Analyst Conference Summary

Biotechnology

conference date: November 4, 2021 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2021 (Q3, third quarter 2021)

Forward-looking statements

Overview:

Basic data (GAAP):

Revenue was $3.45 billion, down 33% sequentially from $5.14 billion and up 51% from $2.29 billion in the year-earlier quarter.

Net income was $1.63 billion, down 47% sequentially from $3.10 billion, and up 94% from $842 million year-earlier.

Diluted Earnings Per Share (EPS) was $14.33, down 49% sequentially from $27.97 and up 94% from $7.39 year-earlier.

Guidance:

Changed 2021 guidance to increase R&D expense but decrease SG&A expense. Capital expenses $545 to $575 million.

Conference Highlights:

Leonard S. Schleifer, CEO, said "Regeneron had another strong quarter of core business growth, with EYLEA and Dupixent reaching more patients than ever and progress made across our diverse pipeline. We secured a new U.S. government supply agreement and are delivering an additional 1.4 million doses of REGEN-COV. Our BLA for REGEN-COV as treatment and prophylaxis was accepted by the FDA for priority review, with a mid-April 2022 action date. During the third quarter, we announced positive data from Phase 3 trials of Dupixent in chronic spontaneous urticaria and pediatric atopic dermatitis. We also recently announced positive data from Phase 3 trials of Dupixent in eosinophilic esophagitis and prurigo nodularis, and that the FDA approval in pediatric asthma was extended to children as young as six. Finally, our abstracts that will be released today for the American Society of Hematology (ASH) Annual Meeting highlight programs across the hematology portfolio, including our BCMA and C5 antibodies."

Sales of REGN-COV2 declined dramatically sequentially in Q3. The FDA PDUFA data is in April 2022. 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.

In Q3 2021 Dupixent reported positive Phase 3 data in uticaria and pediatric atopic dermatitis. In Q4 2021 reported positive Phase 3 data in eosinophilic esophagitis and Prurigo nodularis. Also extended asthma label to children 6 and older.

Future growth will be fueled by the breadth and depth of the pipeline.

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 $2.79 billion. Collaboration revenue $1.07 billion. Other income $98 million.

Non-GAAP results: net income $1.77 billion, down 39% sequentially from $2.90 billion and up 84% from $961 million year earlier. Diluted EPS $15.37, down 40% sequentially from $25.80 and up 84% from $8.36 year-earlier.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $11.4 billion, up sequentially from $7.81 billion. $1.99 billion long-term debt. Cash from operating activities was $na million. $na million free cash flow. $190 million used for stock repurchases.

GAAP expenses of $1.61 billion consisted of: cost of goods sold $239 million; research and development $665 million; selling, general and administrative $445 million; collaboration manufacturing costs $214 million; other operating expense $42 million. Leaving income from operations of $1.85 billion. Other expense was $31 million. Income tax was $184 million.

Q&A selective summary:

CD28 data? In 2022. Depends on trial progress. Combination trials involve dose escalation. Preclinical showed CD28 costim approach was most favorable.

Drug pricing? The bill language is not finalized, so hard to predict. The cap on Medicare expenditures is on Part D. It is remarkable that the industry that saved the world is under attack, but the most draconian ideas have evaporated.

Eyleas Phase 3 filing? Need to achieve similar visual effects but with longer dosing interval.

Covid antibody cocktail? So far our therapy remains effective against known variants. But we are preparing a new cocktail in case a resistant variant arises. The decision making on specifics is complicated.

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