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

[Audio Gap] outstanding performance in the U.S. DUPIXENT really setting a new high watermark globally in terms of revenues as well as LIBTAYO. In fact, all the hit all-time high for quarterly sales in -- for a quarter. Additionally, at the end of the second quarter, we finished repaying the Sanofi development balance right? So going forward, we will be able to record our full share of the profits from DUPIXENT and Kevzara as part of our Sanofi collaboration revenues. So that should give us a little uplift going forward, and we're excited to finally get to that point. Looking ahead, for the rest of 2026, we have some exciting pipeline catalysts mainly around the C5 franchise. We have a PDUFA date for cemdisiran monotherapy for generalized myasthenia gravis which is in November, a huge and growing market, and we think we have a differentiated product there and are looking forward to hopefully launching that by the end of this year. We also have a pivotal data readout in proximal PNH which is another area where we're going to evaluate the combination of pozelimab and cemdisiran head-to-head against eculizumab or Soliris and then we also have an interim readout for geographic atrophy that's looking at the combination that I just mentioned as well as some distant monotherapy. This will be kind of a peak at the data that will inform next steps for that program. We're currently enrolling a pivotal cohort, and this included a form powering as well as whether one arm performs better than another and perhaps we can move forward with just 2 arms as opposed to 3 in our pivotal study. We also expect to have approval for the EYLEA HD prefilled syringe before the end of this year. And we're working with multiple contract manufacturers on issues related to their facilities as opposed to the product. So we hope that they can resolve them and the FDA can ultimately sign off on our application to get this important delivery mechanism into the market. We also are reporting some early data in the metabolic portfolio, the siRNAs that we have been working on in MASH as well as for an antibody that targets the NPR1 receptor and antagonizes it for post-restatic tachycardia syndrome or pots. Those are earlier-stage programs, but we're excited about both. We also anticipate initiating our pivotal studies for obesity and type 2 diabetes with oleterepatide, which we in-licensed from Hans last year. And then finally, I think we're also working towards hopefully expanding our collaboration with Sanofi to go beyond DUPIXENT and potentially other assets. So I'm sure we'll talk about a lot of these. I'll leave it there, and we'll jump into Mohit's questions.

Awesome. Thank you very much for this intro. I really appreciate it. So Mike, I think the broader question that I want to ask is that Regeneron in the last 5 years or so, it's becoming like a multi-franchise company, not just from the top line point of view. Now with the Sanofi profit realization, we are seeing that even for the bottom line, it is not as much dependent on EYLEA as it was in the past. So given that -- I mean when you look like longer term, what do you think investors still underappreciate in Regeneron story investors, including me as well. So like we would love to understand that.

Maybe I'll start, and I'll let Marion certainly jump in. I'm sure she'll have some thoughts on this. But honestly, it comes back to the pipeline and I mentioned a few of the programs that we think are fundamentally undervalued in the C5 franchise alone. We see relatively modest expectations at peak year sales for this [indiscernible] opportunity. I don't think there's anything in models for GA. Admittedly, that's a higher risk program, but we'll see what we have in a few months here, hemonc with our BCMA bispecific Linzyfic, which is currently approved in late line settings, but we're rapidly advancing it into earlier line settings. This is a $40 billion therapeutic area that we fully intend to take some share and especially in the earlier stages and in precursor conditions where we have some advantages in terms of how we're developing our antibody. Factor XI, another really large category in anticoagulation. We think we have 2 differentiated antibodies that can address the disease without increasing with various diseases without increasing the risk of bleeding, which would be an advance from where the Factor Xa is currently are able to do. I think another one that's really under the radar, I think, is our genetics database. And when you think about AI in biotech. I think large language models, I think most believe are going to be relatively commoditized over the years, there's going to be a convergence in how differentiated they are. I think that right now, maybe you have some advantages for one versus another, but over time, those are likely to converge. What's going to win in AI in our view, is proprietary data sets. And Regeneron has been working for the last 12 years to build the biggest genetics database in the world that's all linked to electronic health records. And now we're beginning to layer in proteomics so that we can have even more information about human biology and human genetics to help inform how to not only find new targets to address disease but also how to manage costs in the system for disease. So all these things are things we're working on in the background that certainly hasn't really been fully appreciated, if appreciated at all by analysts and investors. So we're looking forward to advancing all those efforts and maybe a few that Marion has in mind as well.

Sure. And I just would add to that, and good morning, everyone. Ryan describes the scientific platform, which is so exciting for our future and whether you talk about the application of the Regeneron Genetic Center or therapeutic areas that we'll launch in, hopefully, in the future, cardiometabolic obesity [indiscernible] neurology, additional indications in hematology. I just would remind everyone if I go back with you, 5 years, 10 years at Regeneron, when we were the EYLEA company only in every therapeutic area, we've entered, whether immunology, oncology, rare disease, certainly still in ophthalmology. Our teams have been able to prepare the market through commercialization and medical affairs, but then also execute our launches by indication in highly competitive categories, also creating categories where we're first to market like atopic dermatitis, so we'll bring the power of that commercialization ability to our scientific platform for the future. And I'm very pleased to report to you from my perspective, that commercialization ability gets stronger every year. And I would point to the recent results we shared with you in the most recent quarter, the last several quarters and what we intend to do in the future to demonstrate that. So exciting times at Regeneron, [indiscernible] science.

Commercial, we definitely all of us underappreciated in the last couple of quarters. So you've done an amazing job here. And then similarly for [indiscernible] like no one really thought there will be such a success. So kudos to you. So let's just talk a little bit about EYLEA here HD because we saw a strong quarter in second quarter. There seems to be a little bit delayed uptake or inflection in this franchise, like the product has been in the market for 3 years, but we got label expansion last year, but then all of a sudden in the second quarter, went to double digits. So can you talk a little bit about what actually clicked with physicians, all of a sudden? And obviously, there was a lot of work behind that, but talk a little bit about that.

Very happy to move. So I'll remind everyone that we talked a lot about the importance of the label enhancements to include Q4 weekly dosing the RVO indication and also durability with every 20-week dosing. Obviously, that being the most recent enhancement, but the Q4 weekly dosing in RVO occurred towards the end of November there is some time where you need to make sure that the payer updates have taken place. So certainly, the results that we saw in the first half of the year and into the second quarter were a result of that label enhancement. At the same time though, I would also share with you the physician experience that they're seeing with EYLEA HD is very positive, very good. They're coming to see it as the product that truly has greatest durability in the category, a product that they can use now across indications, RVO, obviously, is about 20% of the market. EYLEA has been the standard of care very quickly, we're seeing a lot of switch patients to EYLEA HD and RVO. And in fact, across the entire anti-VEGF category, more switches are going to EYLEA HD than any other product. We're also getting a share of naive patients, but obviously, that's the smaller, about 10% of the overall market at any given point in time. So overall, strong performance. We still have a lot of work to do. It's a highly competitive market. Certainly, we're conscious of additional potential biosimilar to the EYLEA 2-milligram program. But I think we've got a very strong profile on our EYLEA HD, Pleased with the performance and obviously also looking forward to the label enhancement of prefilled syringe.

Got it. So like how -- what are they coming like favorite question on the prefilled syringe. Like where are you right now on this? And then how should investors think about, one, the timing of this; and two, the importance of this at this point?

I'll maybe start with the timing and kind of where we are and Marion can talk about the impact it might have in the market. We don't have much of an update to provide today. We continue to work with multiple contract manufacturers on rectifying some of the issues the FDA has identified in their facilities. So until they are fixed, we're not going to be able to be approved. But we believe we're still on track for an approval by the end of this year at one or more of those CMOs. And certainly, I think that will be helpful to the commercial efforts that Marion can now talk about.

Thanks Ryan. And I just would add maybe a couple of points that I missed is, with EYLEA HD proud to report that it is the innovative branded product growing more than any other in the category. In addition, we were able to report to you in the second quarter that EYLEA HD makes up 60% of our overall Regeneron franchise sales. That's up from about 50% the quarter before. So it's an example of where you see EYLEA HD truly making a mark.

Got it. So second quarter was crucial in the sense that, now people do understand that the HD's growth is kind of overcoming whatever decline you are going to face in standard dose EYLEA. The remaining question is how should we think about the durability of the franchise in the face of new biosimilars coming. And where are you in terms of RVO patients turning over to like what percentage of turnover to HDA versus like how much it is left right now?

So I don't think we've given exact percentages. Ryan will add to my answer. But when it comes to switch patients, because EYLEA is a bigger product, more of our switch patients come from EYLEA. Second source of business will be switches from [indiscernible] where physicians aren't seeing the durability or they're seeing not the clinical types of results they'd hope to or they think they can do better with EYLEA HD. We see switches from Avastin for obvious reasons. We see switches from biosimilar too. So it's really across the board the benefit of wanting to go to an improved product for better clinical results, safety and durability that EYLEA HD achieves. Obviously, a highly competitive market. So our execution is paramount. We have a highly respected team in the marketplace that's really important to us. So we've got a lot of work to do, but I think we're making nice progress.

I think the only thing I would add is that the [ aflibercept ] 2-milligram segment, I believe, is separate and distinct from that of EYLEA HD. While they are biosimilars and more to come in the 2-milligram segment, EYLEA HD stands alone on its durability profile. And I think there will be switches to biosimilar 2-milligram aflibercept, that still -- that remains a good opportunity for switching to EYLEA HD over time. So just because a patient may switch out of branded EYLEA to a biosimilar does not make them a great candidate to eventually switch to HD, and that will be part of our strategy.

I'll make a quick comment to characterize the market. I think retina specialists across practices, large, medium and small, are really sophisticated in terms of their ability of managing their practice, making sure that they get to choose the drug that they want for their patients. They're very aggressive in terms of making sure that they have the opportunity to control treatment of patients, product selection. And of course, when they're treating blinding eye disease, they're injecting in [indiscernible], very important decisions go into how they elect to treat their patients.

Got it. Very helpful. So now turning to the other products, small products you have DUPIXENT. So it's already at $24 billion annualized run rate, multiple indications, probably close to one of the biggest products in the market like KEYTRUDA, these obesity drugs and DUPIXENT. So how much more -- but again, like you pointed out in your prepared remarks at earnings call like there is still -- the penetration is still not very high in some of those markets. So how do you think about the net lag of growth? Is it earlier patient? Is it like earlier lines of use or continued penetration? Like how should we think about where will you grow next.

So I would encourage thinking about DUPIXENT as to your point, such a large product easily top 5 in the world, it was #4 last year, something of that sort. But across indications, we are still underpenetrated, even in atopic dermatitis, we approach the high teens. So there's a lot of opportunity for additional patients to come to marketplace. And if roughly atopic dermatitis is about half the patient population for DUPIXENT, the other really large indications, whether biologic asthma, COPD, sinophilic esophagitis, as you know, across 9 indications. So more recently launched like CSU, we have such tremendous unmet potential benefit of as the KOLs always point out to me, first and best in category, but also because we treat type 2 disease patients with comorbidities or patients with a single type 2 inflammation are being helped in a way that other products can't. And often patients that have, as an example, COPD, they've often had a touch of asthma patients with atopic dermatitis. It's not uncommon for them to have had another type 2 comorbidity. We treat to the indication in the specialists, so we're now the leading biologic across allergists, dermatologists, there are so many categories where DUPIXENT is now the leading biologic product in practice. But certainly, we have a lot of opportunity because of unmet need in the market, whether it's because of geographies where we've launched more recently, indications where we've just launched, age groups as well, we treat patients, obviously, up into their later years with COPD and [indiscernible] so many indications, but also it's reassuring to hear the safety to patients as young as 6 months in atopic dermatitis or patients as young as 1 year old in sinophilic esophagitis. So we create this opportunity for multiple patient types and really tremendous opportunity for future growth. Having said that, DUPIXENT is a big product today so that the -- obviously, the percentage churn on growth has to be considered based on the size of the product and size of the brand today.

Got it. Helpful. So I mean, like this talking to KOLs and experts basically, like the safety is the main -- the clean safety for a [ mab ] is one of the sale-in points for DUPIXENT and it works really well.

And safety and I would here there, too, it's overall safety, multiple indications, but not an immunosuppressant is incredibly important in the market today as well because that creates a whole host of concerns for potential unwanted effects in the future.

Got it. So the question I was getting to was, basically, for years, it was like -- it is considered a durable franchise, and it is a doable franchise. But at the same time, this emergence of YTE drugs like longer acting and all that. They're not necessarily better, but they are probably longer acting. So how do you see a challenge from a drug -- theoretical challenge from a drug which is YTE and not better versus something which is slightly better for whatever magical clinical reason. But like how do you think about that?

So I think we always have to be really cautious and very thoughtful about competitive entries. We do a lot to prepare our field teams, both commercial and medical for education on competitive products. So we're in a better position to talk about the unique differentiation of DUPIXENT, the safety, the experience in market, over 1.5 million patients treated. It really is a tremendous product in terms of what DUPIXENT has created and the remarkable results for patients. Having said that, competitors coming into the market have actually helped educate populations to seek treatment from their specialists that probably helps DUPIXENT quite a lot as well because we do have such unmet need. So certainly, there's a thoughtfulness on products coming in that potentially have aspects of durability or other elements. Having said that, it's really hard to compete with DUPIXENT based on the track record, the history, payer coverage, ease of use and the convenience of dosing hasn't been difficult for patients to give those injections every 2 weeks or in the case of EOE on a weekly basis, because the results are so spectacular. Think of EOE, these are patients, children and adults who have not been able to enjoy normal meals. There's a nutritional aspect to that. There's a social aspect to that, it really is difficult even for children going to school, it changes the world for these patients when -- whether they're skin, they're breathing, they're eating, pick the indication has been approved to a point where they can participate more normally in the world.

Got it. makes sense. And then also, it is approved in multiple indications, they are kind of coexist as well. It's not like someone has 1 indication. Some people may have multiple diseases as well.