that. We also had, I think it was about 1.5 weeks ago where our partner, Intellia really kind of deep and sound results coming on their disease-causing protein in TTR, which we look forward to the full results by the end of the year. Things to look forward to 3 -- many things to look forward, but kind of 3 really hot buttons is we are fully enrolled. We will be reporting out our 8-mg aflibercept high dose in the second half of the year, probably late Q3, maybe early Q4. So again, I want to make sure that that's on your radar. With regards to Dupixent, we have a couple of indications now. We expect by the end of the year to have 2 more indications, one is going to be in EoE and the other one is going to be in Prurigo nodularis. And then we have an important PDUFA date coming up, I believe it's September 19. Our chemo combo with Libtayo in non-small cell lung. We're hoping to get FDA approval, which will again really expand the market. As you know now, we're currently in the mono piece of it with regards to non-small cell lung with Libtayo, and this will really I think it's a 6 or 7x the market will get better on that -- bigger on that front. And then we have a lot of data coming with our chemo combos in the second half of the year, whether it be MUC16xCD3 or MET X MET. And I know Carter is really anxious to get a glimpse of what that data is going to be. So kind of whole type, that's second half year type information that we're hoping is going to be put out to our investors. So Carter, with that, why don't we jump into Q&A.

Perfect, Bob. Thank you. Marion, it feels kind of like Groundhog bank. It seems like every 2 years, we get together. We talk about a new threat to EYLEA coming up. And at the end of the day, like EYLEA is still there, and it's growing at 17% in its tenth year on the market. But it does seem like this time, it maybe is a little bit different with Susvimo having been approved. What gives you confidence you'll be able to defend the EYLEA franchise in the face of new competition?

Sure, Carter, great question. And I do think it's a little bit like Groundhog Day, but every time every situation is a little bit different. Let me talk a little bit about EYLEA and just why we're seeing the performance we are. So as Bob was mentioning and you reaffirmed, it's hard to find 10 year old brands that are still growing at the rate that EYLEA is. And we obviously had a very strong year last year, and we're very confident in our future performance for EYLEA. And it's related to a couple of things, the first and foremost, it's the product. It is EYLEA. Since EYLEA entered the marketplace, it has been proven to have this remarkable efficacy profile against multiple indications. It's become the gold standard of treatment, and that's why today, EYLEA in the market has about 50% of market share, low-cost unapproved Avastin has about 35 and then all the branded products together a number in the teens. So this is a remarkable profile of efficacy and safety. And to your point of the over chapters, we've learned time and time again whether with products that are native to the marketplace or products that recently aren't going to be making into the marketplace that this notion of durability, true efficacy and safety are paramount as retinal specialists and treating physicians ingest product into the eye. So we're feeling confident. And the other thing I would share with you, and I've now been with Regeneron for 4 years. EYLEA has been front and center. We have a remarkable team working on EYLEA. It combines this heritage of Regeneron of individuals who launched the brand also with individuals who joined the team more recently, we've dissected every segment of the marketplace. We know our specialists incredibly well. We know their needs. We meet them with a product profile, dosing flexibility, free filter in, but we also support their offices. We give them patient education materials, and we truly are working to become partners in that space. I'll also share, and it's probably true in all things, the competition makes you better. And I think, in our case, competition has made EYLEA and how we do our work in the market even stronger. So we're up for challenge. We work in a competitive space today. Additional competition is absolutely fine. I think it's very hard for products to even come close to matching the kind of clinical efficacy and safety that we have. Happy to talk more about that if you have more questions.

I think there's a lot of good things that came out of there. We had a tail of it last night with Dr. Rosenfeld, and he talked extensively about that prefilled syringe and how that's going to further kind of help, I guess, stem the tide, particularly in the early days. But we did see the FDA review comments come out for Vabysmo recently. I don't know if there was anything that kind of was teased out of that, that give you further ammunition or just it kind of drives home that EYLEA is really kind of differentiated safety standpoint.

Sure. So of course, we've been staying close to our key opinion leaders and the FDA report that was issued last Friday. In some ways unusual, but I think it was very important. And I think the physician community really appreciated that transparency for the FDA. It actually pointed to some of the things that have been point for concern. Is there a clear role, for example, for ANG2, that's been questioned by many and certainly our own scientists, if not found any value to be proven in that area. The FDA report if you haven't reviewed it will give more detail. Some of the other things were included in the FDA report gave more information on some of the questions and frankly, some of the criticism related to the clinical trial design because the clinical trial design restrained EYLEA performance dosing intervals and then allowed patients almost automatically for faricimab to be in longer dosing intervals, but potentially not for periods of time that would show durability. Now all of the experts and the scientists review the clinical data, but this is why there's some question in the marketplace related to dosing. There's a question in the market related to which patients will actually be able to treat and extend? And there's also this other thing, we talked about 10 years of experience in the market, I'll go back to EYLEA. But today, you can extend EYLEA to 12 weeks in the second week of treatment -- excuse me, second year of treatment for appropriate patients. So again, time will tell, but there are significant questions on clinical data, what's the real world safety profile is going to be and what is the actual experience what's in market, which we've -- as you will recall, has seen recently with a product that was approved in brolucizumab came to market, but then it was the real-world experience that actually teased out some of the significant aspects of that particular product that resulted in safety concerns. And I'm not saying faricimab is identical to that, but what I am saying is that real-world experience is important in determining how a product treats an overall treatment regimen. The other thing that is just a practical reality too is when a product launches, it doesn't have a permanent J code that takes a period of time. So I think there are a number of factors right now that will give us an opportunity to continue to do what we do best with our EYLEA. I always respect my peer group companies, but I do want to give you a level of confidence that I see in EYLEA performance going forward and also the incredible commitment that our team has, both commercial and medical to making that happen.

I think as we had Carol here last night, Carol mentioned I think there had only been 1 injection in the State of Florida for Vabysmo as of yesterday, which I thought was interesting a little tidbit. Maybe moving on to the high dose studies. You guys clearly put out pretty compelling data a couple of weeks ago. I think this has been kind of lost in the mix and lost in some of the noise. As we think about the 2 studies that are going to come out, it sounds like in second half, can you just talk if there's like a specific hurdle you think you guys need to get to in terms of every 12 weeks or every 16 weeks. Just from a competitive standpoint, what's really the goal here?

Yes. Let me talk about the strategy and how we see the possibility, keeping in mind that we'll have an opportunity to continue to work forward with EYLEA. EYLEA is a very important product in the marketplace. It almost becomes a little bit who better than Regeneron to provide the next evolution of advancement for patients in this space. So I joined Bob and all my colleagues and looking forward to incremental data on aflibercept 8-milligram later this year. We certainly will have a team capable and ready to launch and bring products into the marketplace. It's a potential evolution of our experience in market. And of course, the hope is that we'll be able to match efficacy but for patients to provide them a true and meaningful benefit in having fewer injections, longer dosing intervals, but with the same visual acuity gain and with the safety profile we've come to know with EYLEA. So we look forward to it, and certainly, we'll look forward to sharing those results with all of you.

Maybe just last question on EYLEA. There have been questions around with this high dose, if that would open up new IP or restart different clocks from a timing standpoint from biosimilars. How should we think about that? Is there anything you guys can say at this point?

Yes. So I'll start. Bob may wish to add but the patent platform and estate is very robust for EYLEA. And certainly, we are doing everything appropriate as it relates to aflibercept 8 milligram. We'll continue to work closely with FDA as we submit more information on that product. We do believe it will be likely a new BLA associated with that would be a new J-code, which obviously has some opportunity commercially. But we'll look forward to moving the product forward and at the same time, making sure that we're very robust in our promotion and our activities related to EYLEA.

And Carter, the question we get a lot is new composition of matter. No, it won't be a new composition of matter. But to Marion, what you said, we are going to file a bunch of patents. We already have filed patents. We've already gotten 1 approved. So methods of manufacturing and things like that, we will ensure that we can get everything that's obviously legally open to us, but it will not be a new composition of matter. And as most of you may know in the audience, as of right now, our composition of matter will expire in May of 2024. We've put that data out there many, many times. It's in our public filings.

Perfect. Why don't we transition to that small product group that just seems to get bigger and bigger each quarter. I think the -- there's been different messaging from you and your partner around how much this market can grow from sort of depending on who's talking at sort of high single digits today or up to 25%, 30%, 30% plus. We heard Pfizer and Lilly both talk up the overall size of the AD opportunity yesterday. What really is it going to take to get from here to there or even bigger when you think about the size of the AD opportunity?

Yes. So with Dupixent, which has been by every dimension, a remarkable product for patients in atopic dermatitis and of course, in asthma and nasal polyps and the new indications, which Bob mentioned that we're getting ready to launch in the future. I'd also remind all of the broadening of age indications that we've had in many areas. But I do think that there is a tremendous opportunity to bring more patients into the care continuum. Obviously, the first patients who received Dupixent tended to be those patients with more severe disease, that's not uncommon. Many patients though have given up. There are a lot of patients, as we estimate the very low penetration into atopic dermatitis, which is so unfortunate at all age groups, adults, adolescents and children. And the problem with atopic dermatitis is it is a disease that interferes with the totality of individuals' lives, children are home skilled, babies with atopic dermatitis, it disrupts the entire family. We're really still only getting started. So we share the level of ambition. We report our numbers a little bit differently than Sanofi, but we share the ambition that we have a tremendous opportunity for the future. I think also, obviously, there have been some competitive developments even within the last day or so, and what is remarkable about Dupixent being as many of the key opinion leaders described to me, in this particular category first invest. And if you like, you can look at some of these other big psoriasis or some of the other big indication categories, you can go to other disease areas where multiple products have launched in these massive multibillion-dollar categories, Dupixent is unique in being first and best, we'll continue all of our promotion and work in the marketplace and advancement of the clinical data to support new indications in the U.S. and in rest of world, but the fact that other companies are coming into the marketplace, even with products that might not have the same efficacy profile, the same safety profile, we see this growth of the market, which is really important for patients and bringing more into the care continuum.

Wanted to talk about 2 of the additional indications that one that's already largely derisked another one that's coming next year. First one being EOE, which, again, we hear time and time again something that's vastly underdiagnosed, a real opportunity for additional growth. I wanted to get your thoughts on what also requires a new sales -- the additional sales force above and beyond what you have today? How are you thinking about that? If you kind of agree with those sentiments if there's -- it's sort of an untapped market for growth and maybe that's underappreciated by someone on the street?

Well, I think this is another case for patients with eosinophilic esophagitis, very often, they have such difficulty with their symptoms. They've ended up with the -- in the emergency room. They have food that's impacted in their throat to almost -- it's a terrible situation for them. Patients with EOE are treated by allergists, which is a group we already know very, very well and to Carter's point, gastroenterologists. So we look forward to the opportunity to -- with approval. We will be very much prepared to continue with our allergy audience then also adding gastroenterologists who are incredibly enthusiastic, especially those who had exposure through clinical trials to Dupixent. It's not unlike atopic dermatitis. They have truly almost nothing for patients that really worked. The best they can offer today for these patients in terms of chronic medication or probably PPIs and steroids, they don't work very well. Again, this is a disease across age ranges. So they're really excited about Dupixent as an opportunity for these patients. I can put some numbers on it for you. Patients who have failed treatment tends to be about 50,000 patients. Patients who are today in the treatment continuum diagnosed, it's about 160,000 patients in the U.S. But I would also flag this is another area where my numbers potentially are understated because there's been so little for these patients. They don't tend like atopic dermatitis to be counted yet. We look forward to the day where we can bring them an alternative and care in Dupixent. They can be seen by doctors. They can be helped. We're really excited about, obviously, bringing a new indication to allergists, but we're equally excited about the gastroenterology community because these are physicians that are very savvy in their treatment protocols. Their use of biologic therapies, and they're very interested. When we have an FDA approval, our team will be ready and set to go.

And then a second indication I wanted to ask on was COPD, which we're going to start to see some data next year, another very large opportunity for you guys, maybe sort of like the hurdle for clinical meaningfulness as well as on the commercial aspects, sort of the urgency to treat, it seems like that's another kind of really sizable opportunity for Dupi that's not in numbers, maybe rightfully so given kind of where we are in terms of clinical development. But again, like another real opportunity, another driver of growth here.

COPD is a tremendous opportunity. As you know, we're conducting our clinical trials with great rigor to look at the efficacy endpoints that are going to be most meaningful for patients. But again, this is another indication with tremendous unmet need for patients. We have reasons to be optimistic, but of course, we'll have to await the clinical data, but this is an indication that has hundreds of thousands of patients who potentially will be candidates for care. And certainly, we'll be looking at the data very, very closely.

And a prescriber base that's very familiar with the drug already.

That's absolutely true. Absolutely true. It would be an amazing opportunity to help these patients. We all probably in our lives personally know of individuals who are suffering from COPD. It's a terrible disease and has devastating consequences if we could help that would be remarkable.

Okay. And just if you can remind us again, there's multiple studies going on in different populations with different assets. Just kind of, again, how that -- sequence of those data over the course of the next couple of years?

I'll let our scientific team give you the actual specifics of the data and the endpoints, but what I will share with everyone today that's out a little bit further in terms of time. So we would expect to see more specific clinical information coming over next year and then into the time frame of 2023, '24 having even more meaningful impact with not only data, but then launches in market.

Okay. Maybe moving on to oncology now. Libtayo has been a little bit more of a PACE launch, obviously, of the upcoming PDUFA date. What is it really going to take to have meaningful adoption here and really kind of drive sales? You're driving a function of sales.

So a little bit on Libtayo, and I'll give you what I'm seeing. First off, Libtayo is foundational for overall oncology and some of the oncology hematology portfolio. So as you think of the building blocks of the commercial organization, this is a tremendous priority for my team, and we have an incredibly talented team. In Libtayo, we've already launched in our 2 derm indications, cutaneous squamous cell carcinoma and basal cell carcinoma, and we are the standard of care. On the launch to date, we have launched for the monotherapy indication for the appropriate first-line lung patients. And that launch, I will share a couple of things about it. One is that the monotherapy patient population is much smaller than the chemo combo. We've known this going into the marketplace. If you look at the dollar size of the market, it's like a 7:1 ratio in terms of chemo combo being the larger piece of the market opportunity. But it's even more than the 7:1 because when oncologists are treating patients, they like the optionality of chemo combo. They want to be able to do all they can for these patients. And sometimes even if they might start with mono, they want to know they could add chemo if they need to. So today, the monotherapy only market was probably patients who they identify as those who are not going to go on to chemotherapy under any circumstance because of their medical condition, it could be their age, other patient attributes. So we're working to establish experience for Libtayo in the lung through the mono indication. We're very -- we're pleased to be able to do that. I will also share that launching oncology products, in particular, during the pandemic period has been a bit more difficult, as you might expect. But we certainly are building relationships with thoracic specialists. We're already well known at the academic centers, but the more important indication for us, the larger potential indication for us will be chemo combo, and we look forward to getting ready for that launch later this year.

Perfect. And then obviously, we're through the BLA in cervical cancer, is there a path forward yet? Or should we be focusing our attention elsewhere?

Yes. I'll take that and Bon will always add in with more information for me. I just want to say, our assessment of the situation is we want to focus our efforts where there's most opportunity. As you know, the cervical data we had in Libtayo with second line, there is a product approved for first line. We'd rather reapply our resources for Libtayo into places where we can make a meaningful difference for patients in an even greater way. But I will remind we do have cervical indications in other world markets where obviously, there's a significant opportunity and a different patient profile and also a different competitive profile.

Perfect. And then just more broadly, when you think about the potential refinements or disruptions to the accelerated approval pathway, does that add risk to the oncology pipeline or push time lines out, any high level thoughts?

Yes. I mean, Carter, we follow that in the marketplace with regards to there's been certainly more rhetoric coming, particularly in the last couple of months on these accelerated approvals and the fact that commitments are made out there and then the follow-up on the commitments are just not what they should be, and I agree with the FDA. I mean they're getting upset with that back. And they do think they're going to pull that back a little bit. I don't think we over rotate. I don't think we pivot on that. I mean we think that we're very innovative and we're very scientific and what we have coming is going to be really meaningful for patients in the future, Carter. So it's not something that we kind of, like I said, kind of over rotate. I mean we'll have to watch and see how it goes. Indications that we're going after are ones that are -- that need treatments, and we probably still expect the advanced approval or accelerated approvals still to be in place going forward.

At the start of our conversation, you sort of teed up some of those key bispecific and costim data that we're going to start to see in the back half of this year. The dose escalations there have been paced -- and then there's still I think a lot of questions around when we do see data, is it going to be enough to really get a sense to have something here if these are a viable platform?

I mean we're hoping, right. We're dose escalating. It's taking time to necessarily do that to get right to the optimal dose. We put out there certainly on MUC16xCD3. We hope that we will have data to present in the second half of the year. And again, Marion used the word foundation, and I think that's important with Libtayo because everything that we have come, particularly MUC16xCD3, we then have it with Libtayo and then we have MUC16xCD3 plus Libtayo plus MUC16xCD28. This is going to be kind of the world of combinations. I know, Marion, we have chemo combo coming with regards to Libtayo, but certainly going forward and what data points we're going to put out is going to be the world of combinations, which, as you know, and you're probably tired of us saying it. We're blessed to kind of have everything under one roof in terms of being able to kind of mix and match and not have to go out and partner and the like on things of that nature. So we look forward to that. We also have our MET X MET that's going to be coming in the second half of the year. We kind of hinted during Q4 earnings back in February. You know that what we've seen, we'd like. We wouldn't do that, obviously, if we didn't like what we were seeing. We talk about animal models and how successful they've been within our VelocImmune suite. So we think that our fully humanized mice are going to give us an indication on what's coming and it's kind of -- let's just wait till the second half of the year and kind of fingers crossed on all that working out.

All right. Perfect. We're out of time. Marion, Bob, thank you very much, and best of luck this year.

Carter, thank you.

Thank you, Carter, so much. Great to see everybody.

Thanks, everybody.