Ladies and gentlemen, thank you for standing by and welcome to the Regeneron Pharmaceuticals Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Thank you. Justin Holko, I will now turn the call over to you.

Thank you, Stephanie. Good morning, good afternoon and good evening to everyone listening around the globe. Thank you for your interest in Regeneron Pharmaceuticals and welcome to the second quarter 2020 conference call. An archive of this webcast will be available on our website. Joining me on the call today are Dr. Leonard Schleifer, Founder, President and Chief Executive Officer; Dr. George Yancopoulos, Co-Founder, President and Chief Scientific Officer; Marion McCourt, Senior Vice President and Head of Commercial; and Bob Landry, Executive Vice President and 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 today’s call include forward-looking statements about Regeneron. Such statements may include, but are not limited to, those related to Regeneron and its products and businesses, financial forecast and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement issues, intellectual property, pending litigation and other proceedings 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 the statement. 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, including its Form 10-Q for the quarterly period ended June 30, 2020, which has been filed with the SEC today. Regeneron does not undertake any obligation to update 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 in today’s call. Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our financial results press release, which can be accessed on our website. 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?

Thank you, Justin and thanks to everyone for joining the call. I hope all of you are staying safe and well. We very much appreciate your efforts to join given the pandemic conditions and even on top of that northeast some power disruption from the storm, but business continues. We had an eventful and productive second quarter in terms of financial results, business development and corporate accomplishments. In the second quarter, our results demonstrated resilience and strength despite the impact of the ongoing COVID-19 pandemic. In addition to driving double-digit top and bottom line growth, we continue to deliver meaningful advances in our broad and innovative pipeline as well as in our fight against COVID-19 with our novel antibody cocktail. Regeneron continues to execute well in this unprecedented time for our company and our nation in the world. Starting with our products, EYLEA global net product sales were $1.75 billion in the second quarter, a modest decline of 6% compared to the prior year. In the U.S., we generated sales of $1.11 billion, with a pronounced and sustained rebound in demand in May and June, following the decline in sales we experienced in early April. This rebound has continued into July and demand is now approaching pre-COVID levels. The efficacy, safety and convenience of EYLEA have proven to be even more viable in the world of COVID-19. As you will hear for Marion, EYLEA outperformed the broader anti-VEGF class this quarter. Demand for DUPIXENT also proved to be robust in the second quarter, with global sales growth of 70% compared to last year. Sales were nearly $1 billion on continued market penetration in atopic dermatitis, asthma and new launches. Adding to the DUPIXENT momentum, the FDA approved a new indication for atopic dermatitis in children aged 6 to 11. Furthermore,…

Thank you, Len. And with all of us still in the throes of the COVID-19 epidemic, I will start with an update on our antiviral antibody cocktail that has the potential to both possibly protect against infection and also treat those already infected. Based on our Ebola program, our new non-human primary data for our COVID-19 cocktail as well as our understanding of immune response, we believe that our COVID-19 treatment is well positioned to help patients prior to and early in infection. We initiated our clinical program in June, barely 5 months after we started this treatment, developing this treatment. Our rapid timeline was possible due to our VelociSuite technologies, which were developed in-house over decades to allow for specific turnkey disease interventions and were recently applied to develop a similar approach against Ebola, which we hope will prove to be the first treatment approved for this disease with a PDUFA date in October. We are conducting 4 trials of Regeneron COV2, our antibody cocktail: one in hospitalized COVID-19 patients; a second, ambulatory study in outpatients who are diagnosed with COVID-19; a third, preventative study in household contacts with COVID-19 patients being carried out in collaboration with the National Institute of Allergy and Infectious Disease; and a fourth, multi-dose, healthy volunteer study. Our studies are adaptive in nature as we learn more about the virus and our antibody cocktail and other studies are being planned as well. All of these studies have passed several safety assessments with no safety concerns observed to-date. Despite the challenging environment, in which these studies are being conducted, we are targeting to report initial virology and biomarker data from the treatment studies by the end of September with clinical outcome data to follow as enrollment progresses. In June, we have published two important papers…

Thank you, George Our second quarter business performance reflects the resilience and competitive strength of our core brands: EYLEA, DUPIXENT and Libtayo. We remain confident in our ability to navigate through COVID-19 and position our portfolio for future growth as demand recovers. I am going to begin with EYLEA, which had $1.75 billion in global net sales. In the U.S., EYLEA net sales were $1.11 billion, which is just 4% lower than the same quarter last year despite the impact of COVID-19. EYLEA outperformed the overall anti-VEGF market in the U.S. with continued share gains from both branded and unbranded competition. In fact, EYLEA’s share of the branded U.S. market reached 73% of net sales for the quarter solidifying our leadership position in the anti-VEGF market. The impact of COVID-19 on U.S. sales was sold predominantly in April after the sales improved throughout May and into June as retina specialists reopened the offices and patient volume increased. The combination of three EYLEA attributes differentiated efficacy, safety and dosing flexibility are highly valuable in easing physician and patient burdens caused by the pandemic. Physicians may treat with extended dosing of up to 12 weeks in appropriate patients and the recently launched pre-filled syringe offers additional efficiencies for patient care. EYLEA demand continues to show steady improvement and the volume of new patients in the market is approaching pre-pandemic levels. We are closely monitoring the recent resurgence of COVID-19. Under all scenarios, we remain highly committed to supporting the retina community through virtual and in-person platforms to ensure the continuity of patient care. In summary, we are encouraged by the rebound in EYLEA demand in recent months and we will continue to advance efforts to support our customers and their patients during these unprecedented times. Turning next to Libtayo, second quarter global…

Thank you, Marion. For the second quarter of 2020, Regeneron delivered strong results on both the top and bottom line. Our continued ability to generate this year-over-year growth is an encouraging signal of our diversified growth potential now and beyond COVID-19. For the second quarter, total revenues grew 24% year-over-year to $1.95 billion driven by higher Sanofi collaboration revenues as a result of increasing for DUPIXENT sales. Additionally, we recorded significant revenues associated with our infectious disease efforts against both Ebola and COVID-19. These revenues are recorded in our other revenue line. Non-GAAP diluted net income per share grew 19% year-over-year to $7.16 on non-GAAP net income of $854 million. Since Marion discussed our U.S. EYLEA results, I will start with our Bayer and Sanofi collaborations. Starting with the Bayer collaboration, ex-U.S. EYLEA net product sales, which are reported to us by Bayer were $641 million, representing a decline of 10% on a reported basis compared to the prior year due to the COVID-19 impact. Total Bayer collaboration revenue was $244 million, of which we recorded $231 million for our share of net profits from EYLEA sales outside the U.S. Total Sanofi collaboration revenue was $269 million in the second quarter. Our share of the profits from the commercialization of non-IO antibodies was $172 million. This compares favorably to profits of $39 million in the prior year period, which was driven by higher DUPIXENT profits. Before moving to expenses, I will discuss our second quarter 2020 other revenue line item, in which we recorded $212 million, up sharply from the $20 million in the prior year period. The primary driver of the year-over-year increase is the recognition of $126 million associated with BARDA for our research and manufacturing efforts for both Ebola and COVID-19. We record R&D reimbursements from BARDA…

Thank you, Bob. Stephanie, that concludes our prepared remarks. We would now like to open the call for Q&A. We have several callers in the queue and to ensure that we are able to address as many questions as possible, we will address one question from each caller before moving to the next. Please go ahead, Stephanie.

Thank you. [Operator Instructions] And your first question is from the line of Terence Flynn with Goldman Sachs.

Hi, good morning. Thanks for taking the question and thanks for all your efforts on the COVID front. I just had one on the manufacturing side, I was wondering if you can give us anymore detail about your manufacturing costs for the antibodies or if you could at least confirm that these are well below $100 per gram. And if you won’t answer that question, I was just wondering Marion, if any perspective you can share on the opportunity for DUPIXENT in China and specifically what you guys think NRDL reimbursement? Thank you.

Terence, hi, it’s Len. I don’t think we can comment on our COGS, but Marion can certainly comment on China.

Sure, very happy to. Terence, thank you for the question. We are really excited about the opportunity in China and I will also remind that Sanofi has the responsibility for China. I am very encouraged by the progress to-date. And as it relates to specifics on reimbursement, I would guide asking our Sanofi colleagues to describe that in more detail, but as you know, tremendous market opportunity, incredible unmet need and a remarkable clinical profile and we are really excited about the opportunity.

Your next question is from the line of Geoffrey Porges with SVB Leerink.

Good morning and thank you very much for taking the questions. Congratulations on the results and all the progress in the quarter. Perhaps a few questions on the COVID program, George, you referred to the animal data and the high dose used 50 milligrams per kilogram is quite a lot of antibody. Could you give us a sense of first, is that the dentist that you expect to take forward in the pivotal trials for treatment and how much lower could it be for prophylaxis? And secondly, if that indeed turns out to be the dose, could you give us some indication of the number of courses that you could envisage having supply for this year and next year, given the available capacity now?

Yes. We have modeled the doses in the blood levels from the primate studies in order to design our human studies. And so we are hoping and targeting to achieve similar blood levels in the humans as we are achieving to achieve the relative efficacies in the primate studies. At those levels, we are at the production level that we could be delivering hundreds of thousands of doses per month for the prophylactic dose level and tens of thousands of doses per month for the treatment levels assuming that in that those sorts of ranges that we are predicting right now but of course all that is all pending the trials and seeing what doses really work hopefully some of the doses work and so forth. So there's still a lot to figure out that those are the levels that we are targeting and those are the numbers of doses that we are anticipating that we could deliver depending on how all the clinical trials work out.

Next question, please.

Your next question is from the line of Yaron Werber with Cowen.

Hi, good morning. This is Leo Ai for Yaron Werber. Thanks for taking our questions and Congrats on the side of the quarter and the good progress I just had two questions regarding your COVID-19 program. The first question is regarding the durability and safety of your neutralizing antibodies, it seems that some other antibody developers are kind of modifying the actually, demand of their antibody candidates to either extend the half-life or minimize the efficacy dose-limiting toxicities. Can you kind of discuss if you made any modifications to your candidates? And my second question is regarding the prevention study it seems to me that the ongoing Phase III study is looking at the preventing infections in household contacts of infected individual I am just wondering because the trial design looks more like postexposure prophylaxis. I'm just wondering you can provide any features regarding your plans on the prevention Trials are we looking at like the pre-exposure prophylaxis in other high-risk populations

Well there is a lot of questions sort of in there so one in terms of engineering our antibodies, historically, we've had very good success with achieving very good half lives and duration and durability without making modifications which as always come with certain risks so at least for our first generation antibodies based on the historical success were going with unmodified antibodies in terms of the concerns for antibody dependant enhancement we have done extensive studies and efforts on that including with antibodies that we have or have not modified effector function. And based on all of our data and all of our results we are going forward with antibodies once again that are not modified based on the confidence in the data that we have generated with our preclinical experience and finally what was the last question.

The prevention study?

The prevention study, yes, so some of those patients who have only been exposed that there will be ongoing exposure as well. So it is going to be both a pre and a post exposure prophylaxis effort and we will be characterising whether the patient in the household that we are treating have already been exposed in terms of whether already infected or not in our analysis.

Next question, Stephanie.

Your next question is from the line of Chris Raymond with Piper Sandler.

Thanks. So just on the EYLEA high dose program I know from just looking at it from trials.gov website, it looks like your larger DME and AMD trials aren't projected to read out until 2022 but there may be a smaller trial I think, CANDELA, reading out in 2021 So I guess some and the question here is I know you guys have not really guided to data yet but will we get a sense of the feasibility at its approach next year especially given if it is a higher dose and you got to be mindful of information etcetera but also may be remind us why are you guys never went the route of using a half life extension like a biopolymer? Thanks.

So, I will take the first part but George you can take the latter in terms of the data we really have not guided it depends on we are sort of trying to do things in parallel get some Phase 2 data while we are enrolling the Phase 3. So we will just have to see how that comes how that comes along George can comment on the difficulties of biopolymer work.

Right. So we have been investing enormously in efforts with biopolymer extension and so forth. And as we all know and as has been demonstrated recently with the problems of a major competitor, EYLEA sets a very high bar for safety and for efficacy and particularly from a safety point of view. And in all of our efforts, we have not been satisfied with our biopolymer efforts that those modifications meet that high bar, particularly for safety. And so we have been hesitant to move those programs further into the clinic, because of the concerns that we found with those approaches when we compare them and test them in our preclinical settings. In terms of the high dose EYLEA, we are hoping that we will be able to maintain that safety – the high safety bar with a high dose area, but to extend the dosing as you know, right now, studies show that depending on the patients, about 50% of the patients can go to T-12 dosing using the current dose of EYLEA. And what we are hoping is that we maybe able to increase the percentage of those patients who can go to longer term dosing using this higher dose, but to achieve that in as safe manner as we have historically with EYLEA to-date. So that’s the basis of our strategy.

Yes. I just might add that we are not sure there is any evidence that there is a dose dependent effect on inflammation at least with the high-quality EYLEA that we make. So I am not sure that’s necessarily going to be the case.

Next question, Stephanie?

Your next question is from the line of Robyn Karnauskas with Truist.

Hi, guys. Thank you for taking my questions. Good morning. So, question on fasinumab since you announced your top line data this morning. Can you just give us some sense in the hip and the knee? You just talk more broadly about the market, but the hip and the knee, what a monthly dose, what the opportunity might be given that, that would be profile and your strategy for going after now that you know what that profile is going after your other joints? Thank you.

Well, I think the biggest concern is obviously having to do with the benefit risk and the safety profile. Obviously, there is enormous need for alternatives in the pain field and there are so many tens of millions of people who are living with osteoarthritis pain with limited options and concerns about all the available medications, with all the concerns and problems with opioids in particular, but also with NSAIDs and so forth. All of these patients are potential candidates for the NGF inhibitors. So, we are still awaiting and needing to readout additional safety data from our program. And I think it’s going to still be determined in terms of the relative benefit risk as to how important a drug this can be for the so many patients who are in need here.

Yes, Robyn, I just wanted to mention, glad to see you have got a new name there, Truist, sounds good. I don’t know if it’s the truest, we like to think Regeneron is the truest. But in anyway, the notion of whether the risk benefit is going to work, as George pointed out, I mean, to some extent, we are sort of behind the alliance of Lilly and Pfizer in this class and they have announced I think that their action date is December, they have recently said there is not going to be an advisory panel. So, we will get to see as we are preparing our file in collecting that’s why they will get to see how the FDA views all of this and what constraints or restraints they might put or if they will or they won’t approve it. So you will get a little bit of an insight into the class, because it does appear that we see the same kinds of adverse events in general, in terms of arthropathies and these increased joint replacements that we saw off drug that has been seen with the members of the class.

Great. Thanks for the question. Stephanie, next question please.

Thank you. Your next question is from the line of Geoff Meacham with Bank of America.

Hey, guys. Thanks for the question. I had one on Libtayo, obviously, you guys have basal cell and monotherapy in lung as label expansion opportunities. I just wanted to characterize your – the trends in 2Q today and maybe your market share is. Do you feel like you're at saturation today or is there still an opportunity in your co-indication today? Thank you.

Sure. So this is still relatively early in the launch for Libtayo. The team has done a great job of establishing Libtayo for these patients with locally advanced and metastatic disease with the alternative of Libtayo. But certainly there is significant opportunity to expand our utilization. And, obviously, as you mentioned, as we potentially get into future indications even more volatile

Yes, obviously, the big indication where most of the sales in this space are is lung cancer, non small cell lung cancer and so our exciting data, which will be basis of a filing a monotherapy, and we are moving rapidly towards closing out the final patients enrolled in the chemo combination study. So lung cancer is really the bigger future opportunity if we can successfully complete that.

And of course, ultimately as we tried to highlight it is a little disappointing, how the PD1 class has not had as dramatic efficacy as one would have wanted in so many other cancer settings. And that’s why we have our very exciting and innovative collection of by specifics and other combination opportunities. But now that we have our own PD1 as a foundational component, we can now be trying to increase and add efficacy in all these other cancer settings where right now the PD1 class is not really shown as much benefit as one would want, but maybe we can now really create enormous benefit in the sales by making the right combinations, particularly with our bispecifics, but with other combination opportunities as well.

Thanks, Jeff. Next question, Stephanie.

Your next question is from the line of Ronny Gal with Bernstein.

Good morning. Thank you for taking our questions and congratulations on a nice progress. Back to the COVID-19 cost sales one question I have is about the hospitalization patient trial. Which is how do you monitor against patients mounting the autoimmune response and kind of confounding did it that way? And related the release of the biomarker data late summer, does that tell us something about the completion of the efficacy readouts, or is there some relationship there we can follow? Are they going to press release the completion of the enrollment just to give us an idea how do we know that antibody efficacy data is coming?

These are all the great questions, and in fact we are analyze our own data exactly with regards to some of the points and concerns that you have we are measuring among the biomarkers, we're measuring patients' endogenous response to their antibody titers, and we are comparing and dividing the patients based on their baseline levels of antibody titers to see whether the patients who respond the best are the people who are now mounting are too early in the course of their disease. And we have this adaptive design, we are going to continue to generate data and evaluate data. We will hopefully be reporting some of that data publicly, but then using that data to make decisions in terms of the adaptive future portions of our design.

Thanks.

Next question, please.

Next question is from the line of Tim Anderson with Wolfe Research.

Thank you. I have a question on DUPIXENT and COPD, COPD remains the Holy Grail for asthma biologics and there have been earlier preliminary COPD, COPD data sets with other products that looked good, only to fail in Phase 3. So I’m wondering if you can put into context the results from the interim look at your COPD trial that you referenced or at least whether those go no go criteria were the same that other biologics have relied on, or was that interim efficacy bar set higher with DUPIXENT than with competitor biologics at the same stage of development?

Yes, I am not sure that the earlier biologics, that you are referring to demonstrated much different data in your Phase 2 and Phase 3 programs and the problems were was that at best they were demonstrating somewhere around a 15% reduction in their exacerbations and depending on the Phase 3 studies Those were on the border of achieving clinical significance. And that’s why those programs didn’t move forward. So, we did not release the details of the bar that we set. But we did say that the bar that we set had to do with exacerbations and we have to achieve a minimum threshold reduction in exacerbations in order to trigger going forward and triggering the initiation of an additional phase III. So obviously, the fact that we met a threshold bar for reduction in exacerbations, I think creates some excitement, that assuming that we can continue to achieve these sorts of reductions in exacerbations that this could be an important drug for COPD.

Right.

Yes. I just want to echo what George said, because this is a little different than most other sort of, futility analyses where you say, well, even if you have a slim chance you sometimes you will let the trial go forward, as George said, and then just trying to put a exclamation. It was a stringent that means it, it was hard to pass that bar, because obviously Sanofi and Regeneron, we didn't want to take on another whole Phase 3 program, which is obviously takes a lot of time, money and effort. Unless we were told and we didn’t see the data, we just know that we passed this stringent bar if you will.

And the bar was for reduction in exacerbations.

Right.

Next question please.

Your next question is from the line of Yatin Suneja of Guggenheim Partners.

Hey guys. Congrats on all the progress. A question on the commercial front with regard to the cocktail approach that you have, can you can you comment on how do you see the adoption in light of the recent data that we are seeing with vaccine given that they provide a little bit longer protection is that the antibody approach has a lower potential to fail versus a vaccine or and hence you are almost guaranteed protection may be perhaps if you can talk about how the market plays out once you have vaccine available? Thank you.

I wasn’t sure whether there was two parts of that question whether there’s some insight on the technical aspect. If George understood that he can certainly answer that but from the commercial side I think it’s what’s been said for a long time this passive immunization with an antibody cocktail provides immediate immunity. So in the setting of until there’s a vaccine, if this comes first that would be great. But even after this vaccine, there will be many people who are not vaccinated or whose vaccination effects wore off and they got ill or even if they were vaccinated, they didn’t get enough of a response. So we think there is lot of places for this passive immunization with an antibody cocktail. George, I am not sure did you follow that at that point?

I think that you got it.

Thanks. Next question please.

Your next question is from the line of Alethia Young with Cantor.

Hey guys. Thanks for taking my question. I am just kind of curious about what is going on with evinacumab for the ANGPTL3 program. I know that you’re following, but I thought it was a relatively kind of small market opportunity, but just wanted to kind of think about that and what are the potential expansion opportunities from there?

This is ANGPTL3 you said evinacumab was a little hard to hear.

Yes. Oh, sorry.

Yes. But, I think I got it.

What are the commercial potential and life beyond that indication as well?

This is a very important proof of concept setting these are if we get approved as you say it’s for homozygous FH, it’s for a very rare genetic population. And particularly, what we showed was efficacy in patients who have no LDL receptor function. So that means that this drug in this pathway work totally different than all other drugs at lower lipids and cholesterol and it may have important growth opportunities after this in the sense that since it is lowering lipids, not only cholesterol but triglycerides, by these independent mechanisms, it is entirely possible and we are thinking about it about where there is a broader opportunity eventually, for this class of drugs. But we are also very excited about the near term opportunity that we hope we are going to get agreement from the FDA shortly in the homozygous FH population, particularly those who don’t respond to any of the existing drugs.

And I’ll add just you mentioned size of the population, the – this is a rare condition and in the U.S., there is a population of patients about 1,300 who would be eligible candidates, but we feel we would have an opportunity to help very significantly with this rare and challenging disease, ex-U.S. it’s about 1,700.

I think we have time for one more question, Stephanie.

Thank you. Your final question will come from the line of Evan Seigerman with Credit Suisse.

Thanks for squeezing me in at the end. Looking at that antibody data in September would that be assuming it’s positive, is that enough to get an EUA from the FDA and if not, what else you need to generate and when could we see that data? Thank you.

Well, it will all depend on the data and how good it looks. So, there is so many variables that I think it’s really impossible to give a fair answer to that question.

Okay. Thanks.

Thanks, Evan. Thanks for everybody dialing in. This concludes our call. Bob Landry and the IR team will be available after the call to answer further questions. Stay well and safe everyone. Thank you very much.

Thank you. This does conclude today’s conference call. You may now disconnect.