Analyst Conference Summary

Biotechnology

conference date: February 2, 2024 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2023 (Q4, fourth quarter 2023)

Forward-looking statements

Overview: Strong growth apart from Covid therapy decline.

Basic data (GAAP):

Revenue was $3.43 billion, up 2% sequentially from $3.36 billion and up 1% from $3.41 billion in the year-earlier quarter.

Net income was $1.16 billion, up 15% sequentially from $1.01 billion, but down 3% from $1.20 billion year-earlier.

Diluted Earnings Per Share (EPS) was $10.19, up 15% sequentially from $8.89 and down 3% from $10.50 year-earlier.

Guidance:

For 2024 R&D expense GAAP $4.82 to $5.07 billion, non-GAAP $4.3 to $4.5 billion. SG&A GAAP $2.89 to $3.09 billion; non-GAAP $2.5 to $2.65 billion. Gross margin GAAP 86% to 88%; non-GAAP 89% to 91%. COCM $850 to $910 million. Cap ex $825 to $950 million. Tax rate GAAP 8% to 10%, non-GAAP 10% to 12%.

Conference Highlights:

Leonard S. Schleifer, CEO, said "2023 was a strong year for Regeneron . . . In 2024, we plan to build on this momentum with continued growth of our breakthrough products Dupixent and Eylea HD while we bring additional new therapies to market and advance our growing pipeline."

In January 2024 Eylea HD (8 mg) was approved in Europe and Japan. Also CMS assigned it a J code in the U.S. Regeneron prevailed in its patent dispute with Mylan. Hopes to win patients from rival therapies.

In Q4 2023 Regeneron submitted a BLA for linvoseltamab for multiple myeloma.

Duxixent sBLA for EoE (eosinophilic esophagitis) in children ages 1 to 11 was approved by the FDA in January 2024. In December 2023 an sBLA was submitted to the FDA for COPD with type 2 inflammation.

A BLA for odronextamab for FL and DLBCL has a March 31, 2024 PDUFA date and is also in review in the EU.

In Q4 2023 the EC approved Evkeeza (evinacumab) as an adjunct to other lipid-lowering therapies to treat children as young as 5 years of age with homozygous familial hypercholesterolemia (HoFH).

In Q4 2023 Regeneron initiated a Phase 3 study of NTLA-2001 for ATTR-CM.

In January 2024 Regeneron agreed with 2seventy bio (TSVT) to acquire full development and commercialization rights to its preclinical and clinical stage cell therapy pipeline and will assume ongoing costs related to these programs. Should close in 1H 2024.

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.

Revenue by type: product sales 1.85$ billion. Collaboration revenue $1.37 billion. Other income $213 million.

Non-GAAP results: net income $1.37 billion, up 3% sequentially from $1.33 billion and down 6% from $1.45 billion year earlier. Diluted EPS $11.86, up 2% sequentially from $11.59 and down 6% from $12.56 year-earlier.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $16.2 billion, up sequentially from $15.7 billion. $2 billion long-term debt. Cash from operations was $4.59 billion, free cash flow $3.88 billion. $295 million was used for shares repurchased in the quarter.

GAAP expenses of $2.46 billion consisted of: cost of goods sold $307 million; research and development $1.18 billion; selling, general and administrative $738 million; collaboration manufacturing costs $210 million; other operating income $1 million. Leaving income from operations of $973 billion. Other income was $175 million. Income tax benefit $12 million.

Q&A selective summary:

Accelerating rate of converstion to HD, factors? Encouraged by results so far. Clinical data is strong. Physicians building on experience. Reimbursement with J code will help, starting April 1. Improving payer coverage.

Obesity portfolio? Myostatin competition? For muscle preservation, we are the ones who discovered the two key ligands. We are the only that have specific blocking antibodies for both. Can give either or both, looking for safety and efficacy. Competitors are just testing one agent, or with broad-based receptor blockers that also block other receptors. Trials will start this year.

Anti-VEGF category growth? Growth is healthy but variable.

2024 2 mg Eylea price erosion? HD price point is fine.

We are doing other potential therapies for obesity, not just myostatin. We discovered an exciting new obesity target and have some supportive preclinical data with RNAi approaches.

Cash use? We have many R&D opportunities. We have a strong buyback program. We will not do BD just because we can, it has to be right for us.

Linvoseltamab potential against current therapies? We are confident we will be best in class, so will have a strong launch.

2seventy bio deal? They are a long standing partner. Excited about existing programs and especially combination approaches.

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