Welcome to the Regeneron Pharmaceuticals Second Quarter 2022 Earnings Conference Call. My name is Bella and I will 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 today’s conference is being recorded. I will now turn the call over to Ryan Crowe, Vice President, Investor Relations. You may begin.

Thank you, Bella. Good morning, good afternoon and good evening to everyone listening around the globe. Thank you for your interest in Regeneron and welcome to our second quarter 2022 earnings conference call. An archive of this webcast will be available on our Investor Relations website shortly after the call ends. Joining me today are Dr. Leonard Schleifer, Founder, President and Chief Executive Officer; Dr. George Yancopoulos, co-Founder, President and Chief Scientific Officer; Marion McCourt, Executive 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 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 businesses, financial forecasts and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payor 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 that statement. A more complete description of these and other materials 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, 2022 which was filed with the SEC this morning. 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 on 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 any further questions. With that, let me turn the call over to our President and Chief Executive Officer, Dr. Len Schleifer. Len?

Thank you, Ryan and thank you to everyone joining today’s call. Regeneron had a strong second quarter with notable execution across R&D, Commercial, and Business Development functions. Total revenues increased by 20% when excluding contributions from our COVID antibody cocktail. With net sales for EYLEA, Dupixent and Libtayo, each reaching new all-time quarterly highs and growing by double digits year-over-year on a constant currency basis. In addition to exceptional commercial execution, we made significant pipeline progress with three regulatory approvals, two accepted regulatory filings, and one positive Phase 3 readout. We also completed the acquisition of Checkmate Pharmaceuticals and the third quarter purchase of worldwide rights to Libtayo from Sanofi, both of which we believe will strengthen our oncology franchise in the near, medium and long-term. We also reported today preliminary, but promising anti-tumor activity and safety data for REGN5678 our PSMAxCD28 costimulatory bispecific in combination with Libtayo in patients with advanced metastatic castration-resistant prostate cancer. George will have more to say on this shortly. But we believe this represents an important step towards validating our costimulatory approach to fighting cancer and potentially advancing the science of immuno-oncology. Turning to our commercial performance. In the second quarter, EYLEA global net sales grew 13% at constant exchange rates to $2.5 billion. In the U.S. EYLEA net sales were $1.6 billion, up 14% year-over-year and outperforming anti-VEGF category growth of approximately 8%. Despite new competition EYLEA’s share was approximately half of the anti-VEGF category and 75% among branded agents, confirming its status as the gold standard anti-VEGF category. We believe aflibercept represents a significant potential growth opportunity going forward given favorable demographic trends as well as the potential for aflibercept 8 mg to augment the category and complement our retinal franchise. Regarding our investigational aflibercept 8 mg, the goal of our clinical…

Thanks Len. I will start with ophthalmology. We are looking forward to the upcoming Phase 3 readouts of aflibercept 8 mg in patients with diabetic macular edema and in wet age-related macular degeneration. PHOTON in patients with DME and PULSAR in patients with wet AMD will test whether patients treated with 8 mg dose every 12 weeks or every 16 weeks can achieve non-inferior best corrected visual acuity at week 48, compared to the currently approved EYLEA 2 mg dose every eight weeks. Unlike studies from other sponsors, in which patients were assigned to a dosing interval based on disease activity assessments following the loading phase, patients enrolled in the PHOTON and PULSAR studies were randomized at baseline into one of the three treatment groups, which we believe will allow us to determine whether extend dosing can truly be achieved. If the studies are positive and the high safety standard established with EYLEA is maintained, we believe aflibercept 8 mg would represent a significant clinical advance for patients. And we would target a U.S. regulatory filing by early 2023. Moving to Dupixent, which continued to deliver notable milestones in the second quarter of the year, Dupixent was recently improved in children with atopic dermatitis as young as six months old, making Dupixent the first and only biologic medicine approved to treat atopic dermatitis from infancy through adulthood. Marion will talk more about this as well as about our recent earlier than expected FDA approval for a brand new gastroenterology indication, eosinophilic esophagitis, or EOE. Since receiving approval in adults and in adolescent aged 12 and over, we have reported positive data in pediatric patients with EOE as young as 1 year of age. Our Phase 3 study in children 1 to 11 years of age met the primary endpoint with…

Thank you, George. Regeneron’s commercial business achieved another strong quarter demonstrating durable growth across our brands. We're building on the momentum of inline brands, including EYLEA, Dupixent, and Libtayo and also accelerating the potential across our portfolio from new and anticipated future launches. Let me start with EYLEA. Second quarter global net sales grew 13% year-over-year at constant currency to $2.5 billion. In the U.S. EYLEA net sales exceeded $1.6 billion, a 14% year-over-year increase driven by prescribing demand with strong demand continuing into the third quarter. EYLEA year-over-year growth significantly outpaced the category, gaining competitive share and further enhancing EYLEA’s position as the anti-VEGF agent of choice for retinal disease. We continue to see durable growth based on patient flow and new patient starts, ongoing demographic trends such as the aging population and prevalence of diabetes support anticipated mid-to-high single digit category growth for the foreseeable future. In diabetic eye disease, increasing diagnosis rates are also driving strong growth for EYLEA with more than $55 million injections worldwide since launch and well over 1 million injections in the U.S. alone in the second quarter of 2022. Physicians continue to recognize and prefer EYLEA’s differentiated efficacy and safety profile. We are confident in our ability to continue to build on our leadership over the long-term. Pending FDA approvals, there are potential incremental opportunities for EYLEA, including extending the dosing interval up to 16 weeks for diabetic retinopathy and treating preterm infants suffering from retinopathy of prematurity. In addition, aflibercept 8 investigational program has garnered significant enthusiasm from the retinal community and has the potential to significantly enhance the anti-VEGF treatment paradigm. Turning now to Libtayo, global net sales in the second quarter grew 25%, at constant currency to $141 million with U.S. net sales of $91 million. Libtayo continues to…

Thank you, Marion. My comments today on Regeneron’s financial results and outlook will be on a non-GAAP basis unless otherwise noted. Regeneron’s outstanding performance continued in the second quarter as our core business maintained a strong growth trajectory, and we have leveraged our strong financial position to complete two business development oncology transactions. Excluding global revenues related to the COVID-19 antibody cocktail, second quarter total revenues increased 20% year-over-year to $2.9 billion demonstrating continued momentum across our business. Second quarter total diluted net income per share was $9.77 on net income of $1.1 billion. Beginning with collaboration revenue and starting with Bayer. Second quarter 2022 ex-U.S. EYLEA net product sales were $870 million, up to 13% on a constant currency basis versus second quarter 2021. Total Bayer collaboration revenue was $358 million of which $340 million related to our share of EYLEA net profits outside the U.S. Total Sanofi collaboration revenue was $678 million in the second quarter of 2022, improved 55% from the prior year driven by Dupixent. Finally, we recorded Roche collaboration revenue of $8 million related to Roche’s sales of Ronapreve outside the U.S. We expect to record additional revenue from this collaboration in the fourth quarter of 2022. Moving now to our operating expenses. R&D increased 7% year-over-year to $690 million driven by higher head count in cost to support our expanding pipeline, partially offset by lower development costs for REGEN-COV. In the second quarter of 2022 acquired IPR&D was $197 million, which includes a previously disclosed $195 million charge related to our acquisition of Checkmate Pharmaceuticals. SG&A expense increased 14% year-over-year to $418 million, primarily due to costs related to growth initiatives for EYLEA and higher headcount to support our growing organization. Cost of goods sold decreased 73% year-over-year to $137 million primarily due to…

Thank you, Bob. Bella that concludes our prepared remarks. We'd now like to open the call for Q&A. With several callers in the queue and to ensure we are able to address as many questions as possible, we’ll answer one question from each caller before moving to the next. Bella please go ahead and poll for questions.

And our first question comes from the line of Mohit Bansal from Wells Fargo. Your line is now open.

Yes, thanks for taking my question and congrats on the quarter and data. Maybe a question on high dose EYLEA DME trial, especially with the loading dose sticking to that, so if we go back in the memory lane, it seems like the use of five loading doses only came along after the DRCR protocol, because I couldn't find anything which were -- in the history, which suggests that you should use five loading doses. Could you talk a little bit about that? And also, what is the realistic utility of fourth and fifth loading dose even for standard dose EYLEA, especially in the context of one year long trial? Thank you.

Yes, those are really interesting questions and they get into the detail of very specific points of the regimen. Many of these, as you point out have not been directly studied in sort of head to head studies. So where we would have to maybe offline discuss some of these issues, but as I said, details that would require a lot of experimentation, maybe the answer.

Thanks, George.

Bella, can we go to the next question, please?

Your next question comes from the line of Evan Seigerman from BMO Capital. Your line is now open.

Hey guys. Thank you so much for taking my question. I'd love for you to expand on kind of some of the next steps for REGN5678. What do you want to see in additional cohort 8 patients and even at potentially higher dose cohorts to move into a registration directed trial? Thank you.

Yes, no, thanks. We are obviously very excited about these data that have been, long been coming. As you all know we had to go through a very careful dose escalation starting with very low doses, but what we've now seen at the dose level 6, 7 and 8 has really been very exciting. I think that what we're going to be doing is we're going to be continuing to expand the number of patients at these dose levels. We're going to continue to evaluate the tumor activity as well as the safety and we hope that we're going to see that the responses remain profound and durable while the safety hopefully most of them will resolve and be managed well. And if we continue down that path, we will, as you say, also continue to explore other dose levels and so forth. But the level of tumor activity and balanced by the safety event that we're seeing on doses, are occurring now at levels where we think that they could be providing a new standard for benefit risk for this population. I think that it's important now to point out and remind everybody, I mean, I said it, but just to say it again, the IRAs were only seen in the patients who had profound anti-tumor activity. That is the patients who didn't benefit did not really indicate in terms of higher level IRAs to have significant safety concern. And that is of course, what you want to see, that the patients who have the benefit that the safety is limited to those, you’re not doing harm to the patients that do not benefit. Okay, I guess we're ready for next question.

Thanks, George. Bella, next question please?

You must be on mute. We don't hear a question, but maybe we could take the opportunity to amplify even a little further and repeat what George said about this, the safety and one thing, hello?

Can, can you hear me? Sorry. It cut out.

Yes, yes, Tyler.

Good morning. Thanks very much for taking the question. I wanted to ask about PULSAR and PHOTON, just a follow up. Can you elaborate on the decision to randomize patients to the 12-week and 16-week arms prior to assessing their response for loading doses? Since patients can only be rescued during that first year or moved down in dosing interval and not moved up to a less frequent regimen, even though they might be doing well. Doesn't this make the comparison to the term studies difficult, and given this, how do you expect to communicate the data to the physicians when we see it?

Well, we have to, we were somewhat confused by the whole of the business data and it's meaning it's intense because of the confusing study design. We are basically only after you see how well patients are doing you then shift them. So if you take your best patients and you shift them, for example, to a Q 12 or Q 16 regimen, and you say, oh, X percent of patients can send this regimen, you are not really understanding how good your drug is and what percent of the patients can actually achieve that dosing regimen. We know, and we've already published on this, that patients who do well can be dramatically extended. We're trying to answer a very different question, which we think is going to be very, very important to the community, which is whether you can truly achieve extended dosing. And whether you can prospectively put people into these dosing regimens and get substantial numbers of them to stay at these dosing regimens, because we're giving the higher dose of EYLEA, which we believe has this ability to maintain more patients at these longer intervals. So we really believe that this would represent a significant clinical advance and would also clarify how to use these drugs as opposed to the prior somewhat confusing approaches.

Thanks, George.

Okay, that's helpful. And just a brief follow up, in year two is it going to be able to be…

We have to move to the next one. I'm sorry, Tyler. Bella, can we go to the next question?

We'll deal with that privately Tyler, sorry.

Sure. And your next question comes from the line of Salveen Richter from Goldman Sachs. Your line is open.

Good morning. Thank you for taking our question. This is Andrea on for Salveen. Can you walk us through how to think about implications from the potential Medicare negotiation provision to high dose EYLEA, given that there is no distinct IP there, but there will be a biosimilar for the regular dose by mid-24? Thanks so much.

Yes, it's a complicated -- it's a complicated question that until we see the final language in the statute, how it's interpreted and how it's actually implemented as to whether and how we file for the high dose, whether or not there'll be separate considerations for high dose versus the standard dose EYLEA. If there are -- if it turns out that there are, if it turns out that there are separate, we get a separate BLA, obviously you get, I can't remember what the statute says now, 11 or 12 years before this comes into play. And based on our current understanding of the bill, we believe that a new BLA would constitute a new biologic product. And therefore the 8 mg would not be subject to price negotiations in years. But we have to see what the final bill looks like and how it's interpreted. So we we're as anxious to see some of that as you are so being, so we will keep you informed about thinking as the bill is finalized and starting to be interpreted.

Thanks, Len. Bella, next question please?

Yes. Your next question comes through the line of Matthew Harrison from Morgan Stanley. Your line is now open.

Great, good morning. Thanks for taking the question. I was wondering if you could comment maybe a bit more broadly on costims and how the impact of today's data makes you think about investment in additional tumor types or broader investment across costims and other combinations? Thanks very much.

That's a great question. I think you bring up a great point. And I think those of us who have been in this field now, we’re of course so excited by the early promise of immunotherapy checkpoint inhibitors and particularly PD1 antibodies. But of course over the years it's been recognized that only a small percentage of tumors, even in responding, even in the most responsive cancers, not all the patients respond and for many tumor classes, as we just saw with Merck's announcement of their failure today, in many classes, there's almost no detectable activity. So the Holy Grail in the field that people have been looking for is an answer to the question of, how do you activate immunotherapy in all these cold tumors, which is unfortunately the vast majority of cancers, both solid tumors and hemalogic malignancies. And so we went down this path based on the science that we could add the second signal, signal 2 to the first signal that could activate T cells. And these preliminary data suggest that that hypothesis might be right, and that we are on the way to this Holy Grail, that this is we believe very early data. We have a long way to go, but it's a spectacular indication that we have done where we are in the midst of doing and on the path of doing exactly what we set out to do, which is to turn immunotherapy cold tumors into hot tumors with dramatic anti-tumor activity. And the implications here based on all the pre-clinical data suggest that this is going to be broadly applicable. And as you all know, we have been developing a very broad costimulatory pipeline across many, many tumor classes, and several of them are already in the clinic, I mentioned. We…

Yes. And Matthew it’s Len. Maybe just add to, or what George said in terms of the investment side, we're prepared and we're able to make the investment across many different areas that George is talking about. And having under one roof, all the reagents owning all of Libtayo, having the variety of costims, having a variety of the CD3 three bispecifics and having all that knowledge, we think and the ability to invest puts us in a really terrific position. It is early going. We have to work through the safety. But to me, it's sort of reminiscent of once you started to see the excitement around the CAR T-cells, and the CAR T-cells actually provide a pretty good lesson in that they give very high levels of activity, response rates, 75% in some tumors or higher. And when you get those very high response rates, you also got very high levels of these immune reactions. You had -- and you look at the labels, you'll see 25% grade 3 neurologic adverse events and a whole bunch of other, not to mention all the cytokine release syndromes. So I think that these -- this is sort of an equivalent stage. We have got this tiger by the tail I really believe and George has described it well. And the amazing thing that should be echoed is that the preclinical data was extremely valuable. So Regeneron is not a company that just has all these molecules that we've acquired from others. These are all homegrown molecules, home tested, home validated, et cetera. There's a whole collection. We couldn't be more excited. I could keep going on, but maybe I'm getting waved off. We should take the next question.

No, I just want to add and build on what Len has said. So I think just like he said, in some ways, the CAR Ts in terms of high efficacy, particularly in hematologic malignancies, because that's where it's seen high efficacy seeing along with the AEs and in some of the responding patients, that's a good analogy. But I do have to point out the many differences. These are off the shelf reagents. Okay? Which God forbid, if there is a safety issue can be stopped. And it's much easier as we're already demonstrating to create a whole pipeline across a whole variety of broad cancers and unlike the Car T world right now, anyway, these are dramatic effects in solid tumors which were never really seen before by any other modality. So this is actually pretty exciting. There are analogies, there are in terms of dramatic efficacy, but also very important differences here that establish this as a potential breakthrough new class.

Okay. Thank you, George and Len. Next question, please, Bella.

Sure. Your next question comes from the line of Tim Anderson with Wolfe Research. Your line is open.

Thank you. A question on the REGN5678 data, you report out one CR but no other response rate data using recess criteria. So I'm wondering if there's anything else you can say about tumor shrinkage beyond that one CR in those upper three cohorts? And then to clarify, you mentioned a host of grade 3 AEs in the press release and some of those to me don't seem like the classic immune related AEs. So are you, I’m hoping you can clarify which of those you consider to be IRAEs, maybe you consider all of them to be? Thank you.

I think we've given a lot of the details and we're going be giving a lot more details obviously in upcoming meetings. Suffice it to say that as I mentioned for most of these patients, actually many of these patients, they don't have lesions outside of the bone, which is why we use PSA as as the indicator of total disease activity, because you don't have that many lesions. Okay? So that's one point where we're focusing on the PSA. We do believe that many of the IRAEs are the sort of IRAEs that you do see with both PD1 therapy and as Len mentioned also with CAR T therapy. And I think we indicate every single great 3 that we had and indicated that actually even though these are very early data in the treatment most of these patients many of these are actually already resolving or resolved. And we're going to continue to follow these patients and look for hopefully as seen, remember a total of six that one patient, the reason we highlighted then is they were the first responding patients, so we've now had almost a year follow up and we have this very impressive durability of response there. The other cohorts are much more recently treated and that's why we’re not giving that much follow up because these are patients who are in the very early months of being treated. But obviously you hear it, you hear it in our voices probably, those of us who have commented, we think this rule has the potential to be game changing, game changing for the field of immunotherapy and taking immunotherapy to the next level, also game changing for our oncology program and for our company.

Thank you. Bella, next question, please? I think we have time for two more.

All right. Your next question comes from the line of Chris Raymond from Piper Sandler. Your line is now open.

Hey thanks. Maybe back to EYLEA and the high dose format for a second. So our checks have indicated a pretty good chunk of the bio patients are actually EYLEA patients, and specifically EYLEA patients who are on a higher frequency dose regimen. I guess maybe a two part question here. First maybe talk about the plan to sort of mitigate this, you know, either before the high dose format or even after? And I guess is the plan with the high dose one would expect that switching paradigm for the high dose EYLEA would be easier than is that sort of part of the plan? And then the second part is our checks also indicate surprisingly low awareness of this high dose format among docs. Are these signals at odds with what you're seeing or is that correct? And outside of, you know, actually just having the data presented…

Marion is going to answer the question. By the way we don't market products before they are approved. So it's not surprising that there is not awareness of a product that's an investigational product. Marion can comment on the other stuff.

Sure. Let me take a start on some of the situations in market and perhaps George will add to that. But first let me comment that obviously we presented today very strong results on the growth of EYLEA’s standard of care in the marketplace, both in the U.S. and the worldwide information. You know, today in the branded category, U.S. anti-VEGF category, we have 75% of the branded market. We are approaching 50% of the overall market. So truly EYLEA is the standard of care. You know, it, it's probably best that fianlimab organization comment on where their product is being used, I'll comment anecdotally that early days, the response has been fairly muted, fairly low grade use in concentrated accounts rather than market wide. As for the future, we’re very excited and optimistic that the aflibercept 8 mg will represent a new standard of care with true durability of dosing and the same type of efficacy and safety that we see with EYLEA. So we're really excited. And certainly our clinical organization has put together trial designs that truly test the durability of the product, and then we'll allow the commercial organization to determine what the best strategy is for launch if and when we get FDA approval.

All right, let me just add to that, that it's important to point out that the reason why EYLEA has become the leading anti-VEGF agent, branded VEGF agent is because it allows most of the EYLEA patients to go on longer interval dosing and have, and be very satisfied with the response. Now, of course, as with any disease and situation, not every patient is going do perfectly well. And we know that there is a small percentage of patients who do need more frequent EYLEA. And, and of course, if one has a new untested agent that doctors haven't seen, their hope in the place that they would first try in a small percentage of patients who don't -- who are not doing well. And of course, that's why it's being used in that setting. Now our goal, of course, with the high dose of EYLEA is to take now the best-in-class agent and hopefully produce even better results in terms of allowing these small percentage of patients who are being dosed more frequently, or even the patients who are now on eight-week regimens or 12-week regimens to go to more extended regimen. And that's the whole point of the design in the study. So I don't think there's any surprises that it's the small percentage of very hard to treat patients where somebody would try an untested agent that they're hoping might work better, but we have a real logical rational way that we are now taking EYLEA, bringing forth this high dose formulation and hope to extend the benefits that we're already seeing with this tried and true in terms of both safety and efficacy reagent, and even expand it and get even for these small percentage of patients longer dosing and even extend maybe everybody else.

Okay. Thanks, George. Oh, last question please?

Sure. And your last question comes from the line of Carter Gould with Barclays. Your line is now open.

Hi sorry. Thanks, good morning. Thanks for taking the question. Thanks for squeezing us in. I guess, now that you fully own sort of Libtayo, can you update us on kind of where you stand on a subcutaneous formulation given what we've seen data from some of your competitors there and the importance of that the kind of key pace? And I guess, looking down the road then can you talk about the feasibility of potentially co-formulating Libtayo with one of these bispecifics, excuse me, costimulatories and if that's even feasibly possible recognizing it's or either way? Thank you.

You can imagine we're working on the subq. We'll give you some details I think down the road later this year. In terms of co-formulation and we have a strong view that if you're doing it for gamesmanship or patent work and all that kind of stuff, you know that's one thing, but we, what we're more focused on is getting the optimal dose and the optimal regimen and they are not likely to be the same in many of these settings. It’s only useful if you're going try to have a single regimen that covers both. So, but we're a long way from worrying about that. We're far more focused on the fact that we've turned cold to hot which is a big deal at least in our eyes. And obviously it hasn't escaped yours, or I'm sure anybody's attention that now with this just appreciated new data where it looks like we're on the way of turning cold tumors to hot in combination with Libtayo we are in retrospect, very happy that we now have taken on sole ownership of Libtayo.

Thanks Len and George. I think that that’s all we have time for today. Bella, could you please conclude the call?

Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect.