Regeneron Pharmaceuticals, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Commercial Execution: Fourth quarter total revenue grew 3% year-over-year, driven by double-digit growth in DUPIXENT, LIBTAYO, and EYLEA HD. DUPIXENT had strong global and U.S. sales growth, LIBTAYO expanded in new indications, and EYLEA HD saw growth despite category challenges.
• Product Launches and Approvals: EYLEA HD received FDA approvals for monthly dosing and RVO; LIBTAYO got approval for adjuvant CSCC. DUPIXENT remains approved in 8 type 2 inflammatory diseases.
• Pipeline Developments: Anticipate at least 4 FDA approvals in 2026, including new molecular entities and regulatory submissions. Ongoing clinical trials in various areas like oncology, hematology, and complement-mediated diseases. Development of long-acting antibodies and novel intravitreal formulations.
• Patient Affordability: Matched a $60 million donation to a patient fund and extended a matching program up to $200 million to help patients afford medicines.

Segment Performance

• DUPIXENT: Fourth quarter global net sales were $4.9 billion, with full year 2025 sales at $17.8 billion. Grew 32% year-over-year at constant exchange rates. Currently used by over 1.4 million patients globally and approved in 8 indications.
• LIBTAYO: Fourth quarter global net sales were $425 million, with full year 2025 sales at $1.45 billion. Grew 13% year-over-year at constant exchange rates. Leading immunotherapy for advanced non-melanoma skin cancers and making progress in adjuvant CSCC.
• EYLEA HD: Fourth quarter U.S. net sales were $506 million, up 66% year-over-year. Full year 2025 sales were $1.6 billion, up 36%. Approved for monthly dosing and retinal vein occlusion, with FDA submission for prefilled syringe accepted for review.

Guidance

• R&D Spend: Expected to be in the range of $5.9 billion to $6.1 billion in 2026.
• SG&A: Anticipated to be between $2.5 billion and $2.65 billion.
• Gross Margin: Projected to be in the range of 83% to 84%.
• Capex: Estimated to be between $1.1 billion and $1.3 billion.
• Effective Tax Rate: Expected to be 13% to 15%.
• Milestones: Anticipate at least 4 FDA approvals, 18+ Phase III studies, and clinical development of new antibodies across therapeutic areas.

Risks

• Regulatory Risks: Delays or issues in FDA approvals for new products or indications.
• Competition: Intense competition in markets for products like EYLEA 2 milligrams, which will face biosimilar pressure.
• Clinical Trial Outcomes: Uncertainties in the success of ongoing clinical trials and readouts.
• Payer Coverage/Reimbursement: Challenges in securing favorable payer coverage and reimbursement for products.

Question and Answer

Q: Clearly, there's a ton of interest in the upcoming readouts for LIBTAYO plus fianlimab. So in metastatic melanoma and adjuvant, any update on when we could receive this data beyond first half? Should we expect to get an adjuvant interim update with the metastatic? And I guess as a follow-up, we know there are several interims for the adjuvant. So if we don't get an update on the adjuvant with the metastatic readout, when could we expect that next interim?

A: We don't really have any additional clarity right now on the timing for the advanced melanoma readout. First half is the best estimate at this time. In terms of the adjuvant timing, that's also in the first half. They may coincide, they may not. Once we have the data, we will read it out shortly thereafter.

Q: Just a question on DUPIXENT IP. I'm sure you're aware of Sanofi's commentary yesterday about taking potential for taking the runway out well beyond the current thinking. And I think their commentary took things out maybe to the 2040 or beyond range. I know you don't want to give too much detail here, Len, but maybe any commentary you can provide in light of those comments yesterday.

A: No, no additional comments. I thought Sanofi did a good job laying out what the realm of possibilities are.

Q: Just a question on the frontline metastatic melanoma data in the first half. Is there any way you could frame for us how to think about the bar on hazard ratio here? And just any commentary about the PD-L1 expression levels of these patients as we look to this first interim read?

A: I think as we've discussed before, this study is largely powered to get an effect in terms of the primary endpoint, which is the PFS analogous to the current combination standard of care. We're also powered that if we were to hit at that level as the current standard of care, we would also hope to demonstrate a benefit and the study is appropriately powered to pick up an overall survival benefit. That is the minimum hopeful expectations, and we might see better than that as well. Regarding PD-L1 status of the enrollment, we are not -- we are screening patients, but we are not using it as an inclusion or exclusion criteria. There's no forward cap on the proportion of patients with high expression or low expression. So this population we expect would represent a true first-line advanced melanoma population, and we look forward to the results.

Q: Congratulations on the results. I wanted to ask about broader R&D strategy. In your presentation, you have the slide where you divide your pipeline among the 6 therapeutic areas and I&I has expanded significantly as of late as well as ophthalmology, which is not terribly surprising, and I would argue is necessary given the history of the company. So would you say that these 2 areas in addition to oncology will remain a bigger focus than the 3 others? Or are you committed to remaining relatively balanced across all 6 areas over the next few years?

A: Well, Tyler, thanks for bringing that up. First of all, I do want to point out that we are somewhat disappointed with the industry in that we invent a great leading drug like EYLEA. And then you get literally dozens and dozens of companies just trying to come up with a me-too and take a little bit of that business or the same thing with DUPIXENT. They're just trying to come up and try to mimic DUPIXENT and maybe try to make a little incremental improvement. What our goal is to really do what I think this industry should be doing, which is taking advantage of the most innovative approaches to come up with new drugs for new indications. And what we do is we take an agnostic approach that is generally guided by genetics, which has proven to be so successful in our history. This is perhaps one of the first, if not the first company that bet its entire future on the power of genetics versus mouse and now human genetics. So we make our choices based on the most powerful available data and technology that can guide decision-making, which is large-scale human genetics, which allows us to use AI in ways that other people can't. And that allows us to pick targets. So many of the targets that we've now described, for example, in ophthalmology and in immunology and inflammation, but across other areas as well are driven by the same kind of genetics that allows us to know whether DUPIXENT will work in an indication or not. That is the genetic says that if you're missing that genetic pathway, you're likely going to help the disease. And if you have increases in that genetic path, you're going to get more of that disease. And that has proven very powerful for us to make decisions. That's how we find indications. We are therapeutic agnostic, but obviously, we have capabilities broadly across all these areas. But we are very excited about these new programs because like our previous successes, they are driven by human genetics telling us that these targets, if we can make -- and we believe we have the most powerful technologies to address these targets, whether it be antibodies, bispecifics, genetic medicines, if we properly can target these genetically valid pathways, we can create new opportunities, new drugs for new indications, not just also protecting our existing franchises by making sure that we always have the best anti-VEGF approach and portfolio. We have the best anti-allergy portfolio and so forth. But we want to break new ground. We're doing it across all these therapeutic areas. We're very excited about it.