Analyst Conference Summary

Biotechnology

conference date: November 5, 2020 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2020 (Q3, third quarter 2020)

Forward-looking statements

Overview: Continuing hyper revenue growth.

Basic data (GAAP):

Revenue was $2.29 billion, up 17% sequentially from $1.95 billion and up 32% from $1.74 billion in the year-earlier quarter.

Net income was $842 million, down 6% sequentially from $897 million, and up 26% from $670 million year-earlier.

Diluted Earnings Per Share (EPS) was $7.39, down 3% sequentially from $7.61 and up 26% from $5.86 year-earlier.

Guidance:

Gave 2020 expense guidance, but not revenue or earnings.

Conference Highlights:

Leonard S. Schleifer, CEO, said "Last week, Regeneron achieved an important milestone in the fight against COVID-19 with prospective Phase 2/3 results showing REGN-COV2 significantly reduced virus levels and the need for further medical attention in non-hospitalized patients. We have shared these important data with regulatory authorities. Even with our intense commitment to fighting COVID-19, Regeneron continues to deliver across all aspects of our business. This quarter we had robust top- and bottom-line growth driven by Eulea in retinal diseases and Dupixent in atopic dermatitis and asthma. In 2021, we look forward to important potential launches including for our PD-1 inhibitor Libtayo in non-small cell lung cancer and advanced basal cell carcinoma. Lastly, we are proud that our novel antibody cocktail REGN-EB3 recently became the first FDA-approved treatment for Ebola, underscoring the potential of antibody therapies to address deadly infectious diseases."

In July 2020, Regeneron was awarded a $450 million contract to manufacture and supply REGN-COV2 to the U.S. government. Delivery of REGN-COV2 drug product under the agreement started during the third quarter of 2020. The Company continues to ramp up production for and now expects to have approximately 80,000 doses available by the end of November, approximately 200,000 total doses ready by the first week of January 2021, and approximately 300,000 total doses ready by the end of January 2021. In August 2020, the Company entered into a collaboration agreement with Roche to develop, manufacture, and distribute REGN-COV2. Each company has committed to dedicate a certain amount of manufacturing capacity to REGN-COV2 each year, and the collaboration is expected to substantially increase supply of REGN-COV2. Under the terms of the agreement, Regeneron will distribute and record sales for REGN-COV2 in the United States and Roche will be responsible for distribution outside the United States.

In April 2020, the Company and Sanofi announced that the primary endpoint was met in the Phase 3 trial of Libtayo (cemiplimab), a PD-1 antibody, as monotherapy in first-line NSCLC. The full results were shared in Q3. Feb. 28, 2021 PDUFA date. Also given March 3, 2021 PDUFA data in advanced BCC.

In Q2 initiated clinical trials of REGN-COV2, its investigational two-antibody cocktail for the treatment and prevention of COVID-19. Following review from the Independent Data Monitoring Committee Phase 1 safety results, a Phase 3 trial to evaluate REGN-COV2's ability to prevent infection among uninfected people who have had close exposure to a COVID-19 patient was initiated and is being run jointly with NIAID. In addition, REGN-COV2 moved into the Phase 2/3 portion of two adaptive Phase 1/2/3 trials to treat hospitalized and non-hospitalized patients with COVID-19. The Company plans to report initial virology and biomarker results from the REGN-COV2 treatment trials in September 2020.

In the coming years expects to bring an extensive line of bispecific antibodies to the clinic. Believes has advantages over competitors for these, as well as for the PD1 antibody (Libtayo).

Revenue by type: product sales $1.48 billion. Sanofi collaboration revenue $353 million. Bayer collaboration revenue $300 million. Other income $159 million.

Non-GAAP results: net income $961 million, up 13% sequentially from $854 million and up 26% from $762 million year earlier. Diluted EPS $8.36, up 17% sequentially from $7.16 and up 25% from $6.67 year-earlier.

In Q1 2020 the FDA accepted for priority review the supplemental Biologics License Application (sBLA) for children aged 6 to 11 years with moderate-to-severe atopic dermatitis, with a target action (PDUFA) date of May 26, 2020. In March 2020, Dupixent for chronic rhinosinusitis with nasal polyposis (CRSwNP) was approved in Japan.

In March 2020, the Phase 3 trial in adult patients with homozygous familial hypercholesterolemia (HoFH) met its primary endpoint. Regeneron plans to submit an sBLA in mid-2020.

Has moved four bispecifics, to the clinic this year. REGN4018 (MUC16 and CD3) has shown encouraging results so far in platinum-resistant ovarian cancer.

Pozelimab, a C5 antibody, started a Phase 2 trial for CD55-deficit in 2020.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $5.90 billion, up sequentially from $5.73 billion. Repurchased $100 million of shares. $1.98 billion debt. Cash used in operating activities was $254 million; the decrease in cash from operating activities primarily resulted from an increase in trade accounts receivable from extending payment terms to certain Eylea customers due to the COVID-19 pandemic. In August 2020, sold $2.0 billion of senior unsecured notes.

GAAP expenses of $1.24 billion consisted of: cost of goods sold $131 million; research and development $684 million; selling, general and administrative $327 million; collaboration manufacturing costs $143 million. Leaving income from operations of $1.05 billion. Other expense was $55 million. Income tax was $156 million.

Q&A summary:

In 2021 will we have a clear signal about the potential of the bispecifics? Depends on signals from dose escalation studies. We are excited about the class, we have pairs of CD3 and CD28 bispecifics for numerous cancers. Some are in the clinic, some will enter the clinic in the next few years. And to combine them with the PD1.

COV2 safety signal issue? We remain blinded to the cohorts that were paused.

EUA for the AB cocktail? There is no timeline for FDA action. We did see an effect in the overall population, but that was driven by the effect in the population that had not produced their own antibodies.

Considerable discussion of where the COV2 antibodies could best be used. We believe it will initially be used in the overall population based on risk factors, but as better indicators come in that could change.

Backing out about $400 million for covid R&D in 2020, the growth rate was about 15% in 2020, so for 2021 you could back out the covid, though we will consider to invest some there.

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