Analyst Conference Summary

Biotechnology

conference date: August 1, 2024 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2024 (Q2, second quarter 2024)

Forward-looking statements

Overview: Strong results.

Basic data (GAAP):

Revenue was $3.55 billion, up 13% sequentially from $3.15 billion and 12% from $3.16 billion in the year-earlier quarter.

Net income was $1.43 billion, up 98% sequentially from $722 million, and up 48% from $968 million year-earlier.

Diluted Earnings Per Share (EPS) was $12.41, up 98% sequentially from $6.27 and up 46% from $8.50 year-earlier.

Guidance:

Increased expected expenses slightyly, lowered margins slightly, no guidance on revenue or profits.

Conference Highlights:

Leonard S. Schleifer, CEO, said "Regeneron had a strong quarter, with total revenue up 12% driven by notable growth for Eylea HD, Dupixent, and Libtayo. Importantly, Dupixent was granted its first regulatory approval for COPD by the European Commission, with FDA action anticipated in the third quarter, presenting an opportunity to help even more patients around the globe. As always, we remain focused on driving forward our diverse clinical pipeline, progressing late-stage trials for Dupixent in chronic spontaneous urticaria and other dermatologic indications; itepekimab, our IL-33 antibody in COPD; fianlimab, our LAG-3 antibody in metastatic melanoma; and Libtayo in adjuvant cutaneous squamous cell carcinoma. Finally, we were excited to advance several promising earlier-stage programs, including various antibody and GLP-1 combinations for obesity and our gene therapy DB-OTO for genetic hearing loss."

Dupixent sales grew 29% in Q2 2024. For Chronic rhinosinusitis with nasal polyps in adolescents was granted a PDFUA of September 15, 2024. For COPD PDUFA is September 27, 2024. Already approved in EU for COPS. Itepekimab for COPD Phase 3 trial is fully enrolled.

Competition is increasing in the anti-VEGF eyecare space.

In April 2024, Regeneron acquired full development and commercialization rights to 2seventy bio's oncology and autoimmune preclinical and clinical stage cell therapy pipeline. It made a $5 million up-front payment, and has assumed ongoing program, infrastructure, and personnel costs related to the product candidates acquired. In addition, Regeneron is obligated to pay 2seventy bio a regulatory milestone upon the first major market approval of the first approved product; and a low single-digit percent royalty on sales.

In Q1 2024 the FDA accepted the BLA for linvoseltamab for multiple myeloma. PDUFA is August 22, 2024, but could be a delay due to manufacturing issues at a subcontractor. A Phase 3 confirmatory trial is enrolling patients. Odronextamab for NHL Phase 3 trial is underway. A BLA for odronextamab for FL and DLBCL had CRLs issued for both indications in March 2024. The only issue cited was the enrollment status of confirmatory trials. It is also in review in the EU.

Phase 2 obesity trial underway combining semaglutide with and without garetosmab is underway, hoping for better weight loss with muscle retention.

Regeneron is testing several potential cancer agents, including in combo with Libtayo and 8 different bispecifics, plus one CAR-T therapy.

In April 2024, Regeneron and Mammoth Biosciences entered into a collaboration agreement to for in vivo CRISPR-based gene editing therapies. Regeneron purchased an aggregate of $95 million of Mammoth preferred stock and is obligated to make a $5 million up-front payment. The parties will jointly select and research collaboration targets, then Regeneron will lead development and commercialization.

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

Revenue by type: product sales $1.92 billion. Collaboration revenue $1.5 billion (includes Sanofi Dupixent sales), including Dupixent sold by Sanofi. Other income $104 million.

Non-GAAP results: net income $1.35 billion, up 21% sequentially from $1.12 billion and up 14% from $1.18 billion year earlier. Diluted EPS $11.56, up 21% sequentially from $9.55 and up 13% from $10.34 year-earlier.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $17.5 billion, flat sequentially from $17.5 billion. $2 billion long-term debt. Cash from operations was $1.87 billion, free cash flow $1,55 billion. $600 million was used for shares repurchased in the quarter. A new $3 billion share repurchase program was authorized in April 2024.

GAAP expenses of $2.48 billion consisted of: cost of goods sold $258 million; research and development $1.2 billion; acquired in-process R&D $24 million; selling, general and administrative $759 million; collaboration manufacturing costs $222 million; other operating exense $15 million. Leaving income from operations of $ million. Other expense was $ million. Income tax benefit $ million.

Q&A selective summary:

Eylea maintenance of 45% category share, with HD? 2.4% increase y/y. HD still in launch stage, just reporting third full quarter results. Competitive market. Patients are switching from Eylea, but also from competitors. Also seeing HD in front line. So potential to be the new standard of care. The overall market appears to be growing mid-single digits annually.

Obesity Phase 2 decision? This is combination with other weight loss agents. Leptin levels drop as you go through profound weight loss. Limiting weight loss. At least in animal studies. So could get weight loss, for some patients, beyond their plateau.

We hope to move linvoseltamab to earlier lines of therapy, and other cancers.

Factor XI antibodies, differences between? Split the mechanism of action. One the activation domain, the other the catalytic domain. Both best in class. Could move forward with both, for different target populations.

Eylea HD now has 80% coverage in the payer market.

Long discussion of pathways of weight loss and lean muscle loss, and Regeneron's methodology for treatments.

We believe Dupixent can kill the cells that cause food allergies, and keep them from coming back. But not yet proven, and must be very safe. May work for non-food allergies as well. Starting with most severe patients, but then could go to milder cases.

Cash use, particularly outside eye therapies? We ask that every day. We have done some small scale licensing, but have not seen a larger attractive, late-stage product.

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