Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) Credit Suisse 29th Annual Virtual Healthcare Conference November 9, 2020 8:45 AM ET

Company Participants

Marion McCourt – Senior Vice President and Head of Commercial

Justin Holko – Vice President, Investor Relations

Conference Call Participants

Evan Seigerman – Credit Suisse


My name is Evan Seigerman, and I’m the senior biopharma analyst here at Credit Suisse. And welcome to day one of our virtual healthcare conference. I really wish we were all in Scottsdale together as that would be a lot more fun and a lot easier, given some technical difficulties this morning. But it’s my pleasure to have Marion McCourt and Justin Holko from Regeneron. I’m really excited to just have a fantastic conversation about everything that’s happening at Regeneron from the COVID-19 antibody cocktail, Vyriad, Dupixent and the oncology franchise.

And before we jump into Q&A, I just want to pass it over to Justin for a quick disclaimer statement. And then, Marion, I want to give you the floor for a quick introduction.

Justin Holko

Sure, thank you. Actually, two disclaimer statements. The first one is I’d rather be in Scottsdale as well. So, hopefully next year.

But before we begin, I’d like to remind you that, today, there will be some remarks on this webcast that include forward-looking statements by Regeneron and are subject to risks and uncertainties that could cause actual results and events to differ materially. Everybody knows a complete description of these and other material risks can be found in Regeneron’s SEC filings. We do not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

So with that, Marion?

Marion McCourt

I guess my quick comment would only be, as I sit here in New York City this morning, the weather’s a little bit like Arizona in terms of the temperature. So, I’m not sure what’s going on, but I’d rather be with all of you.

I really do look forward to getting to the Q&A, but I think a quick comment would just be to share that we come off our earnings call for the third quarter last week. So, you’ve heard the highlights of our performance. But I think, in summary, it is a really exciting time, as many of us that are at Regeneron, we’ve got a lot of really important work to do. We’re thrilled to be making some progress on our COVID REGN-COV2 antibody cocktail. Certainly, the world could not be in more need in that area. Look forward to talking with you more about that today.

And then on all cylinders, our science is coming to a stage where it’s creating an opportunity for me and my commercial team to really bring forward important advancements in a number of areas. Certainly, it’s been a little bit more than eight years now with Eylea, but the business is performing very, very well. We’re thrilled for the recovery of patients returning to offices and hope that continues.

Dupixent on a global basis now is achieving $1 billion in net sales on a quarter. I remembered when I joined the company now three years ago that we felt we had that sort of promise in the product that it was transformational for patients and prescribers. It’s so exciting to see that come together not only in atopic dermatitis, but also in the respiratory and future indications in age groups and countries where we’ll see additional strength in our product.

And certainly, on the oncology portfolio, LIBTAYO has been a really important launch for patients with cutaneous squamous cell carcinoma. The team has done a really nice job. We did build our oncology talent with the future in mind and look forward to what we hope will be additional indications in basal cell carcinoma and also lung cancer early next year with possible FDA approvals. We will certainly be ready.

And then, for the host of other areas where our science will take us in the portfolio, the commercial organization will certainly be ready.

But pleasure to come here today and happy to answer, Evan, your questions and others’.

Question-and-Answer Session

Q – Evan Seigerman

Let’s start off with the COVID-19 antibody cocktail. I’m not going to quiz you too much on the science, but I want to learn more about the commercial model. This is a new commercial model. So, how are you thinking about it? I know, right now, we have the BARDA contract, and that could be the distribution and kind of financing model in near term. But how does this evolve over time? Any color there as to what could happen when we move beyond that initial $450? million?

Marion McCourt

Evan, I think that you phrase it well because it does start with the science. And I think the one thing I would just add into the mix on the science is that, first and foremost, is helping patients in need. And it was 30 years of work that allowed Regeneron to be at the point where, starting in January, our scientists could quickly get to work. And obviously, the same sorts of platforms and technologies and application of science that we saw with the Ebola advancement that we made in the recent approval in that area, that is the science that is produced this some very interesting, and some would say, almost amazing result in terms of our advances with the COVID dual antibody cocktail.

But in terms of the commercialization model, it’s really important that we realize that this is different. Under the initial distribution, as you point out, this would be under the BARDA contract. That model coordinates the government activities between the federal government and the state, so we can as quickly as possible, once we have, and when and if we have the EUA approval, we can move forward in getting our product to patients who are in need as quickly as possible. We do believe that we potentially have the opportunity to, in the future, help not only with prevention and prophylaxis, but also potentially hospitalized patients. So, we’ll be ready across that schema.

And then, to the point of having adequate supply, not only is our own manufacturing team taking heroic steps to move other products, dedicate facilities to the COVID patient population in need, but also on the global scale, we’ve partnered with Roche and to make sure that we together can do more than what we as Regeneron could do individually.

But as far as commercial model, we’ll have to wait and see how that evolves. Early days, the most important thing is to get product to patients in need. There’s a lot of need. And then in the future, certainly, I would, with the organization, consider options for commercialization. But right now, the absolute focus is making sure we advance our clinical trials, get product into the marketplace and, in this case, that’s secondary. We’ll see and be very disciplined about the type of commercial model that makes sense.

Evan Seigerman

And then, just along those lines, can you just remind us where we are with supply and how much supply we are expected to have this year and next year? And what that could look like over the course of 2021?

Marion McCourt

Let me give you just some of the stats that we shared last week for any who maybe didn’t get this. But under our US government agreement, we now expect to have the 2.4 gram treatment dose ready for approximately 80,000 patients by the end of November, 200,000 total doses ready by the first week of January, and approximately 300,000 doses ready by the end of January. We continue to increase our in-house production capacity for further doses. And, obviously, as I mentioned, the partnership with Roche will help with the global capacity and production availability. So, we are gearing up and we’re taking steps, but those are some of the specific numbers to share with you.

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Evan Seigerman

I guess one more on the antibody cocktail. When can we expect data from the prophylactic setting? How is that progressing? And how does that at all change? I don’t want to say the commercial paradigm, but the end user paradigm, because I think it’s slightly different than the treatment setting.

Marion McCourt

In terms of the updates and studies, we just gave several updates last week. And obviously, as we have more information, we will share it very, very quickly. We’re working obviously closely with the regulatory bodies now based on the data we’ve presented to date. We have a host of trials that are ongoing, and obviously, we’re also working with the RECOVER initiative in the UK. So, we will stay tuned on that and move as quickly as possible.

But in terms of commercialization, as I was pointing out before, in the case of prevention or prophylaxis, obviously, that’s more of an ambulatory population, but our product is administered by infusion. We will work appropriately to make sure that we can reach patients who are candidates for our therapy. And then, obviously, we’ll continue to work forward on the appropriate hospitalized patient populations as well.

Justin Holko

Maybe just to add to some of that, Evan. So, we’ve got a lot of questions on the prophylaxis study. So, we did update last week, as Marion said. There’s about 1000 patients who have enrolled into that study to date. So, that’s moving along pretty well. And I think a lot of folks don’t realize too that this is actually a subcutaneous formulation, where patients will get subcutaneous injections with each antibody. And I think what we’ve seen with most antivirals is that the earlier you treat, the better off you do. So, I think our confidence is very high in that household context study where, again, patients are being dosed if they live with someone who has been infected. And so, we’re looking at a lower dose in that setting. It’s 1.2 grams. But as Marion said, with the 2.4 gram treatment dose, we have hundreds of thousands over the next few months. And then, with Roche, we look to be more than 2 million doses in all of 2021. But, obviously, we could do even more of that potentially, if some of that ends up being moved to the lower dose for the prophylaxis setting.

Evan Seigerman

I want to be mindful of time, and I want to touch on Eylea, Dupixent and, of course, the oncology franchise. So, let’s turn to Eylea really quickly. It seems that your recovery from the lows in April is recovering nicely, especially in the United States. How do you see the drug performing over fourth quarter and really into 2021? And once we move beyond the pandemic, what are some of the near-term growth drivers as this is a more mature brand in the Regeneron portfolio?

Marion McCourt

Let me give you a couple of comments and perspective. I would say in terms of standard in care and experience in market with over – oh my goodness, it’s over 30 million injections and over eight years of experience. Absolutely, Eylea has become the standard of care.

To reflect a little bit to your comment on what happened in the third quarter, and perhaps what might occur in the fourth quarter, I’d lend a perspective that we did see the lows occur earlier this year in the latter portion of March, the early portion of April, and then we started to see recovery as our retinal specialist offices were able to put in the proper means, so that they could see patients, make sure precautions were taken for the safety of their patients and their staff. So, we have seen a recovery that was evident in the third quarter.

Probably in the third quarter, we saw some patients go in for treatment. So, a little bit of demand that had been obviously delayed when people were not able to get out of their homes and go see their specialist. We also have seen that our diabetic population has been a bit slower to return into offices than the wet AMD population where perhaps there was more sight urgency.

As we go into the fourth quarter, I think we’ll just have to be thoughtful. And obviously, across the country we’re seeing, sadly again, spikes in disease. I would balance that with the fact that offices are better geared towards patient flow. So, this is not like going back to those early days of the pandemic. Precautions are in place. But I think we’ll have to wait and see what happens in the fourth quarter. Certainly, we’re really proud of what we saw in the third quarter.

And the profile of Eylea, it’s not just the clinical profile, it’s the clinical results, which are thought of as being leading in the anti-VEGF space by our specialists. But it’s that coupled with dosing flexibility, the ability to extend in some patients up to 12 weeks, but have the flexibility of the four and the eight week dose where it’s more appropriate for patients.

The safety profile is really important. So, that confidence aspect. And then, I think, although we would never would have known to introduce the prefilled syringe in these times, it has been helpful for office efficiency and effectiveness and throughput. And today, we’re probably at about 80% of total Eylea use is in the prefilled syringe.

Evan Seigerman

And looking beyond the pandemic, what are some factors that you think could help contribute to even more growth, even in this brand that is somewhat mature? I know you kind of pushed away some competition earlier this year because of their own safety issues, but how do you see the brand evolving in 2021 and 2022?

Marion McCourt

I think our team is becoming very sophisticated in promotional platforms and clinical data because this is such a specialized audience that is now allowing us, Evan, to really enjoy accelerate brand performance by indication. So, now, for every indication, we are market leader. The largest indications, of course, being with AMD, which is just under 60% of our business, diabetic eye disease and the other indications being the remaining. I think that there’s a tremendous opportunity to help diabetic patients as we go into the next recovered and hopefully a healthy world again. There’s a lot of work that we’re doing in terms of how do we apply technologies to diagnosis and make certain that patients start to come into their care continuum potentially to be given Eylea before they run into situations of vision loss that can’t be recovered.

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But we have a lot of work to do, obviously, not only with the wet AMD population, but these broader indications. Specifically, once again, I would point to the greatest growth opportunity being with patients with diabetic eye disease.

Evan Seigerman

Any other final comments on Eylea. I know we always talk about it when we meet. But anything else before we move on to your growth brands and your oncology franchise?

Marion McCourt

I think our customers and retinal specialists, frankly, have done an absolutely amazing job in difficult times. We’ve tried to be by their side to help, to support their needs, and to be good partners during these difficult times. But I think we approach Eylea with great optimism. And to your question that I didn’t get to in as deep a way related to competition, we always keep an eye on our competitive market and are performing really well in our competitive market today. In terms of future competition, they have a high bar to reach in terms of clinical data, safety and all the attributes that Eylea brings forward with broader indications.

Evan Seigerman

You have an iron clad PI when I look at it. So, it is always encouraging when I see that.

So, moving to Dupixent, I want to congratulate you and your colleagues at Sanofi for reaching or exceeding $1 billion in sales in the quarter. That’s quite the milestone. Looking ahead, what areas do you see – kind of what areas or indications are going to drive the next leg of growth for Dupixent? What are you most excited about over the next 12 months for this brand?

Marion McCourt

It’s going to be a bit of a compounding because when I look at the existing indications in the market, and of course, I remember when I first talked with you and others, you were looking for an expansion of our commercial portfolio beyond Eylea. So, I’m very excited that, today, Dupixent is now operating in that sphere of being a multi-billion dollar brand. We don’t take any of that for granted. And we have a lot more work. I would still say we’ve only gotten – just gotten started because there’s tremendous unmet need in the atopic dermatitis population, both in the US and abroad. We still have many adult patients that we haven’t reached. And I think that the fact that we’re adding in age groups with the adolescent launch, the pediatric launch – but remember, we only just launched pediatrics and adolescents was a relatively recent launch as well.

Similarly, in asthma, I think we’ve got a very, very nice competitive start. And in fact, in asthma, about 80% of our patients are biologic naïve. So, we’re performing well in the category competitively, but we’re also growing the asthma biologics marketplace. But there too, there’s a lot more to be done. That’s before I even get into – and the nasal polyps indication has probably been even a larger indication in terms of the opportunity that it presents for allergists and ENTs in treating these patients than we ever dreamed possible. We have patients coming on therapy, some of whom have had surgery, many who haven’t had surgery. And certainly, in these times of more limited surgeries for more elective or deemed somewhat more elective procedures, it’s been a wonderful opportunity for Dupixent growth.

That’s just existing indications. As I look forward to your point of what’s to come, that’s where I’m getting into this comment of almost – think of this notion of tremendous opportunity with existing indications. And then, secondarily, as we start to get into additional respiratory indications both in asthma based on age groups, potentially COPD in the future, as we start looking at the host of skin indications where we’re looking at additional opportunity and trials are ongoing, and then on top that, we even get into areas like eosinophilic esophagitis.

So, type 2 disease and the manifest of type 2 disease is very, very broad. And I think what’s happening with Dupixent is we’re seeing tremendous comfort in terms of rapid clinical results across the indications, a pronounced safety profile, ease of use is being extended with things like the recently launched prefilled pen for the 300 mg dose, and I think as well we’ve made a lot of progress on the payer and reimbursement front, so that it really is becoming a product that is large today. I’ll never get ahead of ourselves. We’ve got a lot of work to do. But we obviously will take the product in terms of helping patients and giving prescribers an alternative to new heights over the next weeks, months and years. It’s still a very young product.

Evan Seigerman

Along those lines, one of the questions that I get a lot from my investor clients are, how do you position Dupixent with the potential launch of Pfizer’s abrocitinib or Rinvoq in the atopic dermatitis space? I know safety is one of the key differentiators. But is there anything else we should be thinking about when it comes to an increasingly competitive atopic dermatitis treatment space?

Marion McCourt

There is an aspect of competition always that’s good in terms of people and products really being understood and at their best. There’s an attention to the consumer and the patient population as well by having more discussion of a very important condition like atopic dermatitis. But I think when you start looking at what we know today, obviously, the products you mentioned aren’t yet proven in atopic dermatitis. Some of them, obviously, weren’t successful in other indications for type 2 disease. These products are certainly different, they have a different clinical profile, they have a different safety profile. And I think that’s where the importance of the choice is going to come in.

We have a product in Dupixent with a range of ages that reassures when you start looking at indications for adolescents and for pediatric patients, that reassures prescribers that the product is safe, and now they have years of use, they get rapid results, they get relief for patients, patients who are able to do things in their life that many of us just take for granted every day. They’ll have to bump that up against, if approved, a product that might be relegated to use after Dupixent, might be considered for certain niche subsets of patients.

But I think what I hear from our key opinion leaders is that they have an excellent safe alternative. And obviously, even in the current times, the fact that Dupixent is not an immunosuppressant and has such a strong safety profile doesn’t have anything that would be concerning. When you start to go to the realm of products that are likely to carry black box warnings for very serious side effects in a chronic condition, that really makes prescribers stop and, in some instances, has even been difficult, as I know you’re aware, in trial enrollment for those products.

Evan Seigerman

I want to be conscious of our time and spend some time on the growing oncology franchises. I think that is very important for the next leg of growth in Regeneron. Not that Dupixent isn’t going to drive that, but your oncology franchise has performed – we’ve had some really great data recently.

So, when I look at LIBTAYO, we have a nice indication in cutaneous squamous cell carcinoma. Now you have the BLAs and – sBLAs in for both, basal cell carcinoma and non-small cell lung cancer. How does LIBTAYO fit within a very crowded PD-1 space? I know the data you presented in the frontline setting was strong. But how do you position that when and if eventually approved next year.

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Marion McCourt

Let me take it in two fronts. I’ll take quickly basal cell carcinoma and then I want to go over and talk more to you about the possibility of an indication in lung cancer where, obviously, there are a lot of competitors and there’s a lot of thoughtfulness in terms of how we’ll enter the market.

In basal cell carcinoma, remember, for these patients with advanced disease, they’re no longer candidates for surgery and radiation in a curative way, in these patients, we will, obviously, have an indication that’s for second line therapy after the hedgehog inhibitors. Keep in mind, in this phase, that there haven’t been many alternatives for patients. So, we’re very excited about this. We obviously have strong relationships in the oncology/dermatology space. So, this is going to be really an ideal indication to launch for the team, hopefully, early next year, so we’ll be ready. We’re excited. And certainly, a ladder line therapy. But sadly, there are many patients who fail on hedgehog inhibitors and, in some instances, can’t tolerate them either.

As I go over to lung cancer, that’s a different kind of indication, a different kind of competitive space. And what I’ll say today is we’re very confident in what we’re seeing in the clinical data so far. And we’ll have to wait and determine a little bit closer to the time of launch, some of the specific strategies. I’m not going to go into a ton of detail today. But I will when the time is right. And you can count on the fact, Evan, that we will be ready. And I give credit to our oncology team, both our scientific colleagues, our clinical organization, and now my commercial team, we’ve built a commercial team that can take this great science and bring it into the marketplace. And what I’m hearing time and time again from oncologists and others involved in taking care of patients is that, sadly, we have about 200,000 patients diagnosed just in the US each year. So, there is a need for making therapeutic choices on a regular basis.

And oncologists, in particular, obviously, other physicians who treat oncology, patients who are consulting in their care, like radiologists, payers are involved in some aspect of maybe not selecting care, but talking about care alternatives, and the fact that choice exists and is extended by a product like LIBTAYO that has had a very strong start in a smaller indication like CSCC, I think has made them very excited about that alternative in the future.

We take nothing for granted. We know that there’s some really important large companies that have been in this space. But we as a company have been no strangers to competition. So we look forward to have the opportunity to hopefully bring LIBTAYO into the marketplace, pending approvals for lung and basal cell carcinoma. Hopefully, they will come around the same time and and we’ll be ready with Sanofi as our alliance partner to bring these indications into the marketplace. So once again, we’ll be seeking to do more in our collaboration with Sanofi than either company could ever do individually.

Evan Seigerman

Hopefully, next year, when we’re all in person, we can talk more about how your strategy is progressing. I’m really looking forward to that.

Marion McCourt

By this time next year, Evan, I’m sure hoping we’re in person. And I’m also hoping we’ve been in market with our new indication.

Evan Seigerman

I know. Exactly, exactly.

Marion McCourt

By the way, those new indications, we’ve been very busy in these last many months because we have new indications, obviously, in the Dupixent space to be getting ready for. And as mentioned before, a lot of work with Eylea.

I also remind that we look forward to launching a product – a smaller product for rare disease, evinacumab, for patients with HoFH. So, we have been busy in these virtual times and ready.

Evan Seigerman

You’ve been on a lot of Zoom calls. A lot of them, I’m sure.

Marion McCourt

Yes. I should be a Zoom expert by now.

Evan Seigerman

Well, I know we’re kind of hitting up time, but I do want to just touch on a few more things before we end. So, when I think about LIBTAYO, it seems that this could be the backbone for many other investigational assets. And we talk a lot about the CoStims program. I’m not going to quiz you on the science here. But how do you kind of see Regeneron’s oncology franchise evolving beyond just CSCC, basal cell carcinoma, lung? How important is LIBTAYO as the backbone in many more assets that could come to the market in the next couple of years?

Marion McCourt

It was always a foundational start to our oncology platform. It’s not the only product. We’re very excited about the biospecifics and the CoStims costumes and all we have, I think that we will see in the future, emergence of other products that are equally exciting. And then the combination use. But LIBTAYO is really, really important to us. And I think that early days in introducing LIBTAYO into the marketplace, we’ve created that foundation.

My team’s job is always to take this exquisite science, get it to patients, the way Regeneron operates in our very clinically based – in fact, you should be able to quiz me on the science anytime. It’s part of the stakes of being at Regeneron. But it is our job to make sure that we take each of our programs and each of our products, bring them into the marketplace very, very well. And then we build upon that with future indications and future products.

But the core of your question is how important is LIBTAYO. Very. And there’s a lot to come in our oncology space. It’s another great example. You’re not on a billion dollar run rate like Dupixent yet, but it’s another example of – this is a core aspect of the Regeneron commercial platform that we’re building in the marketplace. And we’re really, really excited about it. We’ll be very thoughtful, very deliberate in the steps that we’re taking. Everything we do will be based on the science of the products, their clinical profiles, their differentiation in the marketplace. But I think we’ve got a very exciting business in oncology ahead.

Evan Seigerman

Excellent. Well, we are out of time. I want to be mindful of your time, Justin, Simon [ph], everyone else on the line. And I want to thank you very much for helping me kick off our virtual healthcare conference. I’m really looking forward to when we can all see each other in person and have a drink, hit a golf ball, and just enjoy life as it was before the pandemic.

So, with that, I’m going to end the call here. Thank you so much, Marion. Thank you, Justin, for your time this morning. And we’ll all speak very soon.

Marion McCourt

Thank you so much, Evan. Be well. Stay safe everybody. Bye now.

Evan Seigerman

Bye now.