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

That's a great deep overview and nice to hear. And yes, let's maybe dive into a couple of those in more detail. You mentioned the upcoming Phase III readout in PNH. Maybe walk us through what constitutes success from that readout? Any sort of risk that you want to qualify, if any?

Sure. Yes, PNH is a disease currently being addressed with a couple of antibodies that are approved from AstraZeneca, ravulizumab and eculizumab. What we are evaluating in our study is a combination of a C5 siRNA called cemdisiran as well as an antibody to C5 called pozelimab. And we are running that combination head-to-head against eculizumab over a 26-week period, where we'll be evaluating co-primary endpoints, one being disease control as measured by LDH as well as transfusion avoidance. In terms of LDH and disease control, we have pretty good early indicators from the Part A of this study where we compared the same combination head-to-head against ravulizumab and demonstrated that 96% of patients could reach normalized levels of LDH versus about 80% for ravulizumab. And then we took those same patients who are uncontrolled on ravulizumab and switched them to the combination. I believe all but one went to LDH control very quickly after switching to our combination. So I feel very comfortable with the profile that can be demonstrated for LDH control. The second -- the co-primary endpoint of transfusion avoidance is trickier. And we believe that it introduces some risk to the study because not all transfusions are driven by intravascular hemolysis, which is really the only mechanism you would expect C5 inhibition to prevent. So that is one that we're going to be watching very closely. We should get the data in the next few months. We're excited about the trial and getting the results, but I would point that out as one potential risk for the study.

Absolutely. And always going to be some risk with every trial. So it's good to identify potential one and be prepared. Maybe switching gears then to geographic atrophy, which you just mentioned, the interim analysis coming up. Maybe give your thoughts on that upcoming analysis.

Sure. Geographic atrophy is another disease that we believe is driven by complement and how it inflames the choriocapillaris. And our approach is different than the approved agents, which are administered intravitreally. We will be evaluating systemic administration of either that C5, I keep talking about -- C5 siRNA, I keep talking about cemdisiran or the combination that we're using in the PNH study, cemdisiran plus pozelimab compared to placebo. And we're running, I would call it, a seamless Phase II/III study here with the first 225 patients enrolled comprising the Phase II cohort and then starting with the 226 patient enrolled, that would be the registration-enabling cohort, which ultimately should be around 750 patients. So back to the Phase II cohort, the first 225 patients. They're going to be randomized 1:1:1, so around 75 patients per arm. And after 6 months, we're going to evaluate geographic lesion slope across all 3 arms to determine if there's any efficacy at all. Systemic approaches in GA have historically been very challenging. We have reason to believe that we could have a different outcome based on the inhibitory profile demonstrated in our gMG study, where we demonstrated with the combination 99% inhibition of CH50 assay to C5 at week 12. So that's a really remarkable result and a very quick result. But at 26 weeks with a disease like geographic atrophy, which is very slowly progressing, are we going to see meaningful slowdown of these geographic lesions. We will have to see. Our hope is that we are at least on trend with the approved intravitreal agents. And if we are, I think we'd be confidently moving forward. We can also get some information about maybe one arm is stronger than the other that could inform how we proceed in that Phase III cohort. But we're just hoping to see some activity in terms of geographic slope -- geographic lesion size and slowdown in the slope. We'll also evaluate secondary endpoints and of course, safety with this being an elderly and especially vulnerable population inhibiting complement to the extent we think we can do with this combination could introduce infection risk. We need to be cognizant of that as well. So we'll learn a lot. Again, this is a fourth quarter readout, too. So C5 is going to have a big couple of months upcoming.

Yes. Absolutely. And maybe talking about a broad program, siRNA, it's a broad program in development. Maybe give us an overview of next steps, some data release and then target indications that maybe you've -- where you see most likely to play.

Yes, another probably overlooked franchise at Regeneron. And we talked a lot about the Sanofi collaboration earlier, but the siRNA portfolio at Regeneron is built from a collaboration with Alnylam, which we started, I don't know, 6, 7, 8 years ago, and it's been a lot of work. But we're at a place now where we've got kind of 3 different, I'd say, buckets with cemdisiran being one, C5 being one. Regeneron purchased the rights -- the global rights of cemdisiran from Alnylam. So we own all development and commercialization rights there and are obviously advancing it in C5 indications. The second bucket I would call out is liver, where we have 3 different siRNAs that are targeting MASH. Two of these targets were actually discovered by the Regeneron Genetics Center, HSD17B13 being one and CIDEB being the other. We will have data for these programs later this year that we're excited to share. For CIDEB, it will be the first clinical data presented to date. And obviously, we'll be looking at liver fat and some other endpoints in our single ascending dose study. So the other program within the liver portfolio is for PNPLA3 mutants, which is a subsegment of the NASH population. We have previously presented some data there. It looks very promising, and we're excited about advancing that one as well. The third bucket is in neuroscience, the CNS. And we've already brought to the clinic, I'll say, 4 or 5 siRNAs to various targets in the CNS. The lead one was ALN-APP for amyloid precursor protein in Alzheimer's as well as cerebral amyloid angiopathy. Regeneron opted out of this program. We are entitled to royalties, but Alnylam is solely advancing that one in terms of development and hopefully commercialization. The other programs include ALS, SOD1 mutants, where Regeneron is leading that development. We began dosing patients in 2024. We generated some data in-house, looks very promising. We'll probably be sharing that maybe probably in 2027. We also have programs for Huntington, for Parkinson's, and these are all in the clinic as well. So we're beginning to really accumulate patients in these studies. These are high unmet need disease areas. We're really hopeful that we can really change the course of these diseases in a meaningful way with these different interventions, and are really excited to be working with Alnylam on all of them at this point. So that's the siRNA portfolio as it stands today. We have a ton of other work that we're -- that's preclinical with Alnylam with different other targets that we're also excited about, but we'll save those for another time.

Okay. Well, we look forward to hearing about those great mechanism, and it's really -- it sounds like a fantastic partnership. Maybe switching then to your Factor XI program. Could you highlight why or why not it could be a step change improvement above Factor Xa?

Yes. Factor XI is another one that I think we're really excited about. We are actually advancing 2 antibodies into registration-enabling programs across, I'll say, a half a dozen, maybe more different thrombotic conditions running the gamut from VTE prevention following knee replacement surgery to atrial fibrillation to Cancer-associated thrombosis. So there's a lot -- peripheral artery disease, following revascularization. There's a lot of different conditions that current anticoagulants attempt to treat, but I would say, actually end up not making, not fully recognizing the size of these markets because of bleeding risk that some of these agents introduce. So we have 2 different antibodies. We think one will be -- or has some of the best pharmacokinetic, pharmacodynamic data in class in terms of the Factor XIs and I'm talking specifically about assays for APTT as well as thrombin blockade. That one, we expect to have the best anticoagulation activity among the Factor XIs and with -- and hopefully better than even the Factor Xas, but also versus the Xas not introduce an increased risk of bleeding, which is critical for this class. The other antibody, we think will have comparable activity to approved antithrombotics and other Factor XI antibodies, but targets a different epitope on the Factor XI called A2, which we believe is a functional Factor XII blocker and could actually be even safer in terms of bleeding risk, but perhaps not as powerful as our catalytic domain antibody. So we've kind of -- we want to be able to introduce a couple of antibodies to address the different needs of the patients that are in the space across these various conditions. Choice is good. Patients like it, doctors like it. That's what we hope to bring to anticoagulation with these. And we're beginning to generate data, expect to have initial Phase III data in the VTE prevention studies starting next year. We should also have Phase II data, short duration Phase II data in atrial fibrillation towards the middle part of next year as well. This will give us a sense for activity against clotting in this disease as well as what the safety profile looks like only after 3 months, but it should give us a good sense for where we stand in that market as well. A lot of these other programs are just getting started. So we have a few years before the data will read out, but a huge category, $25 billion, $30 billion today. We think there's probably half the patients that should be on anticoagulants aren't because of bleeding risk or fear of bleeding. And we hope that the Factor XI class and our antibodies, in particular, can overcome those challenges in the current market.

Great overview. We've talked about the big hitters. We talked about EYLEA and Dupixent. We've also talked about some programs that you stated maybe not talked about as much like Libtayo, siRNA. So one more that probably isn't talked about as much, but your PD-1, LAG-3 program, there's 2 ongoing Phase III trials, one adjuvant melanoma, one in metastatic melanoma. Just curious if you don't mind giving us an overview of status of both and then also the strategy there, just like you did for some of the other programs.

Yes. This was a disappointing result for us earlier this year when we read out the first-line metastatic melanoma data comparing our combination LAG-3, PD-1, fianlimab plus Libtayo compared to pembrolizumab, where, unfortunately, despite showing over 5 months of benefit, didn't reach statistical significance. So that was certainly surprising and disappointing for us. We are continuing with this combination in the trials that you mentioned. The head-to-head study against Opdualag, which is Bristol-Myers' LAG-3 PD-1 combination continues to enroll patients. We are in discussions with regulators about how to convert that into a registration-enabling study, and we will learn more about that once those discussions conclude. But for now, the study continues to enroll. The adjuvant melanoma trial fully enrolled several months ago, and we expect data either late this year or in early 2027. I would caution that this is a setting where Opdualag failed and had a hazard ratio of 1, essentially no benefit versus OPDIVO, so we're running our study head-to-head against pembrolizumab, KEYTRUDA. But again, because there was no activity in the trial that Bristol ran, I'm a little cautious on the results here. But we'll get our answer in a few months and see what that looks like.

Great overview. You had mentioned -- also you had mentioned a broader hem/onc portfolio. Anything else that you want to highlight that maybe we touched on several programs here, but give you a chance in case there was anything else, not just in hem/onc, but anything else across the board in Regeneron in terms of the pipeline that you'd like to highlight?

Perhaps I could mention we have a couple of very, I'd say, mid-stage programs that I'm excited about, one being in postural orthostatic tachycardia syndrome or POS. We have an antibody to NPR1, an antagonist that has Phase II data we intend to present later this year that looks very promising. This disease without any approved drugs. And it seems like the prevalence continues to increase. Perhaps this is a post-COVID phenomenon or one that's just becoming more recognized by physicians. But right now, standard of care is like drinking saltwater and hoping for the best. We hope that this drug can really become a better option for those patients, and we'll need to figure out a regulatory path because there really isn't one at this point, but we're working with the FDA on that now and hope to share more with that program next year.

That's great. We've talked a lot about the pipeline, and maybe we could switch gears a bit to your approach to business development, what guides that approach and how you may or may not be differentiated versus other large cap pharmas in terms of your approach to business development.

Sure. So we obviously have a large business development effort. We have a team out there that's constantly scouring and looking at opportunities that are out there. We're not particularly wed to either doing an outright acquisition or basically doing a standard type of collaboration agreement. It's all rooted in, as I said before, as we're talking about the internal aspects of our pipeline, it's rooted in the science. So we're looking at opportunities that in some form or fashion will augment things that we already have ongoing in the pipeline, could potentially be a platform-based approach and additional technology that we'd like to get access to or it doesn't necessarily need to meet all those criteria. It could be a very interesting opportunity from a scientific perspective that could be a later-stage type of asset that has the ability to generate revenue nearer term. But it all has to be linked to making sure that the science is sound and that we believe in the opportunity that we're potentially evaluating.

That makes sense. Curious if there's been -- in the past, has there been anything that may have held you back from prior deals? Anything that -- any factors that you want to highlight that may have prevented you from completing deals or completing deals in the past?

As I said, we've been very, very active. There's been some competitive processes that we've been involved in for some opportunities there that we didn't get there for a variety of reasons. Some of it can be linked to when we actually looked at the underlying data that was in the data room, just didn't find the opportunity as appealing as others may have thought. And other opportunities where we couldn't get there on valuation. I think there's a lot of competition out there looking for the same thing, looking for later-stage assets that have the ability to generate revenue sooner rather than later. We obviously have a very sound, disciplined approach to evaluating opportunities. And at the end of the day, when we kind of looked at what we thought the risk-adjusted returns, we were going to be relative to the value that the target was interested in obviously receiving, we just couldn't get there. And obviously, we've seen some of the announcements and some of the processes that we've been involved in and some of the values just really outstretched where we were able to get to. But we continue to be out there looking. Our capital allocation philosophy, as you've heard from Ryan described, some of the specifics on the pipeline, drug development is expensive, right? When you've got 50-plus things in the pipeline, you need to advance not only the later-stage things that you heard from Ryan, but even the earlier stage things. So that takes a lot of resources and requirements to not only run the clinical studies, but obviously to manufacture the drug in order to basically ensure that you've got adequate clinical supply for those studies. And we ensure that we're doing all that we can to move the pipeline as quickly as possible. But beyond the internal investment from a capital allocation perspective, we are constantly evaluating external opportunities. There's been a variety of things that we've announced even thus far in 2026, more on the collaboration type of relationships. And then after external opportunities, it's returning capital to shareholders. We started a dividend program in 2025, fairly modest in size by design. It was intended to basically broaden the investor base of those investors that have a dividend mandate, but we're unable to participate in investing in Regeneron. So we are obviously with a program that pays out roughly, say, $400 million a year, given some of those investors that flexibility. And then obviously, the last component of our capital allocation priorities is share buybacks. We basically bought back roughly $2 billion worth of our shares in the first half, $1.2 billion in the second quarter alone. We, on average, basically get reauthorization from the Board in the neighborhood of about $3 billion each reauthorization. That's re-upped somewhere between every 12 to 18 months. We continue to be opportunistic buyers of our shares, obviously, in a valuation-sensitive perspective, depending on where the share price is.

That's great. Last 2 minutes, maybe from both of you. Any last thoughts, anything you didn't think we had a chance to talk about today? Anything else you'd like to share about the company?

I mean we have -- we're bringing to the clinic, I think, this year, 4 novel targets that were all discovered or validated by the Regeneron Genetics Center. And these are opportunities in immunology, in ophthalmology, in oncology. And this is going to continue to drive our discovery engine is genetics. So we continue to add to our database. We continue to make really interesting findings. We just published one on obesity for a new gene linked to obesity. So we continue to make these discoveries and develop around that, and that really drives the future of Regeneron. And I couldn't be more optimistic about the work that we're doing and the help that we're going to bring to all of these patients and over the long term, deliver the value to shareholders as well. So I'll turn it over to Chris for any closing remarks.

I would say, I mean, if you look at Regeneron in addition to it being deeply rooted in the science, we're guided by what we call the Regeneron way. You'll often hear Len state, do well by doing good. And if you look at the philosophy at Regeneron, we're trying to improve patients' lives. Obviously, we want to do all that we can to provide returns to shareholders, but the guiding principle is also do all that we can for patients. And I think what you've seen from Regeneron in terms of -- we had DB-OTO approved, right, which is a product for genetic hearing loss. We, in conjunction with the U.S. government, decided to provide that to patients for free and which I don't think there's many companies out there that would do that. We are basically have a product for FOP called garetosmab. And again, a very, very small patient population, but it's an indication of kind of the ethos at Regeneron in terms of what we're trying to do in addition to -- for the investment community, but what we're trying to do for patients. And it's really deep rooted in the tone at the top in terms of what drives a lot of the things that make Regeneron do as well as we're doing.

That's great. It was a wonderful discussion with both of you. Thank you so much for sharing this with our community today, and thanks again.

Thank you Jeffrey.