Analyst Conference Summary

Biotechnology

conference date: May 2, 2024 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2024 (Q1, first quarter 2024)

Forward-looking statements

Overview:

Basic data (GAAP):

Revenue was $3.15 billion, down 8% sequentially from $3.43 billion and down 1% from $3.16 billion in the year-earlier quarter.

Net income was $722 million, down 38% sequentially from $1.16 billion, and down 12% from $818 million year-earlier.

Diluted Earnings Per Share (EPS) was $6.27, down 38% sequentially from $10.19 and down 13% from $7.17 year-earlier.

Guidance:

Conference Highlights:

Leonard S. Schleifer, CEO, said "The Regeneron team has already made substantial progress this year, delivering our approved medicines to more patients around the globe, advancing our pipeline consisting of dozens of clinical-stage programs, and relentlessly pursuing cutting-edge science. We had a strong quarter of Eylea HD uptake, and we are well positioned to continue our leadership in retinal diseases. Dupixent continues to grow at a remarkable pace seven years into its launch and is currently treating over 850,000 patients across a variety of diseases characterized by type 2 inflammation. Our promising oncology franchise is strengthening, driven by strong global growth in Libtayo sales and potential regulatory approvals later this year for linvoseltamab in relapsed/refractory multiple myeloma."

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 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. A Phase 3 confirmatory trial is enrolling patients.

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. In Q1 2024 a Phase 3 study for children age 2 to 5 with asthma was begun.

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.

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 $1.76 billion. Collaboration revenue $1.31 billion, including Dupixent sold by Sanofi. Other income $117 million.

Non-GAAP results: net income $1.12 billion, down 18% sequentially from $1.37 billion and down 4% from $1.17 billion year earlier. Diluted EPS $9.55, down 19% sequentially from $11.86 and down 5% from $10.09 year-earlier.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $17.5 billion, up sequentially from $16.2 billion. $2 billion long-term debt. Cash from operations was $1.51 billion, free cash flow $1.38 billion. $0 million was used for shares repurchased in the quarter. A new $3 billion share repurchase program was authorized in April 2024.

GAAP expenses of $2.39 billion consisted of: cost of goods sold $240 million; research and development $1.25 billion; selling, general and administrative $689 million; collaboration manufacturing costs $193 million; other operating exense $15 million. Leaving income from operations of $751 million. Other expense was $51 million. Income tax benefit $21 million.

Q&A selective summary:

Differentiation of obesity program? Block with magracomib blocks over a dozen members of the family. We target 2 members of this large family that are involved in muscle preservation. In obesity safety matters almost as much as efficacy.

Will quality of loss become a key FDA endpoint? We could see increased weight loss. Better quality weight loss could come in a variety of ways. Metabolic parameters are often used. Maintenance of function could also be used.

Retina marketplace changes, purchases by private equity? Our approach to the marketplace is flexible, addresses the evolving market.

Severe food allergy Dupixent study? He hope the early results will be as dramatic as they were in preclinical studies. IGE is the key measurement. If so, can go onto challenge tests. Patients might have to stay on Dupixent for a long time.

LAG3 (fianlimab)? We are seeing better results than competitors.

We have already started looking at bispecifics as alternatives to CART approaches.

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