Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) 2022 Wells Fargo Healthcare Conference September 8, 2022 11:00 AM ET
Company Participants
Ryan Crowe – Head, IR
Robert Landry – CFO
Conference Call Participants
Mohit Bansal – Wells Fargo
Mohit Bansal
Great. Thank you very much for joining us today. My name is Mohit Bansal. I’m one of the biopharma analysts here at Wells Fargo. And with us next, we have the Regeneron management team with us. We have Bob Landry, the CFO of the company; Ryan Crowe, the Head of IR of the company. Thank you very much, Bob and Ryan, for joining us. And with that, I’ll hand it over to you, Bob.
Robert Landry
Okay. Ryan, why don’t you open up with FLS.
Ryan Crowe
Absolutely. So today’s session may contain forward-looking statements, which may contain – actual results may differ from those forward-looking statements. A discussion of our risks and uncertainties may be found in our SEC disclosure documents. And any forward-looking statements, we’re not obligated to update them at any time.
Robert Landry
All right. So I was going to just do some general opening comments. And then, obviously, I think most of you may have seen the news this morning with regards to our aflibercept eight milligram data that got released. I’ll then hand it over to Ryan. Ryan will make some intro comments with regards to that, make sure that the understanding is clear on what we presented.
And then we’ll hand it back to Mohit and kind of do a Q&A session or the remaining time will be left for Q&A. So as we sit here – and first off, good morning and good afternoon, everybody. As we sit here in early September, just to kind of give a little bit of a background on where we’ve been the last two or three months, really kind of active and productive times at Regeneron. It seems a long time ago, but it was only last month that we released our second quarter earnings. Earnings were very, very strong.
We had kind of all-time highs with regards to global EYLEA net sales and global Dupixent net sales, our two largest products. They’re really doing fabulous. We had 20% year-over-year growth for the quarter when you exclude REGEN-COV. U.S. EYLEA did roughly 13.8%. Again, this is a product that was launched in November of 2011. No price has been taken, and it continues to do great.
In the segment – within this VEGF segment that continues to do really well, and you’ll see – no, we hope that, that’s really going to bode well for aflibercept eight mg with regards to the VEGF category that we’re currently in. DUPIXENT globally had 40% year-over-year growth. We continue to get new indications.
Certainly, we got our smallest kids on AD. These are the 6-month-old to 5-year olds in which approval came. We also had EoE approval several months back. Again, that’s really helping with the volume. And we have a new indication coming on September 30. We have a PDUFA date for prurigo nodularis, which I think is – treatable patients could be in the 75,000-patient number. So again, we have that to look forward to. On the oncology front, we did our first acquisition. It closed at the very end of May, where we picked up an asset that had shown proof of concept. And we picked up some technology with that.
That’s – so that’s all fantastic. And then a month later, we repurchased the remaining 50% of Libtayo on the worldwide rights for us to take ownership of that. And I’m sure there may be a few questions from Mohit. We make it into some of that with regards to the reasoning and all that. So we’ve been active – last month, we showed the first data on our costim, our CD28.
It was PSMAxCD28, which was early. It was a Phase 1/2, but it was positive data. We need to continue to watch the safety on that. I know that enrollment is accelerating since we showed the positive data on that, and that is moving forward. And then we are going to be an ESMO starting Saturday.
I think Saturday, Sunday, Monday, we’re going to have abstracts and presentations in ESMO. We’ve been telling everybody that our IO data is coming. I think they’re going to get a good glimpse at least on early pieces of it. We’re going to have our make it MET X MET. We’re going to have our LAG3 and Libtayo combination.
We’re going to have our MUC16xCD3, and I think we’re going to have something on our neoadjuvant CSCC study. So all that’s exciting. And we are going to have a separate investor event. Again, it will be done partly from Terry Town, partly from Paris. It will be 8:00 a.m.
Eastern time on Monday morning. So with that, let me hand it over to Ryan and Ryan can go through some of the detail, which I will tell you, the Regeneron management team is very, very excited with the data that was just put out. We were kind of unblinded on Tuesday afternoon, and the world saw the data this morning. So Ryan, with that, please?
Ryan Crowe
Thanks, Bob. And it is really an exciting day, not only at Regeneron but for patients with wet AMD and DME. When we set out to run these pivotal studies with this novel 8-milligram formulation of aflibercept, we really had three primary goals.
One, of course, was to be non-inferior to 2-milligram aflibercept, which was the primary endpoint for both of our studies, but also to extend their ability to a large majority of patients. And then, of course, safety, maintain the high bar that EYLEA has set over the last 10 years, 55 million-plus injections globally and over 8 million patient years of experience.
And I think today’s results checked all three of those boxes in a very meaningful way. Perhaps before we get to those results, though, it’s worthwhile to go through the trial design, which has some elements that are similar to other pivotal studies in this space and other dynamics that are somewhat different. So let’s start with – these trials were designed very similarly. The primary endpoint was changed in BCVA from baseline through week 48. It compared aflibercept.
It was an active controlled study with aflibercept 2-milligram, known commercially as EYLEA, being dosed every eight weeks following loading doses. And then there were two investigational arms of 8-milligram aflibercept: one dosed every 12 weeks and the other dose every 16 weeks. The PHOTON study enrolled approximately 650 patients and was randomized 1:2:1 with half the patients enrolled in the Q12 arm. The one wrinkle in this study was that the 2-milligram aflibercept arm actually had five loading doses dosed every four weeks, while the 8-milligram aflibercept arms only had three Q4 loading doses. In the PULSAR study, the loading doses were uniform.
They were three Q4 loading doses followed by the treatment intervals. PULSAR is the name of the AMD study, and it enrolled around 1,000 patients. It was randomized 1:1:1. I guess my – the secondary endpoints for PULSAR are included. The key secondary endpoint was proportion of patients with no fluid in the central subfield at week 16.
And then the key secondary endpoint for the PHOTON study was the proportion of patients that achieved a two or more step improvement in the diabetic retinopathy severity scale. So that kind of is an overview of the design. I guess the last point I’ll make is the dose regimen modification. This is something that colloquially has been called rescue. But what it did was allow a safety valve for any patient in the high-dose arms to have their intervals shortened in cases where there was vision loss or anatomical degradation.
And that was really done in the interest of patient safety and to make sure that nobody was going to be harmed by our studies. And this is unique to the PHOTON and PULSAR studies compared to some of the others that have been conducted in these settings. So that’s probably enough. There’s a lot of detail on the DRM that we can perhaps get into later. I want to get to the results, though, because that’s the exciting stuff, right?
So first off, non-inferiority was met, and it was met in a very statistically – highly statistically significant way. I think the lowest p-value we had was 0.0031. So others were even lower than that. So very highly statistically significant results. If we talk about the PULSAR results in wet AMD, 79% of patients in the Q12 arm and 77% of patients in the Q16 arm maintained their original treatment interval, meaning they did not have their dosing interval shortened, did not have a need for rescue.
And obviously, their vision gains were not inferior to those on the Q8 EYLEA regimen. On the PHOTON side, we had 91% of patients on the every 12-week regimen maintain their dosing interval and 89% of patients maintaining a Q16 interval over the course of the 48 weeks primary endpoint.
So just a really high proportion of patients in both studies that were able to maintain their original treatment interval without any interval shortening and truly remarkable results in our view. Last but not least, on safety, we found the profile to be highly consistent with that of the gold standard of EYLEA. It certainly is a high bar to meet that safety threshold.
We think that there were no significant imbalances in our safety data whatsoever and are very confident that we are putting forward a very safe formulation of aflibercept that can potentially expand the dosing interval quite significantly for a large majority of patients. So I think with that, Mohit, any questions you may have on the results, we’d be happy to take.
Question-and-Answer Session
Q – Mohit Bansal
Great. Thank you very much, and thank you for dropping the data this morning. I mean, there, we can probably go whole day about this. But the key question, one question is that when you look at 12-week versus 16-week, there’s not a lot of difference between the proportion of patients who stayed on 12 weeks versus 16 weeks. So what do you make of that? And how do you think about that?
Ryan Crowe
Yes. It’s interesting. There was only a two percentage point difference. I don’t know if there’s much to make of that. I mean there were some patients in the Q16 arm that dropped to Q12, and they were able to maintain Q12.
And those patients that were in the Q12 arm obviously would have been dropped down to Q8. So I don’t think there’s much to read into in that symmetry there. It just – I think it was more chance or coincidence than anything. But we’re just very pleased with the magnitude of the proportion in both treatment arms in both studies.
Mohit Bansal
Got it. So there’s not a lot to pick at this data, but I mean, if I pick a couple of things which I have been getting is, number one is about the letters of benefit. There is a slight decline in number of letters of benefit both pronounced in 16-week versus the 12-week arm. So what’s your internal thinking regarding that? And is it meaningful enough, the delta?
Ryan Crowe
I think it’s really not meaningful. I think the biggest delta is only about 1.4 letters. And if you normalize for baseline vision, there’s even less of a difference. So I really don’t think there’s anything there. And considering the extension of the dosing interval, I think that it’s a highly important result that I think bodes well for the patients in this setting.
Mohit Bansal
Got it. Super helpful. And then the second question I’m getting is regarding, at least in the PULSAR trial, there were some – there was a higher number of serious ocular adverse event. Can you talk about that? And where they drug-related?
Ryan Crowe
There was a slight imbalance there. I would note that, that did not happen in the PHOTON study. The DME study did not have that serious ocular adverse event imbalance. I’d also note that the majority of those in both studies were not actually related to the drug. It was actually procedure-related, and more details on that will be shared once this data is presented. But those are mainly procedure-related adverse events and not related to high-dose aflibercept.
Mohit Bansal
Got it. Got it. The other point which is interesting is that the presence of central subfield – a fluid in center subfield, there was superiority there. So can you talk a little bit about the importance of that data as well for physicians early on?
Ryan Crowe
I think every doctor or every retinal specialist wants to see dry retinas as quickly as possible. And the more the better. And this is – this was an important endpoint for us because it was eight weeks after the final loading dose in the wet AMD study.
And it showed that, to a statistically superior level, we were able to show that the high dose was drying more patients, a greater proportion of patients. And I think there won’t be anybody that’s disappointed by that result. And it was, again, highly statically significant. I think the p-value there was 0.0002.
Mohit Bansal
Right. Got it. Super helpful. And talk a little bit about the IP side of this drug. I mean, what do you have at this point? I mean, how long the IP for 8-milligram could go on? And how should we think about that?
Ryan Crowe
Sure. The 8-milligram formulation is very novel. It’s not simply 4x the 2-milligram formulation. It’s a very different molar concentration of aflibercept, one that we worked for years on without any certainty that it would actually do anything. So we took a lot of risk there, and we’re able to have a patent issued for our formulation that expires in 2039. We have filed for various other patents that we think could protect this formulation even beyond that.
And those are still pending with the patent office, but we have great confidence in our ability to secure more patents related to this formulation. Regarding regulatory, which is another question we’ve been receiving and we’ve said this before, we intend to pursue this as a new BLA. And we believe we’re aligned with the FDA on that approach. And that’s important for commercial implications, of course. It will not confer any regulatory exclusivity in and of itself, but we do think it is still an important thing to note.
Mohit Bansal
Got it. Super helpful. Maybe another question for you as well. So when you think about the formulation patent for standard-dose EYLEA at this point, where do you stand? And you have patents beyond the comp of matter at this point. So how should we think about the real biosimilar challenge for EYLEA at this point?
Robert Landry
Yes. I mean, as everyone knows, right? I mean there are biosimilars that are kind of lining up. Our regulatory exclusivity ends in November 2023. We’ll be able to get that extended until May of 2024, and we’ll have to go through the regular patent dances.
We feel very comfortable, as you would think that a company would with regards to the patents that have been filed in what the biosimilars are going to need to get work around. As you know, there are attacks that are being made. Rest assured that the attacks are coming on our weakest patents. That’s what they’re going to go after first, right? So – and there’s a lot for them to go after. So we’ll have to kind of do that dance and go through the legal hurdles with regards to how that’s exactly going to kind of play out.
Ryan Crowe
And there are actually a number of patents that have been issued for 2-milligram aflibercept formulation that we believe actually could apply to the 8-milligram formulation as well, and some of those extend to even 2032. So we feel very confident with the patent estate that we’ve built around aflibercept and hope to extend that with this novel formulation.
Mohit Bansal
Got it. Any questions on high-dose EYLEA in the audience?
Robert Landry
Okay. We’ve talked a lot internally with regards to what our biosimilar is going to do, right? So if and when the eight mg gets filed and gets approved, then are they going to go back to the drawing board? Has anyone done any work with regards to high-dose our aflibercept eight mg formulation and how long that’s going to take? And then obviously, any trials that are going to need to be done, and then they’ll have to go through the FDA, and then they’ll have to go through the aflibercept eight mg patent situation with regards to what Ryan just referred to.
So it’s going to be interesting to see how this plays out, but we see that there’s no easy path given the data that we showed this morning for a biosimilar eight mg approach to come without certainly the time lines being way pushed back.
Mohit Bansal
Got it. That’s very clear at this point. Maybe switching gears a little bit towards the Libtayo deal you just announced a few months back. Could you talk a little bit about the internal thinking there? And some people talk about the impact on EPS as well. Was that a consideration at all, upfront payment versus the EPS impact there?
Robert Landry
Yes. So what Mohit is referring to is we were in a 50-50 alliance with regards to our PD-1 Libtayo with Sanofi, and we took back full rights to that effective July 1. And the question was on the reasoning. Well, I mean, we’ve always said and we’ve been very public with this with regards to our IO strategy is that Libtayo was foundational. It was foundational to our strategy, and we wanted to make sure that it was kind of always fully funded and front and center and like.
And we had a partner that wasn’t as foundational. So here you have two partners that are attached to an asset in which one thinks it’s a lot more foundational than the other, which was the impetus to negotiate with Sanofi in terms of getting back 100%. Additionally, as you know, we’re into a lot of combinations with Libtayo.
And from an economics perspective, we’re funding a lot of these combinatorial trials, whether it be with our buy specs or whatever with Libtayo. So to the extent that we want full ownership of Libtayo, we’re going to get full economics back with the exception of a royalty that we’ll be paying to Sanofi.
So there is an economic benefit to how we saw things with regards to where our IO portfolio was heading. It’s heading towards combination of which Libtayo is a piece of that combination. So let’s pull that back. And then kind of a side benefit and not a main driver is really the globalization that this has to do for Regeneron, right? So we’re taking over global rights for a product that’s, I believe, currently in 32 countries.
Now there’s no way we’re going to go into 32 countries, but certainly, we’re going to be setting up somewhere it makes sense and where we can do it efficiently, beachheads within certain countries because we have other products that are coming and it will not have to allow us to partner with kind of all ex U.S. products that we see coming. We could partner, but we’re going to have beachheads set up in certain locations. That’s a nice kind of side benefit from the transaction. With regards to EPS, we’ve said this is going to be dilutive on the front end.
Part of the transaction was a doubling of the development balance that is associated with the antibody alliance that will get paid back. So instead of paying back 10%, we’re going to be paying back 20%. So on the front end, this will be dilutive. But on a long-term perspective, it will be some inflection point.
And we won’t give you the year in which that development balance will be totally repaid, and we will pick up significant revenues with regards to the collaboration revenue that we’re going to be receiving from the antibody alliance with Sanofi. So again, kind of short-term dilution, but longer term, much longer-term benefit for us.
Mohit Bansal
Got it. That’s super helpful. Maybe switching gears to the small product you have, Dupixent. So when you look at Street models at this point, I mean, it has been approved in multiple indications, and it has approval coming in multiple other indications at this point. So when you look at Street models at this point, I know you don’t give guidance. But what parts of the business for Dupixent are well understood? And is there some room or some uncertainty in certain parts where you think there could be upside?
Robert Landry
Let me start and then Ryan can add anything. So what’s out there publicly – and again, we haven’t given – we do not give long-term guidance. As Paul Hudson, the CEO of Sanofi, recently updated the guidance in which he said, we expect as a waypoint, is how the terminology was used, a waypoint in terms of it will get to and possibly go beyond is going to be €13 billion. And at the time, that was about a US$14 billion equivalent, which it’s currently tracking at $8.4 billion. That seems very doable, and we’re seeing that in a lot of consensus models that are out there by The Street.
Now to Mohit’s kind of more defined question, what – where there may be wrinkles? Well, the wrinkle for me is how underpenetrated we are in AD. We’ve said as an alliance that we would love to get to kind of 25% penetration in AD. We’re not even at 10% yet. So you can imagine with regards to what the growth could be if we could even start to scratch a 20-handle on the AD side.
Additionally, I mentioned prurigo nodularis. There are certainly more indications to come. There are certainly more indications to be kind of fully rolled out as we’ve gotten a lot recently. And, there’s a big and, none of this includes COPD, right, which we’re going to have kind of initial data in the first half of 2023, right?
So the €13 billion was excluding big footnote, any potential upside that you may see on COPD, which, as everybody knows, is a very, very large category. We are studying a way. We have two Phase 3s that are in process and anxious to see what that may be hold. Ryan, anything to punctuate on that?
Ryan Crowe
I think we’re just getting off – or just launching right now the eosinophilic esophagitis indication. I think it was approved this summer. We’re beginning to detail that in front of a new set of prescribers, gastroenterologists. So they’re becoming familiar with the product over time. And I think that could be a rather underappreciated indication.
And then, of course, prurigo nodularis, we hope to get an approval later this month, which would add another 75,000 patients or so to the eligible pool for Dupixent therapy.
Mohit Bansal
And then in that context, I mean, how do you think the challenge from IL-13 lebrikizumab for this market? And where do you think Dupixent could have an edge here?
Ryan Crowe
Maybe I’ll start. I think we look at the IL-13s as sort of an incomplete mechanism, where Dupixent is an inhibitor of IL-4 and IL-13. It gives it blockade across all type 2 – well, I shouldn’t say all, but almost all type 2 diseases, some of which are to be determined. But so far, so good. IL-13s have not shown that.
And in atopic dermatitis, we’ve seen similar levels of efficacy. You can point here or there, maybe we’re a little better in one study. They’re a little better in another. But when you mix it all together, I think we still believe we have an edge there and especially across other type 2 diseases, which most of these patients are comorbid. They have more than one type 2 disease.
So when they present with atopic dermatitis, they often might have asthma or something else that is bothering them. And Dupixent can address all of them or most of them. So we feel very good about our position and that our mechanism is complete. And of course, prescriber confidence in our product is there. The IL-13 that’s been on the market has not done very well, and we’ll see what happens with the Eli Lilly product.
Mohit Bansal
Got it. Maybe switching gears to the business development side. I mean Regeneron has traditionally not done a lot, but in last few years, Regeneron has been very much focused on BD. And many of these were early-stage deals. So can you talk a little bit about your thought process and approach there? And how do you go about taking deals? And do you think with your balance sheet, there is an opportunity to go a little bit later in the development cycle at this point?
Robert Landry
So I mean we’ve been active in the last three months, I mean, active relative to maybe the previous nine years with regards to the Checkmate and Libtayo. And Libtayo as a little bit of a separate transaction. Like I said, Checkmate was a – we had proof of proof of concept related to that. We’re not against kind of going after kind of late Phase 3 drugs. But we’re probably not going to do anything transformational.
That hasn’t been our MO. We don’t look to do things that are transformational. And then even things that are kind of post POC, we’re not trying to fill a gap. We need a gap for this or a gap for that or running a little skinny with regards to Phase 3s. I mean, if we see an asset that we think is going to be complementary with good technology and we think we can add value to it and not just kind of take it and just market it, our R&D, particularly George, we like to add value to things that are complementary.
We could go after that. But it wouldn’t be a Phase 3 where we’re going to be going up against somebody with bigger arsenal than us and someone that’s a hell a lot more desperate than us. Those situations we’re always going to kind of stay away from. We just don’t need them. We have a plethora of targets that we have that will continue to be put through the pipeline. But again, I don’t think we have a fear of doing stuff like that. Again, as I opened up, it’s unlike us to do something transformational though.
Mohit Bansal
And when you look at your internal pipeline plus base business, do you think you have enough at this point in the pipeline to have a sustainable long-term growth?
Robert Landry
I mean we continue to grow the amount of assets we have under clinical development. I think in quarter two, we’re at 35 assets that we have. And we have a lot of kind of stage-gated INDs. We can kind of put anywhere from, I don’t know, six to eight, six to 10 INDs entering the clinic. So there’s no shortage of what we have.
And we’ve always known, thanks to our Regeneron Genetics Center and all our VelocImmune technology, we’re very good at kind of getting targets. We’re not out kind of hunting for targets. If BD deals can kind of help us with the modality of putting targets to work, that’s great, and we’ll take that all the time. But we have a lot of targets and a lot of INDs that will continue to enter the clinic, where we just need to have a watch and remain efficient as getting it through the pipeline with regards to clinical development. We have a lot of things that get in.
We just need to get these things through at a quicker speed. So I think we’re comfortable with what we have. If you saw my strat plan, the 35 is certainly going to go higher. We have the capacity to develop targets. We need to find good equilibrium.
And with regards to our long-term EPS growth that you commented, I mean, certainly, I think people would say with regards to what we have on Dupixent, particularly the inflection on the Libtayo transaction and what that will do once the development balance is paid off, the new news that we have today with regards to continuing our best-in-class VEGF leadership and then everything we have coming with regards to IO, of which you’ll see a little bit of at ESMO. You saw a little bit of the costim last month. We feel comfortable with our growth projections that are coming.
Mohit Bansal
Great. Any questions from the audience? All right. One last question from my side. Fast forward one year, September 2023, I hope you are here sitting here. So what would make you look back at the year and say, boy, this was good year or great year?
Robert Landry
You want to start, Ryan?
Ryan Crowe
Sure. I mean, I think our plan is to – with going back to aflibercept 8-milligram, certainly to move as quickly as possible to a filing stage. And we do have the opportunity to deploy a priority review voucher. So theoretically, if we’re able to file by year-end, we could potentially be on the market with aflibercept eight milligrams by this time next year. So that’s probably one thing I would look for in terms of success.
Another big milestone that’s out there is Dupixent in COPD. The BAREA study is going to read out in the first half of next year. And certainly, that is another opportunity, another big leg of growth – potential leg of growth for Dupixent that, if successful, we would have to wait on the second study, of course, which will be in the second half of next year, but would be a good sign that there is significantly more growth to come for Dupixent.
And then, of course, continuing to evolve our oncology business, right? So we’re going to get a first taste at ESMO over the weekend and continuing to see progress across the oncology pipeline would be another check box I’d like to hit by this time next year and we can talk about on stage with you.
Mohit Bansal
Great. Thank you very much. You just confirm your participation, maybe. Just kidding. Thank you for this, and really appreciate you participating in the conference.
Robert Landry
Great. Thank you.
Ryan Crowe
Thanks, Mohit
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