Analyst Conference Summary

Biotechnology

conference date: August 3, 2023 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2023 (Q2, second quarter 2023)

Forward-looking statements

Overview: Revenue grew y/y, but Eylea revenue now in decline.

Basic data (GAAP):

Revenue was $3.16 billion, flat sequentially from $3.16 billion but up 11% from $2.86 billion in the year-earlier quarter.

Net income was $968 million, up 18% sequentially from $818 million, but up 14% from $852 million year-earlier.

Diluted Earnings Per Share (EPS) was $8.50, up 19% sequentially from $7.17 and up 14% from $7.47 year-earlier.

Guidance:

Updated 2023 guidance to higher R&D and SG&A expnses, but lower cap ex.

Conference Highlights:

Leonard S. Schleifer, CEO, said "Regeneron delivered strong financial results in the second quarter of 2023 through increasingly diversified revenue streams, and we remain well-positioned for long-term growth. In the past months, we have continued to advance our pipeline, in particular aflibercept 8 mg which we are progressing towards a potential FDA decision in the third quarter and for which we shared unprecedented two-year results in the pivotal PHOTON trial demonstrating durable vision gains at extended dosing intervals in patients with diabetic macular edema."

The FDA rejected the 8 mg dose of Eylea in June 2023, issuing a complete response letter (CLR). Regeneron had been 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. A BLA was filed in December 2022 with a priority review voucher. Sees a potential FDA action in Q3 2023. Believes issue is vial filling facility that is oursourced.

There are a large number of data readouts ahead in the cancer pipeline programs over the next two years.

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

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 the sBLA for chronic spontaneous urticaria was submitted to the FDA, with PDUFA set for October 22, 2023. In 2023 approved by EC for eosinophilic esophagitis.

Due to an adverse event, one Libtayo combination with PSMAxCD28 has been restricted to a lower dose.

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

Regeneron continued to advance its bispecific antibodies for cancers in early stage trials.In all it has 30 product candidates in clinical development.

Revenue by type: product sales $1.77 billion. Collaboration revenue $1.32 billion. Other income $69 million.

Non-GAAP results: net income $1.18 billion, up 1% sequentially from $1.17 billion and down 7% from $1.27 billion year earlier. Diluted EPS $10.24, up 1% sequentially from $10.09 and up 5% from $9.77 year-earlier.

Regeneron now has about 35 therapies in clinical development.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $15.3 billion, up sequentially from $na billion. $ billion long-term debt. Cash from operations was $2.39 billion, free cash flow $2.10 billion. $723 million shares repurchased in the quarter.

GAAP expenses of $2.14 billion consisted of: cost of goods sold $192 million; research and development $1.09 billion; selling, general and administrative $652 million; collaboration manufacturing costs $213 million; other operating income $1 million. Leaving income from operations of $1.02 billion. Other income was $66 million. Income tax was $115 million.

Q&A selective summary:

8mg, class 1 or class 2, nature of decision? Not classified because tied to pozelimab. We believe action is approval or not. If manufacturing is approvable.

Details with Catalan? We have been in very close contact and have a clear understanding of what is required. Catalan is submitting data on a rolling basis. The last submission will be small and in by mid-August. FDA hopes to review by August 20, which is the pozelimab PDUFA date. It is all about manufacturing processes, not trial data.

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