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

All right. Welcome, everyone. This is Josh Schimmer from the Evercore ISI biotech team. Pleased to welcome, from Regeneron, we have Neil Stahl, Executive Vice President of R&D; John Lin, Senior Vice President of Immuno-Oncology and Head of Bispecifics Programs. From the Investor Relations group, we have Mark Hudson [indiscernible] and Ryan Crowe, so thank you all for joining. A whole lot of moving parts on Regeneron, not a lot of time, but I'm hoping we can spend some time on the bispecific and ADC portfolio, high-dose EYLEA and iraE. And hopefully cover as much territory better as we can. So why don't we start on the bispecifics and the CD28 bispecifics is starting to generate a fair amount of interest.

So I guess the first question is, why start with PSMA and prostate cancer for CD28 as opposed to including any other solid tumor setting you could have gone into?

John, but just before you get started, I don't mean to interrupt, but I just have to read this for legal reasons. But I'd like to remind you that remarks made today may include forward-looking statements by 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 such statements. The description material risks and uncertainties can be found in Regeneron's SEC filings. Regeneron does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. I think John is probably best suited to answer that on why PSMA first.

Thank you. I hope you can all hear me well. I'm glad to answer this question. In fact, we didn't specifically take any particular antigen to begin our [indiscernible] inventory bispecific technology development. From the outset, we were interested in looking into whether any antigen will be -- we will be able to make such a bispecific antibody and make it work, first of all, in animal model. And PSMA happens to be the first one that we tested just purely for technical reason. It was the first antibody that we were able to make a CD28 bispecific against. But in general, we think it's also a good place to start only because it is a very kind of resistant to immuno-oncology, especially checkpoint inhibitor. It has no -- very, very, very low single-agent response rate to anti-PD-1 agent. So if we see anything in this setting, even in a single-arm dose escalation study, we will be convinced if it has any activity.

Okay. Got it. And so you're starting to see some interesting signs of efficacy also some intermediate Taltz, like is there a plan to try to mitigate the Taltz while preserving efficacy? And if so, what would that be?

Yes. Definitely. We put patient safety as our priority. And therefore, currently, we are actively exploring different dose levels as well as different ways to mitigate the potential safety concerns. So as we conduct more and more studies in these patients, we're hoping to find optimal dose to go forward in combination with [indiscernible]

John, you said other mitigating steps aside from dose modification, what else can you change to try to shift that needle?

Sure. Yes. So it's hard to know whether we could prevent the emergence of any immune-related AEs. And so probably the first thing is to be more vigilant in monitoring the patient symptoms as they are emerging any sort of symptoms or signs that are kind of consistent with immune-related AEs, then we could react more actively. So I think that's probably the #1 is to be more vigilant. And as we see emerging -- any sort of emerging signs or symptoms, we could potentially combine with other drugs. For example, there are publications in the literature that suggests, maybe IL-6 receptor blocking antibody will be one way to mitigate immune-related toxicity from immune checkpoint inhibitor or the combination of PD-1 and CTLA-4. So we obviously are aware of all these potential mechanisms and we're actively considering them.

So I guess the theory is that the PSMAxCD28 itself may not have dramatic efficacy. But when you pair it with Libtayo, it can, I guess, how do we -- how does the data support that? And just for context, right, Amgen's PSMA CD3 bispecific is looking quite good. We've got PSMA targeting radio label therapeutics that look quite good. Like how do we know that Libtayo is really necessary or not?

Yes. That's a great question. We were asking ourselves all these questions when we were starting the research. In our research studies, we definitely noticed that because CD28 is the co-hosting receptor for T cells, and it doesn't work unless you trigger T cell receptor activation. So that's the signal 1 is TCR versus CD28 is the signal 2 concept. And we know from multiple type of experiments, including PSA, PSMA project as well as other projects, if we don't have Signal 1 in place, just adding a hosting Signal to bispecific, it will not have any antitumor activity. So we figured that that's kind of a given. And given that prostate cancer traditionally has not responded to anti-PD-1 very much unless the patient has some sort of -- in the human genome, otherwise, they don't have great responses. So we figured that prostate cancer is a great place to test. And in the initial patients that we had disclosed earlier this year, we do see that during the first 3 weeks of PSMAxCD28 alone, that's sort of the safety-leading period where we were trying to figure out whether the drug itself is safe enough. During that 3 weeks period, we saw steady increase of serum PA stage level in the patient. And indicating that just by giving a PSMAxCD28 alone is -- doesn't seem to control the tumor burden. And yet as soon as week 4, we start dosing Libtayo, suddenly, there's a precipitous drop in PSA. That gives us sort of a dynamic view of how the patient's tumor responding to single agent as well as to the combination.

And when should we expect to see more updates from this program?

Ryan?

Sure. I think we intend to have follow-up data on these initial patients as well as patients that we enrolled post the topline report at a scientific meeting in the first half of next year.

And maybe we can toggle to the MET bispecific. And specifically, like how are you thinking of that program differentiating in the MET field that includes an advanced ADC, TKIs, et cetera?

Sure. Josh, the data that we presented at ESMO demonstrated the -- kind of our initial dose escalation study for our METxMET bispecific antibody that blocks, internalize and degrades the c-MET oncogene in non-small cell lung cancer. As you know, MET amplification and over expression is often accompanied by the resistance to eGFR inhibitor in lung cancer patients whose cancer is driven by eGFR mutation. And therefore, there's a great interest in the field to study whether blocking c-MET's oncogene signaling could add to the antitumor efficacy in the case where patient develop resistance to eGFR inhibitor. So there is this concept out there. And as you know, some of our competitor has now recently demonstrated that this probably is indeed the case. And we are asking the same question ourselves whether we do see that. And in fact, in our dose escalation, we do see some responses in patients with eGFR mutation and with -- and then also accompanied by c-MET amplification over expression. So I think it's a good sign that we do see activity of our METxMET bispecific antibody. And the competitive advantage at this point, I think it's probably too early to say. But one thing I do want to point out is that we do not see exactly the same toxicity profile as the MET TKIs. So as you know, many companies have MET TKIs that produces very high percentage, upwards of 40% to 60% of peripheral edema. And in our trial that we presented at ESMO, we saw only 9% of peripheral edema. And in fact, all of the patients for peripheral edema is the grade 1 or grade 2. So it's much diminished. So one could speculate that maybe the TKI is still not totally specific to c-MET and therefore, an antibody will be more specific and it will be safer. But on the -- so on the efficacy side, in fact, we are very excited about a second molecule that is derived from this METxMET antibody, which is the METxMET ADCs. So we attached a autopsy payload to the same -- exact same bispecific antibody. And we found that since MET is a rapidly internalizing receptor on the tumor cell surface, it actually serves a very, very good mechanism to bring in ADC to the tumor cells. So we are also looking on that end, we are very excited to see whether we can bring more efficacy to patients with lung cancer with or without MET amplification because -- in the recent ADC field, we realized that if you design the ADC correctly, one can also bring efficacy to patients whose tumor target is not over expressed.

If we can toggle over to high-dose EYLEA for a little bit. I guess the question that I continue to wrestle with is, if you can apply the same redosing criteria in PHOTON or PULSAR to the 2-milligram EYLEA arm, what would that look like? And how do you know has that ever been done?

Right. Well, I mean, I don't see a lot of point in speculating on data that we don't actually have. But the only relevant place to do so would be in PULSAR because they had the same loading criteria. And so after week 16, we saw that when you look at the comparison of the patients without fluid that the 8 mg was superior to at 63% to the 2 mg at 52%. So I would guess at that point that you would have more shifting backwards of the 2 mg EYLEA dosing and not going for longer interval. And typically, the physicians treat to dry. And so we think that the outcome in the real world would be the same.

Moving on, maybe on the strategic side for Mark or for that matter Ryan, the irAE introduces kind of an interesting dynamic here where, on the one hand, if high dose was considered a line extension and a biosimilar version of EYLEA were launched, it would exempt a high dose from any near-term pricing negotiation consideration. On the other hand, we talked about the strategy of potentially having a separate BLA. How are you thinking -- like what is the latest in terms of how the irAE may affect your high-dose EYLEA strategy, if at all?

Good thing to call it a strategy, Josh. I think it's more -- just what we think is in -- within the regulatory framework and what's in the best interest of patient safety without any dosing errors and the like. But yes, the dynamic with the irAE is certainly interesting. And while the ink is still barely dry on that lawn, it's hard to project how this might be interpreted or implemented down the road. We have a similar view in that if we were to file aflibercept 8 milligram as a new BLA, which we intend to and we have aligned with the FDA on, we would be shielded from a negotiated price for its first 13 years on the market. And similarly, if for whatever reason, we were unable to file it as a new BLA and instead as an sBLA, because biosimilars may be introduced prior to 2028, that would potentially exempt 8 milligram aflibercept forever because of the biosimilar carve out for negotiation. So I don't want to say anything definitive on this, but our interpretation is similar to that of the expert I saw on the No Patient Left Behind webinar a couple of weeks ago.

And what is the role of the J code in all of this. If it's under the same BLA, is it the same J code? If it's a different BLA, it means a new J code? How does that influence?

Yeah. It's exactly right. So if you -- we plan to file it as a new BLA, as I said, separate from EYLEA. And if approved, the CMS, as a matter of course, would issue a new J code since the new reference product. And clearly, that's important from a pricing standpoint. So with a new J code, you would not be bound to the [ ASB ] for EYLEA. And that's both dosed on a per milligram basis. So you would potentially have linear pricing for 8 milligrams versus 2, and that would be a very different outcome that I think will probably lend with our final 8-milligram price.

And maybe quick. We can't ignore Dupixent just given how strong trajectory has been and appears to be like, how do you rank order the top 2 or 3 growth drivers at this point, just because there are so many ongoing expansion efforts in play here?

Sure. I can maybe take a shot at that and others can weigh in, that would be great. So AD is clearly the largest opportunity today. And there's plenty of runway to grow there as well where we're only at 9% penetration in the adults. And with just recent approvals in younger AD populations, I think we'll only continue to see atopic dermatitis to be a primary growth driver for the foreseeable future. Asthma, another large untapped market. And we recently received pediatric approval there as well. So an additional age cohort to add to that indication. Nasal polyps, we are continuing to expand there and seeing substantial growth in these. Even more recent new indications, eosinophilic esophagitis, which was approved around the midyear and prurigo nodularis, which was only approved at the end of September. And between those 2, I believe we have upwards of 115,000 to 120,000 new patients that could potentially be eligible for Dupixent therapy. And I think it's important to note that Dupixent today is now #1 in every indication that we compete by new-to-brand share. So in addition to having a lot of runway in these indications, we also have leadership.

And where would COPD fit or rank? Does it lead to the top of growth drivers, just given the size of the market dynamic? Is it more asthma light, which not to understate asthma, but it doesn't seem like as big a driver as like atopic derm?

Yes. I think -- before we get ahead of ourselves, I'd like to see what the data looks like and how clinically meaningful the result is. But yes, there's several hundred thousand patients in a type 2 COPD market that would be addressed should Dupixent have favorable data in the clinical -- in the pivotal studies. So I don't want to get into how big it could be until we actually have a data set to look at. But clearly, there's a lot of underserved patients. There hasn't been a lot of innovation in the space, and we would probably be there on our own in terms of new launches or at least a while. And that's very exciting. We should have data in the first pivotal readout, in the first half of next year and the second pivotal probably by early '24 .

Now that -- did you say are there any headwinds to Dupixent for the next 3 years?

I don't think so. And I know there's new competition in the atopic derm space. But I think competition really does make us stronger. And a lot of the promotional dollars that will come into the market by these new entrants will only serve to increase awareness of the category, drive more patients to doctors' offices and because of Dupixent's leadership position, probably more Dupixent prescriptions. So I don't really see a lot of headwinds to growth for Dupixent and really, we have a really remarkable antibody and are excited about its opportunity going forward.

Got it. So a number of oncology updates next year that you've outlined, the COPD Phase III next year, the filing and FDA decision on high-dose EYLEA, what are the -- anything else key that we should be keeping an eye on in '23?

I guess I would just add 1 more. The 2-year data in -- for high-dose EYLEA will come out in wet AMD and DME in the second half of next year, and that will be important for durability standpoint. And then Neil, maybe you want to talk to the amyloid precursor protein data set that we expect in early '23?

Yes. We have a collaboration with Alnylam to look at siRNA and CNS against APP. And we have several biomarker readouts in the CF that will tell us how well we're engaging the target. And I think this -- if it's successful, even from a biomarker point of view, it just opens the horizon for CNS treatment with other siRNA for other validated targets. So it's just a huge bellwether, I think, going forward, regardless of whether in this instance it cures Alzheimer's or not, which would be somewhat of an upside.

Maybe a little.

Excellent. Something else to keep a watch for. Thank you so much for joining us, and thanks everyone for tuning in and happy holidays.

Thank you, Josh.

Take care.