Analyst Conference Summary

Biotechnology

conference date: February 3, 2023 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2022 (Q4, fourth quarter 2022)

Forward-looking statements

Overview: Revenue down y/y as Covid sales go to zero, but other products continue to ramp.

Basic data (GAAP):

Revenue was $3.41 billion, up 16% sequentially from $2.94 billion but down 31% from $4.95 billion in the year-earlier quarter.

Net income was $1.20 billion, down 9% sequentially from $1.32 billion, and down 46% from $2.23 billion year-earlier.

Diluted Earnings Per Share (EPS) was $10.50, down 10% sequentially from $11.66 and down 47% from $19.69 year-earlier.

Guidance:

No revenue guidance for 2023. Non-GAAP R&D expense 43.725 to $3.925 billion. SG&A $2.13 to $2.28 billion. Cap ex 4825 to $950 million.

Conference Highlights:

Leonard S. Schleifer, CEO, said "In the fourth quarter of 2022, we submitted our Biologics License Application for neovascular age-related macular degeneration and diabetic macular edema for aflibercept 8 mg, which could potentially reach patients in the third quarter of 2023. We also continued to expand the use of our commercial products with the FDA approval of Libtayo in combination with chemotherapy for non-small cell lung cancer and the European Commission approval of Dupixent for prurigo nodularis. In 2023, we remain committed to achieving the full potential of our diverse commercial- and clinical-stage portfolio, with a particular focus on aflibercept 8 mg, Dupixent in a variety of type 2 allergic diseases, and our promising oncology and hematology assets." Excluding the drop in Covid antibody sales, other product sales grew 14% y/y. In January $3 billion repurchase program authorized. Hopes 8 mg Eylea becomes the new standard of care, when launched in August, fending off biosimilars entering the market.

Pushing the idea that giving Eylea at an increased, 8 mg dose, at longer (12 to 16 week) intervals, will extend the lifetime of revenue, despite expiring patents and biosimilar competition. 8 mg dose has not yet been approved, but trial data released in Q3 2022 is encouraging. A BLA was filed in December 2022 with a priority review voucher. Sees a potential FDA approval around August 2023. In December 2022, the European Commission approved Eylea for the treatment of retinopathy of prematurity in preterm infants. The sBLA is currently under review by the FDA, with a PDUFA of February 11, 2023.

There are a large number of data readouts ahead in the cancer pipeline programs over the next two years. The first FDA submissions, for Linvoseltamab and Odreonextamab, could come in 2023.

Pozelimab for CD55-deficient protein-losing enteropathy could have the BLA submitted to the FDA within 12 months (so end of 2023).

Dupixent was approved in Europe in December 2022 for prurigo nodularis, and in January 2023 for EoE. The CHMP recommended it for children with severe atopic dermatitis. In the US in Q4 an sBLA for chronic spontaneous urticaria was submitted to the FDA.

In November 2022, the FDA approved Libtayo in combination with platinum-based chemotherapy for first-line adult patients with advanced NSCLC. In November 2022, the EC approved Libtayo as a monotherapy for the treatment of adult patients with recurrent or metastatic cervical cancer after failed platinum-based chemotherapy. In December 2022, Japan also approved Libtayo in advanced or recurrent cervical cancer.

In Q4 2022 positive Phase 2 data was released for linvoseltamab for heavily pre-treated, relapsed/refractory multiple myeloma.

Two cohorts of a pivotal Phase 2 trial studying odronextamab in patients with relapsed/refractory diffuse large B-cell lymphoma (DLBCL) and follicular lymphoma reported positive data in December 2022.

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

In Q4 the FDA accepted for priority review the sBLA for Evkeeza (evinacumab) as an adjunct to other lipid-lowering therapies to treat children aged 5 to 11 years with homozygous familial hypercholesterolemia with a PDUFA of March 30, 2023.

In Q4 2022 A BLA for pozelimab, an antibody to C5, for the treatment of CD55-deficient protein-losing enteropathy (CHAPLE) was submitted to the FDA. The FDA also accepted for priority review the sBLA for Kevzara (sarilumab) to treat polymyalgia rheumatica, with a PDUFA of February 28, 2023.

In November 2022, the Company and CytomX Therapeutics, Inc. entered into a license and collaboration agreement to create conditionally-activated investigational bispecific cancer therapies utilizing CytomX's Probody therapeutic platform and Regeneron's Veloci-Bi bispecific antibody development platform. Regeneron made an upfront payment of $30 million and will be responsible for funding development and commercial activities. CytomX will be eligible to receive future target nomination payments and preclinical, clinical, and commercial milestone payments as well as royalties on global net sales.

Regeneron 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 $1.70 billion. Collaboration revenue $1.59 billion. Other income $128 million.

Non-GAAP results: net income $1.45 billion, up 14% sequentially from $1.27 billion and down 46% from $2.68 billion year earlier. Diluted EPS $12.56, up 13% sequentially from $11.14 and down 46% from $23.42 year-earlier.

Regeneron now has about 35 therapies in clinical development.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at 14.3$ billion, up sequentially from $13.0 billion. $2 billion long-term debt. Cash from operations was $5.01 billion, free cash flow $4.42 billion. $na million shares repurchased in the quarter.

GAAP expenses of $2.27 billion consisted of: cost of goods sold $302 million; research and development $1.04 billion; selling, general and administrative $661 million; collaboration manufacturing costs $238 million; other operating income $7 million. Leaving income from operations of $1.15 billion. Other income was $178 million. Income tax was $128 million.

Q&A selective summary:

Eylea v. Roche Vabysmo? Our performance continues to be strong. There is competition, but with Roche uptake has been modest and we have heard reports of patients switching back to Eylea.

If the Alnylam partnership first try works outside the liver, it would be a platform enabler.

Strategy for 8 mg dose? Looking at pricing, rollout, targetting, but we need an approved label. Initial launch should be with a vial, later on a pre-filled syringe.

PSMAxCD28 asset? We need more patients. We want to develop the best-in-class checkpoint inhibitors. We are very excited about our CD20xCD3 bispecific by itself and our BCMAxCD3 bispecific by themselves. We are filing for those hopefully by the end of the year, but also initiating earlier-line studies. We see few cancer cures in serious advanced tumors, so there is still tremendous unmet medical need. We do not have cures for more serious cancers.

Geographic atrophy patient, potential growth for long-acting wet amd therapies? The primary driver will be that patients get a needle in the eye less frequently.

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