Analyst Conference Summary

Biotechnology

conference date: May 6, 2021 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2021 (Q1, first quarter 2021)

Forward-looking statements

Overview: Continued hyper-rapid revenue growth.

Basic data (GAAP):

Revenue was $2.53 billion, up 5% sequentially from $2.42 billion and up 38% from $1.83 billion in the year-earlier quarter.

Net income was $1.12 billion, down 3% sequentially from $1.15 billion, and up 78% from $625 million year-earlier.

Diluted Earnings Per Share (EPS) was $10.09, down 1% sequentially from $10.24 and up 86% from $5.43 year-earlier.

Guidance:

Fro full year 2021 GAAP R&D expense range $3 to $3.175 billion. SG&A $1.69 to $1.84 billion. 86% to 88% gross margin. Cap ex $585 to $650 million. 12% to 14% tax rate.

Conference Highlights:

Leonard S. Schleifer, CEO, said "Regeneron had a strong first quarter highlighting our continued evolution into a company with multiple durable product lines helping people with a range of serious diseases including Covid-19. We recently reported positive Phase 3 results for REGEN-COV in both the Covid-19 outpatient treatment and prevention settings and are working with national and state authorities to improve access. We expect continued growth with Eylea in retinal diseases, as well as with Dupixent through further penetration in existing indications and a broad Phase 3 development program. In oncology, we are in the early days of launching Libtayo for advanced basal cell carcinoma and non-small cell lung cancer and recently announced positive pivotal data in cervical cancer with regulatory submissions planned for later this year." .

In November 2020, Regeneron got an EUA for REGN-COV 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 March 2021 Phase 3 top line results were positive.

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 Q1 2021 Evkeeza was approved for homozygous familial hypercholesteroemia.

Dupixent got a EU marketing authorization extending to children 6 to 11 years old in November 2020 for severe atopic dermatitis. Children with moderate to severe asthma FDA PFUFA date October 11; also submitted in EU. In Q4 2020 Phase 3 studies in chronic inducible urticaria, chronic sinusitis without nasal polyposis, and allergic fungal rhinosinusitis were initiated.

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. It has 30 product candidates in clinical development.

Revenue by type: product sales $1.72 billion. Collaboration revenue $754 million. Other income $50 million.

Non-GAAP results: net income $1.11 billion, up 3% sequentially from $1.08 million and up 44% from $771 million year earlier. Diluted EPS $9.89, up 4% sequentially from $9.53 and up 50% from $6.60 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 $7.05 billion, up sequentially from $6.72 billion. $2.0 billion debt. Cash from operating activities was $669 million. $553 million free cash flow.

GAAP expenses of $1.42 billion consisted of: cost of goods sold $183 million; research and development $743 million; selling, general and administrative $406 million; collaboration manufacturing costs $125 million; other operating income $41 million. Leaving income from operations of $111 billion. Other income was $140 million. Income tax was $138 million.

Q&A summary:

Dupixent competition, JAK inhibitors? We are seeing great sales. There is data questioning safety for JAK inhibitors, especially at high doses. We are confidend in the profile of dupixent, especially for long-term treatment of children. The overall market penetration is low, so there is room for market growth and new entrants.

Dupixent patients with non-optimal, but not failing, responses? Moderate to severe atopic dermatitis patients have lesions over large fractions of their bodies. Not clear if adding topicals would be attractive. Our market research shows very high satisfaction with dupixent.

Covid hurdles for low dose EUA? We are in discussions with the FDA. We anticipate an action by the FDA over the next few weeks. We are in constant contact with them.

We have cash to buy complementary technologies if we need them, we would probably buy early stage rights rather than mergers. We will continue buy backs because we believe our stock is undervalued.

Eylea life cycle managment? The main thing is generating data that drives more treatment. We should get preliminary Phase 2 data for the high dose later this year. A new compound is being prepared to enter the clinic.

Faricimab competition to Eylea? It is not approved yet, and the safety profile is questionable. Key opinion leaders did not see an obvious benefit to the product.

Asthma expansion indication? Pediatric launch for dupixent later this year is a tremendous opportunity for patients.

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