Regeneron Pharmaceuticals, Inc. (REGN) Earnings Call Transcript

Thank you for joining us. I always have to remember to give that pause. Always thankful to the operators for making this so smooth. Our early morning on a busy and a little bit interesting week here on Wall Street, we've got Regeneron, one of our favorite companies joining us. We have Neil Stahl and Jamie from there, and Ryan also joining the 3 of them. We'll do a modified sort of fireside chat where we'll talk about the company's pipeline and some of the thoughts as to how the company is pursuing current projects and future projects also. One other Regeneron person was not able to join us, John, but hopefully, later on today, sending him our very best thoughts. So Ryan, please take it away, and then we'll go to the fireside chat.

Thanks, Hartaj. I'll try and keep this brief and thanks for hosting us here at the Oppenheimer Healthcare Conference. Just wanted to remind folks that remarks made today may include forward-looking statements about Regeneron. And each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in such statements. A description of material risks and uncertainties can be found in Regeneron's SEC filings. Regeneron does not undertake any obligations to update any forward-looking statements, whether as a result of new information, future events or otherwise. Okay. Hartaj, back to you.

Thank you. Thanks, Ryan, really, really appreciate it. Neil and Jamie, maybe just start off very, very broadly, whenever I have kind of heard some of Regeneron's thoughts behind the pipeline, George has spent a lot of time explaining the company's approach. We've also had one of the heads of IO last year. Maybe we can just start, Neil, with you as to what are the fundamental underpinnings of Power Regeneron use its pipeline, both R&D. And then maybe Jamie can give us a perspective from the immunology and allergy side.

Sure. First, it's great to be here this morning. I hope everybody is getting used to daylight standard -- daylight savings time. I'm not quite used of it myself. But I've been at Regeneron for 32 years now, and it's really amazing that we have really the same perspective and approach that entire time in that we couple deep biological pursuit that sometimes can last decades on a single problem along with technology development that has provides us with cutting-edge tools to rapidly get new candidates based on the discoveries that we made. And so I take one example that Jamie can touch on is Dupixent, where I worked on that for 25 years, just taking the long view before we actually got it turned into a drug. And then the VelociSuite technologies, which we worked on for 2 decades at least, those allowed us to do things like make Ebola drug, MERS drug and COVID octal very rapidly, like in 4 months, which is really unheard of. We also invested heavily in the Regeneron Genetic Center, which really is the world's largest database of genetics -- human genetics linked to anonymous medical records that allows us to discover potential targets in biology that wasn't known before right in human being. So it's a huge, huge tool. Beyond what I think is one of the best, if not the best, antibody technologies in the world, we've also created collaborations to explore some of the new modalities that I think are going to be critical for the future of biology and that's with CRISPR, who we've partnered with Intellia; and also siRNA, with Alnylam. And we have a lot of really interesting programs that maybe we'll touch on here in this meeting, certainly in the day.

To that point, Jamie, just sort of going over to you, Dupixent has, for lack of a better word, taking the world by storm, change the course of the disease and patients atopic dermatitis, especially. Just what are your thoughts on next stages for Dupixent? And I'm actually kind of asking this question because we'll have to ask about COPD somewhere down the line, but maybe if you can just set the stage for us before we go there.

Right. So thank you, and it's great to be here. I can echo a little bit of what Neil said and relate that to Dupixent. I've been at the company for 15 years, also super excited about the work that we're doing at Regeneron and really believe and see that we're a technology-based company, right? And we're constantly thinking of new ways to tackle complex biological questions, right? COPD would be one of those, really complicated diseases that we're thinking about. And Dupixent, as you know, it started in our Regeneron research laboratories, and we've been working on this for really a long time and constantly trying to understand what are the key drivers of Type 2 inflammation. We believe that IL-4 and IL-13 play a key role. And then constantly on packaging, the roles of IL-4 and IL-13 in different diseases, we've been able to identify areas that we believe we could benefit patients, right? COPD being one of them. Obviously, asthma. All of the other indications, which Dupixent is approved for, it continues to perform well in all of the approved indications, and we have new indications coming down the road in the near future. So I think the future is bright for Dupixent, right? I think we're just at the beginning.

And Jamie, before going back to Neil, I mean, I just want to kind of drill down a little bit there. With Dupixent, the focus on various types of inflammatory-mediated conditions, you went from atopic dermatitis, asthma, specific portions within asthma, other indications also. How has the science translated into these clinical advances? Like what's been the stepwise process you've taken? And then again, I'll ask about -- we'll talk about COPD afterwards.

So I mean this is something that I love talking about, right? As a basic science researcher, I think one of the views as the company is to understand the science and use the science to pick indications, right? There are no other deciding factors. It's really what's the biology of the disease. And then once we can understand that, we can apply medications that we also know the biology of and match the 2 together, right? And so we believe that we're making these thoughtful decisions where we understand what are the key drivers of such disease and in knowing that, then we can take a medication and bring it there. So something like Dupixent, to Neil's point, we've all been working on this for a really, really long time and really trying to understand how this molecule is behaving in patients and in understanding how it behaves mechanistically in patients, we can understand the diseases that we can apply for future indications.

Yes. And last question, just on COPD specifically, Jamie -- we'll probably come back to this a little bit before the end. But I remember a few years ago, it didn't seem like Regeneron or partner, Sanofi, wasn't as excited about COPD. It's a different sort of a disease from like an asthma, as a lung disorder, more of a smoker's disease, I guess. What's changed in the last 2, 3 years to give? It seems your partner Sanofi and Regeneron more confidence as you approached the COPD readout.

So you bring up a good question, right? And we all know, for COPD, there's been no innovation in this space, right? There are no approved biologics. Patients -- there's a huge unmet need for these patients, right? And as I mentioned, we've been learning more about how Dupixent works in patients where it can improve, specific impacts in airway diseases, right, improvements to lung function, improvements to exacerbations, applying that knowledge to mechanisms that drive COPD and the 2 marry, right? So that we can then -- hopefully, we'll see an impact as these trials readout.

Yes. That helps a lot, Jamie. Neil, kind of going back to you, we'll talk about EYLEA maybe a little bit later. But maybe just about oncology, where we really focused the last few years, and I know if you can maybe just talk a little bit about what we're going to ask John, which is that -- how is the company sort of doing its mix and match approach? It's been going on for about 2, 3 years now. It seems every ASH or EHA, the company is getting more thoughtful and smarter about these. ASH stats was definitely, I would imagine, the ASH or bispecifics. I mean the energy I saw around bispecific is phenomenal. Just maybe if you can just answer that question on a high level sense is, how are your combinations working out? How are you thinking about them going forward?

Sure. I mean we have a really good foundational drug, which is Libtayo, which is as good as any PD-1 blocker out there. And we call it foundational because as good as it is, there's still a lot of indications and a lot of patients that are not treated well with it. And so we firmly believe that adding in some of these other molecules, especially bispecifics, is a way to enhance the activity or increase the indication spread or increase the number of patients that respond. And so far, we've focused on both a CD3 bispecific pathway as well as now a CD28 bispecific pathway. CD28 is the Signal 2 of T cells that by activating it in the presence of Signal 1, which is CD3 activation, that you get more activity in many cases. And the beauty of CD28 is, so they have really safe profile. There are maybe 1 or 2 current molecules that do have a bit of activity. So you're right that the hardest thing is figuring out what combinations to use. And so we really are expanding our reach to look at patients and biomarkers and things like that, try to understand which molecules might be the most effective. The other thing is that I do believe that we have the best mouse models of these diseases in the world that we've made humanized immune systems and humanized mouse and put it in human tumors that I think give us a better readout on which molecules to combine together than perhaps other companies or individuals have been able to access.

And to that point, I guess, as we see the updates from Regeneron, it seems you're also very fast follower, for example, in the PD-1 and the LAG-3, dual antibody approach, right? And then you've also got Libtayo combined with bispecifics. Has there been any sort of, I guess, learnings that Regeneron is having that some tumors might be more amenable to 2 antibodies versus an antibody plus a bispecific. Are there any such thoughts coming to Regeneron when you're thinking of different tumors you're going after? Or is it still you're using the best science to go after every tumor?

I think that we try to pick tumors that we think might have the best bet. But before we do that, we actually have to come up with the best molecule to treat them with. And so we can compare our LAG-3 antibody to other people's LAG-3 antibodies and evaluate whether or not we think ours has an advantage. And in every single case, our antibodies are either as good or have superior properties to what others have come up with. And I think you can see that in our LAG-3 data where we have some really interesting activity that, although not directly compared to head-to-head, looks really interesting compared to what others have shown.

Yes. No, absolutely. I mean even Libtayo, we're doing some work there, especially in chemo combo, and it's really fascinating how much further Regeneron has been able to push that, that antibody. Even though I think pembro is a fantastic agent also. Jamie, just kind of going back to you, IL-33 comes up from time-to-time in COPD. It seems a couple of years ago, Regeneron seemed a little bit less excited. Now it seems it's back in play. Just how to think about IL-33, assuming Dupixent in COPD works out?

Yes. So we've always been excited about IL-33, right? This is another molecule that came from Regeneron research laboratories. As you recall, we tested it in asthma, and we also have some really exciting proof-of-concept data in COPD and asthma. We also achieved proof-of-concept. So it's telling us that IL-33 is very active in the airway. With respect to COPD and that Phase II study, which brought a lot of excitement to the industry, is looking at our pre-specified subgroup analysis, where we found that in patients that were former smokers, there was a 42% reduction in exacerbations. This was really incredible, right? So we were really excited about these data. We kicked off 2 parallel Phase III studies to see if we can replicate these findings and eventually bring something like this to patients in need. As I mentioned previously, there's really limited options for patients with COPD. So we think this could be really beneficial.

And I apologize, Jamie, if I indicated that maybe Regeneron's "love" for IL-33 had weighed a little bit or seems not -- maybe you can just talk to us a little bit about the COPD population that you're going after in this Phase III trial and where that population stands within the overall COPD sort of patient population?

Thanks. So for itepekimab, there's no eosinophil requirement for these patients, right? So regardless of your eosinophil levels, we think that itepekimab could have benefit. But where we see this huge reduction in exacerbation is really limited to the former smokers. So that's where we're looking to position this and where we're seeing the clinical benefit for those patients.

The other question I have is just on the overall -- I know this is more of a commercial question, but I just want to ask you this because I imagine it's important for you also when you look at the signs, but biologics are still under-penetrated in various sort of lung associated conditions, asthma probably better than most when you look at COPD. When you're running these trials, what's the level of comfort physicians have using biologics to treat a COPD, for example?

I mean, I can start off and then pass it over to Ryan after. But from my point of view, I think with respect to COPD, it's going to come down to what the data say in the end, right? And if there's a meaningful reduction in exacerbation together with improvements in lung function, there's reason to believe that physicians will use it. I mean, these patients are really looking for a therapy. I think clinicians are looking for a therapy that can meaningfully impact their disease.

Yes, I'll just add to that. I think, I heard a variety of opinions on what clinically meaningful is, and I think each KOL sort of has their own view on that. But for Regeneron, I think really, to Jamie's point, a statistically significant result in this population would be very important. We haven't had one of those in the past. This is a disease that is the third leading cause of death globally and hasn't had any innovation for decades. So I think the low end for us would probably be in the mid- to high teens percentage and reduction in exacerbations. But certainly, we're going to aim for higher and hope that because of the enriched population, we're able to achieve that.

And Ryan, when you're talking about the [ low to mid ] this is for the Dupixent COPD trial, right? itepekimab. Yeah.

Yes. So for itepekimab, I think, again, there hasn't been any innovation in COPD. So I wouldn't say that my opinion on that is all that different.

Yes. Yes. Yes.