Q4 2019 Earnings Call
George D. Yancopoulos: Eosinophilic esophagitis, or EOE, is a currently underdiagnosed but increasingly recognized serious allergic condition with limited effective treatment options. Following up on our promising proof-of-concept study, we will read out on the Phase 2 portion of our Phase 2-3 study in adults and adolescents by mid-year, while the Phase 3 portion continues to enroll. Additionally, we are studying a phase 3 study in pediatric EOE patients in the second half of the year. On a related front, we are excited about our collaborator Amien's recent approval for Palforzia, an oral immunotherapy for peanut allergy. However, there is still an enormous need for therapies for the treatment of food allergies.
Well I'm, sorry to interrupt pharmaceuticals, Q why should stop at night.
Our next conference call.
So yeah and I'll be operator for today's call.
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George D. Yancopoulos: As many of these patients are at risk for EOE and other allergic conditions, we think Dupixen, studied in combination with Palforzia, has the potential to further improve outcomes for these patients. I'm also pleased to share that pivotal studies for depictions in the new indications we announced last November are kicking off. Studies for chronic spontaneous urticaria, prurigo nodularis, and bullous pemphigoid have already started. The study in allergic bronchopulmonary aspergillosis will commence in the first half of this year.
Alternate callers adjusting holcomb, Justin you may begin.
Thank you Sylvia good morning, good afternoon, and good evening to everyone listening around the world. Thank you for your interest in Regeneron Pharmaceuticals, and welcome to the fourth quarter 2019 conference call and archive of this webcast will be available on our website.
Joining me today are Leonard Slifer, <unk>, founder, President and Chief Executive Officer, Georgienne capitalist founding scientists President and Chief Scientific Officer, Marion Mccourt scientists senior Vice President and head of commercial and Bob Landry Executive Vice President and Chief Financial Officer.
George D. Yancopoulos: Now let's turn and spend a few moments on immuno-oncology, where we are strategically positioned to compete, enhance, and extend the benefits of immunotherapy to many more patients than are currently benefiting today. With Liptayo, we have an important opportunity to compete in the PD-1 treatment landscape by combining LipTi with other antibodies from our Velocigene and Velocimune-derived toolkit, including bi-specific antibodies.
After I prepared remarks, we open the call for Tonight.
Would also like to remind you that remarks made on today's call include four looking statements about regeneron such statements may include but are not limited to those related to regeneron and its product in business.
Natural forecasting guidance development programs and related anticipated milestones collaboration finances regulatory matters payer coverage and reimbursement issues intellectual property pending litigation and other proceedings and competition.
George D. Yancopoulos: We are looking to enhance responsiveness for more than half the patients that do not respond to PD-1 therapy alone. Moreover, such combinations have the potential to extend our reach to patients with cancers such as breast, colon, pancreatic, and prostate, which show very limited response to checkpoint inhibition. Philip Tayo, in addition to being foundational to our combinatorial approach in oncology, we're expecting some near-term milestones. Later this year, the Independent Data Monitoring Committee will conduct pre-specified interim analyses assessing overall survival for the Pivotal Leptile Monotherapy Study in non-small cell monkeys.
For looking statement is subject to risks and uncertainties that could cause actual result, and events to defer materially from those projected in that statement more complete description of these and other material risks can be found and regenerons filings with the United States Securities and Exchange Commission, including its form 10 K. for the year ended December 31st 2000.
19, which you are planning to file with the S.U.C. tomorrow.
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 gap and non gap measures will be discussed on today's call information regarding our use of non get financial measures and a reconciliation of those measures to gas.
George D. Yancopoulos: At the last quarterly update, we announced that an interim analysis of the first 361 randomized patients, The firm's objective response rate, as determined by investigators, was 42% for Leptile vs. 22% for Chemotherapy. Although promising in terms of indicating profound clinical activity for leptarion lung cancer, objective response rate is not a validated endpoint for regulatory approval in this setting. Our other pivotal lung cancer study, in which Leptio is being tested in combination with chemotherapy, is more than 50% enrolled and is expected to fully enroll by mid-year. While we are investigating different combination approaches with liptile and melanoma skin cancers, where less than half the patients benefit from PD-1 therapy alone, we believe patients with non-melanoma skin cancers still remain underserved, and we are working to expand the Tyre remains the first and only approved therapeutic in advanced squamous cell carcinoma of the skin, or CSCC, with a safety profile that is similar to that of the other approved PD-1 or PD-L1 inhibitors.
Up is available in our financial results press release, which can be accessed on our website additional information about those measures is also available on the investor and media section of our website. Once our call concludes Bob Landry in the I.R. team will be available to answer for the questions with that let me turn the call over to our president.
Chief Executive Officer, Dr Lunch Lifer.
Thank you Justin Thank you to everyone for joining a call today.
The fourth quarter capped off a strong 2019 regenerons.
Are three gross drivers I <unk> <unk> <unk> drove double digit growth on the top and bottom line is what we continue to make substantial investments you know innovative r. and D. pipeline.
In the quarter Ilea Global net product sales grew 11% two $2 billion, including U.S.I. Lee a net sales growth of 13% to 1.22 billion, even with the launch of a new competitive.
George D. Yancopoulos: Following on recent promising results with Leptio in neoadjuvant CSCC, which we recently announced, we are now enrolling a registrational study in the adjuvant study setting, as well as a follow-up neoadjuvant CSCC study. We're also looking forward to the potentially pivotal data readout for basal cell carcinoma of the skin in mid-2020. The data are positive.
For the full year global net sales of by Leah grew 12% to 7.5 billion.
We remain confident as we expand our leadership position in wet A.M.D. and diabetics.
George D. Yancopoulos: We are hoping to proceed with the regulatory filing this year, and we continue to make exciting progress with our bi-specific antibody platform at the American Society of Hematology, or ASHMEDH. We presented data from our first class of these antibodies, CD3 bi-specifics that are designed to bring a killer T cell to a tumor and trigger the so-called signal one in the T cell activation process, leading to tumor cell destruction. For Regeneron 1979, or CD20 by CD3 by Pacific, we reported a 95% overall response rate, 77 complete responses, and 22 late-stage follicular lymphoma patients.
Diseases.
Dupixent sales and now.
Rebuilt as we expand a footprint in the treatment of type two inflammatory diseases global knit product sales grew 136% to 762 million in the fourth quarter.
And just last week, we announced that the F.B. accepted for priority with you are filing in pediatric a topic dermatitis, which if approved will represent a breakthrough for children six to 11 years old suffering from this debilitating disease.
We have still in the early days of Dupixent with many global launches just starting in several potential new indications in late stage development.
As expected the profits from or anybody collaboration with sanity continue to increase creating further revenue in earnings diversification regeneron on the strength of Dupixent, we generated profits of 104 million for the fourth quarter and 209 million for the full year, despite the losses associated with probably.
George D. Yancopoulos: In late-stage diffuse large B-cell lymphoma, we observed 71% overall response rates, all of which were complete responses, in seven CAR-T nave patients. Moreover, and quite remarkably, we saw a 50% overall response rate in 12 patients who had failed CAR-T, with three of these patients achieving a complete response to treatment with Regeneron 1979. Clearly, this bi-specific has demonstrated promising single-agent clinical activity in late-stage patients and supports initiation of a potentially pivotal Phase II program for Regeneron 1979 in several monotherapies, including Relapsed Refractory Folliculum Foma, Relapsed Refractory DLBCL, as well as several other non-Hodgkin's lymphoma subtypes. We are also planning to initiate chemotherapy combination studies At the same ASH meeting, we presented preliminary data for our second CD3 bisubstantiation trial.
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To that end, we've been working hard to address probably would and kids are performance to further enhanced profitability of the collaboration.
In December we insanity announced a major restructuring it'd been lines that will improve profitability increase efficiency and enhanced focus undo picks it.
We remain on track to close the transaction in the first quarter.
<unk>, we continue to make progress both commercially and then on D. sales, who live tile are anti P.D. One therapy. Good is 75 million and the fourth quarter in the U.S., we extended live tires leadership position as the number one.
Them at treatment in cutaneous squamous cell carcinoma.
George D. Yancopoulos: Regeneron 5458 is a BC made by CE3 Bison for late-stage multiple myeloma. Remarkably, the first patient in this program was dosed at the beginning of 2019, and we were able to show initial efficacy and safety data at the ASH meeting later that same year. At the higher of the two initial doses, objective responses were observed in 3 out of 4 patients, two of which achieved MRD negativity.
As we look to 2020 flip time, we're excited about the late stage day to read read outs in pagers cell carcinoma, and the interim analysis for a pivotal monotherapy study in none small so lung cancer.
We also making significant progress on a by specific krugman ecology, we had a strong showing at the American Society Hematology meeting in December where we presented initial data for a B.C.M.A. by C.D. three in the body as well as updated data for a C.D. 20 by C.D. three antibody well each of these programs.
George D. Yancopoulos: These were all very advanced patients who had failed a median of seven lines of prior systemic therapy, including anti-CD38. We are currently enrolling a Higher Dose Escalation Cohort. This year, we also advanced our novel second class of bispecifics into the clinic. These bispecifics are referred to as CD28 or CoStim bispecifics because they activate the CD28-mediated co-stimulatory signal, also known as Signal 2, that is normally required to optimize cell killing by T-cells.
Could be important individual treatments over time, they also represent validation of a by specifics program.
Which long with with <unk>, former diverse and powerful tool kit to put potentially address malignant diseases.
Regenerate has attracted of tackling some of the world's most challenging health issues, while creating longterm value shareholder.
Looking back at 2019, we achieved six important regulatory approvals across a growth drivers <unk> dupixent in <unk>.
George D. Yancopoulos: Researchers have avoided targeting this T-cell activation pathway for almost 15 years, ever since the disastrous clinical trial involving a CD28 super agonist, which indiscriminately activated T-cells in the bodies of healthy volunteers, leading to cytokine storms and severe toxicity. In contrast, our CD28 bi-specifics are designed to avoid this problem by locally engaging T-cells only at the tumor site, as validated by our preclinical studies, some of which were published a few weeks ago in Science Translational Medicine, and which demonstrated synergistic activity when co-stems were combined with lip tire or with other bi-specifics, even for tumors historically unresponsive to PD-1 blockade. At the end of last year, we enrolled our first patients in the clinical trial of our first co-stem. PSMA by CD28 in combination with Liptio in advanced prostate cancer patients.
Beyond these approvals, we made significant advances in a pipeline, which George will discuss.
Additionally, I would like to call your attention to the global health crisis and Corona virus.
We have answered the call for help in responding diligent movie with H.H.S. to develop potential treatments. George will also further outline this effort.
Degenerates anything 2020 from position of financial strength, we have the necessarily capital to advance and expand our wholly owned R. and D. pipeline. Additionally, we continue to seek value, creating business development with a focus on technologies that enabling accelerate our own technologies in drugs.
Rubbery and development.
And we're market conditions create opportunity we will continue to buy back shares undo I share. We purchased program, where we continue to see a significant dislocation between share price in the long term value of the company.
George D. Yancopoulos: We expect additional customs to enter the clinic in 2020. Now, I'd like to move on to the rest of our pipeline. With the C5 blocker pozelemin, our goal is to achieve a more complete blockade of inappropriate complement activation compared to the currently available therapies and to do this with a more convenient, self-administered subcutaneous dosage. Results from an initial six-patient cohort of our Phase II study in paroxysmal nocturnal hemoglobinuria patients announced in December showed that our subcutaneous weekly regimen of pozzolamib maintained Lactate Dehydrogenase, a biomarker for red blood cell damage, at normal levels at week 8.
In conclusion, we are pleased with a continued operational and financial execution, there's creating near and long term value. We renting 2020. It was strong momentum and we remain confident you know strategy and in a business now turn the call over to George.
Thank you <unk>.
I will provide an overview of our diverse pipeline, which is made possible bar foundational technologies and allow us to rapidly identify invalidate genetic targets and go quickly and efficiently to turn key therapeutic solutions, whether through internally developed approaches such as Velocigene velocimmune in the general on genetics.
George D. Yancopoulos: Importantly, we are uniquely positioned to test a novel approach by combining pozzolamib with our partner Elnilam's anti-C5 siRNA, which has the potential to maximize efficacy while further significantly reducing dosing frequency. This will be the first in a series of opportunities for the combination of our antibodies with siRNA. We will be initiating our Potentially Pivotal Program with prozelomib, as well as combinations with the siRNA, this year. Additionally, I'd like to provide an update on a few other late stage programs. Earlier this year, the top-line results of the Phase 2 study of GERTUSMab were active in an antibody for fibrodysplasia ossificans progressa, a devastating orphan disease in which patients' muscles, tendons, and ligaments are progressively replaced by bone, forming a second skeleton that traps them in their own bodies, often leading to asphyxiation. In the 44 patient study, GERITOSOMAB demonstrated a nearly 90% reduction in the formation of new bone lesions compared to placebo.
There were important new collaborative capabilities, such as those with El Nio, Intellia Bluebird and others.
Starting with I. Liam this weekend at the Bascom Palmer engines. This meeting we were presented to your data for the Panorama studying nonproliferation diabetic retinopathy, which showed a market reduction in the risk of developing vision threatening complications.
The same time, we will discuss the rationale for clinical testing of high don't say we are currently in a phase two trial and went M.D. that will provide initial safety and efficacy data.
Phase three trial Indian me will begin mid year closely followed by phase three study in wedding handy.
Moving onto Dupixent or do a block or both the interleukin foreign into <unk>. There are two pathways, which is changing the lives of so many people suffering from allergic diseases, such as asthma, a topic dermatitis and chronic rhinosinusitis with nasal pulse with more than 125000 patients treated globally since launch.
George D. Yancopoulos: This treatment has the potential to transform the course of this disease. We plan to discuss the data with the regulators, as well as initiate a study in pediatric patients. In 2020, we are also planning a regulatory submission for Evanacumab, our ANG-PTL-3 antibody for homozygous familial hypercholesterolemia patients.
Just last week, we announced that the F.D.A.'s undertaking a priori view to extend approval of Dupixent to children age six to 11 years suffering for moderate to severe any topic German ties to target do for date May 26 2020.
George D. Yancopoulos: We're also anticipating readout of the Facinimab, or anti-NGF, studies in osteoarthritis pain, including the long-term safety study, as well as phase 3 studies comparing it to naproxen and NCF. Finally, I'd like to finish by discussing our partnership with BARDA. Part of the Office of Preparedness and Response for the Department of Health and Human Services. Together, we hope to exploit our rapid response capabilities to address emerging infectious disease outbreaks. We initially built this program and worked with BARDA to address the 2012 MERS epidemic. MERS is a coronavirus closely related to the Wuhan virus that is causing the current global public health emergency. Then, in 2014, we turned our rapid response capabilities to focus on Ebola, working together with BARDA and the World Health Organization.
If approved this will be the first biologic indicated for these children. We would help to disapproval will continue to reflect the remarkable efficacy and safety profile of Dupixent.
Evidence by the absence of a black box warning or any associated series infection risks, which are often seen with other room and you know modulatory biologics and <unk>.
Well marrying we'll update you on quarterly performance I'd like to highlight other near and long term opportunities for depicts.
<unk> or <unk> is it currently under diagnosed but increasingly recognized serious allergic condition with limited effective treatment options. Following up on our promising proof of concept study, we will read out on the phase two portion of our phase two three studying adults and.
Adolescence, my mid year, while the phase three portion continues to enroll.
Additionally, we're studying a phase three study and pediatric ill he patients in the second half of the year.
George D. Yancopoulos: Progressing therapeutic candidates in just six months and resulting in the potential cure even for the sickest Ebola patients, as was recently published in the New England Journal of Medicine, allowing for an ongoing rolling submission to the FDA for approval of our life-saving antibody. As BARDA announced just this week, we are now extending our collaboration with them to address the Wuhan coronavirus. We're already scaling up one set of potential antibody treatments that could be available for testing or for compassionate use in patients within a few months, as well as a new set of treatments that could be available soon thereafter.
Unrelated front, we are excited about our collaborator <unk> reason approval for <unk>, an oral immunotherapy peanut allergy.
But there is still an enormous need for therapies for the treatment of food allergies as many of these patients or at risk for <unk> and other allergic conditions. We think dupixent studied in combination with bell fours here has the potential to further improve the outcomes for these patients.
I'm also please does she have the pivotal stays <unk>, new indications, we announced last November or kicking off studies for chronic spontaneous urticaria <unk> and bullets pemphigoid have already started.
Marion McCourt: Thank you, George. We closed out 2019 on a high note with continued commercial execution across our portfolio and Ron's Commercials and Oncology. Starting with ILEA, in the fourth quarter, we recorded our best performance in terms of volume and net sales since launch in 2011. Global net sales grew 11% year-over-year to more than $2 billion, and U.S. net sales grew 13% to $1.22 billion versus the prior year. Growth was driven by increases in both market share and market expansion.
Studying allergic bronco pulmonary aspergillosis will commence in the first half of this year.
Now, let's turn and spend a few moments on Immunooncology, where we are strategically positioned to compete and Hansen extend the benefits of immunotherapy too many more patients that are currently benefiting today.
<unk>, we have an important opportunity to compete in the P.D. one treatment landscape combining the tie with other random buys from our Velocigene and velocimmune derive tool kit, including by specific anybody [noise].
We are looking to enhance responsiveness for the more than half the patients that do not respond to P.D. one therapy alone.
Marion McCourt: ILEA's sales grew in diabetic eye disease and in wet AMD despite a new anti-VEGF market entry. Also, while not a material driver of performance in the quarter, we introduced the ILEA prefilled syringe in mid-December and anticipate full market supply in March. The overall anti-VEGF market continues to grow at a steady mid-to-high single-digit pace, underpinned by the aging population and increasing prevalence of diabetes. Our renewed strategy and incremental 2019 investments enhanced wet AMD leadership and drove further penetration in diabetic eye disease, which has ILEA growing faster than the market across all indications. As we have seen for the last several quarters, the growth rate in diabetic eye disease exceeds the growth rate in wet AMD. Accordingly, the wet AMD business represents less than 60% of total US ILEA net product sales.
Moreover, such combinations have the potential to extend our reach to patients with Kansas such as breast colon pancreatic in prostate would show very limited response to checkpoint inhibition at this point.
Flip tile in addition to being foundational to our combinatorial approaching <unk>, we're expecting some near term milestones later this year the independent data monitoring committee will conduct.
Specified interminably <unk> assessing overall survival for the pivotal time on a therapy study nonsmall, so lung cancer at the last quarterly updates, we announced that an interim analysis of the first 361 randomized patients.
The confirmed objective response rate as determined by investigators was 42% <unk> versus 22% for chemotherapy.
Although promising in terms of indicating profound clinical activity Philip talent lung cancer objective response rate is not a validated endpoint for regulatory approval in this setting.
Marion McCourt: In 2020, we have significant opportunities to advance ILEA's leadership position. For WET-AMD, we are executing initiatives designed to position ILEA as the preferred first-line treatment. Beyond WET-AMD, we see tremendous opportunity in diabetic eye disease as patients remain largely underdiagnosed and undertreated.
Or other pivotal lung cancer study English subtitles being tested in combination with K. My therapy is more than 50 per cent enrolled and is expected to fully in Rome by mid year.
Well, we are investigating different combination approaches with <unk> melanoma skin cancers were less than half the patients.
Marion McCourt: We're investing in targeted initiatives with physicians and consumers to increase diagnosis and treatment rates, as well as applying technologies to support screening and diagnosis. The totality of our clinical profile, safety record, dosing flexibility, breadth of indications, and established reimbursement give us confidence in the future for ILEA. Turning to Libtio, fourth-quarter global net sales were $75 million.
Benefit from P.D., one therapy alone, we believe patients with non melanoma skin cancers still remain underserved and we're working to expand the available treatment options for these patients. The tie remains the first and only put therapeutic in advance squamous cell carcinoma, the skin, where C.S.C.C. with the safety profile did a similar to that of the other.
P.D., one or P.D.O. one inhibitors.
Falling on recent promising results with reptile in Neoadjuvant, C.S.C.C., which we recently announced we are now in rolling or read Registrational study in Adjutant study setting as well as a follow up Neoadjuvant C.S.C.C. study.
Marion McCourt: In the U.S., where sales were $61 million, we've quickly established Libtio as the leading systemic treatment for advanced cutaneous squamous cell carcinoma, or CSCC. Approximately 60% of CSCC patients now receive anti-PD-1 therapy, and in the anti-PD-1 class, Libtio has nearly 90% of new patients. In 2020, we're investing to increase our commercial presence, including expanding our field force to strengthen Libtio's position as the standard of care in CSCC. Additionally, launch preparations for a potential approval in basal cell carcinoma are underway. Outside the U.S., initial CSCC launches are ongoing and led by our collaborator, Sanofi. We're encouraged by early prescribing trends and continue to see progress with access and reimbursement. Overall, we're very pleased with the early impact we have made with Lubtio. And finally, for Dupixent, global net sales in the fourth quarter were 752 million. In the U.S., net sales reached 605 million, representing 134% growth as compared to the prior year.
We're also looking forward to the potentially pivotal data read out for Baysal cell carcinoma. The skin in mid 2020, if the data are positive we're hoping to proceed with the regulatory filing this year.
And we continue to make exciting progress with our by specific antibody platform at the American Society of hematology or Ash means we presented data from our first class of these antibodies to C.D. three by specifics that are designed to bring a killer t. cell to a tumor and trigger the so called signal one.
And the T. cell activation process, leading to tumor cell destruction.
For Regeneron 1979, or C.D. 20 by C. three by specific we reported 95% overall response rates with 77 complete response rates in 20 too late stage phallic you'll them from patients.
Late stage diffuse large be sell them phone, we observed 71% overall response rates all of which were completely sponsors in seven Cartier naive basis.
Marion McCourt: We continue to see strong prescribing trends across all indications, with total prescriptions growing approximately 18% compared to the third quarter. Weekly Nudibrand prescriptions at quarter end were approximately 1,500 patients per week. Atopic dermatitis remains a significant growth driver for Dupixent. The brand continues to outpace other biologic launches in dermatology, and there is significant room for further penetration. We're expanding the market through increased prescribing across both moderate and severe disease. Additionally, the recent adolescent launch is contributing to growth, aided by physician experience and comfort with Dupixent's efficacy and safety profile. As Len mentioned, we eagerly await the potential FDA approval in 6- to 11-year-olds, where there is a significant disease burden for young patients and their families. In asthma, Dupixent is outperforming other recent biologic launches, with nearly 80% of Dupixent asthma patients being new to biologic treatment.
Moreover, and quite remarkably we saw a 50% overall response rate in 12 patients who had failed car t. therapy with three of these patients cheating a complete response to treatment with Regeneron 1979.
Clearly this by specific has demonstrated promising single ancient clinical activity in late states patients and supports initiation of potentially poodle phase two program for a general 979 in several Monotherapies studies.
Including relapse refractory flicking lymphoma, relapse or factory D.L.B.C.L. as well and several other non hodgkin's lymphoma sub types.
We are also planning to initiate chemotherapy combination studies this year in earlier lines of non Hodgkin's lymphoma.
At the same ash meeting, we presented preliminary data for a second city three by specific Regenerons 54, 58, or B.C. may buy c. three by specific in late stage multiple myeloma remarkably the first patient in this program was dose at the beginning of 2009 team and we were able to show <unk>.
Marion McCourt: We continue to demonstrate that our strategy to grow and compete in this market is working. There is a significant opportunity to advance Dupixent's market position, with less than 15% of eligible patients currently receiving biologic treatment. We recently began the rollout of our Asthma Direct-to-Consumer TV campaign. Although early, our campaign is generating positive results from leading indicators. Finally, our launch in chronic rhinocyticitis with nasal polyps is off to a strong start, and patients are initiating on Dupixan regardless of prior surgery. Prescribing is being driven by both allergists and ENTs, including many new Dupixan prescribers. We see tremendous growth potential for Dupixent and remain committed to advancing Dupixent prescribing to many more patients by way of expanded indications, age groups, and geographies. In closing, we delivered strong growth across our core commercial franchise in the fourth quarter and throughout 2019. We are entering 2020 with significant momentum and confidence to drive the future. I'll turn the call over now to Bob.
The data at the asked me later the same year.
In the higher the two initial doses objective responses were observed in three out of four patients two of which achieved.
M.R.D. negativity.
These were all very advanced patients, who had failed a median seven lines of prices timing therapy, including anti C.D. 38.
We are currently enrolling.
Higher dose escalation co horse.
This year, we also advance our novels second class by specific into the clinic.
<unk> are referred to a C.D. 28 or coast him by specifics because they activate the C.D. 28 meetings costume and Tory signal will also known as signal to that is normally rijkaard to optimize sell killing by T. cells.
Researchers have avoided targeting this t. cell activation pathway for almost 15 years ever since the disastrous clinical trial involving a C.D. 28, Super Agnes, which indiscriminately activate t. cells in the bodies and healthy volunteers, leading decided kinds doormen severe toxicity in contrast, R.C.D. 20 by specifics.
Are designed to avoid this problem by locally engaging t. cells only at the tumor site as validated by a pre clinical studies some of which were published a few weeks ago in science translational medicine.
Robert E. Landry: Thank you Marion. For the fourth quarter of 2019, Regeneron delivered another quarter of strong revenue and EPS. Fourth quarter 2019 revenues grew 13% to $2.17 billion, driven by continued growth of our core brands, ILEA, Liptio, and Independent. Non-Gap Diluted Net Income per share grew 10% year-over-year to $7.50 on non-gap net income of $858 million. Let me remind everyone, when compared to the prior year, the fourth quarter 2018 revenues included a $149 million catch-up benefit related to the modification of the IO Discovery Agreement with Santa Fe, which makes this quarter's growth even more impressive. Since Marion discussed her US ILEA results, I will start with our Bayer and Sanofi collaboration.
In which demonstrated <unk> activity when costumes were combined with lip tire war with other by specifics even for tumors historically unresponsive two P.D. one blockade.
At the end of last year, we enrolled our first patients in the clinical trial of our first coast him P.S. I mean by C. 28 in combination with reptile in advance prostate cancer patients.
We expect additional <unk> to enter in the clinic in 2020.
I'd like to move onto the rest of our pipeline with the C. five blocker pause element. Our goal is to achieve a more complete blockade of inappropriate complement activation compared to the currently available therapies and to do this with a more convenient self administered subcutaneous dosage form results from an initial.
Robert E. Landry: Starting with the Bayer collaboration, ex-US ILEA net product sales, which are reported to us by Bayer, were $783 million, representing growth of 8% on a reported basis and 9% on a constant currency basis. Total Bayer Collaboration revenue for the fourth quarter of 2019 grew 6% year-over-year to $321 million, of which $298 million was derived from our share in net profits from ILEA sales outside the U.S. Total Sanofi collaboration revenue in the fourth quarter was $427 million. Regeneron recognized a profit of $104 million from the commercialization of non-IO antibodies, compared to a loss of $44 million in the prior year period.
Six patient cohort of our phase to study in <unk> Turner hemoglobin area patients announced in December showed that are subcutaneous weekly regimen applause element maintained.
Lactate dehydration biomarker for Red blood cell damage at normal levels at week. Eight importantly, we are uniquely positioned to test a novel approach by combining puzzlement with our partners <unk> anti five anti C. five s. ironing, which has the potential to maximize efficacy.
Well further significantly reducing dosing frequency.
It will be the first in a series of opportunities for combination of oriented bodies with S.I.R. <unk>, we will be initiating are potentially pivotal program was puts element as well as combinations with the S.A., earning this year.
Robert E. Landry: These increases were driven primarily by higher DEPIXENT net sales, partially offset by the rollout of the DEPIXENT Asthma DTC campaign, as well as incremental costs to support ongoing global DEPIXENT launches. Moving to our expense basis, starting with R&D. Non-GAAP R&D expenses were $581 million for the fourth quarter of 2019, an increase of 9% compared to the prior year. Non-GAAP unreimbursed R&D expenses, calculated as the total non-GAAP R&D expense less reimbursements from our collaborators, were $393 million for the fourth quarter of 2019, an increase of 13% compared to the prior year. Higher R&D expenses result from broadening and advancing our pipeline of wholly owned drug candidates, particularly in oncology. We're also funding jointly developed molecules with strategic external partners. In November, we announced a research collaboration with Veriad, focusing on the development of new oncolytic virus-based treatments for cancer.
I'd like to provide an update on a few other late stage programs.
Earlier this year, we top line results of the phase to study of Gary <unk> or active in a in and body for five both dysplasia ossificans progressive, though a devastating orphaned disease in which patients muscles tendons and ligaments are progressively replaced by bone, forming a second skelton that traps them in their own bodies, often leading to a <unk>.
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In the 44 patients study.
Study <unk> demonstrated in nearly 90% reduction in formation of new bone lesions compared to placebo.
This treatment has the potential to transform the course of this disease, we plan to discuss the data with the regulators as well as initiate a study in pediatric patients.
In 2020, we were also planning.
Regulatory submission for <unk> are entropy juthree anybody for homozygous familial hypercholesterolemia patients were also anticipating read out of the facility Ma'am were anti N.G.S. studies in osteoarthritis pain, including the long term safety study as well as basically studies comparing it to an approximate and insects.
Robert E. Landry: Taken together, we continue to expect 2020 R&D expenses to increase. Next, non-GAAP SG&A expense was $446 million for the fourth quarter of 2019. This represents a 9% year-over-year increase driven by higher headcount and related costs in commercialization expenses related to both ILEA and DPI. We expect non-GAAP SG&A expenses to increase in 2020 as we invest for further growth in our three core brands, ILEA, DEPICSIN, and LIBDA. In the fourth quarter of 2019, combined non-GAAP cost of goods sold and cost of collaboration in contract manufacturing were $208 million, compared to $109 million in the fourth quarter of 2018. The year-over-year increase in cost of goods sold was primarily due to the company's obligation to pay Sanofi its share of Leptio U.S. gross profits, third-party royalties on Liptio U.S. sales, and higher inventory reserves The year-over-year increase in the cost of collaboration and contract manufacturing was primarily due to the recognition of manufacturing costs associated with higher sales of the depicted products.
Finally, I'd like to finished by discussing our partnership with boredom.
Part of the office of preparedness and response for the Department of Health and human services.
Together, we hope to explore our rapid response capabilities to address emerging infectious disease outbreaks. We initially built this program and work with barter to address the 2012 mirrors epidemic mirrors is a corona virus closely related to the will hand viruses.
Causing the current global public health emergency.
And then in 2014, we turn to a rapid response capabilities to focus on a bowl up working together with BARDA in the World Health organization progressing therapeutic candidates in just six month and resulting in the potential cure even for the sickest a bowler patients as was recently published in the New England Journal Medicine.
Allowing for an ongoing rolling submission to the F.D.A. for approval of our life saving antibody cocktail.
As bar to announce just this week, we are now extending our collaboration with them to address the Wu hand, Corona virus, we're already scaling up one set of potential antibody treatments that could be available for testing or for compassion use and patients within a few months as well as a new set of treatments that can be available soon thereafter.
With that I will turn the call over to Marion.
Thank you age we closed out 2019, and a high net with continued commercial execution across our portfolio <unk>.
Robert E. Landry: Shifting to cash flow in the balance, full year 2019 Regeneron generated two billion dollars in free cash flow. We ended the year with cash and marketable securities of nearly six and a half billion. Recall last November we announced a billion dollar share repurchase program. In the fourth quarter, we repurchased approximately 250 million dollars worth of shares in open market transactions. We continue to repurchase shares opportunistically. Now, let me take a minute to discuss the restructuring of our antibody agreement with Sanofi. As we previously disclosed, the anticipated benefits of this proposed restructured agreement are improved profitability, increased efficiencies, and improved reliability. In summary, upon closing of the deal, we expect this transaction to be immediately accretive to Regeneron. We are working diligently to ensure an expedient close to the transaction this quarter.
That runs commercial that's an ontology.
Yeah.
We recorded our best performance in terms of volume and that health since launching 2011.
That sounds <unk>, 11% and every year to more than $2 billion and U.S. net sounds crazy, 13% to 1.22 billion versus the prior year.
Driving by increases to both market share and market expansion.
As it sounds kind of a diabetic eye disease, any what Andy Despite and you and he said Jeff market entrance also well not a material driver a performance and a quarter, we introduce the idea pretty sounds strange mid December and anticipate phone market supply in March.
Robert E. Landry: As such, we will provide annual guidance by the end of the first quarter to account for the various line items impacted by the Restructured Antibody Agreement, given the expected timing of the transaction closing. Continue to model Regeneron's financials for the first quarter as you have historically. Note that our first quarter non-GAAP EPS results are typically lower than the fourth quarter of the prior year due to trends in tax rates and other seasonal market dynamics. However, we are generally comfortable with consensus non-GAAP EPS estimates for the full year. However, our quarterly reported increases from the beginning of the year to the end of the year will be more pronounced than what the current consensus reflects. In conclusion, the fourth quarter capped off a strong year for Regeneron. We are pleased with our financial results and operational performance. We look forward to providing more details on the Restructure and Antibody Agreement in 2020 annual guidance later this quarter. With that, I'd like to turn the call back to Justin.
Entomologist market continues to crown steady needs a high single digit pace underpinned by the aging populations and increasing prevalence of diabetes I renewed strategy and incremental 2019 investments enhanced wet M.D. leadership and kind of further penetration diabetic eye disease, which has.
Growing faster than the market across all indications as we've seen fit the last several corners growth rate in diabetic I disease exceeds the growth rate in wet aim d. accordingly, the web MD business represents less than 60% of told me that finally in that product sales.
And 2020, we have significant opportunities to advance I lia's leadership position.
<unk> M.D., we are executing initiatives designed to position I mean as their preferred first line treatment <unk>, we see tremendous opportunity and diabetic eye disease as patients remain largely under diagnosed in the under treated or investing and targeted initiatives of physicians and consumers to increase diagnose.
Justin Holcomb: Thank you.
Justin Holcomb: Thank you, Bob. We'd now like to open the call for Q&A. To ensure we are able to address as many callers as possible, please limit your questions to one or two questions. Please go ahead, Sylvia.
<unk> and treatment rates as well as applying technologies, just impart screening and diagnosis totality of our clinical profile safety record guessing flexibility breath of indications and established reimbursement give us confidence in the future friendlier.
Operator: Thank you. We will now begin the question and answer session. If you have a question, please press star, then 1 on your touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash. Once again, if you have a question, please press star, then 1 on your touchtone phone. The first question comes from Terence Flynn from Goldman Sachs.
<unk> fourth quarter global net sales for 75 million in the U.S. or sales for 61 million. We've quickly established went time as the lighting system treatment.
<unk>, she teeny squamous cell carcinoma, or C.S.C.C., approximately 60% of fancy see patients now or C.N.T.P.D., one therapy and in the N.C.P.D. One class, let tile has nearly 90 per cent share of new patients.
Terence C. Flynn: Hi, good morning. Thanks for taking the questions. Maybe just two for me.
George D. Yancopoulos: One question on the first is with respect to bispecifics; maybe George, what gives you confidence that these will be successful in solid tumors? I know you guys have a number of different targets you're going after and waiting to see the data, but just maybe remind us what gives you confidence there. And then, just on DUPI, can you give us the sales split by indication or maybe the prescriber mix? Thank you.
Twentytwenty, we're investing to increase our commercial presence, including expanding ours field for us to strengthen my Titus position as the standard of care in C.S.C.C.
<unk> launch preparations for potential approval and Baysal cell carcinoma underway.
Outside the U.S. initial C.S.C.C. lunches are ongoing a led by our collaborators status.
George D. Yancopoulos: George, why don't you start and then Marion can take the dupee question?
George D. Yancopoulos: Okay, so first of all, we have no reason to think that they wouldn't be. I know that there's a lot of speculation, but it hasn't really been tested with reagents like our bispecifics to see whether solid tumors are indeed more resistant or not. But that notwithstanding, in case single agent therapy is not as effective for solid tumors, that is why we are preparing for that possibility with our various combinations. And our combinations include both combinations with these new classes of bispecs called Costins, which dramatically increase responsiveness at least in preclinical models in the solid tumor setting, but also combinations with Liptio and other kinds of checkpoint inhibitors and immunomodulatory agents. So the notion is that we're hopeful for single agent activity.
We're encouraged by early prescribing trends and continue to see progress with access and reimbursement overall, we're very pleased with the early impact we've made with love child.
And finally to to pick sense.
<unk> and the fourth quarter or 752 million M.U.S. net sales reach 605 million, representing 134% <unk> as compared to the prior year. We continued to see strong describing trends across all indications, let's total prescriptions growing up.
<unk>, 18% compared to the third quarter.
Weekly near the brand prescriptions <unk> and we're approximately 1500 patients per week.
Topic dermatitis remains a significant girls driver for depicts since the brand continues to outpaced other biologic launches in dermatology and there are significant room for further penetration or expanding and market through increased prescribing credit, but across both moderate and severe disease. Additionally, recent adolescent launches.
George D. Yancopoulos: We are ready for the idea that, just like in many other cancers and many other treatment settings, combinations are going to be the key to success. And we have a really exciting set of combination opportunities in the solid tumor space setting. As I said, particularly with our Costin bispecifics added to our CD3 bispecifics, as well as our PD-1, and other additional immunomodulatory agents. I'll turn the next question over to Marion. Oh sure, happy to turn. And this relates to your question on the breakdown of um...
Contributing <unk> eat it by physician experience in conflict with depictions advocacy and safety profile as I mentioned, we eagerly await the potential after came from all in six till 11 year olds, where there is significant disease burden for young patients and their families and athletic it takes an outperforming other recent by.
Logic lunches with nearly 80% of depiction asthma patients being needed to biologic treatment. We continue to demonstrate that our strategy teaching grow and compete in this market is working there are significant opportunity to advance depictions market position with less than 15% of the eligible patients.
Marion McCourt: Sales and Performance for Dipixent. First, I just want to comment that we're seeing strong performance in sales growth and NBRX across all indications. We haven't specifically given a breakdown by indication. Again, I confirm strength and strong performance and competitive performance in areas where we have competitors. But I can give you a little bit in terms of how we're seeing the majority of our sales in NBRXs in atopic dermatitis, and that's then followed by asthma. And then third would be the nasal polyps, where we're also seeing encouraging performance.
Currently receiving biologic treatment.
He recently began to roll out of our asthma direct to consumer T.V. campaign, although early are companions generating positive results from leading indicators.
Finally are launching chronicler on your side decides with nasal polyps, it's off to a strong start patients are initiating onto picks and regardless of prior surgery prescribing is being driven by both allergist N.E.M.T.'s, including many new Texan prescribers.
Operator: Next question.
Jeff Meaton: Our next question comes from Jeff Meaton from Bank of America.
We see tremendous growth potential with depictions and remain committed to advancing depicts in prescribing too many more patients by way it expanded indications age groups and geography is in closing we delivered strong growth across our core commercial franchise in the fourth quarter inch route 2019, when you're entering 22.
Marion McCourt: Hey guys, this is Alec on for Jeff. Thanks for taking our questions. I have two, one on ILEA and one on Pryelin. So for ILEA, how are you guys thinking about the ongoing BOVU launch? Specifically, do you view the earlier 12-week dosing as driving drug choice by prescribers? And any color you can give on the ongoing or anticipated impact on rebate to provide for ILEA to maintain formulary status? And then on Pryelin, we've noted that the price reductions for the CFK-9 class have had an outsized benefit on Repatha volumes. Could you talk about the sales efforts you and Sanofi have been making in the US? And what was the feedback from physicians and payers? And, I guess, ultimately, how do you hope bringing these efforts entirely in-house will help drive volumes for Pryelin? Thanks.
Plenty with significant momentum and confidence to drive the future altering the call over now to Bob.
Thank you Marion.
For the fourth quarter 2019, Regeneron delivered another quarter of strong revenue in D.P.S. growth.
Fourthquarter 2019 revenues grew 13% 2.17 billion driven by continued growth of our core brands Leah reptile into picks and <unk>.
Non gap diluted net income per share grew 10 per cent. Your every year to $7.50 a non gap net income of 858 million.
Let me remind everyone when comparing to the prior year. The fourth quarter 2018 revenues included 149 million dollar ketchup benefit related to the modification of the I.O. discovery agreement with Santa fee, which makes this quarter's growth even more impressive.
Marion McCourt: Marion
Marion McCourt: Sure, so let me first comment on ILEA's performance. And certainly, we've worked very hard and been in a competitive market with ILEA for many years, and certainly, we have established a very strong market leadership position. It's very early days for the newest competitor in the marketplace, but what I will affirm is that ILEA has a profile that is incredibly well received and is referred to as the standard of care by our retinal specialists and injectors. Specifically, things like the clinical profile, as it relates to impact on visual acuity, multiple indications, experience not only clinically but with an established safety profile, reimbursement, dosing flexibility, So ILEA has an incredibly compelling profile.
Since marrying discussed or U.S.I. Lear results I will start with our bay or insanity collaboration <unk>.
Starting with the bay or collaboration X.U.S. highly a net product sales, which are reported to us by there were 783 million representing growth of 8% on a reported basis in 9% on a constant currency basis.
Total bear collaboration revenue for the fourth quarter of 2019 grew 6% euro per year to 321 million of which 298 million was derived from our Sharon net profits from my Leo sales outside the U.S.
Total sanitary collaboration revenue in the fourth quarter was 427 million Regeneron recognized a profit of 104 million from the commercialization of non Ohio antibodies compared to a loss of 44 million in the prior year period.
Marion McCourt: You know, as to competition, both competition historically and future competition, it becomes a matter of physicians determining what is the risk benefit of using a different product. And, you know, certainly, there will be ample opportunity for retinal specialists to make the choice in prescribing that's best for them. But to date, we hear very, very positive feedback on ILEA. Certainly, our most recent indication in diabetic eye disease, diabetic retinopathy, is very important. As we described earlier in 2019, we put forward earlier in 2019 a new strategy to make sure that we were strengthening our position in the wet AMD marketplace and then also expanding into diabetic eye disease. So I think we feel really good about the performance that we saw in 2019.
Increases were driven primarily by hired to pixel net sales, partially offset by the roll out of the depiction asthma D.T.C. campaign as well as incremental costs to support ongoing global Dupixent launches.
Moving to our expense basis, starting with R. and D. non gap R. and D. expenses were 581 million for the fourth quarter of 2019 increase of 9% compared to prior year.
Non gap unreimbursed, R. and D. expense, which is calculated as the total non gap on D. expense less reimbursements from our collaborators was 393 million for fourth quarter 2019, an increase of 13% compared to the prior year higher R. and D. expenses result from broadening in advancing or pipeline of wholly owned drug.
Marion McCourt: But we also see an awful lot of work ahead because, as I mentioned, there's tremendous unmet need in disease burden and diabetic eye disease that we have not impacted yet. So there is a lot of work going forward. You also asked a question related to pricing in ILEA. We don't give information on our pricing strategies, but I will say that we are very committed to physicians having choice of prescribing in all the categories in which we have competition. And it's really important that doctors make the right choice for their patients, so we'll continue to take that position in the marketplace. I'll move over to Praluent quickly. You know, as was announced in the restructuring of our arrangement with Sanofi, Regeneron is now very pleased to be running the Praluent business in the US. It's early days. In the future, certainly, we'll have more to say about our positioning in the market and our strategy in the marketplace. But I think at this point it's probably best that we let it go until the end of the restructuring agreement and the finalization of that transaction.
<unk>, particularly in ontology.
We were also funding jointly developed molecules with strategic external partners in November we announced a research collaboration with very odd focusing on the development of new uncle Lydic virus based treatments for cancer taken together, we continue to expect 2020, R. and d. expenses to increase.
Next non gap does she an expense was 446 million for the fourth quarter 2019.
Misrepresenting nine per cent. Your every year increase driven by higher headcount in related costs in commercialization expenses related to both <unk>, we expect non gap S.G. inexpensive to increase in 2020 as we invest for further growth in or three core brands Leo Dupixent in <unk> and.
Fourth quarter 2019, combined non gap cost of goods sold in cost of coat collaboration in contract manufacturing, where 208 million compared to 109 million on the fourth quarter of 2018.
George D. Yancopoulos: And just to add to Marion's points, she mentioned benefit-risk for ILEA and also safety for ILEA. And I think it's very important to mention that physicians are, of course, very sensitive to this. And in settings where efficacy and durability are considered similar, they're going to pay very close attention to things like inflammation. And certainly, in the head-to-head studies, ILEA was shown to have about four-fold lower levels of inflammation. And these are the sort of things that physicians pay close attention to when efficacy and durability are considered rather similar.
The year over year, increasing cost a good soul was primarily due to the company's obligation to pay sunapee it share a blip tile U.S. gross profits.
Third party royalties on lip time, when U.S. sales in higher inventory reserves and write offs.
The year over year, increasing cost of collaboration and contract manufacturing was primarily due to recognition of manufacturing costs associated with higher sales of depiction.
Shifting to cash flow into balance sheet.
For full year 2019, regeneron generated $2 billion them free cash flow. We ended the year with cash 'em marketable securities of nearly six and a half billion recall last November we announced a billion dollar share repurchase program in the fourth quarter. We were purchased approximately $250 million worth of shares in open market.
Operator: Great, next question.
Christopher Joseph Raymond: Our next question comes from Chris Raymond of Piper Sandler.
Christopher Joseph Raymond: Thanks, just a couple. So, just maybe first, maybe continuing on the ILEA front, I think I heard you guys say that there was no stocking benefit. For more information, please visit www.fema.gov for the first quarter.
Transactions, we continue to repurchase shares opportunistically.
Now, let me take a minute to discuss the restructuring over anybody agreement with Santa fee as we previously disclosed the anticipated benefits of this proposed restructured agreement or improve profitability increase deficiencies.
Robert E. Landry: And maybe if you can put some brackets around that, that would be helpful. And then maybe, um, for Bob, I think I heard you say, Bob, in your prepared remarks that you were comfortable with the 2020 EPS consensus. And so I know you guys are still in the process of, you know, trying to figure out how you're going to guide and the parameters, et cetera. But should we view this as a signal that?
In simplification.
Upon closing the deal we expect this transaction to be immediately creative to regeneron.
We are working diligently to ensure inexpedient close to the transaction this quarter as such we will provide annual gains by the end of the first quarter to account for the various line items impacted by the restructured anybody agreement.
Operator: So let me take the first part on ILEA, and yes, you did hear me correctly, that while we introduced the pre-filled syringe for ILEA in mid-December, it did not have an impact, a material impact, and certainly we were at normal stocking levels, bays on hand, in the fourth quarter. We do anticipate, however, that the pre-filled syringe will be very popular in the marketplace and, over time, will be the majority of our use, but it has been a staggered introduction.
Even the expected timing of the transaction closing continue to model Regenerons financials for the first quarter as you have historically.
Note that our first quarter non gap bps results are typically lower than the fourth quarter of the prior year due to trends in tax rate in other seasonal market dynamics.
Evan Seigerman: Chris, with regard to your question on guidance, you know we are in a unique situation; by now, you know we would have given guidance at JP Morgan, and we would have reconfirmed it on this call, and we just wanted to give you a sense of a little bit of direction instead of everyone driving blind with regard to where 2020 is expected to come. So again, you know, we. We did our analysis and determined that we are comfortable with the current consensus as it exists for full year EPS, and we are not imagining giving full EPS guidance at the end of the quarter. We will give other guidance as has been typical, with maybe a few enhancements included.
We are generally comfortable with consensus Nongaap E.P.S. estimates for the full year. However, our quarterly report it increases from the beginning of the year to the end of the year will be more pronounced than what current consensus reflects.
In conclusion, the fourth quarter capped off a strong year for Regeneron. We are pleased with our financial results and operational performance. We look forward to providing more details on the restructuring anybody agreement in 2020, and you will guidance later this quarter with that I'd like to turn the call back to Justin.
Thank you Bob [noise], we now like to open the call for Q. and a to ensure we are able to address as many cars as possible. Please limit your questions to one or two questions. Please go ahead Sylvia.
Thank you when I speak into question <unk>. If you have a question. Please press start that one and you touch Tom phone.
George D. Yancopoulos: Our next question comes from Evan Seigerman from Credit Suisse.
<unk>. Please press the pound sign or the Huskies once again it be happy question. Please pass Star then one and he touched <unk> pound.
George D. Yancopoulos: Hi all, thank you for taking my questions and congratulations on the progress last year. So on leptile and non-small cell lung cancer, what gives you confidence that this trial will hit on the OS interim and high PD-L1 patients? And if successful, would you file on this data, and how would you potentially position leptile versus other checkpoint injuries?
And our first question comes from parents plan from called mid sex.
Hi, good morning, Thanks for taking the questions maybe just two for me one on the the first is with respect to buy specifics maybe George what gives you confidence that these will be successful and solid tumors. I know you guys have a number of different targets, you're going after and waiting to see the data, but just maybe remind us what gives you confidence there.
George D. Yancopoulos: George, why don't you start?
George D. Yancopoulos: Yeah, so, as we said, response rates are not a regulatory approvable endpoint. However, historically, they've been shown to be a very good indicator of activity, and in the setting of checkpoint inhibitors, they tend to correlate pretty well with what you see in terms of overall survival. And so our already reported response rates, where we've almost doubled the response rate, certainly suggest profound clinical activity and is a real positive indicator. Of course, until we see the interim data, we won't know. But I think that that... We'd put Leptio in a very small group of agents that are now showing profound monotherapy activity in PD-L1 positive settings, so it would be a very exciting position to be in on top of its already demonstrated impressive best-in-class activity in the non-melanoma skin space.
And then just on Dupee can you give us the sail split by indication or maybe the prescriber mix. Thank you.
You know George Ryan you start than married and you can take the do precaution.
Okay. So first of all we have no reason to think that they wouldn't be I know that there's a lot of speculation, but it hasn't really been tested with reagents like our by civics to see whether solid tumors are indeed, more resistant or not but that notwithstanding in case.
Single agent therapy is not as effective for solid tumors that is why we are preparing for that possibility with our various combinations and our combinations include both combinations with these new classes of bisects called <unk> withdrew which dramatically increase responses at least in <unk>.
Well models in the solid tumors setting, but also combinations with live tile and other kinds of checkpoint inhibitors and Immunomodulatory agents. So the notion is is though we're hopeful for single agent activity.
Operator: Next question, please.
Jeffrey Porges: Our next question comes from Jeffrey Porges from SVP Learing.
Jeffrey Porges: Thank you very much. Bob, just on the comment about accretion, could you just give us a sense of whether, if the status quo prevailed, would your operating margin be consistent with last year or better? And then presumably, the intention of the agreement is that we would see operating margin improvement, and that's how you get to it being accretive. So could you just comment on that? And then just a second question for George. You mentioned the COSTIM program, and I think we're all interested in seeing the first clinical data from that. That's not on your 2020 highlights, so should we be assuming that we won't see any clinical disclosure on the PSMA program until next year? Bob, do you want to start?
We are prepared that just like in many other cancers.
In many other treatments settings at combinations are going to be the key to success and we have a real exciting said.
Combination opportunities in the solid tumors space setting as I said, particularly with our coast in by specifics added to our city three by civics as well as our R.P.D. one but other additional immunomodulatory agents I'll turn the next question over to Marion about the costs are happy to change.
To your question on the breakdown of.
Performance for the Texans in a first I just <unk> Wow seen strong performances sales grows and M.B.R.X. across all the indications.
Robert E. Landry: So, George, Jeff, I would concur with the assumptions that you made. I mean, certainly We've mentioned that Kevzar and Pralulin have been a sizable drain with regard to the alliance profitability that we've shown. So certainly, the changes that are going to be made and coupled with, you know, the incoming royalties that we expect to get will certainly help our going forward margins.
<unk>, a brainstorm by indication again, I can from strain and strong performance in Canada performance in areas, where we have competitors I, but I can give you a little bit of in terms of how we're seeing the majority of our sales and your axes in <unk>.
That's then followed by asthma, and then thirdly be the nasal polyps, where we're also seeing encouraging performance.
George D. Yancopoulos: and George.
George D. Yancopoulos: Well, as Jeff, you probably followed closely with our first class of bison. Whenever you have a new class of agents and you're working with the FDA, of course, the first purpose is to move as carefully and as safely as possible. And so for our first bi-spec, it took a long time to get to effective dose levels. When we finally got there, we had actually shown that we had gotten there with a pretty safe approach, which now other people are trying to emulate. And then we were able, as I described, with our second dose level, to get to efficacious dose levels with our second CD3 bi-spec. So now this CD28 class represents, once again, a new class.
X. question.
Hi next question comes from kept me temper make of America.
Hey, guys. This is alec on for Jeff. Thanks for taking our questions I have two one on ilea and one on <unk>.
So far we.
How are you guys thinking about the ongoing over lunch specifically to view the earlier 12 week, though thing that's driving drug choice by prescribers add any color you can give on ongoing or anticipated in pack to rebate to provide for ilea to maintain formulary status and then on <unk>.
We've noted that the price reductions for the C.F.K. nine class have hadn't outside outsize benefit to Repatha volumes could you talk about the sales efforts you in snow fee have been taking in the U.S. and what was the feedback I'm from physicians in pairs and I guess ultimately how do you hope bring these efforts entirely in house will help.
George D. Yancopoulos: We are hoping that we're going to repeat that sort of experience. And the timing of it, of course, is dependent on so many factors. So, depending on how it goes, we may reach effective dose levels sooner rather than later and get data sooner rather than later, but the major point is that we're working with the FDA and with our collaborators to make sure that we use this innovative new approach as safely as possible. So, it all depends on how the dose escalation goes and when we get to what we think are the effective dose levels, and it could be sooner or it could be a little later. And all we're hoping is that we're going to see the same sort of profound activity that we saw with our first class of bispecifics, which is really suggesting that they may be best in class, and if we can now layer on a completely new class that has synergistic activity, I think that'll be very exciting and important for patients for all these settings where they're not responding right now to immunotherapy or where their responses are not as optimal as we would want.
Volumes for probably island. Thanks.
Sure Marion sure so.
I live performance.
And certainly we worked very hard and has been in a competitive market with I.D. and for many years and and certainly have established a very strong market leadership position. It's very early days for the newest competitor in the marketplace, but when I. When I will affirm is that I Leah has a profile that is incredibly well received.
And is referred to as the standard of care by our retinal specialists and injectors.
Typically things like be clinical profile.
As it relates to impact on visual acuity multiple indications experience not only clinically, but <unk> and established safety profile reimbursement dusting flexibility and offer now does his delivery with the Prefilled syringe. So I have an incredibly compelling profile.
Jeffrey Porges: Great. Thanks for the question, Jeff. Next question.
Yatin Suneja: Our next question comes from Yatin Suneja from Guggenheim Partners. Good morning, everyone, and congratulations on a very good quarter.
Asked a competition our competition historically in future competition.
George D. Yancopoulos: Just a question on the C5 antibody that you have. Give us a little bit more insight into how you are thinking about broadening the development. Are there disease indications that you could potentially prioritize which might not be as competitive and might be a little bit broader? And then a quick one for Bob on the Sanofi collaboration. Relative to Q3, are there particular factors that might have impacted the results in Q4?
A matter of physicians determining what is the risk benefit of using a different products and you know certainly there will be ample opportunity for retinal specialists to make the choice in prescribing, it's best for them, but.
We are very very positive feedback on earlier, certainly our ministry indication in diabetic I busy diabetic retinopathy is very important. We described we did put forward earlier and 2019 strategy to make sure that we were making vary from our position in the Red M.D. marketplace and then also.
George D. Yancopoulos: Thank you. George, why don't you start at C5 and then Bob?
George D. Yancopoulos: As you said, we agree with you. We believe that there are a lot of settings for CFI beyond the PNH setting. But I think that what we've disclosed so far and what we're talking about right now is the PNH setting. Why?
Expanding and diabetic articles I think we feel really good about the performance at least on 2019, but we also see an awful that'll work ahead, because as I mentioned, there's tremendous unmet need and disease Burton diabetic I believe we have not impacted yet so a lot of work going forward. You also asked a question related to to pricing.
George D. Yancopoulos: Because the data are so clear-cut in terms of the high bar that we have to reach to believe that we have something that could be a real improvement for patients and for the class And so once we hit that bar, we would be pretty confident then that it would also continue to be a real advance for patients and best in class in all these other settings that you're referring to. So we're certainly not ignoring those. But what we're talking about and focusing on right now is the really well understood space of PNH.
We don't give information on our pricing strategies, but I will say that we are very committed to physicians, having choice of prescribing in all the categories in which we have competition, it's really important that doctors make the right choice for their patients symbol continue to take that position in the market place.
I'll move over to probably went quickly you know as was announced in the restructuring of our arrangement with fantasy Regeneron is now very pleased she'd be running the probably win business in the U.S.. It's early days in the future certainly will have more to say about our positioning the market in our strategy in the marketplace.
Robert E. Landry: Great And Bob?
Robert E. Landry: Do you have a question?
Robert E. Landry: The question with regard to whether or not the Sanofi deal has given us a benefit versus, In Q4, I would say, you know, we continue to go after operating expenses for Praline and Kevzar, and we did see some of that in Q4. Again, this is an issue that we've been going after, and we've had some success in terms of lowering the operating expenses associated with that. We did take a restructuring charge in Q4, and you'll see that outlined in our earnings announcement that was issued earlier this morning, and the big benefits you will begin to see will take place kind of effectively in Q1, where, you know, as we speak right now, we're changing the operations of the businesses.
I think at this point is probably best that we'd let it go Toby the end of the the restructuring agreement in the Finalization of that transaction.
And just add to marian's points, she mentioned benefit risk for Ilea and also safety for <unk> I think it's very important to mention that physicians of course very sensitive to this and in settings, where advocacy and durability are considered.
Similar they're going to pay very close attention to things like inflammation and certainly in the head head studies Leah was shown have about fourfold lower levels of inflammation and these are the sort of things that physicians pay close attention to win advocacy into her ability are considered rather similar.
George D. Yancopoulos: I just wanted to add to my comments on the C5. As I said, we set a pretty high bar for ourselves with just our antibody, and as we've announced, the data suggests that that antibody is meeting that high bar by itself, on its own, which I think puts us in a very, very exciting position because now we have the opportunity to take it to a completely new level with this exciting collaborative opportunity with the Alnylam siRNA. So the fact that our antibody by itself is looking like it might be meeting this high bar of being a best-in-class agent, providing big advantages to patients on its own, having the opportunity to then combine it with the siRNA is really, I think, very exciting for the field and for patients.
Right next question.
<unk>.
Yeah. Thanks, It's just a couple of soap just maybe first maybe continuing on the highly a front I I think I heard you guys say that there was no stocking benefit into four from from the availability of the of the <unk>. Maybe can you talk about is is this I mean, there's a tail wind potentially in in.
For the first quarter and maybe if you can put some brackets around that that would be helpful. And then maybe for Bob I I think I heard you say Bob in in your prepared remarks that you were comfortable with a with 2028 A.P.S. consensus and so I know you guys are still in the process of.
Robert E. Landry: And let me just clarify one other thing. With regard to Q4 on alliance profitability, we were, we did incur significant expenses associated with the Asthma DTC campaign, which had a rollout effective in Q4, and I'm sure a lot of people have seen that throughout the quarter.
Trying to figure out how you're going to guide in the parameters et cetera, but you know should we view this as a signal that maybe you guys are comfortable guiding T.P.S. at some point.
Thanks.
Oh.
Glazner, So let me take the first.
Operator: Great. Thanks for the question, John. Next question?
You didn't hear hear me correctly that while we introduced priests <unk> in mid December.
Yaron Werber: And the following question comes from Yaron Werber from Cohen. Yes, hi, thanks for taking the question. I have a couple of questions.
Not have an impact of material impact and certainly we were at normal stocking levels of days on hand in the in the fourth quarter, one thing I'll I'll describe.
George D. Yancopoulos: The first one is, George, maybe for you on Leptalio, and maybe help us understand a little bit as you think about the hazard ratio versus what Keynote showed. And if I recall correctly, Keytruda was able to get stopped early. Obviously, PD-1 was not approved then, and that study had about 305 patients. The hazard ratio was 0.5. Do you think you've got the patient powered with a bigger sample to essentially match or beat that hazard ratio? And then maybe, Bob, for you, it sounds like you're comfortable with the consensus you mentioned for this year. When we're looking at consensus, non-GAAP is around 25-90 for earnings. Are you comfortable with that including the restructuring, or are you comfortable with that even excluding the restructuring? Thank you. Go ahead, George. Yeah,
Deliberately have introduced to Prefilled syringe and staggered way and this was obviously was such a large product. So that there would be marketing experience and we would have a gradual introduction.
Do you plan to have availability.
Markets supply by them March time frame and then you have transitions in offices will be able to make a decision as to whether they choose to use the prefilled syringe, which does have tremendous convenience and has had very positive early market feedback, but the file will be available as well if there are instances where and.
Office or a physician would like to use the file we do anticipate however, though that the prefilled syringe will be very popular in the marketplace in overtime will be the majority is our use but it has been a staggered introduction.
Robert E. Landry: Yeah, well, as you said, we have the power, and the expectation is that if we were to hit an interim, we would have a hazard ratio that would be comparable, analogous to those seen by Keytruda in its monotherapy first-line lung studies. So that is the expectation; the power is there to potentially see that in the interim analyses.
Chris with regards to your your your question on guide you know we are in a unique situation by now you know we would've given guidance at J.P. Morgan, we would've reconfirmed. It on this call and we just wanted to give you a sense a little bit direction, instead of everyone driving blind with regards to where.
George D. Yancopoulos: Bob?
Robert E. Landry: To the question on comfortability in the restructuring... We are comfortable with the consensus, with the restructuring built into that. And again, let me remind you, you know. As I stated on the call, the first quarter non-GAAP EPS results are typically lower than the fourth quarter of the prior year due to trends in tax rates and other seasonal market dynamics.
2020 is expected to come so again you know we we.
Theodore analysis and determine that we are comfortable with current consensus as as as it exists for full year E.P.S.
And we are not envisioning to give full U.P.S. guidance at the end of the quarter. We will we will give other guidance as has been typical with maybe a little a few enhancements included.
Yaron Werber: And maybe, George, just for you, when the interim initially in that study was based on 361 patients, Keytruda stopped with the same response rates based on 305. So are you thinking that the next 240 patients are going to have a better response than the first 361 in the study to be able to match the hazard ratio? Or is there, it depends on how many patients are in that interim analysis, and there could be...
Okay. Thank you.
My next question comes from I haven't seen airmen from credit Suisse.
Hi, all thank you for taking my questions and I'm. Congrats on the progress last year, So I'm not Tyler Nonsmall sold lung cancer. What gives you confidence at this trial will hit on the O.S. interim and high P.D.L., one patients and if successful would you file on this data and how would you potentially position the tile versus other checkpoint inhibitors.
George once you Sir.
Yeah. So as we said response rates are not regulatory approval endpoint. However, historically they've been shown to to be a very good indicator for the activity and in this setting a checkpoint inhibitors, they tend to correlate pretty well.
George D. Yancopoulos: When you're talking about race,
Operator: ........
George D. Yancopoulos: One second, George, before you get into it, I just wanted to comment so there's no misunderstanding. You cited a hazard ratio of 0.5, and I think that was for the chemocombo therapy. In 24, the overall survival hazard ratio was 0.6, and in 42, just to double check, it was 0.69. So I just want to make sure we have the right hazard ratios. Sorry, go ahead,
With what you see in terms of overall survival and so are already reported response rates were we've almost doubled the response rate certainly suggest profound clinical activity and is a real positive indicator of course until we see the interim data we won't know.
George D. Yancopoulos: Well, yeah, I was going to say, well, the hazard ratio actually was.63 for Keynote 24 and.69 for Keynote 42, but you also mentioned the ratio, so the first 361 patients, in that interim analysis, what we announced was the response rates, and our response rates in those patients were actually better than the response rates of any response rates that have been reported by Keytruda in first-line lung settings. However, the data was immature.
But I think that that.
We'd put look tile in a in a very small space of agents that are now showing profound motto therapy activity and P.D.L. one positive setting so it'd be a very exciting position to being on top of this already demonstrated.
Impressive best in class activity in the non melanoma skin space.
George D. Yancopoulos: That's response rate data. The hazard ratio that you're referring to is overall survival. That requires much more mature data where you're following patients out for obviously survival. So the early data, it was that obviously we're reporting on the more mature response rate data, which are pretty close or should reflect what the ultimate data will look like. The survival data, we have to wait and see for those events to start accruing. And what we said is the ratio of the response rates is very favorable when you compare it because, in all the studies that have either succeeded or failed, the response rate data ends up being pretty predictive of the overall survival hazard ratio. And what we are saying is that as the data is maturing now, we have the power if we have overall survival hazard ratios akin to those sorts of between 0.6 to 0.7 numbers, we will have the power to see that.
The next question please.
Hi next question comes from caffeine part that's from as me <unk>.
Thank thank you very much <unk> just on the comment about the creation.
Could you just gives a sense if if the status quo prevailed would you're operating margin be consistent with last year or better and then presumably the intention of the agreement is that we would see operating margin improvement and that's how you get to it being a creative sorry produced coming on on just a second question.
For George you mention the coast in program and I think we're all interested in seeing the first clinical data from that's not on your 2020 highlights. So should we be assuming that we don't see any clinical disclosure on on the P.S.M.A. program until next year.
Monster.
Jeff <unk>.
Would concur with the assumptions that you made I mean certainly.
We've mentioned that cabs are in probably island have have been a a sizable drain with regards to the alliance profitability that we've shown so certainly.
Operator: Great. Thanks for the question, Yaron. We have several callers still in the queue. I'm going to ask that each caller asks one question. We'll try to get to two or three more.
You know the changes that are going to be made and coupled with you know the incoming royalties that we expect to get we'll we'll certainly help are are going forward margins George.
Mohit Bansal: Our next question comes from Mohit Bansal from Citigroup. Thanks for taking my question. And it's pretty amazing to see double-digit growth in ILEA after so many years. Could you please help us characterize this growth a little bit further in terms of AMD versus non-AMD indications?
Well as Jeff you, probably followed closely.
With our first class of by specs whenever you have a new class of agents and you're working with the F.D.A. of course, the the the first purpose is to be moving as carefully N.S. safely as possible and so for our first by spec. It took a long time to get to efficacious.
Marion McCourt: I have been putting more effort in for diabetic eye diseases.
Marion McCourt: So, as we go forward, how do you imagine that segment growing over time? Thank you.
Dose levels.
When we finally got there we had actually shown that that we have gotten there with a pretty safe approach, which now other people are trying to emulate and and then we were able to pretty rapidly as I described with our second dose level get to efficacious dose loves with our second C.D. three bytes of civics.
Operator: I'm happy to comment. As I mentioned, the overall market is growing, obviously driven by demographics, and then also the diabetic population is growing as well. I really don't have specificity to give you on market growth particular by indication, but I can give you some of the trends that I think will be helpful. We are seeing greater growth in our ILEA business coming from diabetic eye disease while still growing and performing very competitively in wet AMD, not only in the fourth quarter but through the entirety of last year. In terms of going forward, though, as I mentioned before, the source of business is shifting somewhat. As we looked at the fourth quarter performance, I shared with you that our ILEA business for wet AMD is just under 60% of the business. That's a migration to a greater source of business coming from diabetic eye disease. Then, if we looked at the overall business, I would also add in probably, if you do the math, that leaves maybe about 30% of business coming from diabetic eye disease and approximately 10% of business coming from retinal vein occlusion.
So now the C.D. 28 class represents once again, a new class we are hoping that we're going to repeat that sort of experience and the timing of it of course is is dependent on so many factors. So depending on how it goes we may reach effective dose levels sooner rather than later and get.
Data sooner rather than later, but the major point is that we're working with the F.D.A. in with our collaborators to make sure that we use this innovative new approaches safely as possible. So it all depends on how the dose escalation goes and when we get to what we think are the effective dose levels and it could be.
Sooner or could be a little later and all were hoping is that we're going to see the same sort of profound activity that we saw was our first class of by specifics, which is really suggesting that they may be best in class and if we can now layer on a completely new class that has synergistic activity I think that'll be very exciting.
Important for patients for all the settings, where they're not responding right now to immunotherapy or where their responses are not as optimal as we would want.
Corey Kassimov: Great, next question.
Marion McCourt: Our following question comes from Corey Kassimov on behalf of David Morgan.
Hartaj Singh: Hey, good morning. Thanks for taking the question. Another one for Marion. Can you just talk about how the commercial approach for DUPI for kids age 6 to 11 with an atopic derm might be different than the older populations you currently serve and what your market research suggests about the potential pent-up demand in this segment?
Thanks for the question, Jeff X. question.
<unk>.
Good morning, everyone and collapse on a very good court or just a question on I see five in a antibody that you have given us a little bit more inside into high you are thinking about broadening the development out of their disease indication that you could potentially prioritize which might not be ask.
Marion McCourt: Sure. So, you know, as I reflect on atopic dermatitis for adults and adolescents, first of all, I share with you that we're in the early days. For atopic dermatitis with adults, we've only really captured about 20% of the population of moderate to severe patients that are in need. Adolescents, obviously, have been a more recent launch. The adolescent population is approximately maybe half or so of the adult population for atopic dermatitis. As we come into pediatrics, obviously, we don't have an indication there. We're doing our final preparation work for the launch. We're very excited about this population because these, you know, these very young patients are suffering tremendously, as are their entire family. But we feel very, very, very positively about what's happened to date in atopic dermatitis and where we're going in the future. Frankly, we, you know, FDA willing, cannot wait for this indication so we can help more patients.
I do and might be a little bit broader and then it quick one or Bob on the Santa fee collaboration that it took you three out of their particular factors that might have impacted the results in in Q4, Oh. Thank you.
Thank you George aren't you start to see five of them yet as you said.
We agree with you we believe that there are a lot of settings for Sci Fi beyond the P.N.H. setting I think that what we've disclose so far and and and and what we're talking about right now is the P.N.H.Y. because the data or so clear cut in terms of what the high bar that we have to.
Reach to believe that we have something that could be a real improvement for patients in for the class and so once we hit that bar there.
We would be pretty confident then that it would also continue to maybe be a real advanced for patients and best and class in all these other settings that you referred to so we're certainly not ignoring those but what we're talking about and focusing about right. Now is the really well understood space of P.N. age right and ball Yeah <unk>.
Operator: Thank you. We're bumping up at the top of the hour. We're going to go with one more question.
Operator: Our final question comes from Hartaj Singh from Oppenheimer Company. Great, thank you for the question. I just wanted to ask Bob one question. Bob, I know you had indicated that for 2020 you would see increases in non-GAAP SG&A and R&D, and I think you've already given some sort of guidance, you know, thinking about consensus earnings, but could you sort of flesh that out a little bit as to whether, you know, you expect that to go, you know, below, I guess, revenue and sort of differentiate between the two? Thank you very much.
And with regards to whether or not.
Satfi deal has given us benefit versus in in in Q. for I I would say you know we continue to go after operating expenses for probably lending Cubs are and we did see some of that and Q. for again. This is you know this is an issue that we've been going after and we've had some success in terms of lowering the operating expenses associated.
With that we did take a restructuring charge.
In two four and you'll see that outlined in our earnings announcement that was issued earlier. This morning in the Big benefit you you will begin to see will take place kind of affective Q1, where you know as we speak right now we're we're changing the operations of the businesses.
Hartaj Singh: Yeah, Hartaj, thanks for the question. I'm going to wait until we iron that out with regard to, you know, at the end of Q1, where we give our guidance related to that. There's a lot of moving parts associated with exactly what the Kevzar and Pralulent responsibilities are going to look like, the deal closing timing associated with that, and possibly, you know, the related modification of the agreement which may allow us to change the financial presentation associated with that, so there's again a lot of moving parts. So if you can just kind of park that question until the end of the month, thanks, Bob.
I just wanted to add to my comments on the C. five.
As I said, we set a pretty high bar for ourselves with just a random body and as we the now the data suggested that and by his meeting that high bar by itself on its own which I think puts us in a very very exciting position because now we have the opportunity to even take it to a completely new level with his excite.
Robert E. Landry: Thanks, Bob. Apologies to folks in the queue who we did not get to and for running late here on the call this morning. The IR team and Bob will be around after the call to take any of your questions.
Eating collaborative opportunity with the L. Nile S.I.R. <unk>. So the fact that are antibody by itself is looking like <unk> might be meeting this high bar of being a best in class agent, providing big advantages to to to patients on its own having the opportunity then combine it with the S.R. in a real.
Operator: Thank you. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. Thank you for watching!
<unk> I think it's very exciting for the field and for patients.
Yeah, and you let me just clarify one or the thing with regards to queue for on the alliance profitability. We were we we did incur significant expenses associated with the asthma D.T.C. campaign, which had a roll out effective into four and I'm sure a lotta people I've seen that throughout.
[noise] throughout the quarter.
Great. Thanks for the question job in the next question and <unk> <unk> from call him.
Yeah effects of taking the question. So I have a a couple of questions.
The first one is George maybe for you on the Italian go and maybe help us understand a little bit as you think about the hasn't ratio versus what keynote showed and if a recall correctly controller was able to get stopped early obviously there was no p. do you want approved and and and that's I did about 305 patients the hasn't ratio was.
0.5, <unk> do you think you you got sufficient powered with a bigger sampled too so essentially match debate that has ratio.
Then maybe Bob for you just it sounds like you're comfortable with consensus you mention for this here what we're looking consensus non guesses about 20 590 in earnings are you comfortable with that including the restructuring or you're comfortable with that even excluding the restructuring. Thank you.
Go ahead, George Yeah, well.
As you said, we we have the power and the expectation is that if we were to hit an interim we would have a hazard ratio that we'd be comparable analogous to those seen by keytruda in its monotherapies first line lungs studies, so that is the.
<unk> and the power is there to potentially see that in the interim analyses.
Due to the question on Comfortability in in the restructuring.
We are comfortable with the consensus with the restructuring built into that.
And again, let me remind you.
<unk>.
As I stated on the on on the call. The first quarter non gap bps results are typically lower than the fourth quarter of the prior year due to trends in tax rate in other seasonal market dynamics.
Yeah.
And maybe George just for for you when the the instrument initially in the study was based on 361 patient Katrina stopped with the same response rate of faith and three O. Five. So are you thinking that the next 240 patients are going to have a better response than the first 361 industry.
To to be able to match the hasn't ratio or is there it depends on how many patients are in that interim analysis and there could be another one.
When you're talking about <unk>.
Once enjoyed before you get into it just wanted to come it. So there's no misunderstanding you cited a a.
Hazard ratio of 0.5, and I think that was for the chemo combo therapy in 24. The overall survival has ratio was 0.6 and 42 just to double check it was point.
Six nine so I just sort of make sure we have the right has gracious sorry go ahead.
Well, yeah, I was going to say, whether it has a rich action was 0.63 for Keno 24.69 for keynote 42, but you also mentioned the ratio. So the first 161 patients Nat interim analysis, what we announce was the response rates in our ratio for response.
Rates.
Those patients was actually better than the ratio of any response rates that had been reported a bike construed and first line lungs setting. However, the data was immature that's response rate data the hazards ratio that you're referring to his overall survival that requires much more mature data where you're following patients out.
For obviously survival. So the early data it was that obviously, we're reporting on the more mature response rate data, which are pretty close or should reflect what the ultimate data will look like other survived data we have to wait and see for those events to start.
Accruing and what we said is the ratio of the response rates is very favorable when you compare that because in all the studies that have either succeeded or failed. The response rate data ends up being pretty predictive of the overall survival hazard ratio and what we are saying is that as the data is maturing.
Now we have the power if we have overall survival hazard ratios akin to those sorts of between 0.62 0.7 numbers that is the data matures, we will have the power to see that.
Great. Thanks for the question your own we have several colors still in the queue I'm gonna ask that each color ask one question will try to get to two or three more if we can.
<unk>.
Great. Thanks for taking my question [noise].
And it's pretty amazing that to see double digit growth in I leave after so many could you. Please help us characterized this cool little bit, but the income so M.D. versus lawn M.D. indication I know you have been putting would effort into diabetic I.D.C.C. So.
As we go followed how do you envision that segment grueling over time actually thank you.
<unk> I'm happy to comment you know you mentioned the overall market is growing obviously driven by demographics and then also the the diabetic population sadly is growing as well I really don't have specificity <unk> <unk>.
Particular by indication that I can give you some of the trends that I think we'll be helpful.
We are seeing greater grows in our.
Business coming from.
<unk>, while still growing in performing very competitively in wet A.M.D. not only in the fourth quarter, but for the entirety of last year.
You know in terms of going forward, though as I mentioned before a source of business is shifting someone so as we looked at the fourth quarter performance I shared with you that I'd I'd be a business from A.M.D. is just under 60% of the business. So that's a migrations real graders.
Source of business coming from <unk>, and then if we looked at the overall business and off probably it was if he do the math at that leaves maybe about 30% of business coming from diabetic I.D. and approximately 10% of business coming from right in a room inclusion.
Great next question.
I finally class and cause I'm, Corey kasimov from tape marking.
Hey, Good morning takes takes my question. Another one for Marion can you just talk about how the the commercial approach for Dupee for kids H. six to 11 with a topic there might be different than the older population to currently serving what your market research suggests about the potential pent up demand in the segment.
Sure. So you know is always lots on a topic dermatitis for adults adolescence first.
They were in the early days, probably topic dermatitis with adults.
Really captured about 20% of the population of moderate to severe patients that are in need adolescents. Obviously has been a more recent lunch. The adolescent population is products approximately.
Half or some of the adult population for H. habit dermatitis as we come into pediatrics, obviously, we don't have an indication there or doing our final preparation work for the launch very excited about this population because these.
Very young patients are suffering tremendously.
Higher family I think the experienced that we had with adults and adolescence bodes well for our ability to be very successful with a pediatric indication as soon as we have the approval. So we'll look forward in the future can giving more insight in more content on our strategy size of population and I'll go to market pro.
File, but we feel very very very positively about what's happened today in a topic dermatitis and where we're going in the future frankly, we you know F.D.A. willing we cannot wait for the syndication. So we can help more patients.
Thank you, we're we're bumping up at the top they all ready to go with one more question I find acquire <unk> from Oppenheimer Company.
Oh, great. Thank you for the question.
Bob One question ball I know you had indicated that for 2020, you would see increases and the non gap S.G.N.A. and Arnie and I think you've already given some sort of a guidance you know thinking about a consensus earnings but could you sort of flushed out a little bit as to whether you know you expect that to grow.
You know below I guess, we're avenue and sort of a different shape between the two thank you very much.
Yeah touch thanks for the question I, I'm I'm going to wait until.
We iron that out with regards to you know at the end to Q1, where we give our guidance related to that there's a lot of moving parts associated with exactly what the <unk> responsibilities are going to look the deal closing timing associated with that.
And possibly you know they're related.
Modification to the agreement, which may allow us to change the.
Financial presentation associated with that so there's there's again a lot of moving parts. So if you can just kind of park that question until the end of.
March thanks, great. Thanks, five apologies to 'em folks in the queue, who we did not get to a and for running late here on the call. This morning, the I.R. team and Bob will be around after the call to take into your questions. Thank you.
They give me the <unk>. Thank you for participating coming out this connect.
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