Analyst Conference Summary

Biotechnology

conference date: February 5, 2021 @ 5:30 AM Pacific Time
for quarter ending: December 30, 2020 (Q4, fourth quarter 2020)

Forward-looking statements

Overview: Continued hyper-rapid revenue growth.

Basic data (GAAP):

Revenue was $2.42 billion, up 6% sequentially from $2.29 billion and up 30% from $1.86 billion in the year-earlier quarter.

Net income was $1.15 billion, up 37% sequentially from $842 million, and up 45% from $792 million year-earlier.

Diluted Earnings Per Share (EPS) was $10.24, up 39% sequentially from $7.39 and up 48% from $6.93 year-earlier.

Guidance:

Full year 2021 guidance did not include a revenue target. GAAP R&D expense expected between $3.0 and $3.175 billion. SG&A expense $1.7 to $1.85 billion. Gross margin 86% to 88%. COCM $670 to $750 million. Other income $150 to $175 million. Cap ex $600 to $680 million. Effective tax rate 11-13%.

Conference Highlights:

Leonard S. Schleifer, CEO, said "In 2021, in addition to our ongoing work on COVID-19, we expect further diversified growth driven by continued Eylea momentum, expanded approvals and increased market penetration for Dupixent, and new launches for Libtayo in oncology. We anticipate U.S. regulatory action for Libtayo in both non-small cell lung cancer and basal cell carcinoma within the next month and anticipate additional readouts later this year from across our oncology pipeline, including the bispecific platform." Positioned to deliver significant and sustained growth for years to come. Up to 7 INDs for drugs to start clinical trials are planned for 2021.

In November 2020, Regeneron got an EUA for REGN-COV2 from the FDA. Delivery of REGN-COV2 drug product under the agreement started during the third quarter of 2020. 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 January 2021, the Company announced a second agreement with the U.S. government to manufacture and deliver REGEN-COV. 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 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.

Dupixent got a EU marketing authorization extending to children 6 to 11 years old in November 2020 for severe atopic dermatitis. In October the Phase 3 trial for asthma in 6 to 11 year old children reported positive results. In Q4 2020 Phase 3 studies in chronic inducible urticaria, chronic sinusitis without nasal polyposis, and allergic fungal rhinosinusitis were initiated

Libtayo for NSCLC, first-line with >50% PD-L1 expression now has an FDA PDUFA date of February 21, 2020. For basal cell carcinoma the PDUFA is March 3, 2021.

In October 2020, the FDA approved Inmazeb (REGN-EB3) for the treatment of infection caused by Zaire ebolavirus in adult and pediatric patients, including newborns of mothers who have tested positive for the infection.

The company continued to advance its bispecific antibodies in early stage trials. Also a Phase 3 study for birch pollen allergy was started for REGN5713.

Revenue by type: product sales $1.62 billion. Sanofi collaboration revenue $317 million. Bayer collaboration revenue $361 million. Other income $123 million.

Non-GAAP results: net income $1.08 billion, up 12% sequentially from $961 million and up 26% from $858 million year earlier. Diluted EPS $9.53, up 14% sequentially from $8.36 and up 27% from $7.50 year-earlier.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $6.72 billion, up sequentially from $5.90 billion. $2.0 billion debt. Cash from operating activities was $1.23 billion. $1.07 billion free cash flow. Authorized a new $1.5 billion buyback program.

GAAP expenses of $1.26 billion consisted of: cost of goods sold $180 million; research and development $744 million; selling, general and administrative $304 million; collaboration manufacturing costs $174 million. Leaving income from operations of $1.17 billion. Other income was $58 million. Income tax was $75 million.

Q&A summary:

REGN-COV bottlenecks? We need to work on all parts of the funnel, from getting doctors to prescribe, to allowing for easy administration. There has been progress. There is still some skepticism about the completeness of data. EUA has made working with government important.

Dupixent, key to market share? For atopic dermatitis it was a novelty requiring a lot of education. There is a lot of unmet need and need to reach new prescribers. Also a belief that oral drugs are not as effective as injected drugs. Need to see Dupixent as a targetted biological pill.

Ovarian cancer data? Efficacy relates to Resist and CA125, will have to wait for a presentation at a science meeting.

Path to peanut allergy? Excited about the entire portfolio. We were able to demonstrate peanut desensitivization. We are also moving antibodies that directly bind allergens into the clinic with exciting early results for cat and birch allergy.

Eyelea competition? Roche product ANG2, we could not find a benefit to adding it to a VEGF compound. We have not seen all their data, we don't see it as superior to Eylea, just a high dose therapy that we can match.

1979 plan? We just need to continue to efficacy while building on duration. Data already are supportive of approval if we can support with larger numbers of patients.

Physicians tend to be conservative with vision because the risk of a new approach is blindness.

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