Analyst Conference Summary

Biotechnology

conference date: May 4, 2022 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2022 (Q1, first quarter 2022)

Forward-looking statements

Overview: Strong y/y growth despite q/q decline in Covid antibody sales.

Basic data (GAAP):

Revenue was $2.97 billion, down 40% sequentially from $4.95 billion but up 17% from $2.53 billion in the year-earlier quarter.

Net income was $0.97 billion, down 57% sequentially from $2.23 billion, and down 13% from $1.12 billion year-earlier.

Diluted Earnings Per Share (EPS) was $8.61, down 56% sequentially from $19.69 and down 15% from $10.09 year-earlier.

Guidance:

Modified prior 2022 guidance to $100 million higher R&D costs. Increased capital expense estimate by $30 million. But lowered effective tax rate by 1%.

Conference Highlights:

Leonard S. Schleifer, CEO, said "We continued to see substantial U.S. sales growth for EYLEA and Dupixent worldwide. We are well-positioned to reach even more patients with type 2 inflammatory disease through FDA priority review designations for Dupixent in children with atopic dermatitis and in adults and adolescents with eosinophilic esophagitis."

In April 2022, Regeneron entered into an agreement to acquire Checkmate Pharmaceuticals, Inc. at a total equity value of approximately $250 million. The transaction is expected to close, subject to the satisfaction of customary closing conditions including regulatory approvals, in mid-2022. This is the first time Regeneron has ever acquired an entire company.

In April 2022, the European Commission approved Dupixent for the treatment of severe asthma in children aged 6 to 11 years.

In Q1 the FDA accepted for priority review the sBLA for Dupixent for children aged 6 months to 5 years with moderate-to-severe atopic dermatitis, with a PDUFA date of June 9, 2022. A regulatory application was also submitted in the European Union (EU). The FDA accepted for priority review the sBLA for Dupixent for adults and adolescents aged 12 years and older with eosinophilic esophagitis (EoE), with a target action date of August 3, 2022. A regulatory application was also submitted in the EU.

In Q1 2022 a supplemental Biologics License Application (sBLA) for Eylea for an every-16-weeks dosing regimen in patients with non-proliferative diabetic retinopathy was submitted to the FDA.

In January 2022, Regeneron entered into a license and collaboration agreement for Ultragenyx Pharmaceutical to develop and commercialize Evkeeza in countries outside the US.

In Q4 2021 the FDA accepted the sBLA for Libtayo in combination with chemotherapy to treat patients with advanced non-small cell lung cancer (NSCLC). The PDUFA date is September 19, 2022. A regulatory application was also submitted in the EU.

Dupixent for prurigo nodularis Phase 3 trial met is endpoints, with a regulatory submission expected 1H 2022.

In February 2022, results from its Phase 2 trial evaluating an investigational 8 mg high dose of aflibercept (Eylea) compared to the currently-approved 2 mg dose of Eylea in patients with neovascular age-related macular degeneration (wet AMD) were released. The trial met its primary endpoints for safety. Aflibercept 8 mg continued to show numeric improvements in anatomical and vision outcomes compared to Eylea through 44 weeks.

Future growth will be fueled by the breadth and depth of the pipeline. Genetic medicines portfolio pipeline has high potential future value.

The company continued to advance its bispecific antibodies for cancers in early stage trials. The first data readout from a prostate cancer bispecific is expected later this year. Many anti-cancer agents are being tested in combination with Libtayo. In all it has 30 product candidates in clinical development.

Revenue by type: product sales $1.64 billion. Collaboration revenue $1.23 billion. Other income $94 million.

Non-GAAP results: net income $1.32 billion, down 51% sequentially from $2.71 billion and up 19% from $1.11 billion year earlier. Diluted EPS $11.49, down 52% sequentially from $23.72 and up 16% from $9.89 year-earlier.

In Q1 2022 Fianlimab, a LAG-3 agonist, initiated a Phase 3 study in first-line metastatic melanoma.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $14.1 billion, up sequentially from $12.5 billion. $2 billion long-term debt. Cash from operations was $2.10 billion, free cash flow $1.96 billion. $352 million shares repurchased in the quarter.

GAAP expenses of $1.71 billion consisted of: cost of goods sold $207 million; research and development $844 million; selling, general and administrative $450 million; collaboration manufacturing costs $198 million; other operating income $20 million. Leaving income from operations of $1.26 billion. Other expense was $197 million. Income tax was $88 million.

Q&A selective summary:

Eylea v. competition with Roche drug [Faricimab]? Rebates? Eylea performance remains strong across indications, including capturing market growth. We have about 50% of VEGF market and over 70% of branded market. We have an extensive safety record. We see Eylea to continue its strong leadership in uptake and use.

Hi dose Eylea market? Will look at mature clinical data, then at patient need.

Checkmate rational? Can't discuss until deal closes.

In late stage cancer patients we are looking for our novel agent combinations to show objective responses and good duration. We would expect to see better activity in earlier lines of therapy.

Odronextamab dosing? By starting at low doses and building up you reduce adverse events like cytokine release syndrome. We may be able to use this approach in an outpatient setting, but still be able to get to the maximum dose in a short period of time.

Cardiovascular plans? We are exploring ways to approach this market. We agree it is not a major near-term contributor to our performance.

Faricimab v. high dose Eylea? It will be up to clinicians. High dose Eylea will be a well known entity with the same safety as the low dose, but with the long duration of dosing of the new molecule. It would be an easier transition for clinicians than a new drug.

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