Regeneron Pharmaceuticals Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 17 speakers on the call.

Operator

Welcome to the Regeneron Pharmaceuticals Second Quarter 2023 Earnings Conference Call. My name is Shannon, and I will be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded.

Operator

I will now turn the call over to Ryan Crow, Vice President, Investor Relations. You may begin.

Speaker 1

Thank you, Shannon. Good morning, good afternoon, and good evening to everyone listening around the world. Thank you for your interest in Regeneron, and welcome to our Q2 2023 earnings conference call. An archive of this webcast will be available on our Investor Relations website shortly after the call ends. Joining me on today's call are Doctor.

Speaker 1

Leonard Schleifer, Board Co Chair, Co Founder, President and Chief Executive Officer Doctor. George Yancopoulos, Board Co Chair, Co Founder, President and Chief Scientific Officer Marion McCourt, Executive Vice President and Head of Commercial and Bob Landry, Executive Vice President and Chief Financial After our prepared remarks, we will open the call for Q and A. I would like to remind you that remarks made on today's call may include forward looking statements Val Regeneron. Such statements may include, but are not limited to, those related to Regeneron and its products and business, financial forecasting guidance, Revenue diversification, development programs and related anticipated milestones, including anticipated regulatory actions, collaborations, finances, Regulatory matters, payer coverage and reimbursement issues, intellectual property, pending litigation and other proceedings, and competition. Each forward looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those A more complete description of these and other material risks can be found in Regeneron's filings with the United States Securities and Exchange Commission, including its Form 10 Q for the quarterly period ended June 30, 2023, which was filed with the SEC this morning.

Speaker 1

Regeneron does not undertake any obligation to update any forward looking statements whether as a result of new information, future events or otherwise. In addition, please note that GAAP and non GAAP measures will be discussed in today's call. Information regarding our use of non GAAP financial measures and a reconciliation Of those measures, to GAAP is available in our financial results press release and our corporate presentation, which can be accessed on our website. Once our call concludes, Bob Landry and the IR team will be available to answer further questions. With that, let me turn the call over to our President and Chief Executive Officer, Doctor.

Speaker 1

Len Schleifer. Len?

Speaker 2

Thanks, Ryan, and thanks to everyone joining today's call. Regeneron delivered strong results Across the organization in the Q2 of 2023, while continuing to make progress toward our long term objective of growing the business while simultaneously diversifying its revenue and earnings streams. Total revenues increased by 11% compared The prior year quarter, primarily driven by Sanofi collaboration revenues and Libtayo net product sales, Which grew by 39% 49% respectively. Non EYLEA revenue contributions were 41% of total revenues, the highest proportion for any quarter in the last 10 years, excluding those with COVID antibody revenue contributions. Overall, we were pleased with the trajectory of the business and believe the company continues to be well positioned to deliver long term growth.

Speaker 2

In a few minutes, George, Marion and Bob will provide commentary on pipeline developments, commercial execution and financial results that we achieved during the Q2. For the remainder of my remarks today, I will focus on aflibercept 8 milligrams. We are very excited about the emerging clinical profile including the compelling 2 year data from the pivotal photon study In patients with diabetic macular edema, which George will discuss in more detail. Now I will summarize the progress that has been made toward getting this Important product candidate approved by the FDA. As we announced in late June, the Complete Response Letter Or CRL that we received from the FDA regarding our biologic license application for aflibercept 8 milligrams for the treatment of patients With wet age related macular degeneration, DME and diabetic retinopathy did not identify Any issues related to afliprisept 8 milligrams clinical efficacy, safety profile, trial design, labeling For Drug Substance Manufacturing, nor has the FDA requested any additional clinical data.

Speaker 2

The CRL was entirely based on unresolved observations resulting from the May 2023 FDA pre approval inspection of a 3rd party contract manufacturing organization, Catalent, that Regeneron engaged to complete vial filling For aflibercept 8 milligrams. The inspection observations were noted in a Form 483 And we're related to a manufacturing line in Catalent's facility that is used to fill vials with a flibaset 8 milligrams As well as our C5 antibody pozelimab for the ultra rare Chapel disease, which has a PDUFA date of August The inspection was conducted as part of the FDA review process for both the infliboset 8 milligram BLA And the pozelimab BLA. Broadly speaking, the observation cited production and process control procedures, Equipment validation and facility maintenance. We, Catalent and the FDA have had multiple discussions Since the oflibercept 8 milligram CRL, there is a clear understanding of the remediation work that is required To allow the FDA to resume approving BLAs that involve manufacturing on this line. Catalent has already provided data and information to the FDA that could satisfy some of these requirements And expects to be able to provide the remaining required data and information by mid August.

Speaker 2

The FDA said they will strive to complete their review expeditiously Prior to the August 20 PDUFA date for pozelimab. However, if they are unable to complete their review before this date, The FDA said that they may need to extend their review by up to 3 months. If they do extend the review, FDA has stated that they will continue to prioritize the review and complete it as early as possible. Importantly, the FDA has also stated that their review of the Catalent manufacturing data In the context of the pozelimab BLA, we'll support actions for both the pozelimab BLA And the eflibercept 8 milligram BLA resubmission which has already been submitted. In summary, we in Catalent expect to submit by mid August all of the Catalent manufacturing data and information Required to address the observations resulting from the pre approval inspection.

Speaker 2

The FDA has stated that they will strive to complete their review expeditiously prior to August 20th. If not, we anticipate the FDA will act on opazilumab and aflipizib 8 milligram BLAs before the end of the Q3. In closing, we remain confident in our strategy of focusing investment on our internal R and D capabilities, While exploring potential external collaborations as well as in our ability to deliver breakthroughs to patients and value to shareholders. With that, let me turn the call over to George.

Speaker 3

Thank you, Len. I would like to start with a recent update on the flibercept 8 milligram data in DME that Len referred to. At the Annual American Society of Retina Specialists meeting, We presented the 2 year results from our photon study. These data demonstrated that the vast majority of flibrocept 8 milligram patients randomized The 12 week and 16 week dosing intervals continue to sustain vision and anatomic improvements through 96 weeks. 89% of all of Libercept 8 milligram patients were able to maintain at least every 12 week dosing intervals For the entire 2 year period, while 84% of patients assigned to every 16 week dosing at baseline, We're able to maintain that interval or extend beyond it.

Speaker 3

On that point, many patients met the criteria for extension to longer intervals With 44% meeting the criteria for greater than 20 week dosing intervals including 27% who are eligible for 24 week dosing. The safety profile of afliprocess 8 milligram remained consistent with EYLEA. Sustaining vision and anatomic improvements While maintaining such extended dosing intervals over 2 years is unprecedented in the field. Our results further strengthen the clinical profile of flumorcept 8 milligram and position this investigational medicine to become the future standard of care for retinal diseases. Later in the Q3, we and Bayer are planning to share initial results from the 2nd year analysis of the PULSAR study in patients with wet AMD.

Speaker 3

Moving to our immunology and inflammation pipeline on Dupixent, We look forward to the FDA decision for our SLA in chronic spontaneous urticaria by October 22, 2023. In terms of Dupixent in patients with COPD, we and Sanofi are pleased to announce that Dupixent was granted breakthrough designation Based on the positive results of the Phase 3 Borrease study. Based on ongoing discussions with the FDA, We expect that in addition to the FORIA study results, we will need to provide data from the replicate Phase 3 NOTICE study to support a BLA And such data requirements remain under discussion with the FDA. We continue to expect final results for the NOTA study by mid-twenty 24. Moving to idepikumab, our anti IL-thirty three antibody, which is being evaluated for COPD in former smokers.

Speaker 3

In May Sanofi announced that the Phase 3 ARIFY-one and two studies had passed an interim futility analysis. These studies remain on track for readout and regulatory submissions in 2025. Both idepikumab and Dupixent could transform the treatment paradigm for COPD By levering their distinct mechanism of action in reducing different types of inflammation that contribute to COPD. Moving to oncology and combinations with Libtayo. In June, in an oral presentation at the ASCO conference, We presented data for the combination of fienalimab, our LAG-three antibody plus Libtayo, which showed consistent response rates ranging from 56% to 63% across 3 independent cohorts of advanced melanoma patients, including a new cohort of patients Who had received prior anti PD-one therapy in the adjuvant melanoma setting.

Speaker 3

These response rates represent about double The rate historically seen with anti PD-one monotherapy in similar settings and clinically meaningful responses were observed in post hoc analysis of various populations of interest, including patients with poor prognosis factors and varying tumor PD L1 expression levels. The safety profile of fianlimab and the Libtayo combination in these cohorts appears to be generally consistent with the safety profile of monotherapy and other anti PD-one or PD L1 agents except for the higher rates of adrenal insufficiency, which were Grade 2 or lower in the majority of cases, With all cases successfully managed with steroid replacement, our Feanumab plus Libtayo Phase 3 studies in metastatic and adjuvant melanoma are enrolling patients As are the Phase 2 portions of the Phase 2, 3 studies in advanced non small cell lung cancer. Next, on to bispecifics for solid tumors, Which are being investigated in combination with Libtayo and other modalities. Later this year, we are planning to share initial clinical data for the combination of Uvamatinib are MUC16xCD3 bispecific plus Libtayo in advanced ovarian cancer. Last year we showed encouraging uvimumab monotherapy data in advanced ovarian cancer and we believe that combining it with Libtayo May lead to enhanced anti tumor activity.

Speaker 3

Moving to coast inventory bispecifics, we're currently exploring multiple Differen CD28 post inventory bispecific antibodies in early clinical trials in a variety of tumor settings in combination with Libtayo Or with corresponding CD3 bispecifics. In our Phase 1 study of REGEN5678, Our PSMA by CD28 co stimulatory bispecific in advanced prostate cancer in combination with Libtayo, which has demonstrated promising anti tumor activity. The safety profile of this combination continues to pose a challenge, Highlighted by a recently observed second grade 5 adverse event or death. Although serious immune mediated adverse events Continue to be highly correlated to patients who experience profound responses. We have decided to discontinue enrollment of new patients with the full dose Libtayo combination and explore PSMAxCD28 combination with lower doses of Libtayo.

Speaker 3

We also will continue to explore PSMAxCD28 as a monotherapy where we have seen anti tumor activity in some patients And we will explore PSMAxCD28 in combination with other immunotherapy modalities. We believe our prostate cancer data The exciting potential of cost inventory bispecifics, but with the challenge of focusing the response solely to the tumor. Our preclinical studies and mechanistic insight The degree of immune related adverse events seen when combining costims with PD-one blockade may depend on the particular costim target and tumor type. Moreover, combining Costumes with CD3 bispecifics may not result in these types of severe immune mediated adverse events. Along these lines, our other cost inventory bispecific programs continue, including our MUC16xCD28 costim with Libtayo And our MUC16xCD28 costin with uvumetimab, both in ovarian cancer as well as our EGFRxCD28 costin with Libtayo In colorectal and other cancers, in these early dose escalation studies, we have observed limited immune mediated toxicities to date.

Speaker 3

We're also excited about combining our cost inventory bispecifics with our CD3 bispecifics in our hemonc programs which continue to progress. We have initiated dosing of our CD22xCD28 costimulatory bispecific with odranexamab, our CD20xCD3 bispecific In relapsedrefractory diffuse large B cell lymphoma, which we hope can improve and the impressive efficacy demonstrated by otranexanab alone in that In terms of udgenexanab monotherapy, U. S. And EU regulatory submissions for both relapsed or refractory Lymphoma and diffuse large B cell lymphoma remain on track. Regarding limvoseltumab or BCMA by CA3 bispecific, We recently presented updated data at the ASCO Annual Meeting, demonstrating early, deep and durable responses in patients with heavily pretreated multiple myeloma With 71% objective response rate and 59% of patients achieving a very good partial response or better at the recommended 200 milligram dose With the median follow-up of only 6 months with the data potentially improving as they mature, we believe these data support limvoseltumab's best in class With differentiated efficacy, safety, hospital requirements and favorable dosing schedule.

Speaker 3

In the Q4 of this year, we are planning to present additional data with longer follow-up and to submit regulatory applications for lymphocyte demand. We also plan to start combination studies with the myeloma specific costum next year. Next to genetic medicines. In the Q2, we and Alnylam jointly announced the first human data suggesting that a siRNA can be used to Silence pathological genes in the brain, which may open up an entirely new approach for fighting back against neurodegenerative And other central nervous system diseases. We plan to initiate additional clinical programs For CNS diseases next year.

Speaker 3

As announced by our collaborators at Intellia, we plan to initiate the first in vivo CRISPR based Phase 3 clinical program by year end subject to regulatory feedback in patients with transthyretin amyloidosis cardiomyopathy. And in terms of our targeted gene delivery pipeline, we hope to initiate our first clinical program in 2024 for hemophilia B. In conclusion, Regeneron's R and D engine continues to grow and deliver differentiated late and early stage opportunities We are looking forward to several important clinical milestones in the second half of this year. With that, I will turn the call over to Maryann.

Speaker 4

Thank you, George. In the Q2, Regeneron delivered impressive results across our commercial portfolio. Notably, Regeneron medicines currently lead multiple disease And our future is promising with short and longer term scientific innovations on the horizon. As Lynn mentioned, we eagerly await the anticipated approval avaslibrasib 8 milligram for retinal diseases. Beyond that, a robust late stage pipeline supports additional commercial opportunities that we anticipate will continue to drive growth.

Speaker 4

Starting with EYLEA, the anti ZEGF category leader in retinal diseases, U. S. EYLEA net sales were $1,500,000,000 down 7% year over year and up 5% quarter over quarter. EYLEA total category share remained stable at 46% over the last two quarters And at approximately 70% for branded share. At the end of the second quarter, there was minimal sequential change in wholesaler inventory levels compared to the levels at the end of the Q1.

Speaker 4

Our strategic focus is to maintain and grow Regeneron's anti VEGF leadership, And we're well positioned to deliver on this goal in an increasingly competitive category. Last week at ASRS, we presented our 2 year data in diabetic macular edema, which further confirm the unprecedented durability of aflibercept 8 milligrams with 44% of patients assigned intervals of at least 20 weeks At the end of their 2nd year, market enthusiasm remains high for this important innovation, and our commercial team is ready and excited to launch of Liberacept 8 milligram upon approval. Moving now to Libtayo. Global net sales were $210,000,000 up 49% year over year In the U. S, net sales were $130,000,000 up 43%, driven by steady growth in non melanoma skin cancer And strong growth in lung cancer.

Speaker 4

In lung cancer Libtayo use, the new patients' share is accelerating both monotherapy and in combination with chemotherapy with an expanding base of prescribers in the community and academic settings. Outside the U. S, Libtayo net sales were 80,000,000 A 58% increase on a constant currency basis. Growth was driven by demand in the non melanoma skin cancer indications And initial launches in lung cancer, we expect to drive accelerated performance as we build Regeneron's presence in key international markets and secure access and reimbursement for lung cancer indications. And lastly to Dupixent, which continues to revolutionize the lives of patients with Type Global net sales were approximately $2,800,000,000 up 34% year over year on a constant currency basis and up 12% compared to the Q1 of 2023.

Speaker 4

In the U. S, net sales grew 33% year over year to $2,100,000,000 Driven by growth across all indications and age groups, once again, Dupixent is the number one prescribed biologic medicine for new to brand patients across All approved indications and is the category leader in total prescriptions in 4 out of 5 indications. We see impressive uptake across our recent U. S. Launches with significant opportunity for future growth.

Speaker 4

In eosinophilic esophagitis, well over 15,000 patients have been initiated since launch, and we are actively investing in disease awareness initiatives to empower patients To seek diagnosis and treatment for this debilitating disease, our Paragas Nodularis launch is off to a fast start With physicians rapidly recognizing Dupixent as the go to treatment for this often under diagnosed dermatologic condition. Additionally, we look forward to our October 22 PDUFA date in chronic spontaneous urticaria, where we estimate Dupixent could benefit up to 300,000 U. S. Patients. We also continue to generate impressive growth across atopic dermatitis, asthma and nasal polyps, Dupixent's 3 largest indications, there is robust demand among all indicated age groups with a significant opportunity for future growth beyond the Hundreds of thousands of patients around the world whose lives have already been transformed by Dupixent.

Speaker 4

In summary, We delivered a strong commercial performance in the Q2 with Regeneron's medicines position for sustained growth. We continue to demonstrate industry leading across our current portfolio, and we are prepared to maximize opportunities from our robust pipeline with the goal of extending Regeneron Scientific Innovation Now I will turn the call over to Bob.

Speaker 5

Thank you, Marion. My comments today on Regeneron's financial results and outlook We'll be on a non GAAP basis unless otherwise noted. Regeneron's 2nd quarter results demonstrate continued growth And strong financial performance across the organization. Q2 2023 total revenues increased 11% Year over year to $3,200,000,000 driven by strong Dupixent sales growth coupled with improving profitability Within our Sanofi collaboration and continued momentum from Libtayo, 2nd quarter diluted net income per share Was $10.24 on net income of $1,200,000,000 Moving to collaboration revenue and starting with Bayer. 2nd quarter 2023 ex U.

Speaker 5

S. EYLEA net product sales were $886,000,000 up 4% on a constant currency basis Versus Q2 2022, total Bayer collaboration revenue was $377,000,000 of which $350,000,000 related to our share of EYLEA net profits outside the U. S. Total Sanofi collaboration revenue was $944,000,000 in 2nd quarter and grew 39% versus the prior year. Our share of profits from the commercialization of Dupixent and Kevlar was 751,000,000 An increase of 51% from the Q2 of 2022, reflecting higher volumes and improving Margin profile for Dupixent.

Speaker 5

We expect further margin expansion from the collaboration driven by continued Dupixent Global sales growth coupled with higher gross margins due to significant drug substance yield improvements resulting from tepilumab Manufacturing process enhancements. These factors are also contributing to a gradual increase in the rate in which we are re The antibody development balance to Sanofi. Once this balance is fully repaid in the next few years, we expect a meaningful step up in our share of Recall that a portion of our Sanofi collaboration revenue is related to the manufacturing of commercial supplies For which we are reimbursed by Sanofi. As we continue to phase in the higher yield manufacturing process for Dupixent, We expect these second half reimbursements to be approximately 25% lower than the first half of twenty twenty three with the Q4 expected to be the lowest of the year. Other revenues were $69,000,000 in the 2nd quarter, up 17% versus the prior year.

Speaker 5

We continue to expect other revenue to be higher in the second half of twenty twenty three as compared to the first half. Recall that other revenue primarily includes reimbursements For the manufacturing of certain Regeneron Discovered products commercialized by other companies including ex U. S. Praluent, Arcolist and Xaltrap As well as royalties for Alaris and our share of global profits for Archivist. Moving now to our operating expenses.

Speaker 5

Q2 2023 R and D expense was $974,000,000 representing continued investment in our robust pipeline. Year over year R and D growth was primarily driven by higher headcount and related costs in funding of the company's pipeline, which encompasses approximately 20 late stage or We will now begin the presentation of our Phase 3 studies and earlier lines of therapy for our hemonc product candidates and our advancing fionlimab development program. The increase in R and D expense was also driven in part by the impact of the 2022 amendments to the Sanofi collaboration agreement and increased manufacturing activity associated with the company's earlier stage product candidates. SG and A was $562,000,000 in the second quarter reflecting the ongoing build out of our ex U. S.

Speaker 5

Operations Following the acquisition of Global Rights to Libtayo last year, higher headcount and related costs and higher contributions to an independent not for profit patient 2nd quarter 2023 COCM was $213,000,000 up 44% versus the prior year, Driven by manufacturing costs associated with higher Dupixent volumes. As we progress the phase in of the improved manufacturing process for Dupixent, We expect COCM in the second half of this year to decline versus the first half as our unchanged 2023 COCM guidance reflects With the Q4 expected to be the lowest of the year. Now to cash flow and the balance sheet. In the first half of twenty twenty three, Regeneron Generated approximately $2,100,000,000 in free cash flow. We ended the 2nd quarter with cash and marketable securities less debt of approximately 12.6 We continue to opportunistically deploy cash towards share repurchases throughout the Q2 buying back $723,000,000 of our shares.

Speaker 5

At current levels, we remain buyers of our shares. And as of June 30 approximately $2,300,000,000 remained available for repurchases under our existing authorization. Finally, we've made some minor changes to our full year 2023 guidance ranges based On our first half results and our latest outlook for the remainder of the year, we have tightened guidance ranges for 2023 SG and A and R and D spend And provided updated guidance ranges for our effective tax rate. A complete summary of our latest full year guidance is available in our press release issued earlier this morning. In conclusion, Regeneron delivered positive financial results in the Q2 of 2023 and we remain excited for the potential upcoming launch I'll flip flippercept 8 mg in the 3rd quarter.

Speaker 5

With that, I will now pass the call back to Ryan.

Speaker 1

Thank you, Bob. This concludes our prepared remarks. We will now open the call for Q and A. To ensure we are able to address as many questions as possible, Shannon, can we go to the first question, please?

Operator

Thank you. Our first question comes from the line of Evan Seigerman with BMO.

Speaker 6

Your line is now open.

Speaker 7

Hi, guys. Thank you so much for taking my questions and on all the updates today. So on the 8 milligram CRL, Do you have any idea if it's a Class I or Class II resubmission? And you say that FDA is going to take action in the Q3 or could take action.

Speaker 2

Hi, Evan. Thanks for your question. So just to clarify, the FDA has not classified the resubmission as Class 1 or Class 2 because they have said that the timeline for pazelumab We'll be governing what happens with our 8 milligrams. So let me remind you what happened. There was a pre approval inspection for both products.

Speaker 2

The pozelimab is for our ultra rare Disease, Chapel disease and it has a PDUFA date of 20th. What the FDA has said is that They will review the remediation efforts in the context of the pozelimab BLA And therefore, whatever happens there will govern the timeline and results. And when we say we expect them to take action, We mean we expect them to make an approval or not decision. If they find the manufacturing remediation acceptable for the pizelumab, Then we think they'll be in a position to promptly make a decision on approval for the 8 milligrams. Does that answer your question?

Speaker 8

He's off the line. We'll move to the next question, Shannon.

Operator

Our next question comes from the line of Tyler Van Buren with TD Cowen, your line is now open.

Speaker 8

Hi there. Good morning. Thanks for taking the question. So the timeline The FDA potentially taking action by the end of this quarter on high dose EYLEA is very encouraging and investors are clearly surprised by the short line. So kudos to you all for executing.

Speaker 8

But as we think about the data submission in a couple of weeks, what additional detail can you provide regarding the manufacturing data and other information that are required from Catalent and how feasible it is to review this in a few days prior to the pozelimab decision date on August 20th?

Speaker 2

Right. Great question. So, we've been in very close contact with Catalent and the FDA, Multiple meetings, oral, written and so forth. And we have a clear understanding of what's required from an information point of view and from a data point of view. The submissions have been on a rolling basis that as Catalent has completed work, they've submitted data and information already To the FDA, there is very little that will be left for the last submission at the middle of August.

Speaker 2

And that's why the FDA has told us and they know what's coming that they will strive to expeditiously review that. And if they can't get that done By the few days before the pozelimab PDUFA date, they have told us that they will prioritize Our review and do that as soon as possible. That's why we have confidence about this getting done in this quarter. So to summarize, the data has been coming in on a rolling basis. We have everything we need.

Speaker 2

The last piece of information we'll be rolling in and submitted by the middle of the month. The FDA will strive expeditiously to review that return in time for the August 20 PDUFA date, but if not, there will be a clock extension For up to 3 months, but they have told us that they will prioritize our review. And that's why we believe it will get done If not in time for the pizelumab PDUFA date in the near future thereafter.

Speaker 1

Okay. Thanks, Lynn. Next question please, Shannon.

Operator

Our next question comes from the line of Mohit Bansal with Wells Fargo. Your line is now open.

Speaker 7

Great. Thank you very much

Speaker 8

for taking my question and really thank you very much for providing all the clarity on the filing situation right now. Maybe taking so just trying to understand this

Speaker 7

a little bit more. So is it fair to say you

Speaker 8

have already submitted everything for pislelumab and The remaining part is related to high dose EYLEA only. Is that fair?

Speaker 2

Actually, the way you should think about it, we've submitted everything we need for pazelumab except for The final remediation of the pre approval inspection, which applies both to pazelumab and to the 8 milligram EYLEA. So it's a single pre approval inspection, same date and information required for both. Once that is in, Then we will have completed everything necessary for pazelumab and for the EYLEA 8 milligrams. They are Linked together, the FDA has clearly stated to us that the review of this remediation in the context Of the pozelimab BLA will govern what happens to the 8 milligram remediation.

Speaker 3

And I think Sarah said there's nothing specific to either pozelimab Or aflibercept about the data. This has to do as Len said with general manufacturing Processes and operations at the Catalent manufacturing facility particularly with this one manufacturing line.

Speaker 2

That's a very good point, George. So that's why the single preapproval inspection applies to both products. It wasn't the product specifically, it was the processes and validations on the line that fills the 2 products. So one remediation satisfies both, all the data and information are being submitted on a rolling basis. The last piece comes in, in the middle of August.

Speaker 2

The FDA is aware of this. They've told us in writing that they will strive to review that expeditiously. If they get it done before the end of the PDUFA, an original PDUFA clock, that's great. If they don't, they'll consider an amendment that will set clock back 3 months, but notwithstanding that 3 months, they've told us that they will continue to prioritize our review. So we're very pleased and we're working very hard.

Speaker 2

Catalent is working very hard. The FDA is working very hard. Everybody wants this Done properly and finished and properly remediated. Okay. Next question please, Shannon.

Operator

Our next question comes from the line of Tim Anderson with Wolfe Research, your line is now open.

Speaker 9

Thank you very much. I have a question on the VIVIZMO. So Roche at Q3 said they're capturing 30% of treatment naive patients, which seems like a quite high figure frankly. And then they said afterwards that it's not the extended dosing that's driving this as much as it is the better drying that they say docs are Seeing with their product, so I'm wondering how those comments kind of line up with what you're seeing play out in the U.

Speaker 10

S. Market? Thank you.

Speaker 4

Sure. So Tim, I will comment on our EYLEA performance. And as I just shared with you, the performance in the quarter Was strong. Certainly, we see EYLEA steadily as the standard of care in the anti VEGF category. We continue to capture not only naive patients, but also another big source of business is switch patients from Avaskan.

Speaker 4

Obviously, the other branded competitors are smaller in market today. But I would say that beyond your comment, probably best to get more Clarification from the individuals who are commercializing forisimab in the market. But certainly I do want you to know that we are seeing Continued strength in EYLEA performance and obviously very much look forward to having the potentially game changing opportunity of bringing aflibercept

Operator

Our next question comes from the line of Chris Raymond with Piper Sandler. Your line is now open.

Speaker 10

Thanks. Just maybe another market VEGF market related question. So I know these extended dose Therapies have benefits in and of themselves on the face of them, but there's been some decent level of market chatter around docs Looking to free up injection capacity, specifically to make room for geographic atrophy patients And seeing specifically with the Apellis drug, just maybe curious how widespread was that notion Before the cephovary safety issue and now with the issue, have you noticed that the steering will shift among docs who were talking about that? And then maybe a related question. You guys have talked, I think, about an early effort of your own in geographic atrophy.

Speaker 10

Clearly the market is sizable. When could we expect to hear more about that effort?

Speaker 4

So let me share first in terms of the market dynamic. I think the most exciting thing and most important thing about afliprasib 8 milligram is that it gives prescribers For all of their patients, whether a naive patient, a patient currently on EYLEA or a patient on another anti VEGF category product, The opportunity to decide if that patient is a candidate when we launch and when we have an FDA approval, if the patient is a candidate for libricep 8 milligram, that does have benefit to the patient and prescriber and potentially to the office capacity and patient flow. I think it's premature to comment on a category that we're not directly involved in. We are though very focused on making sure that we are Ready for launch and certainly at the proper time, educating all stakeholders on afliparcept 8 milligram once we have an approval.

Speaker 3

And in terms of our own efforts, as I'm sure many are aware, we've been very active With what we feel are very innovative approaches in the complement blockade field and we believe that we may have an approach That may allow potentially treatment in these retinal diseases while avoiding some of the very concerning adverse events having to do with Issues like occlusive vasodilitis and so forth and you'll be hearing much more about those efforts In the short term.

Speaker 1

Okay. Thanks Marion and George. Shannon, please move to the next question.

Operator

Our next question comes from the line of Carter Gould With Barclays, your line is now open.

Speaker 11

Great. Good morning and thanks for all the transparency. Maybe switching gears In terms of the update on your costim and the report of the death and the change in the dosing paradigm with 5678 in combination with Libtayo. George, maybe you can speak about the implications for other combination efforts of CD28 with Libtayo. It is going to require lower dosing with those efforts on the Libtayo portion and just the broader implications there and just still your level of confidence you can kind Thread that needle in terms of the dosing levels?

Speaker 11

Thank you.

Speaker 3

Right now, great question. Obviously, as you know, in cancer, the biggest hurdle is actually coming up with approaches and new classes of agents That have the ability to really change the efficacy paradigm to really bring new ability to address cancers that have previously been Untreatable or refractory to treatment. So I think that that excitement continues with the co stim platform In terms of all of the science and the preclinical modeling and predictions, have really delivered in terms of showing That this new class does seemingly have the ability to really change the efficacy paradigm. But now we have to balance that as you said with the safety because with more efficacy which is often seen in the cancer field comes more safety concerns. To what you just said, what we've seen pre clinically and we're now beginning to see it in the clinic that the amount of Associated immune adverse events is related to the particular co stim target.

Speaker 3

So what you see for one costin doesn't necessarily apply to the other costin. So we are as you said for our PSMA costin Moving out of lower doses of the leptayo, because the full dose combination, while it seems like it has the potential to be very Acatius also has in some cases these associated only in remember only in the patients who are having deep responses These associated in some cases can be very serious even resulting in deaths associated in these adverse events. So We're moving away from full dose combinations there and we're going and hoping that we can maintain some level of the efficacy, but avoiding these very serious Immune related adverse events. We're not doing that yet because we're not seeing these sort of immune related adverse events with our other customers. And the other very, very important thing, just to remind you from our preclinical modeling, these types Immune related adverse events that we're seeing with the PCMA in combination, costin in combination with Libtayo are not seen pre clinically When you combine with the C3 bispecifics and so we are very aggressively trying to move forward those programs as well Where we hope we might even have a better efficacy safety profile.

Speaker 3

So, it's both a Very exciting time to have these very active molecules. Remember, I remind you, we have 3 classes now, 3 independent classes Very active molecules that have been individually validated in our portfolio. We have the checkpoint inhibitors, In particular, our PD-one and our LAG-three checkpoint inhibitors, which are validated. We have our CD3 bispecifics were validated and we now have our costims which are validated from the efficacy perspective. Very exciting time to be mixing and matching them.

Speaker 3

The challenge is to mix and match them appropriately to maximize the signal to noise, the therapeutic benefit Relative to the potential adverse events we would see in the patients.

Speaker 1

Thanks George. Next question please.

Operator

Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Speaker 6

Good morning. Thanks for taking my question and nice updates this morning. Clearly, the Possibility of a permanent J cloud now has moved to April and it shortens the runway for patients switching from EYLEA ahead Potentially loss of exclusivity in May. So kind of a 2 part question here. What are the dynamics around this And how do you on one hand kind of maintain and grow the switch population from EYLEA?

Speaker 6

But secondly, how

Speaker 4

Hi, Salveen. So I'll get started. Certainly, we're conscious of the dates and the requirement for submissions to CMS that occur At the start of a quarter, so we would estimate potentially the timeframe that you're referencing, if we have an approval in the 3rd quarter. What I would share is that we anticipate use of aflibercept 8 milligram after approval and launch before we have the permanent J code. Retina specialists are sophisticated in their reimbursement capabilities at the office level.

Speaker 4

They are experienced with newer products coming into the marketplace, on a fairly regular basis and how to make Certain that they validate reimbursement for products prior to having the permanent J code under a temporary J code. So obviously we want to have the permanent J code that will be a positive, but certainly we do see the opportunity for uptake across patient types prior to that situation with CMS.

Speaker 1

Okay. Thanks, Mary. And Shannon, please move to the next question.

Operator

Our next question comes from the line of Terence Flynn with Morgan Stanley. Your line is now open.

Speaker 12

Great. Thanks so much for taking the question. Len, I know we've talked about this before, but the company has been somewhat nontraditional on pricing decisions historically. You guys Priced EYLEA at a discount to Lucentis. You worked with ICER on Dupixent pricing.

Speaker 12

So just wondering, why we shouldn't expect Similar approach here with high dose EYLEA. Thank you.

Speaker 2

Thanks, Terrence. If your Comments referencing similar means thoughtful and appropriate. We would agree.

Speaker 1

Okay. Next question please, Shannon.

Operator

Our next question comes from the line of Brian Abrahams with RBC Capital Markets, your line is now open.

Speaker 13

Good morning. Thanks for taking my question. Congrats on all the progress and Maybe just another clarification on 8 milligram iflipurcept. Can you characterize your level of confidence So the reinspection would not be required. Have you had any interactions or feedback with the agency around this?

Speaker 13

And is there a defined period of time where The FDA would need to wait reinspection or not to ensure that the remediations are sustainable before approving the BLAs? Thanks.

Speaker 2

Great. Thanks for your question. We've tried to be a 1000% transparent as usual with Regeneron. And this is really let me just see if I can summarize it again what we know. We've been in close contact with the FDA as has Catalent.

Speaker 2

We know what the remediations required are and we've been submitting them on a rolling basis. We expect to submit the last requirement by the middle of August and that will be several days before the PDUFA date for the pazelimab BLA. The FDA has been very clear that they will strive to expeditiously review that. If they can, great. If they can't, They said there would be a 3 month clock extension, but even with the 3 month clock extension, they've been very categorical in saying that they would I prioritize our review and try and get it done as soon as possible.

Speaker 2

Those facts are what led us to believe it would be done In all of this is the fact that there has been no need, no discussion, no indication whatsoever That a reinspection would be necessary. The FDA of course is free to make those decisions, but we have not seen any indication of that In our very detailed and close contact. So we've given you our best estimate at this point.

Speaker 1

Thanks, Glenn. Let's move to the next question, please.

Operator

Our next question comes from the line of Chris Schott with JPMorgan. Your line is now open.

Speaker 14

Great. Thanks so much. Can I just come back to the CD28 PSMA update? Maybe just elaborate a little bit more in terms of the approach of lowering the PD-one exposure to address the safety issues here and taking that approach versus trying to work to further adjust the dosing of the bi

Speaker 3

Well, we should say that we are adjusting both doses. We have been already exploring a variety of doses from very low doses to the highest active doses On the costim side, but we've been doing all of them in the context of the full dose of Libtayo. So now what we're doing is we're exploring some of the doses That are active, particularly ones that are active as monotherapy. As I mentioned, there is monotherapy activity With the PSMA co stim and now we're to try to decrease these immune related adverse events. Let me remind you, they are in the same sort of class of immune related adverse events that you do see with checkpoint inhibitors In general, we're just seeing them in some patients, the one with the biggest responses in some cases to a greater extent.

Speaker 3

So we're hoping that lowering The checkpoint inhibition may allow us to adjust the therapeutic window there. But we are, as you're saying, dealing with A couple of different doses of the costim, but now we're incorporating lower doses of the Libtayo into the program as well.

Speaker 2

I think what George said earlier, just maybe a fast repeating, is that he said that we're starting with the good position Having very impressive efficacy, 1, and 2, side effects that are for the most part In the patients who are benefiting with the efficacy, that's a very good position to begin to explore and how to get the therapeutic Index or signal to noise as George calls it, right.

Speaker 8

Okay. Let's move to the next question, Shannon. Thank you.

Operator

Our next question comes from the line of Dane Leone with Raymond James. Your line is now open.

Speaker 15

Thank you for taking the questions. Congratulations on the updates and best of luck with the resolution Of the reviews for pazelumab and 8 megaflobracept. I actually want to ask you to expand a bit on Your discussions with the FDA and potential filing or early filing on Dupixent for COPD. The point I'd like a little bit more clarity on is specifically what you may be able to have from notice Before the final readout of that study that you could potentially include in a package with the Boreas results To get the FDA comfortable with an accelerated review for that indication. Thank you.

Speaker 3

Yes. What we know right now is that we're going to need data from NOTICE. And right now, as we said, We are still in discussions on what that data could be. And so right now, we don't have any details to give you.

Speaker 1

Okay. Thanks, George. Hopefully an update soon. Next question please.

Operator

Our next question comes from the line of Colin Bristow with UBS. Your line is now open.

Speaker 16

Hey, good morning and congrats on the quarter and the progress. Just maybe one on the ipadikimab interim. Can you share anything on the futility thresholds? And if not specifically, Could you say how these sort of said relative to Borrius? Thanks.

Speaker 2

I don't think we have anything specific. This was handled By the Data Safety Monitoring Committee, sort of a standard approach. We're pleased that we passed it and we will look forward To further data at the end of the study.

Speaker 1

Yes. And both we and Sanofi are blinded to that. We only got the go decision from the Independent Data Monitoring Committee. So we'll proceed to a final readout for both of those studies. Let's go to the next question, please.

Operator

Our next question comes from the line of Brian Skorney with Baird. Your line is now open.

Speaker 8

Hey, this is Luke on for Brian. Thanks for taking the question. Can you just provide a little bit more color on what drove the Libtayo growth this quarter? Was there any stocking or was it largely

Speaker 4

Thank you, Luke. And I'm pleased to share it is demand growth. Certainly, we see continued and steady performance Across our skin indications both cutaneous squamous cell carcinoma and basal cell carcinoma, in addition to that, It is exciting that we are seeing not only an increase in the number of prescribers for our lung cancer indications, but the depth of prescribing is improving And increasing in both the community and also academic settings. But that is demand based, it is not stocking based.

Speaker 1

I think Shannon we have time for 2 more questions please.

Operator

Our next question comes from the line of David Risinger with Leerink Partners. Your line is now open.

Speaker 8

Yes, thanks very much. Excuse me. So my question is for George on the COSTIMs, please. You mentioned that you haven't seen the immune AEs with Respect to your other CoStim trials, could you please comment on whether the dosing step ups at this point Are close to the higher dosing levels that you're stepping back from in the PSMA trial? I'm just trying to contextualize whether you really have advanced those other trials to the point to really know Whether you're going to have similar problems in your other CoStim trials?

Speaker 8

Thanks very much.

Speaker 3

That's a very good and fair question. And those programs are at earlier stages. So we won't know until we're more advanced Whether when we get to the same sort of efficacy type levels, do we have the same sort of immune related adverse event associations or not? What I was referring to is in the preclinical studies, the amount of this associated T cell activation that can lead to these sorts of immune related adverse events varies depending on the tumor class and on the co So based on that we would expect to see different ratios of immune related adverse events. Those other programs though right now are all in stages where they're in with full dose Libtayo combinations at this point.

Speaker 1

Okay. Thanks, Shannon. We have time for one more question.

Operator

Our last question is from Akash Tewari with Jefferies. Your line is now open.

Speaker 8

Hey, thanks so much. I'll switch it up. I guess maybe for your obesity program, you had data at the ADA showing synergy with your myostatin inhibition program when combined with the GLP-one. I guess the natural observation here is Regeneron doesn't currently have a program in development. Is there any interest in acquiring 1 externally via BD or partnership at this time.

Speaker 8

Thanks.

Speaker 3

Well, what we would say is we do think that Obviously, there's a lot of focus on obesity and particularly these new agents that are causing a large amount of weight loss. But as you described as being increasingly recognized that the quality of this weight loss may prove challenging that many patients are actually losing Muscle or lean body mass, which is can be very detrimental, particularly If they stay on these therapies or yo yo on and off them, that can really lead to substantial changes over time in body composition that can be very debilitating And as you said, we've had long investment in programs that can maintain muscle mass in various settings And we've shown that they can maintain or even grow muscle mass in the setting of these types of obesity treatments in our Preclinical modeling. So obviously it is a very exciting opportunity to think about, which is can we combine Some of our muscle preservation or growth strategies and biologics to prevent These concerning side effects that are being seen with the new class of profound weight loss agents. And so we are very actively pursuing everything that we can imagine and hopefully we'll be providing updates on our approaches as time goes along.

Speaker 1

All right. Thanks, George. And thanks for everyone who dialed in today and for your interest in Regeneron. We apologize to those remaining in the queue that we did not have a chance to hear from. As always, the Investor Relations team is available to answer any remaining questions.

Speaker 1

Thank you once again and have a great day.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Earnings Conference Call
Regeneron Pharmaceuticals Q2 2023
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