Welcome to the Regeneron Pharmaceuticals first quarter 2017 earnings conference call. My name is Sylvia, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to Manisha Narasimhan. Manisha, you may begin.

Thank you, Sylvia. Good morning, and welcome to Regeneron Pharmaceuticals' first quarter 2017 conference call. An archive of this webcast will be available on our website under Events and Presentations for 30 days. Joining me on the call today are Dr. Leonard Schleifer, Founder, President and Chief Executive Officer; George Yancopoulos, Founding Scientist, President and Chief Scientific Officer; Bob Terifay, Executive Vice President-Commercial; and Bob Landry, Chief Financial Officer. After our prepared remarks, we will open the call for Q&A. I would also like to remind you that remarks made on this call today include forward-looking statements about Regeneron. Such statements may include, but are not limited to those related to Regeneron and its products and business, sales and expense forecasts, financial forecasts, development programs, collaborations, finances, regulatory matters, intellectual property and competition. 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 more complete description of these and other material risks can be found in Regeneron's filings with the United States Securities and Exchange Commission or SEC, including its Form 10-Q for the quarter ended March 31, 2017, which was filed with the SEC this morning. Regeneron does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, please note that GAAP and non-GAAP measures will be discussed on today's call. Information regarding our use of non-GAAP financial measures and a reconciliation of these measures to GAAP are available in our financial results press release, which can be accessed on our website at www.regeneron.com. Once our call concludes, Bob Landry and the IR team will be available to answer further questions. With that, let me turn the call over to our President and Chief Executive Officer, Dr. Len Schleifer. Len?

Thanks, Manisha. Good morning, everyone, and thank you for joining us on the call and webcast today. The first quarter of 2017 was an eventful and significant quarter. Dupixent, our breakthrough drug for the treatment of moderate to severe atopic dermatitis in adults, received regulatory approval in the United States and the launch is underway. This marked the first of two anticipated FDA approvals in 2017, the second being for sarilumab, also now known as Kevzara, where we have been granted an FDA action or PDUFA date of May 22. Before we get into the details of our quarterly performance, I want to take a moment to remind everyone of two important priorities at Regeneron. At the core, we have always been a company that is driven by science, and committed to bringing important new drugs to patients in need. These priorities are directly responsible for the robust pipeline that we have today, with five FDA approved drugs and 16 product candidates in various stages of clinical development, all of which have come out of Regeneron labs. George will provide more details on pipeline progress. As we advance as a company, the commercial aspects of our business is growing in importance as well. This year, we and our collaborator, Sanofi, are laser-focused on ensuring that the ongoing Dupixent launch is successful. While it is too early for us to provide you with sales updates, I am pleased to share with you that about five weeks into the launch of Dupixent, things are continuing to go well. We are pleased with the interest and reception from both patients and physicians. Just last week you heard from our partner, Sanofi, that about four weeks into the launch, more than 2,500 prescriptions for new patients for Dupixent had been written. I'm happy to…

Thank you, Len, and a very good morning to everyone who has joined us today. On the call today, I would like to focus on our ongoing clinical development program for dupilumab, review some important data on the long-term use of EYLEA, share some updates on our immuno-oncology program, as well as the progress of the rest of our pipeline. I'd like to begin with the approval of Dupixent, our IL-4/IL-13 blocker for the treatment of moderate to severe atopic dermatitis in adult patients whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable. This approval is the culmination of a scientific quest that has been decades in the making. While Bob Terifay will address the ongoing launch of Dupixent in greater detail, I would like to focus on the progress that we are making in the clinic with dupilumab in various other indications. Asthma is an important late-stage opportunity where we are investigating in the use of dupilumab. Despite the recent approval of drugs from the IL-5 inhibitor class in what has been characterized as the allergic patient population, we believe there is an unmet medical need for these patients for a drug that can markedly improve lung function, as well as provide further protection against exacerbations. In addition, there is a need for drugs that will show efficacy in a wider patient population across all allergic classifications. Based on results from our Phase 2B pivotal study in asthma, where we showed robust improvements in both lung function as measured by FEV1 and reductions in exacerbations, in all patients regardless of their allergic classification, we believe that dupilumab has the potential, if approved, to fill these needs. Our second pivotal study in the adult asthma indication, the LIBERTY ASTHMA QUEST study in…

Thank you, George, and good morning, everyone. First quarter 2017 U.S. net sales of EYLEA or aflibercept were $854 million versus $781 million in the first quarter of 2016. This represents growth of 9% year-over-year. Ex-U.S. net sales of EYLEA were $484 million compared to $419 million in the first quarter of 2016. This represents growth of 16% year-over-year. EYLEA is approved in approximately 100 countries for the treatment of wet AMD and DME. EYLEA continues to be the market-leading product among FDA-approved anti-VEGF agents for all of its approved indications in the United States. U.S. EYLEA net sales in the first quarter were impacted by a slight decrease in distributor or inventory as well as an increase in the gross-to-net margin, which Bob Landry will discuss in more detail. Based on a qualitative market research survey we conducted in the first quarter, EYLEA market share remained consistent at approximately 66% of the FDA-approved anti-VEGF market. Also based on this survey, FDA approved anti-VEGF therapies account for approximately 56% of the overall anti-VEGF market. In term of treatment regimens, as George noted, the variable interval dosing regimens that are often used in the treatment of retinal diseases with the anti-VEGF agents can contribute to inadequate vision improvements and we believe are not optimal for long-term maintenance of visual acuity. We are focused on educating retinal physicians and their patients on the benefits of using dosing regimens supported by evidence-based medicine and approved by the FDA. The recent approval and launch of Dupixent or dupilumab in the United States is the beginning of a new chapter for Regeneron. Dupixent was approved for the treatment of adults with moderate to severe atopic dermatitis at the end of March. As Len mentioned, the drug is commercially available to patients. Our field force is…

Thanks, Bob, and good morning, everyone. During today's call, I'll discuss our first quarter 2017 financial performance and highlight changes to a few of our full-year 2017 guidance line items. In the first quarter of 2017, we earned $2.92 per diluted share from non-GAAP net income of $337 million. This represents a year-over-year increase in non-GAAP diluted EPS and net income of 22% and 23%, respectively. I'd like to remind everyone that these growth numbers are based upon revised first quarter 2016 non-GAAP net income and EPS results relating to the company's adaption of Accounting Standard Update 2016-09 in the second quarter of 2016. This accounting standard requires companies to recognize excess tax benefits in connection with employee exercises of stock options in the income statement. You can access these revised numbers and further information in our Form 10-Q filed earlier this morning. Regeneron's first quarter 2016 and 2017 non-GAAP net income excludes non-cash share-based compensation expense and includes the income tax effect of non-GAAP reconciling items. A full reconciliation of GAAP to non-GAAP earnings is set forth in our earnings release. Total revenues in the first quarter of 2017 were $1.3 billion, which represented year-over-year growth of 10% over the first quarter of 2016. Net product sale were $858 million in the first quarter of 2017, compared to $784 million in the first quarter of 2016. EYLEA net product sales in the United States were $854 million in the first quarter of 2017 compared to $781 million in the first quarter of 2016, which represents an increase of 9%. For the full year 2017, we reaffirm our U.S. EYLEA net sales guidance of year-over-year single-digit percentage growth. During the first quarter of 2017, EYLEA experienced a slight drawdown in U.S. distributor inventory levels yet remained within our normal one-…

Thank you, Bob. Sylvia, we'd now like to open the line for Q&A. In the interest of time, we'd like to request that you limit yourself to one question. We will be available in the office after the call for a follow-up Q&A.

Thank you. We will now begin the question-and-answer session. And our first question comes from Geoff Porges from Leerink Partners.

Thanks very much for taking the question and congratulations on all the progress. And Len, don't take this the wrong way, but congratulations on the cash flow and filing the Q account. I wanted to ask, George, just a few questions – related questions on the pipeline. Looking through the Q this morning, there's no mention of your C5 antibody nor of your CD3 biospecific. Could you jus comment on the status of those programs? And then, on the ODYSSEY Outcomes study, given the timing that you've provided to us, can you give us a sense of what you estimate the median duration of exposure will be in the study and what effect that might have on the likely effect size given the offset of the lower dosing that you may have with some patients?

Yeah. A lot of questions in there. First, we did actually comment on the CD20 by CD3 biospecific that it's moving along, that basically we've spent a lot of time because as obviously, you've all noticed that there have been concerns with similar types of agents, as well as the CAR-T approaches in terms of really getting the right dose and avoiding very dangerous toxicity. So, we've been very careful about dose selection in that program, and we're hoping very close to be – to the point where we can initiate larger trials. In terms of our C5 antibody, I don't know how much we've said publicly about it, but I guess we've said that we will be in the clinic with it this year and I'm sorry I didn't make any references. That was just an oversight on my part. In terms of our Outcomes study, I have to say there are so many differences between our design and the four-year design that I think it's almost impossible to try to model it and figure out are the results going to be substantially different. I think that the four-year data pretty strongly show that its results are very consistent with the sort of benefits that, when obtained in terms of cardiovascular outcomes with the proportional LDL lowering, and that's pretty much exactly what we hope to show, that we're pretty much on the same sort of curve as the statins and now the first results that are coming out of the PCSK9 class.

Operator, next question, please.

Our following question comes from Chris Raymond from Raymond James. Christopher Raymond - Raymond James & Associates, Inc.: Hey. Thanks. Question on Dupixent. So, according to some of our market checks, it looks like the breakdown among patients by age is that roughly half are adults, you've got maybe 20% adolescents, but then there's another maybe sort of 33% or 34% that are treated by docs today that are under 12. I know you guys have talked about the clinical path for kids 6 to 12 but, at least according to our data anyway, derms today have a sizable patient load under 6, and there's probably many more who haven't made their way to a derm. So, can you maybe talk about the potential to get at that market of kids under 6? Like, for example, some of our data says that maybe as much as 12% or so of patient load are actually even under 2. So, what's the setup, I guess, there for treating kids younger? Thanks.

Yeah. You are absolutely right that a lot of these allergic diseases, it's not only atopic dermatitis, but eosinophilic esophagitis and so forth and so on, unfortunately, afflict the very young. There's a very deliberate process that we work with with regulatory authorities to progress to the youngest in our population because we all feel that we have to be very careful, and we're working very closely with the FDA to follow along those guidelines to be able to bring this treatment down the line to the youngest of patients who really need it. But as you said, there is a very important unmet need in these populations for all sorts of allergic diseases.

One thing, just to amplify what George said, is that the FDA clearly recognizes it. They had an advisory group, and they in fact pushed us to start on younger populations even sooner than one might normally in the development program. So, I think we get it. The agency gets it. They've granted us I think breakthrough status for – I can't remember which age group, maybe – Manisha, do you remember?

12 to 17.

12 to 17. So, I mean, I think everybody gets it, and we've got good early data, and as George said, we're sort of doing this logically, and trying to move to where that need is. Of course, the chronocity of treatment from a commercial point of view, once you make it to adulthood and you have the disease, we should be clear that this is – we don't view this as treating an episodic disease. These people have disease chronically and will need chronic treatment, which may be different than children who can possibly outgrow this. Christopher Raymond - Raymond James & Associates, Inc.: So, should we see a trial then start maybe for kids under six at some point? I guess that's the key question.

Yes. You will see us moving towards younger age groups steadily. Christopher Raymond - Raymond James & Associates, Inc.: Thank you.

Next question, please?

Our following question comes from Ying Huang from Bank of America Merrill Lynch.

Hey, good morning. Thanks for taking my question, and congrats on the launch of Dupixent. I have one question on EYLEA. It seems that you reported pretty strong numbers for EYLEA sales in the U.S. and Roche reported strong numbers for Lucentis. So does that mean the market is growing at a higher rate this year or are the branded medicines taking share from off-label Avastin? And then, maybe for George, a quick question on you PD-1 trial for non-small cell lung cancer. Given there's a debate around PD-L1 levels, I was wondering if you can comment how do you plan to design that trial in terms of stratification of PD-L1 expression levels? And do you see any differentiation from your PD-1 and the other marketed bio drugs? Thank you.

Okay. So let's take that – Ying, thanks – in two parts. First, Bob can address what he thinks the market size is overall for anti-VEGF therapy, and what the branded versus non-branded split is. And then George can deal with your question on lung cancer and PD-1.

I think it's – as we mentioned, the overall branded anti-VEGF market year-over-year grew by 9%, which is consistent with what we saw in our growth. So, you can assume that both products had approximately 9% growth. We did mention that in terms of what portion of the market is the branded market, it's approximately 65%. So...

Which hasn't really changed...

... hasn't changed.

...so the market itself seems to be growing, although our figures showed a slight inventory drawdown, and we don't know well-enough what happened with Lucentis and whether there was some destocking at the end of last quarter, and then restocking with their new formulation or not. So, to get more granularity on that, Ying, you'll have to pester Roche. George?

Yeah. About PD-1 and PD-L1 levels and so forth, I don't think there is actually that much of a controversy. I think that all the data shows that in most cases a higher PDL expression correlates with better responses. The controversy I think that you're referring to has to do with the fact that the first line lung study from Merck with KEYTRUDA was very impressively positive whereas the very similar population studied with the BMS drug was not. And this did not really seem to be dependent on the PDL levels. People are really working hard to understand why the Bristol drug showed very disappointing results in that study. Our goal is to show that our drug is very effective in the various lung cancer indications and we're designing, we hope and we believe robust studies to demonstrate that. And we are, I believe, going to be announcing that we're going to be – when we initiate these studies in the very, very near future.

Good. Next question.

Our following question comes from Ronny Gal from Bernstein. Aaron Gal - Sanford C. Bernstein & Co. LLC: Hi. Good morning. Thank you for taking my question. Question for Bob, could you contrast for us a little bit the cost of launching Praluent versus Kevzara and Dupixent? Essentially, when you think about the magnitude of cost to launch those two drugs, how do they differ? And second, if we think about the international operations of Praluent, roughly when should we expect them to breakeven? Essentially, what revenue do you need internationally to breakeven on that product?

I'll talk in generalities. I'm not going to get into any specifics on the financials, but what I can say is there is a major difference between Dupixent and Praluent in terms of the targeted audiences. Praluent is competing in the hypercholesterolemia market. That is a condition that's primarily treated by primary care physicians, but also was treated by a large group of cardiologists and lipidologists. So, in terms of the effort on Praluent, one has to go broad to be able to get to the large physician audience. In terms of Dupixent, as we mentioned in the United States, we're targeting about 7,000 specialists. So, the effort is more limited in terms of who you have to call on and what types of support you have to give to those patients. In terms of ex U.S., it's premature to talk about breakeven.

And just to reiterate what Bob said, I think if you do the math, we've hit about – in the neighborhood of about 25% of the doctors we targeted have actually written a prescription, which is really pretty good at this stage of the launch. Next question?

Our following question comes from Carter Gould from UBS.

Good morning, guys. Congrats on all the progress with Dupixent. I got one for George or Len on Regeneron 2222. The PR mentioned enrollment was 1,200 but I think you've been targeting 1,500-plus patients. Does this impact your (48:41) for the primary endpoint or change how we should be thinking about the likelihood of hitting on one-time-a-season dosing? And I guess if anyone wanted to comment on the competitiveness of this program given Sanofi's distributor (48:52) program and subsequent decision to partner with MedImmune, that would be appreciated as well. Thank you.

I'll comment on the latter, and George can comment on the former. The decisions that people make aren't always the best ones, and we love our partnership with Sanofi, but remember they are the ones that turned back EYLEA. So we'll see them in the marketplace. And we think we have a very good entry, and we love the friendly competition with really good partners. George can get more into the specifics.

Well, as you know, the power of the study is more dependent on events rather than numbers of patients that actually enrolled. We feel, though, there's always concerns, we feel that we're adequately powered, and we're hoping that the study will meet its expectations.

Operator, next question, please.

Our following question comes from Terence Flynn from Goldman Sachs. Terence Flynn - Goldman Sachs & Co.: Hi. Thanks for taking the question. Maybe – George, I was intrigued by your comments on the long-term EYLEA VIEW data and the importance of adhering to the approved dosing interval. Do you think that proposition would also apply to Novartis' RTH, recognizing we don't have the Phase 3 data yet? But as you think what they're trying to accomplish with their drug, maybe help us think about the importance of longer-term data? Thank you.

Yeah. I think it will be a very long time before one has the long-term data with a new agent to be able to say whether or not it could possibly not only cause initial visual gains but maintain them, which is, I think, more important over the four- and five-year time intervals. Right now, we have the only such study that shows that, and the only such data. I think that the field has been going in the wrong direction focusing on convenience, okay, as opposed to focusing on vision. We all know, we all cherish our vision. There's nothing more important than maintaining our vision, and we think that there's been an over-focus on convenience as opposed to on bringing back – these drugs have the ability to give back vision, and we have now shown that there's at least one drug with one regimen or an assorted regimen that has the ability to maintain this over the long term. And I think that we all have to focus on that and less on trying to save an injection or two per year, which is at most what all of these non-medicine-based approaches have been doing. I think this is really important for the field, and we hope, as Bob says, that doctors can be educated about this and stop experimenting on their patients and instead follow the FDA guidelines.

Operator, next question, please.

Our next question comes from Alethia Young from Credit Suisse. Alethia Young - Credit Suisse Securities (USA) LLC (Broker): Hey, guys. Thanks for taking my question. Congrats on the progress over the quarter. I just had one on EoE. Can you talk maybe about the potential market size and thoughts on endpoints? I know there's been some conversions in public domains around the FDA discussing endpoints. Thanks.

So, in terms of market size, this is very difficult to ascertain. We know that the market size quote-unquote is "increasing." What we don't know whether that's because there's more patients being diagnosed or it's just tracking the general increase in allergic diseases. So we remind you that there's a strong set of evidence to indicate that eosinophilic esophagitis can be a manifestation of food allergy. And so, as an allergy, we're seeing lots of these increase. The actual numbers, we just don't feel we have a good handle on the number of patients. If Bob wants to give a shot at it, that would be great. In terms of endpoints, we saw clear results, as George mentioned, both on the patient-reported outcomes as well as the hard anatomic. In some cases in the past, for example, in ulcer disease or erosive esophagitis, FDA has used endpoints such as healing, actually, by endoscopy measured. We have not had the conversation yet with the agency about these data. They're very new to us, so we will do that and then sort of let you know what it's going to take from an approval perspective. Bob, you have...

Yeah. Well, I think Len really nailed the situation with EoE. It is a disease that has generally been underdiagnosed. The current estimate in the U.S. among adults is somewhere between 100,000 and 200,000, but the true instance could be higher based upon underdiagnosis.

Okay.

Next question, please.

Our next question comes from Cory Kasimov from JPMorgan.

Hey. Good morning, guys, and thanks for taking the question. I wanted to ask on Dupi as well and kind of how you're thinking about the dynamics of a bolus of severe atopic dermatitis patients for Dupixent as we see these early trends and think about the launch going forward. 1,000 scripts written per week is obviously quite an encouraging number but, one, obviously, we can't expect to go on forever. So, how much pent-up demand do you see out there now that you're in the field? Thanks.

Yes. So, that's a very, also a very difficult question to get a hard answer on. When you talk to some doctors, they'll tell you, well, they had a list of patients that they were going to bring in. When you talk to other doctors, they'll tell you that they're not – the patients are just sort of showing up and they're incident patients which they are constantly seeing in their practice and that patients are aware of the product and want to discuss it with their doctors. How long this goes on? Well, I don't know, and we don't have enough information to see what the trends are. Have we peaked because of a bolus? Are we increasing still? Are we decreasing? Really too early to tell you. We do know that we're focusing on in the 100,000 to 200,000-patient range who are the most difficult to treat. I think with any new drug class, some of it is also going to be dependent upon the doctors' reaction. The great data that I think we have in our label encourages doctors to try the product. But it will take individual experience and successes with individual patients for them to continue to use it. And so far, we even have heard some early anecdotes on that line as well. So, bottom line is we just don't have enough information to guide you, we'd like to know ourselves. And I think anybody's guess at this point is as good as anybody else.

I think Len makes an important point. There are patients in need of this important therapy and our job beyond this initial bolus is really to educate physicians and patients on the fact that there is now something that could help these patients.

We do want to reach out and we'll reach out appropriately to patients directly because we believe, as Bob was just suggesting, that there are patients who have dropped out of the medical system because they've been to so many different doctors with so many different regimens and nothing has helped them that making them aware that there is something new is an important part of our effort. Next question.

Operator. In the essence of time, we have one last question. After that, we will be in our office to take additional follow-up questions and our apologies to those who are in queue and who didn't get a chance to ask their questions.

Our next question comes from Hartaj Singh from Oppenheimer. Hartaj Singh - Oppenheimer & Co., Inc.: Yeah. Hi. Thank you. Thanks for letting me take the – I have a question. We just noticed actually slightly different take on just on your operating expenditures you've managed your P&L very well this quarter. It looks like, on just a straight run rate into the end of the year, you would actually come below your guidance and with just 110 million shares outstanding, that's not trivial. Just any thoughts on the progression of operating expenditures and how you're thinking of managing it with the Kevzara launch and all the other activities? Thank you.

Yeah. No. Thanks for the question. You're right in terms of the guidance that we've set for the full year and where we are for the first quarter. As you can imagine, we do obviously spend a lot of time and effort in terms of forecasting where we're going to come out on a by-quarter basis, and the quarters are not always consistent. We are going to be in kind of full bloom in the second quarter when we get hopefully our PDUFA approval with Kevzara, and we'll have our full strength out there in the marketplace. And again, we do expect higher expenditures with regards to SG&A and with unreimbursed R&D in the second half of 2017.

Thank you, operator. That concludes our call today.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.