Analyst Conference Summary

Biotechnology

conference date: February 4, 2022 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2021 (Q4, fourth quarter 2021)

Forward-looking statements

Overview: Stong quarter, but mainly from the Covid antibodies.

Basic data (GAAP):

Revenue was $4.95 billion, up 43% sequentially from $3.45 billion and up 104% from $2.42 billion in the year-earlier quarter.

Net income was $2.23 billion, up 37% sequentially from $1.63 billion, and up 94% from $1.15 million year-earlier.

Diluted Earnings Per Share (EPS) was $19.69, up 37% sequentially from $14.33 and up 92% from $10.24 year-earlier.

Guidance:

Full year 2022 guidance did not include revenue guidance. R&D spend $2.8 to $3.4 billion. SGA spend $1.65 to $2.03 billion. Gross margins 89% to 92%. Cap ex $650 to $730 million. Did say expects pressure on Praluent sales.

Conference Highlights:

Leonard S. Schleifer, CEO, said "For 2022, we remain focused on building on Eylea's success, expanding approvals and patient reach for Dupixent, pursuing new indications for Libtayo, and reading out data from our oncology pipeline – all while continuing to progress our diversified earlier-stage pipeline. We also remain committed to our efforts to fight the Covid-19 pandemic and address the significant need for effective treatments and preventative approaches to SARS-CoV-2. Given the lack of efficacy of Regen-Cov against the Omicron variant, we are working hard to develop next generation antibodies that are active against Omicron and all other variants of concern."

Does not expect to record any REGN-COV2 sales in the first half of 2022, since not effective against omicron. Sales of REGN-COV2 increased significantly sequentially in Q4. The FDA PDUFA data is in April 2022. In June 2021 the EUA was amended to allow for a lower dose, increasing the number of doses available. Japan was the first nation to grant formal approval.

In January 2022, Regeneron entered into a license and collaboration agreement for Ultragenyx Pharmaceutical to develop and commercialize Evkeeza in countries outside the US.

In Q4 2021 he FDA accepted the sBLA for Libtayo in combination with chemotherapy to treat patients with advanced non-small cell lung cancer (NSCLC). The PDUFA date is September 19, 2022. A regulatory application was also submitted in the EU.

In October 2021, the FDA approved Dupixent for children aged 6 to 11 years with moderate-to-severe asthma. The CHMP issued a positive opinion. An sBLA was submitted for children 6 months to 5 years for atopic dermatitis. A second prurigo nodularis Phase 3 trial met is endpoints, with a regulatory submission expected 1H 2022.

New antibodies that could address Covid Omicron and other variants are under development.

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

The company continued to advance its bispecific antibodies for cancers in early stage trials. The first data readout from a prostate cancer bispecific is expected later this year. In all it has 30 product candidates in clinical development.

Revenue by type: product sales $3.975 billion. Collaboration revenue $0.89 billion. Other income $86 million.

Non-GAAP results: net income $2.71 billion, up 53% sequentially from $1.77 billion and up 151% from $1.08 million year earlier. Diluted EPS $23.72, up 54% sequentially from $15.37 and up 149% from $9.53 year-earlier.

In Q3 2021 Dupixent reported positive Phase 3 data in uticaria and pediatric atopic dermatitis. In Q4 2021 reported positive Phase 3 data in eosinophilic esophagitis and Prurigo nodularis. Also extended asthma label to children 6 and older.

See also the Regeneron Pipeline.

Cash and equivalents balance ended at $12.5 billion, up sequentially from $11.4 billion. $2 billion long-term debt. $850 million shares repurchased in the quarter, new authorization made.

GAAP expenses of $2.31 billion consisted of: cost of goods sold $812 million; research and development $786 million; selling, general and administrative $560 million; collaboration manufacturing costs $171 million; other operating income $16 million. Leaving income from operations of $2.64 billion. Other expense was $136 million. Income tax was $274 million.

Q&A selective summary:

Solid tumor franchise? Both trials are in late stage patients who have failed all available therapies. So if we see some positive results, that would inform us on how to move ahead.

Eylea vs. competition? We do not see faricimab (Vabysmo) as a transforming therapy of any kind. ANG2 blockade does not seem to be of much value. It requires a higher dose than Lucentis. While efficacy is important, we have a huge safety database with Eylea. We think it will mainly take share from Lucentis. Our 8mg high-dose product could also be big if the trial results are good.

The goal of our next generation antibody is to work against both old and new Covid variants.

The hope for siRNA programs is that they will be fundamentally different in attack brain diseases than antibodies. We have a pipeline of CNS diseases we plan to address in partnership with Alnylam. But there could be synergies between antibodies and siRNA.

VEGF market? A new entrant's ability to compete would depend on their differentiation and data. The growth was pronounced last year and we picked up market share. It takes 6 months for a product to get a permanent J code, which endangers reimbursement during that period. We believe the VEGF market will continue to grow because of demographics and with better diagnosis work.

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