REGENERON PHARMACEUTICALS, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Key Performance Drivers: Regeneron had a strong fourth quarter with 10% revenue growth, driven by the strength of franchises like Dupixent, Libtayo, and EYLEA HD/EYLEA. Significant investments in the pipeline yielded progress in various programs.
• Pipeline Updates: Anticipated regulatory approvals include linvoseltamab in relapsed/refractory multiple myeloma, odronextamab in late-line follicular lymphoma, and Libtayo in adjuvant CSCC. Pivotal data expected this year include for itepekimab in COPD, fianlimab-libtayo in first line metastatic melanoma, and C5 antibody siRNA in generalized myasthenia gravis. Progress also in Factor XI antibodies, obesity programs, genetics medicine, and big data initiatives.
• Capital Allocation: Initiated a quarterly cash dividend of $0.88 per share and an additional $3 billion share repurchase authorization, increasing buyback capacity to approximately $4.5 billion, with commitment to returning capital to shareholders while investing in R&D.

Segment Performance

• Dupixent: Worldwide net sales grew 15% year-over-year to $3.7 billion in the fourth quarter of 2024. Over 1 million patients are on treatment globally across 7 approved indications. It showed growth across all blockbuster indications like atopic dermatitis, asthma, and nasal polyps, and had strong uptake in new launches such as eosinophilic esophagitis and prurigo nodularis, with progress in COPD.
• EYLEA HD and EYLEA: Combined U.S. net sales in the fourth quarter were $1.5 billion. EYLEA HD had net sales of $305 million in the fourth quarter and $1.2 billion for the full year. EYLEA had net sales of $1.2 billion in the fourth quarter. EYLEA HD is expected to accelerate uptake with anticipated label enhancements and the launch of a prefilled syringe, while EYLEA faces competitive pressure from biosimilars and other competitors.
• Libtayo: Global net sales reached $1.2 billion in 2024. In the fourth quarter, global net sales grew 50% year-over-year to $367 million, with U.S. net sales at $251 million. It saw growth in non-melanoma skin cancers and lung cancer, and has potential for approval in high risk adjuvant cutaneous squamous cell carcinoma (CSCC).

Guidance

• 2025 R&D Spend: Expected to be in the range of $5 billion to $5.2 billion, driven by cost to support an expanding late-stage pipeline.
• SG&A: Expected to be in the range of $2.55 billion to $2.7 billion, representing 3% growth at the midpoint versus 2024, driven by investments for potential oncology launches.
• Gross Margin: Expected to be in the range of 87% to 88% on net product sales.
• Cost of Collaboration Manufacturing: Expected to be in the range of $1 billion to $1.15 billion in 2025, primarily driven by higher Dupixent volumes.
• Capital Expenditures: Expected to be in the range of $850 million to $975 million, related to ongoing expansion of R&D facilities and manufacturing capacity.
• Effective Tax Rate: Expected to be in the range of 11% to 13%.

Risks

• Competitive Pressure: EYLEA faces significant competitive pressure from biosimilars and other competitors in the anti-VEGF category.
• Safety Concerns: Certain pipeline programs, such as CD20xCD3 bispecifics for solid tumors and complement programs, have safety concerns that need to be mitigated.
• Regulatory and Payer Uncertainties: Uncertainties exist in regulatory approvals for new indications and payer coverage for those indications.

Question and Answer

• Q: Consensus numbers suggest annual sales erosion for the EYLEA franchise. Do expectations look reasonable? A: Marion McCourt stated EYLEA HD has a strong profile with potential approvals, but EYLEA faces competitive pressure including biosimilar, though Regeneron has a strong category share.
• Q: Why was the dividend initiated now? A: Chris Fenimore said it's due to confidence in cash flows, flexibility in capital return, and expanding the shareholder base.
• Q: How critical is overall survival (OS) for the adjuvant CSCC Libtayo readout? A: George Yancopoulos said there are few survival events, and the FDA will review the data; Marion McCourt noted approximately 10,000 potential U.S. patients for the indication.
• Q: EYLEA HD inventory impact and Pavblu biosimilar? A: Marion McCourt said EYLEA HD inventory build impacted the fourth quarter, and George Yancopoulos mentioned Federal Circuit Court wins affecting biosimilar dynamics.
• Q: Operating expenses and pipeline partnership? A: Leonard Schleifer said focus on productive R&D, open to partnerships based on program needs.
• Q: Obesity program and myostatin/Activin blocker? A: George Yancopoulos explained the combination strategy for muscle preservation, balancing efficacy and safety.
• Q: LAG-3 plus PD-1 combo in NSCLC? A: George Yancopoulos said focus on melanoma pivotal data for insights into other settings.
• Q: EYLEA pricing strategy? A: Marion McCourt said no comment on pricing strategy.