Analyst Conference Summary

Biotechnology

conference date: August 5, 2021 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2021 (Q2, second quarter 2021)

Forward-looking statements

Overview: REGEN-COV for covid spiked revenue.

Basic data (GAAP):

Revenue was $5.14 billion, up 103% sequentially from $2.53 billion and up 163% from $1.95 billion in the year-earlier quarter.

Net income was $3.10 billion, up 176% sequentially from $1.12 billion, and up 245% from $897 million year-earlier.

Diluted Earnings Per Share (EPS) was $27.97, up 177% sequentially from $10.09 and up 268% from $7.61 year-earlier.

Guidance:

Full year 2029, no revenue guidance. Expenses lowered to R&D $2.95 to $3.075 billion GAAP. SG&A $1.73 to $1.83 billion. Gross margin GAAP 875 to 88%, non-GAAP 88% to 89%. Cap ex $590 to $640 millin. Tax rate 14% to 16%.

Conference Highlights:

Leonard S. Schleifer, CEO, said "Regeneron had outstanding performance in the second quarter during which we delivered to the U.S. government the entire order for our COVID-19 antibody cocktail and recognized record global sales from our Eylea and Dupixent franchises. We continue to advance Dupixent's potential to help new patient groups, with recent positive Phase 3 data in chronic spontaneous urticaria and additional late-stage read-outs expected later this year in prurigo nodularis, eosinophilic esophagitis, and pediatric atopic dermatitis. With today's positive Phase 3 results in combination with chemotherapy in non-small cell lung cancer, Libtayo yet again demonstrates its potential to be a leading checkpoint inhibitor. We also progressed our genetics medicines platform, with landmark clinical data alongside our collaborator Intellia using a CRISPR therapeutic and the discovery of a promising new obesity target from the Regeneron Genetics Center."

Sales of REGN-COV2 jumped to over $3 billion in the quarter, becoming Regeneron's number 1 seller. In January 2021, the Company announced a second agreement with the U.S. government to manufacture and deliver REGN-COV2. The U.S. government has agreed to acquire up to 1.25 million additional doses for up to $2.625 billion. The EMA is currently reviewing the data. Believes the cocktail was designed so as to be active against Covid variants, and has an antibody collection that could be mixed and matched. In March 2021 Phase 3 top line results were positive. In June 2021 the EUA was amended to allow for a lower dose, increasing the number of doses available. Japan became the first nation to grant formal approval.

But given the number of doses of REGN-COV2 delivered in Q2, Regeneron does not expect the US supply to be exhausted until the end of the year, dependent on the course of the pandemic. Some US residual revenue will be recorded in Q3. Sales by Roche, outside the U.S., will continue, generating royalties.

Libtayo (cemiplimab), a PD-1 antibody, got FDA approval in Q1 2021 as monotherapy in first-line NSCLC. The full results were shared in Q3, 2020. Also approved in advanced BCC (basal cell carcinoma) in Q2 2021. In August 2021 announced Libtayo + chemotherapy in a Phase 3 NSCLC trial reduced death rate 30% compared to chemotherapy alone, meeting its OS primary endpoint.

In Q1 2021 Evkeeza was approved for homozygous familial hypercholesteroemia.

Genetics intelligence pipeline is showing early investigational promising results.

In Q2 2021 Dupixent reported positive data in a Phase 3 trail for chronic spontaneous urticaria. Also approved in June in the US for the 200 mg single-dose pre-filled pen.

The company continued to advance its bispecific antibodies in early stage trials. It has 30 product candidates in clinical development.

Revenue by type: product sales $4.14 billion. Collaboration revenue $955 million. Other income $46 million.

Non-GAAP results: net income $2.90 billion, up 161% sequentially from $1.11 billion and up 241% from $854 million year earlier. Diluted EPS $25.80, up 161% sequentially from $9.89 and up 260% from $7.16 year-earlier.

In February 2021 Regeneron announced the Phase 2 study in cat allergic patients with mild asthma met its primary and key secondary endpoints. It plans to initiate a Phase 3 study later in 2021.

REGN5668 (MUC16xCD28) for ovarian cancer is now (Q2 2021) in the clinic. Several other new compounds are now in clinical trials or will begin in 2021, most in combination with Librayo. [See Slide 19]

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $7.81 billion, up sequentially from $7.05 billion. $2.0 billion long-term debt. Cash from operating activities was $627 million. $478 million free cash flow.

GAAP expenses of $1.79 billion consisted of: cost of goods sold $539 million; research and development $714 million; selling, general and administrative $415 million; collaboration manufacturing costs $154 million; other operating income $31 million. Leaving income from operations of $3.35 billion. Other income was $406 million. Income tax was $654 million.

Q&A summary:

Empower comp, Libtayo to Keytruda? Balance between squamous and non-squamous and other data will be presented later. Medium surivival stats are right on top of each other. But we allowed more patient subtypes in our study. In monotherapy in >50% positive, our results were better than Keytruda. Ours works as monotherapy and in combination with chemotherapy, it looks at least as active as what is out there. We believe we will be competitive in the lung cancer space. With combinations we hope to elevate results to another level.

Immonocompromised will not be able to generate their own antibodies, their best protection would be our manufactured antibodies. After about 1 week, treated patients are about 90% protected against infection.

Eylea return to growth, is run-rate sustainable? Gained share from competition. Did see patient flow to offices, could have included delayed treatment. Diabetic eye disease has the highest growth trajectory.

US reorder? Contract is fulfilled. Could be another contract, could switch to commercial model. There has been a tremendous acceleration in use. We are positioned to supply similar amounts, Roche could supply some capacity. Depends on the current surge.

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