Analyst Conference Summary

Biotechnology

conference date: November 2, 2023 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2023 (Q3, third quarter 2023)

Forward-looking statements

Overview: Continued strong sales.

Basic data (GAAP):

Revenue was $3.36 billion, up 6% sequentially from $3.16 billion and up 15% from $2.94 billion in the year-earlier quarter.

Net income was $1.01 billion, up 4% sequentially from $968 million, but down 23% from $1.31 billion year-earlier.

Diluted Earnings Per Share (EPS) was $8.89, up 5% sequentially from $8.50 and down 24% from $11.66 year-earlier.

Guidance:

Updated 2023 guidance to slightly higher expense ranges: R&D $4.37 to $4.455 billion GAAP, $3.875 to $3.925 non-GAAP. SGA $5.585 to $2.685 GAAP, $2.21 to $2.27 non-GAAP. But will lower cap ex.

Conference Highlights:

Leonard S. Schleifer, CEO, said "We have continued our momentum in the third quarter of 2023 with double-digit year-over-year revenue growth, driven by strong Dupixent and Libtayo performance, as well as strong initial uptake of Eylea HD following its late August launch. We are also making significant progress across our diversified pipeline, with FDA priority review designations for odronextamab in relapsed/refractory (R/R) follicular lymphoma and R/R diffuse large B-cell lymphoma as well as for Dupixent in pediatric eosinophilic esophagitis, while also adding a promising gene therapy platform to our portfolio through the recent acquisition of Decibel Therapeutics." Given anticipated future cash flow, believes can repurchase shares and pursue emerging science.

In August 2023, the FDA approved Eylea HD for wAMD, DME, and DR. The FDA had 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, compensating for expiring patents and biosimilar competition with the original dose.

In Q3 Regeneron completed the acquisition of Decibel Therapeutics for $101 million in cash, plus possible milestones.

Duxixent in Q3, 2023 was approved in Japan for pediatric and adolescent atopic dermatitis. An sBLA ofr EoE in children ages 1 to 11 was accepted, with a PDUFA of January 31, 2024. But got a CLR for chronic spontaneous urticaria.

In Q3 2023 the FDA accepted the BLA for odronextamab (CD20 + CD3) for r/r FL and r/r DLBCL. Also submitted in EU.

In Q3 2023 Libtayo had encouraging secondary endpoint data presented for cutaneous squamous cell carcinoma.

In Q3 2023 the FDA approved Veopoz (pozelimab-bbfg), an antibody to C5, for adult and pediatric patients with CHAPLE disease, also known as CD55-deficient protein-losing enteropathy.

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 $1.33 billion, up 13% sequentially from $1.18 billion and up 5% from $1.27 billion year earlier. Diluted EPS $11.59, up 13% sequentially from $10.24 and up 4% from $11.14 year-earlier.

Regeneron now has about 35 therapies in clinical development.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $15.7 billion, up sequentially from $15.3 billion. $2 billion long-term debt. Cash from operations was $2.50 billion, free cash flow $3.04 billion. $507 million shares for shares repurchased in the quarter.

GAAP expenses of $2.25 billion consisted of: cost of goods sold $225 million; research and development $1.08 billion; selling, general and administrative $640 million; collaboration manufacturing costs $212 million; other operating income $0 million. Leaving income from operations of $1.11 billion. Other income was $0 million. Income tax was $103 million.

Q&A selective summary:

Cash and allocation? Interest rates are high, so that helps. We continue to look at a lot of opportunities for acquisitions. But we are looking for optimal results. We believe our share repurchases are good because of price and the value of our pipeline.

Dupixent treats interrelated diseases with a common disorder. Many patients see effects in more than one part of the body. We are looking for biomarkers driving a subset of ulcerative colitis patients.

COPD, risk reward in alpha from look? We have an alpha sparing approach for the interim analysis.

Obesity strategy? Excited about 2 approaches: target collection like GPR75; new approaches like aleptin receptor antibodies. Looking at potential within the field. About 40% of the weight loss from the current therapies is loss of muscle, which cannot be regained, but the fat can. We are looking at muscle preservation and muscle growth agents.

Any switching from competitors to HD? Positive annecdotal reports of better vision and drying. Too early to see switch trends except from Eylea, but a few from competitors including Avastin. We have a sample program for Eylea HD and have seen high conversions after its use.

Mylan Eylea litigation? Had the trial, waiting for a decision, have been waiting several months.

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