Q4 2024 Regeneron Pharmaceuticals Inc Earnings Call
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Tawanda: Hello, and welcome to Regeneron Pharmaceuticals' fourth quarter 2024 earnings conference call. My name is Tawanda, and I will be your operator for today's call.
Tawanda: At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.
Please note that this conference is being recorded.
Speaker Change: I will now turn the call over to Ryan Crowe, Senior Vice President and Vestal Relations. You may begin.
Speaker Change: Thank you, Tawanda. Good morning, good afternoon, and good evening to everyone listening around the world. Thank you for your interest in Regeneron and welcome to our fourth quarter 2024 earnings conference call.
Speaker Change: An archive and transcript of this call will be available on the Regeneron Investor Relations website shortly after the call ends. Joining me on today's call are Dr. Leonard Schleifer, Board Co-Chair, Co-Founder, President and Chief Executive Officer.
Speaker Change: After our prepared remarks, the remaining time will be available for your questions.
Speaker Change: I would like to remind you that remarks made on today's call may include forward-looking statements about Regeneron. Such statements may include, but are not limited to, those related to Regeneron and its products and business.
Speaker Change: Financial Forecasting Guidance, Development Programs and Related Anticipated Milestones, Collaborations, Finances, Regulatory Matters, Payor Coverage and Reimbursement, Intellectual Property, Pending Litigation and Other Proceedings, and Competition.
Speaker Change: Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement.
Speaker Change: A more complete description of these and other material risks can be found in Regeneron's filings with the United States Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2024, which we expect to file with the SEC tomorrow, February 5.
Speaker Change: Regeneron does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
Speaker Change: In addition, please note that GAAP and non-GAAP financial measures will be discussed on today's call.
Speaker Change: Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our quarterly results press release.
Speaker Change: and our corporate presentation, both of which can be accessed on the Regeneron Investor Relations website. Once our call concludes, Chris and the IR team will be available to answer any further questions.
Speaker Change: With that, let me turn the call over to our President and Chief Executive Officer, Dr. Leonard Schleifer.
Speaker Change: Thank you, Ryan, and thank you, everyone, for joining today's call.
Speaker Change: Regeneron capped 2024 with a strong fourth quarter, highlighted by 10% revenue growth, reflecting the strength and durability of our key franchises, primarily Dupixent, Libtile, and ILEA, and ILEA HD.
Speaker Change: 2024 was also a year in which we made significant investments across our broad pipeline, which yielded notable progress across several key programs.
Speaker Change: For my remarks today, I will review some of our key performance drivers, then briefly discuss a few of our more differentiated pipeline opportunities, and close with a few comments on capital allocation.
Speaker Change: After my remarks, George will provide further updates on our pipeline. Marion will then review our commercial performance. And finally, Chris will detail our financial results for the fourth quarter of 2024 and our guidance for the current year.
Speaker Change: To start, I would like to share my perspective on the current state of Regeneron. From the beginning, our focus has been on science and innovation, developing cutting-edge technology platforms that repeatedly yield scientific breakthroughs.
Speaker Change: These efforts have led to 13 products that have been approved or authorized worldwide, several of which are driving revenue growth and hold significant future potential.
Speaker Change: Our approach has already delivered five blockbuster drugs, a leading pipeline of approximately 40 product candidates across various therapeutic areas, and a world-class DNA sequence-linked healthcare database.
providing us with unparalleled insights into key drivers of disease.
Speaker Change: At the J.P. Morgan Conference last month, we detailed 10 differentiated mid- and late-pipeline opportunities that could collectively address a total market opportunity of over $220 billion.
Speaker Change: Given these opportunities, the strength of our early stage pipeline, and our turnkey technology platforms, we have never been more confident in Regeneron's future, and we are incredibly excited about what lies ahead.
Moving to our quarterly results.
Speaker Change: Tupixent continues to be a transformative medicine, with over 1 million patients on treatment around the world, across 7 approved indications.
Speaker Change: In the U.S., Dupixent remains the leader in new-to-brand prescription share across all of its approved indications.
Speaker Change: and continues to be well positioned for future growth, given the potential for further penetration in approved indications, the ongoing launch in COPD, and potential 2025 launches in chronic spontaneous urticaria and bullous tymphagoid.
Speaker Change: Regarding the ongoing launch in COPD, where Dupixit is the first and only biologic approved, we and our partner Sanofi have made great progress securing broad payer coverage and reimbursement.
Speaker Change: positioning us to drive uptake over the course of this year and beyond.
Speaker Change: ILEA HD and ILEA continue to lead the anti-VEGF category and our commercial efforts remain focused on driving ILEA HD uptake.
while preserving Sheriff Rylea in an increasingly competitive category.
Speaker Change: Over the course of this year, we expect continued competitive pressure.
on Aaliyah.
while strengthening the profile of ILEA-HD.
by offering it in a more convenient prefilled syringe administration.
Speaker Change: broadening its label to include macular edema following retinal vein occlusion, or RVO, and adding more dosing flexibility, including every four-week dosing, as well as extended dosing intervals of up to every 24 weeks for certain indications.
Speaker Change: With these anticipated label enhancements, ALEA-HD will offer the broader set of retinal disease indications with the greatest dose and flexibility of any product in the anti-VEGF category, positioning it to become the new standard of care in the category.
Speaker Change: And we anticipate these enhancements will lead to acceleration in ILEA HD uptake starting in the second half of this year.
Speaker Change: The Tyler became Regeneron's latest blockbuster product in 2024 and we are looking to build on that by expanding shared metastatic non-melanoma skin cancers along with making further inroads in lung cancer.
Speaker Change: We also plan to seek regulatory approval for high-risk adjuvant cutaneous squamous cell carcinoma, a setting in which Katrina failed and over the longer term could represent a blockbuster opportunity globally in and of itself.
Speaker Change: Moving to our pipeline and focusing on the upcoming year, we expect regulatory approvals for limosaltamib in relapsed refractory multiple myeloma, oginectamib in late-line folliculiforma, and the aforementioned lipsioindication in adjuvant CSCC.
Speaker Change: In addition, we expect to read out pivotal or proof-of-concept data this year from several other programs, including our Pivotal RFI studies for interpecumab, our IL-33 antibody, and former smokers with COPD.
Speaker Change: Pivotal data for the pheanlumab-liptyl combination in first-line metastatic melanoma are also anticipated in 2024. We also expect pivotal data for our C5 antibody-sIRNA combination in generalized myasthenia gravis.
Speaker Change: Finally, we expect to learn more about our potential opportunity to improve the quality of weight loss in obese patients on semiglutide by blocking myostatin and activin A.
Speaker Change: George will soon discuss these programs in more detail and provide updates on many of the other programs in our broad and differentiated pipeline.
Speaker Change: Finally, regarding capital allocation, this morning we were pleased to announce the initiation of a quarterly cash dividend program and an additional $3 billion share repurchase authorization, increasing our total current buyback capacity to approximately $4.5 billion.
Speaker Change: These decisions reflect our Board of Management's ongoing commitment to returning capital to shareholders.
Speaker Change: But this does not change the core of our capital allocation framework.
Speaker Change: Importantly, our dividend will not impact the way we plan to...
heavily invest in our business and pipeline going forward.
Speaker Change: does not impair our ability to do business development in the future.
Speaker Change: And we anticipate that share repurchases will remain the primary means of returning capital to shareholders.
Speaker Change: However, initiating a dividend reflects our continued confidence in the future cash flows from our business, provides more balance to our approach to capital returns.
Speaker Change: It gives us flexibility in how we return capital in the future and expands the pool of potential regenerative shareholders to include funds with a dividend mandate.
Speaker Change: In closing, Regeneron remains in a very strong position scientifically, commercially, and financially.
Speaker Change: enabling us to invest heavily in R&D and deliver tremendous innovation from a pipeline.
Speaker Change: maximize the growth opportunities from our inline brands, initiate a quarterly dividend, and significantly increase our capacity to repurchase shares.
Speaker Change: We look forward to keeping you updated in these innovations throughout 2025 and beyond. With that, I'll now turn the call over to George.
Thank you, Len.
George: At last month's J.P. Morgan Healthcare Conference, we showcased our robust R&D efforts and the promising opportunities within our pipeline that have the potential to revolutionize the practice of medicine across several different disease areas.
Speaker Change: This year holds the potential to be transformative for Regeneron as we hope to capitalize on several of our scientific and technological breakthroughs.
Speaker Change: We anticipate reporting pivotal or proof-of-concept data from multiple programs across diverse therapeutic areas, including in oncology, COPD, and obesity, while also rapidly advancing our Factor XI antibodies to multiple Phase III trials.
Speaker Change: These programs represent significant opportunities for Regeneron to address substantial unmet needs across large commercial categories, positioning Regeneron for long-term growth. Let me highlight some of these opportunities and recent pipeline advancements.
starting with ILEA HD.
Speaker Change: In December, we and Bayer reported positive data from the Phase III Quasar Study in Retinal Vein Occlusion, where ILEA-HD demonstrated non-inferior vision gains within every 8-week dosing regimen compared to the standard-of-care 2 mg ILEA dosed every 4 weeks.
Speaker Change: Additionally, approximately 90% of our LEHD patients were able to maintain 8-week dosing intervals throughout the 36 weeks.
Speaker Change: These data, together with our recently presented long-term follow-up data from the Pulsar and Photon studies in WET-AMD and DME, respectively, continue to support ILEA-HD's best-in-class clinical profile.
Speaker Change: We remain on track to submit a supplementary BLA for this indication later in the first quarter. We also plan to seek approval from the FDA to potentially include every four-week dosing, maximizing ILEA's HD's dosing flexibility for physicians.
The longest intervals in the category.
Speaker Change: ILEA HD is set to provide the greatest dosing flexibility across the broadest indication set of any anti-VEGF therapy, all in a convenient pre-filled syringe.
Thank you.
Next, immunology and starting with Dupixent.
Speaker Change: In November, Dupixen was approved in Europe to treat eosinophilic esophagitis in children as young as one year old, making it the first and only medicine indicated for these young patients in the U.S. and the European Union, and further highlighting Dupixen's exceptional safety profile.
Speaker Change: The supplementary BLA resubmission for chronic spontaneous urticaria was recently accepted by the FDA with a target action date of April 18th, potentially making it the first new target therapy for CSU in a decade.
Speaker Change: Finally, a supplementary BLA was submitted for Bullis pemphigoid late last year, marking another first as Dupixent is the only biologic to achieve significant improvements in disease remission and symptoms for this indication.
Speaker Change: While Marion will discuss the ongoing launch of dupixent in COPD, I want to remind you of another potentially significant opportunity in COPD within a picomab, our interleukin-33 antibody discovered by Regeneron.
Speaker Change: We anticipate reporting pivotal results in former smokers from the RFI program in the second half of this year, a partially overloping and distinct population from that treated with the PIXEN.
Thank you. Thank you.
Speaker Change: As part of our long-term commitment to improving the lives of patients with allergic conditions, I would also like to highlight the compelling initial data from our ongoing Duprexin plus limbosaltamib trial for severe food allergy.
Speaker Change: These two agents have the potential to eliminate immunoglobulin E, or IgE, the key driver allergic reactions and prevent IgE from returning, thereby reversing severe allergies.
Speaker Change: Last month we shared initial clinical data from the first patient in our proof-of-concept study which showed greater than 90% reductions in both total and food-specific IgE levels following initial treatments at low doses.
Speaker Change: This trial is continuing to enroll patients, and we plan to provide updates throughout 2025.
Speaker Change: Turning now to oncology, where we continue to break new ground. Last month, we announced positive data for leptile in high-risk adjuvant CSCC, becoming the first immunotherapy to show a benefit in this high-risk population.
Speaker Change: At the first pre-specified interim analysis for disease-free survival, adjuvant Liptio demonstrated a 68% reduction in the risk of disease recurrence or death compared to placebo.
with no new safety signals identified.
Speaker Change: This is the same setting in which Merck reported last year that Kachuta had failed.
Speaker Change: highlighting that antibodies, even within the same class, do not always produce the same treatment effect. We plan to submit these data to the FDA in the first half of 2025 and present these results at a medical meeting later this year.
Speaker Change: This data set reinforces our belief that Leptile provides a best-in-class foundation for combinations with our other oncology assets.
Speaker Change: Data from early clinical trials in melanoma suggests that the Cianlamab, our LAG-3 antibody, when combined with liptyle, might be the first combination to demonstrate meaningful additive benefit compared to PD-1 monotherapy without exacerbating safety.
Speaker Change: This combination is being studied in an ongoing randomized phase 3 trial versus contruded monotherapy in first-line metastatic melanoma with results expected in the second half of this year.
Speaker Change: If these data confirm best-in-class activity in melanoma, it will increase our confidence for this combination in other cancer settings.
Turning to our C3 Bi-Specifics.
Speaker Change: We are pleased to announce that we have recently resubmitted the BLA for limbosaltamate or BCMA by CD3 bispecific for relapse, refractory, multiple myeloma.
Speaker Change: Following the resolution of third-party manufacturing issues, Limvoseltramab has the potential to be the best-in-class BCMA by CD3 bispecific due to its differentiated clinical profile, dosing, and administration, with nearly double the reported complete response rates at similar duration of follow-up.
Speaker Change: Given the strength of the data in late lines of therapy, including the observed level of efficacy and favorable safety profile as in levonseltamab, we are pursuing a differentiated approach in earlier lines of therapy, emphasizing monotherapy and novel limited combination approaches.
Speaker Change: For Odronexamab, or CD20 by CD3 bispecific, we are pleased to announce that we have resubmitted the BLA for relapsed refractory follicular lymphoma, where Odronexamab has also demonstrated potentially best-in-class efficacy.
Speaker Change: and we expect an FDA decision in the second half of 2025.
Speaker Change: In December, at the American Society of Hematology meeting, we presented initial results from the safety lead-in portion of the confirmatory Phase III Olympia trial.
Speaker Change: The standard of care regimen in this setting, rituximab plus chemotherapy, has historically achieved complete responses in approximately 67% of patients.
Speaker Change: Based on this impressive monotherapy efficacy for otonexamab in both late-line and first-line patients, we are once again exploring a differentiated program in early lines of therapy.
Speaker Change: Highlighted by our head-to-head evaluation of ultra next-in-rep monotherapy compared to rituxan plus chemotherapy in our Phase 3 Olympia 1 trial, which has already achieved over 40% enrollment.
Speaker Change: Our CD28 co-stimulatory bispecifics for solid tumors are also progressing. We're working to mitigate safety concerns related to their combination with PD-1 blockade, while prioritizing combination with CD3 bispecifics.
Speaker Change: The science suggests that this approach may enhance efficacy with fewer immune-mediated adverse events. We will provide updates on these innovative combinations later this year.
Moving now to a rapidly advancing Factor XI program.
Speaker Change: We're employing a two-pronged approach to anticoagulation that offers a potential for improved blood clot prevention and lower bleeding risk.
Speaker Change: Supported by genetic data from the Regeneron Genetic Center, our approach has delivered two antibodies with unique profiles to meet different market needs.
Speaker Change: Regeneron 708, which targets the catalytic domain of factor XI, may provide improved efficacy compared to standard of care options.
Speaker Change: offering patients who need significant anticoagulation activity a potentially more effective option. On the other hand, Regen 9933, which targets the A2 domain, is expected to carry a lower risk of bleeding.
Speaker Change: potentially making it a viable option for patients with the highest bleeding risk who would otherwise not be candidates for currently available anticoagulants.
Speaker Change: Late this year, we reported positive proof-of-concept data for the prevention of venous thromboembolism following total knee replacement, with both antibodies demonstrating robust antithrombotic effects.
Speaker Change: Regeneron 7508 was superior to enoxaparin and non-inferior opixaban, while Regen9933 was numerically better than enoxaparin. These data support the advancement of both antibodies into broad pivotal programs across multiple indications and patient types.
Speaker Change: with initial phase 3 studies expected to begin enrolling this year.
Thank you. Thank you.
Speaker Change: Moving briefly to obesity, where we are progressing early clinical programs in an expansive pipeline of preclinical assets.
Speaker Change: Trivagramab to semaglutide with and without garotizumab to improve the quality of weight loss and evaluate the maintenance of weight loss after discontinuing semaglutide. This trial is fully enrolled with data expected in the second half of the year.
Speaker Change: Moving to our Regeneron Genetics Medicine Pipeline, starting with our differentiated siRNA plus antibody approach, we have the potential to address multiple complement-mediated diseases.
Speaker Change: In December, at the ASH annual meeting, we presented compelling updated results from an exploratory cohort in our Phase III program for paroxysmal nocturnal hemoglobinuria.
Speaker Change: Our combination achieved greater disease control compared to the standard current of care, Revilizumab, and only our combination lowered mean LDH levels to the normal range.
Speaker Change: When Revluzumab patients were switched to our combination, their mean LDH levels, which remained higher than normal, also became normalized.
Speaker Change: We are also evaluating this combination in generalized myosinia gravis with pivotal results expected in the second half of this year.
Speaker Change: In addition, we recently initiated our Phase III program exploring this combination in geographic atrophy in dry, age-related macular degeneration, where we believe our systemic approach has several advantages over currently approved intravitreal agents.
Speaker Change: For DB-OTO, our autoferulene gene therapy program for genetic hearing loss, we announced data last month from the ongoing clinical program. DB-OTO is an AAV-based dual-vector gene therapy delivered to the inner ear to enable hearing in children suffering from profound genetic hearing deficits.
Speaker Change: We reported that 10 out of 11 treated children with at least one post-treatment assessment showed a notable increase in hearing, with some reaching the normal range. We look forward to continue to share additional data later this year.
Speaker Change: Regarding our collaboration with Alnylam, we are advancing several new siRNA-CNS programs, including synuclein for Parkinson's and tau for Alzheimer's and other neurodegenerative diseases, with trials initiating later this year.
Speaker Change: Over the past decade, we have become the leader in high-throughput human DNA sequencing, enabling us to create the world's largest DNA sequence-linked healthcare database, encompassing nearly three million individuals, all with DNA sequence linked to de-identified healthcare records.
Speaker Change: We are now emerging also as the leaders in high-throughput proteomics.
Speaker Change: as reflected by the selection of the Regeneron Genetic Center to generate the proteomics data for the UK Biobank Pharma Proteomics Project, building on our previous selection to provide the sequence data for the UK Biobank.
Speaker Change: Importantly, our new strategic collaboration with Truveda is expected to dramatically expand our database to include up to an additional 10 million individuals from Truveda's network of leading U.S. health systems, with the opportunity to generate both DNA sequence and proteomics information.
Speaker Change: In summary, I have never been more excited about the future of Regeneron and our potential to transform the practice of medicine and revolutionize the healthcare industry.
Speaker Change: Our pipeline is more innovative and exciting than ever, and we anticipate several pivotal or proof-of-concept data readouts throughout 2025 positioning Regeneron for long-term success.
Speaker Change: Let me now turn the call over to Marion. Thank you, George. Regeneron's fourth quarter performance demonstrates our ongoing leadership across therapeutic categories. Our commercial team is well positioned to optimize our 2025 growth opportunities, driven by new indications, new product enhancements, and new product approvals.
Marion: Turning to fourth quarter results starting with ILEA HD and ILEA, in January we announced combined fourth quarter U.S. net sales of 1.5 billion for ILEA HD and ILEA
capturing over 46% of the total anti-VEGF category.
Marion: For the full year, net product sales grew by 1.4% to approximately $6 billion, despite increasing competition in the category.
Marion: ILEA HD net sales were $3.05 million in the fourth quarter and $1.2 billion for the full year, representing 20% of the combined net sales for ILEA HD and ILEA.
Marion: Fourth quarter net sales for LEHD were affected by elevated wholesaler inventory levels at the end of Q3, which were absorbed over the course of the fourth quarter.
Marion: In 2025, our team is laser-focused on growing ILEA HD adoption. Physicians tell us that ILEA HD has the potential to be the new standard of care for retinal diseases, and several catalysts occurring this year will put us in a position to grow our competitive share.
Marion: The team is ready to launch the pre-filled syringe and our two-year label updates, both of which are anticipated to occur in the second quarter.
Physicians eagerly await the pre-filled syringe.
which has been described as game-changing by clinical trial participants.
Marion: Further, our two-year long-term follow-up data from the Pulsar and Photon studies in wet AMD and DME, respectively, clearly illustrate ILEA-HD's ability to extend dosing beyond any other competitor in the anti-VEGF category.
Marion: Two other potential FDA approvals are also expected later this year, the RVO indication and additional dosing flexibility. In RVO clinical trials, ILEA-HD dosing could be extended to every 12 weeks following loading doses.
Marion: making it the only medicine with durability beyond four weeks and also the only medicine to show a numeric improvement in vision for RVO patients compared to ILEA, dosed every four weeks.
Marion: In terms of additional dosing flexibility across all of our approved indications, we look forward to the potential FDA approval of every four-week dosing for the subset of patients who need it, which would mean ILEA HD has the most flexible dosing schedule of any anti-VEGF medicine.
Marion: Fourth quarter ILEA net sales were $1.2 billion, primarily driven by persistent
Marion: physician demand in spite of a recent Aflibercept 2 milligram biosimilar launch.
Marion: Wholesale inventory levels were elevated at the end of the fourth quarter, and we expect ILEA net sales will be negatively impacted in the first quarter of 2025 as this increase in inventory is absorbed.
Marion: We also expect ongoing market dynamics will put downward pressure on ILEA business.
Marion: We continue supporting existing and new patients who benefit from ILEA, while prioritizing uptake of ILEA HD, which has the clinical profile to potentially become the new standard of care in the anti-VEGF category.
Marion: In the fourth quarter, global net sales grew by 50% year-over-year to $367 million, with U.S. net sales reaching $251 million.
Marion: Leptio's strong performance was based on growth in non-melanoma skin cancers and steady gains in lung cancer. Looking forward, we eagerly await the submission and potential approval of Leptio in high-risk adjuvant CSCC.
Marion: beginning in the U.S. where we estimate there are approximately 10,000 patients who may benefit from treatment.
Marion: And next to Dupixent, which continues to deliver exceptional results in type 2 inflammatory diseases.
Marion: Approved in seven indications worldwide, more than one million patients are currently benefiting from Dupixent treatment.
Marion: Three of these indications, atopic dermatitis, asthma, and nasal polyps have achieved blockbuster status, each generating over a billion dollars in annual net sales.
Marion: In the fourth quarter, PIXENT worldwide net sales grew 15% year-over-year to $3.7 billion, with increasing volume across all indications, age groups, and geographies.
Sanofi: In the U.S., net sales grew 10% year-over-year to $2.7 billion, driven by a 24% increase in total prescriptions, including the recent COPD launch. As Sanofi noted, fourth quarter results were negatively impacted by one-time items.
Sanofi: We continue to see broad growth across all blockbuster indications of atopic dermatitis, asthma, and nasal polyps.
Sanofi: who now understand that IL-4 and IL-13 are crucial drivers of type 2 inflammation.
Sanofi: Additionally, there is robust uptake in our recent U.S. launches for Sinophel gasophagitis, Paragenodularis, with current trends suggesting that these indications will likely also achieve blockbuster status.
Sanofi: We are off to a promising start in COPD, following approvals in more than 30 countries. In the U.S., the FDA-approved depicts it in September of last year.
Sanofi: And we are very encouraged by our progress in early market adoption. Together with our partner Sanofi, we've made significant strides in securing U.S. access and reimbursement for commercial and Medicare patients.
Sanofi: At the start of this year, nearly 85% of commercial patients and nearly 90% of Medicare patients had coverage. Additionally, we are pleased that Global Gold Treatment Guidelines for COPD now include Dipixen as the only recommended biologic medicine for these patients.
Sanofi: We look forward to accelerating the launch of this important indication and to make a significant difference in the lives of hundreds of thousands of CUPD patients worldwide.
Sanofi: Our teams are also preparing for a potential April launch in Chronic Spontaneous Urticaria, pending FDA approval. We believe Dipixen offers a compelling treatment option, and if approved, would be the first new targeted therapy in the U.S. in over a decade for the estimated 300,000 CSU patients.
Chris: In conclusion, we continue to deliver solid performance across our commercial portfolio in the fourth quarter. We also see significant growth opportunities in 2025 and beyond with near and medium term catalysts to drive growth. With that, I'll turn the call to Chris.
Chris: Thank you, Marion. My comments today on Regeneron's financial results and outlook will be on a non-GAAP basis unless otherwise noted.
Chris: Regeneron ended 2024 with strong financial performance in the fourth quarter, delivering growth on both the top and bottom line.
Chris: Total revenues grew 10% year-over-year to $3.8 billion, primarily reflecting higher Sanofi Collaboration revenue driven by Dupixent growth, strong global net sales growth for Libtayo, and modest growth for combined net sales of ILEA HD and ILEA in the U.S.
Chris: Fourth quarter diluted net income per share was $12.07, a net income of $1.4 billion, up 2% from the prior year. On a full year basis, total revenues were $14.2 billion, representing growth of 10% when excluding revenues from RONAPRIEF.
Chris: 2024 earnings per share grew 4% from the prior year to $45.62.
Chris: Turning to collaboration revenue in the fourth quarter, revenues from the Sanofi collaboration were $1.2 billion, of which $1 billion related to our share of collaboration profits.
Chris: Regeneron's share of profits grew 18% versus the prior year, driven by volume growth through duplexant and higher collaboration margins.
Chris: For the year, our share of profit, net of development balance reimbursement, increased to the highest level since initiation of the collaboration, reaching approximately 20% of total antibody net sales.
Chris: We continue to expect this balance to be fully reimbursed by the end of 2026, which is expected to result in a significant increase in Sanofi Collaboration revenue and cash flow thereafter.
Moving to Bayer.
Chris: Fourth quarter, ex-U.S. net sales of ILEA and ILEA 8-MIG were $888 million, up 2% on a constant currency basis versus the prior year. Total buyer collaboration revenue was $377 million, of which $349 million related to our share of net profits outside the U.S.
Now to our operating expenses.
R&D expense was $1.2 billion in the fourth quarter.
Chris: Fourth quarter 2024 gross margin on net product sales was 86 percent, up slightly from the prior year quarter.
Now, to Cash Flow and the Balance Sheet.
Chris: Regeneron generated approximately 3.7 billion in free cash flow in 2024 and end of the year with cash and marketable securities less debt of approximately 15.2 billion.
Chris: Consistent with our capital allocation framework, we are investing heavily in R&D capabilities to drive long-term growth, exploring business development opportunities, and returning capital to shareholders.
Chris: This morning we announced an additional share repurchase authorization of $3 billion, increasing our capacity for repurchases to approximately $4.5 billion as of today.
Chris: In addition, we are enhancing our approach to returning capital to shareholders.
Chris: As announced this morning, our Board of Directors has authorized the initiation of a quarterly dividend with the first dividend payable on March 20th to shareholders of record as of February 20th. The dividend will be $0.88 per share, equivalent to $3.52 per share on an annual basis.
I'll conclude with a review of our 2025 financial guidance.
Chris: We expect 2025 R&D spend to be in the range of $5 to $5.2 billion.
Chris: We expect 2025 SG&A to be in the range of 2.55 to 2.7 billion, representing 3% growth at the midpoint of this range versus 2024, driven by investments to support multiple potential oncology launches.
Chris: We expect our gross margin on net product sales to be in the range of 87 to 88 percent. This guidance reflects a changing product mix, as well as ongoing startup costs for our new, till-finished facility and investments to drive future efficiencies across our manufacturing network.
Chris: We expect cost of collaboration in manufacturing to be in the range of $1 to $1.15 billion in 2025, primarily driven by higher depiction volumes.
Chris: Recall that we are reimbursed for these costs as revenue, making them generally neutral to net income.
Chris: We expect 2025 capital expenditures to be in a range of $850 million to $975 million, primarily related to ongoing expansion of the R&D facilities at our Tarrytown headquarters and investments to increase bulk manufacturing capacity in the U.S. and Ireland to support our expanding pipeline.
Chris: Finally, we expect our 2025 effective tax rate to be in the range of 11 to 13 percent.
Chris: In summary, Regeneron delivered solid financial results in 2024, and our strong financial position and prudent capital allocation enables Regeneron to deliver long-term shareholder value. With that, I'll pass the call back to Ryan.
Ryan Crowe: Thanks, Chris. This concludes our prepared remarks. We will now open the call for Q&A. To ensure we were able to address as many questions as possible, we will answer only one question from each caller before moving to the next. Tawanda, can you go to the first question, please? Thank you.
Please stand by for our first question.
Speaker Change: Our first question comes from the line of Brian Abrahams. Your line is open.
Thank you.
Brian Abrahams: Hey guys, good morning. Thanks for taking my question. Consensus numbers suggest expectations for annual sales erosion of about seven percent annually over the next few years for the ILEA franchise.
Brian Abrahams: Just given what you've been seeing on the ground and some of the dynamics you described including competitive pressure but a potential acceleration in HD with some of those approvals
Brian Abrahams: Do you think that these expectations look reasonable, and I know you guys don't typically provide guidance, but I think any directionality might be helpful here just to understand whether folks are looking at dynamics here the right way or if expectations may be way off. Thanks.
Brian Abrahams: So, as you pointed out, we don't give guidance. I wanted to give you a summary today of how we see the market.
Brian Abrahams: And certainly, as it relates to ILEA-HD and the strengthening of the profile that we hope with additional FDA approvals this year related to delivery system with the prefilled syringe, indication with RVO, dosing flexibility, and then also the clinical data that further cements ILEA-HD as the product with the greatest durability. You know, we believe that combination of factors for ILEA-HD, and the fact that already in
Brian Abrahams: H.D. at $1.2 billion in net sales as a Blockbuster product.
We see that as a very compelling profile.
Brian Abrahams: But I did want to be very realistic, and my comments indicated we do expect to see additional competitive pressure on ILEA.
Brian Abrahams: Obviously, there's a biosimilar in the market today, so that is a factor that needs to be considered as well. But overall, we certainly believe we have a very strong position. I also noted today that our category share in the fourth quarter was at 46%, so obviously we have a very strong position in the marketplace.
Thank you. Next question, please.
Speaker Change: Thank you. Our next question comes from the line of Tyler Van Buren with TD Cohen. Your line is open.
Speaker Change: Hey guys, good morning. Thank you very much for taking the question. So the dividend initiation is an exciting disclosure and earlier than some might have expected, so I'm curious why you guys decided to institute the dividend now as opposed to when the Santa Fe development balance was paid off by the end of next year and whether you plan to increase it from these levels over time.
Speaker Change: Thanks, Tyler. Thanks for the question. So, you know, obviously we publicly were talking about initiating it at the end of the repayment of the Sanofi development balance. I think for a variety of reasons we have a lot of confidence, as we reiterated on the call today, that that would be paid down.
Speaker Change: It's also, obviously, a differentiation in our capital allocation strategy to sort of migrate a little bit away from share buybacks, although, as Len indicated in his remarks, that'll be the primary purpose of returning capital to our shareholders, but allowing us a little bit more flexibility of starting the dividend.
Speaker Change: And it also opens up a larger base of shareholders. So there are a lot of funds out there that have a dividend mandate, and this will give them the opportunity to invest in Regeneron that they wouldn't have otherwise in the past been able to do.
Thank you. Thank you.
Thanks, Chris. Next question, please.
Speaker Change: Our next question comes from the line of Corey Casamope with Epicor.
Corey Casamope: Hey, good morning, guys. I wanted to ask on the adjuvant CSCC-Libtio readout that you top-lined in January. How critical is it that the product also hits an overall survival in addition to the DFS you top-lined? And can you kind of comment as to how you see this, the opportunity here from a commercial perspective relative to the indications you already have? Thank you.
Thank you.
Corey Casamope: Well, because these patients are relatively earlier stages of their disease, they tend to have long survival times from their initial.
Um
Corey Casamope: surgeries and so forth. So there are very few survival events. That said, of course, the FDA will be looking at the data to make sure that at least numerically things are not going in surprising or wrong directions. But we have confidence that the package is going to look pretty attractive.
Corey Casamope: And then just adding on the commercial perspective, you know, as I noted, we obviously have a very capable and talented oncology LibTiO team.
Corey Casamope: the U.S. and in key international markets, but for the U.S. we estimate there'd be about 10,000 patients who may benefit from the adjuvant CSCC indication.
Thanks George and Marion. Next question please, Tawanda.
Thank you. Thank you. Thank you.
Speaker Change: Our next question comes from the line of Salvin Richter with Goldman Sachs.
Salvin Richter: Good morning, thanks for taking my question. Could you just speak to the magnitude of inventory impact on ILEA HD that played out last quarter and also the dynamics that are happening in the marketplace with with Pav-Flu, the biosimilar?
Speaker Change: So, Salvinas, we had noted last quarter there had been a build in ILEA HD inventory and that obviously impacted fourth quarter for ILEA HD burning off that inventory. As to the specific numbers, the range of impact in total would have been in the range of,
Combined IVHD
Speaker Change: and ILEA net product sales for the fourth quarter, the favorable impact was predominantly to ILEA and that was about 85 million. And that was the result of higher wholesale inventory levels for ILEA, partially offset by lower wholesale inventory levels for ILEA each day.
Did you want to comment on the pad blue impact?
Speaker Change: Well, Flynn, you know, it's really difficult to comment on Pavlou. I will know one thing that very recently...
Speaker Change: We had some victories at the Federal Circuit Court of Appeals.
which thus far is leading to the conclusion.
Speaker Change: that there's only one competitor of a biosimilar. If that holds, that really changes the dynamic.
Speaker Change: quite a bit in terms of pricing and things like that, so having one competitor is quite different than having multiple competitors.
So I encourage you to look at some of the
Speaker Change: some of the recent wins we had at the federal circuit on the injunctions against other players. In terms of what's actually going in the market, you know, I think maybe you'll be on Amgen's call this afternoon, maybe they can give you a more direct answer.
Thank you. Next question, please.
Thank you. Thank you.
Speaker Change: Our next question comes from the line of Chris Schott with J.P. Morgan.
Speaker Change: Hi, this is Taylor Hanley. I'm for Chris Schott. I just had a question on how you're thinking about operating expenses going forward.
Speaker Change: Numerous programs advancing to late-stage development. How are you thinking about balancing investments across the pipeline? And do you think that there would be the potential to partner any of these programs, or should we think about Regeneron keeping everything in-house going forward?
Speaker Change: So I think it's important to note that our primary allocation of our capital is to our research and development efforts.
Speaker Change: We're in the midst of doing a little interesting exercise, that if you compare our investments
equity investments and other upfronts and milestones.
that are essentially buying research and development.
Speaker Change: I think the data is going to show that we have an incredibly productive, dollar-for-dollar, pound-for-pound R&D capabilities in the industry.
Speaker Change: In terms of whether or not we would partner, I think we have always been, that is, a financial partner, perhaps, or even a strategic partner on some program. We've always kept an open mind to see what is the best.
Speaker Change: for the program and how can we best allocate our resources.
Speaker Change: So, we don't manage the business in any fixed allocation way. We don't say we're going to spend X percent. We look at what's worth spending our money on. We look at what the potential ways to fund our programs are, and we try and make decisions that way, rather than having some...
Speaker Change: allocation quotas or the like. That flexibility I think has served us well and it will continue to serve us well given that we have more than 40 programs in the clinic and many many more heading towards the clinic.
Okay, thank you. Next question please, Tawanda.
Speaker Change: Our next question comes from the line of Christopher Raymond with Piper Sandler.
Speaker Change: Hey, this is Sam on for Chris. Thanks for taking our question. On ILEA, we noticed you had a modest price increase, which is the first time we've seen that for ILEA. Meanwhile, we've seen Roche have more regular price increases for Robizema since they launched. Any comments on your pricing strategy for ILEA going forward? Is the goal to, you know, stabilize average sale price over time? Thank you.
Okay, next question please.
Speaker Change: Our next question comes from the line of Mohit Bansal with Wells Fargo.
Great, thank you very much for taking my question.
Speaker Change: Maybe, Marion, I just wanted to get a little bit more color on how you are thinking about the cadence of high layer.
Speaker Change: H.D. for the year because it seems like you're saying that you expect
Speaker Change: incremental conversion when pre-filled syringe and label expansion comes in. Could you help us understand, I mean, is it like, is it going to be more incremental or do you think there is an infraction especially due to pre-filled syringe given the market acceptability of that formulation? Thank you.
Yeah.
Speaker Change: Mohit, I don't have additional comment at this time. I wanted to give the overall...
Speaker Change: balance that we see obviously opportunity for ILEA HD to continue to grow. As you know the market is probably about 10% naive patients, 90% switch patients going over to ILEA HD and you know among those patients that are switching the source of business is often coming from ILEA, second for Asimab, and third of Aston. But as to the overall market dynamics I don't have additional comment.
Speaker Change: Yeah, I mean, I would encourage you obviously to look beyond the hyperfocus on ALEA. We have DUPIXENT launching away in COPD. We have pivotal data coming up with it at PECOMAB and COPD. We have first-line melanoma, metastatic melanoma data coming up. Second part of this year, we've got data in myasthenia gravis coming up. We're starting a trial in geographic atrophy, and I could go on and on.
Speaker Change: and on and I would encourage you to work through those because our strategy is not to be solely dependent on any one thing yet still optimize every single thing.
Speaker Change: So we will do everything we can to optimize each of our programs, HD and so forth, but we don't want to become dependent on any one thing, which is why we're so excited about the pipeline. So I would say it's the pipeline.
Next question.
For more information, visit www.FEMA.gov
Thank you.
Speaker Change: Our next question comes from the line of Tim Anderson with Bank of America.
Thank you. Thank you. Thank you.
Speaker Change: Hi, this is Alice Nettleton on for Tim Anderson. Thanks for taking our question. Sorry, another one on ILEA. Why don't we come back to it? Why don't we come back to that question at the end so we can get some non-ILEA questions in. We'll put you at the end of the queue and we'll come back to you. Next question, please. Sure.
One moment.
Speaker Change: Our next question comes from the line of Akash Tewari with Jeffries.
Akash Tewari: I'm not going to ask an ILEA question. George, I love your take on Factor 11. We've seen both Asyndexian and some of the private MAP players show issues in preventing ischemic stroke events, with the MAP also showing an inverse dose response on bleed prevention. That said, Regeneron's the only company that's shown an incremental benefit in a total knee replacement study versus Eliquis. So can you talk about your confidence on 5708 and some of the recent data sets in the space?
Thank you. Thank you.
Speaker Change: Yeah, our strategy from the beginning was take advantage of our understanding from the genetics to design and select two antibodies that have very complementary but different profiles can address different patients and allow physicians and patients to choose the best antibody for their needs.
Speaker Change: So, our antibody, the 7508 that you mentioned, that hits the cataract domain in side-by-side comparisons is biochemically the strongest blocker and has the strongest anticoagulant activity of anything in this class.
and and that
would be designed.
Speaker Change: for the patients who need the most anticoagulant control. And as you said, it performed very impressively in the initial proof-of-concept studies with regard to that functionality.
Speaker Change: The 9933, which affects the A2 domain, is designed to be slightly gentler, and the genetics suggest it may have very little, if any, bleeding risk, but perhaps a little bit less anticoagulation activity.
Speaker Change: So that's designed to give alternatives or options for the patients and the physicians who are most concerned in that setting about bleeding risk. So we think this is a very powerful
Speaker Change: optionality and flexibility to be able to offer both physicians and patients who struggle between solving the dilemma about how do I control anticoagulation without causing bleeding and all of those concerns that go with that and this way we'll have data and we'll have comparative data in multiple settings
Speaker Change: to allow the physician and the patient to hopefully choose the best approach for their situation. And we think that certainly the...
Speaker Change: The patients, the settings, are really crying out for this sort of optionality and flexibility. This is why so many patients in so many indications, not only in atrial fibrillation, but across the entire spectrum of diseases in which
Speaker Change: Thrombi and clots are a problem are left untreated or not maximally treated. So we're hoping to address that huge unmet need by evaluating and getting data on these two genetically validated approaches.
Speaker Change: Our next question comes from the line of William Pickering with Bernstein.
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William Pickering: Hi, thank you for taking my question. It's about your complement programs. So it seems like your antibody-sRNA combo has potential to deliver really leading efficacy, but on safety you've seen some grade 5 AEs so far.
William Pickering: to discuss how you see these combos fitting into the MG and GA treatment landscapes, and for GA specifically, anything about the design of the Phase 3 trial that would kind of minimize some of those safety events that you've seen so far. Thank you.
Speaker Change: Yeah, so first of all, the safety events are consistent with what's been seen with the class in general. Right now, we don't really have evidence to suggest that it's different than the other approaches vis-a-vis safety.
Speaker Change: In terms of efficacy, it's an incremental benefit that is able to drive many more of the patients into the normal range. So the current drugs can achieve, in some patients, as deep
complement inhibition as we're seeing
But they don't do it for all the patients.
Speaker Change: We're doing it for a much higher percentage of patients. So we're not really lowering Complement to much lower levels. We're just driving more of the patients to the levels that are already being achieved This is consistent with the safety profiles being analogous to what's already been seen with the class
But very importantly, it's the uncontrolled patients.
Speaker Change: which are causing the problems, whether it be in PNH or perhaps some of these other complementary media diseases, who are being suboptimally treated, which we hope we now have a solution for. For those patients, roughly 30 percent of the populations, even with the best standard of care, who are left suboptimally treated.
That said...
Speaker Change: Complement inhibition for an elderly or older AMD patient is certainly a concern with any approach and as you said we are doing a variety of things
that are somewhat standard for the class.
Speaker Change: to try to choose, first of all, enroll patients who are not as high risk to make sure, for example, they're vaccinated against the organisms of risk and, of course, monitoring them closely.
Speaker Change: But, we have to balance that, of course, with the concerns and the safety events that have been happening with the intravitreal approaches. I mean, these are designed to slow down.
Speaker Change: slowly progressing vision-threatening events, yet the safety events can cause catastrophic immediate vision loss.
Speaker Change: in patients. So that's a little bit of a dilemma. Do you take a prevention that can make you immediately blind to slow down your eventual blindness? We're hoping to offer another option for these patients.
Speaker Change: that might not risk their vision, but as you said, we'll have to balance the safety infectious types of events, which, as I said, are a class-specific type of problem.
Speaker Change: Thanks George, I think we have time for two more questions.
and Rhonda.
Speaker Change: Our next question comes from the line of Dave Reisinger with Lyric Partners. Your line is open.
Dave Reisinger: Yes, thanks very much. So, my question is on obesity. George, could you please discuss the need to combine myostatin with an ActiVen blocker to treat obesity and optimize body composition? I ask because I'm curious about whether, if the ActiVen doesn't have the right benefit-risk profile, whether you could develop a myostatin as a standalone or not. Thanks very much.
Dave Reisinger: Yeah, you've pretty much summarized exactly our strategy based on our previous data in humans including in sarcopenic individuals. The combination can grow more muscle.
Dave Reisinger: However, we do have some concerns with the active in a blockade the GDFA blockade now based on both genetics and what we've seen
Dave Reisinger: looks to be exceedingly safe in terms of all the early data. We don't have as much data with the active in A, and so we're left with more concerns. So we're testing the combination, but we can fall back on just single approaches, which might have a little bit less efficacy in terms of muscle preservation, but might be safer. So that's why we're exploring these individually, but also together, so to understand the best benefit-risk profile.
Dave Reisinger: I want to remind you that, for example, at Lilly, they're trying a receptor blocker that not only blocks these two growth factors, but more than a dozen other related growth factors.
So that
Dave Reisinger: may yield good efficacy, but the concerns there is not only you're blocking the myostatin and the active innate, but a dozen other factors as well. And what are the potential side effects you'll see here? That's why we like our program, that we can actually target the two most important factors as we've shown preclinically and clinically.
Dave Reisinger: for muscle preservation, while also trying them individually. So that way we'll have, once again, the most flexibility, as a lot of our programs are designed to dissect and separate individual agents in various processes to understand best.
Dave Reisinger: The benefit risk profile where you might trade efficacy for safety and vice versa
Speaker Change: Thanks, George. I don't see Bank of America in the queue, so we'll just go to the next question in the queue as our final question.
Terrence Flynn: Our final question comes from the line of Terrence Flynn with Morgan Stanley.
Terrence Flynn: Thank you. This is Chris on for Terrence. Just a question on your leg 3 plus PD-1 combo in non-small cell lung cancer program. What is the efficacy bar on the duration of response or PFS that you need to see for you to advance that into a pivotal program? Thank you.
Terrence Flynn: Yeah, as we've seen from the small data set with our friends at Bristol in terms of their combination, those data sets are very small and they're hard to really make
convincing conclusions on.
That's why we're more focused on our melanoma data.
If the melanoma data really deliver the sort of...
Terrence Flynn: efficacy profile, safety and efficacy profile that we've seen in our proof of concept studies when we read out the phase three. I think that's gonna generate enormous excitement, both for the potential to really help first-line melanoma patients.
Terrence Flynn: but also to extend this combination to a variety of other cancer settings, including potentially lung cancer.
Terrence Flynn: So, I think that the bigger data set in the Phase 3 study is going to provide the most insight and the most potential confidence.
as opposed to, you know, the smaller...
Terrence Flynn: Phase IIs and proof-of-concept studies, which obviously can generate excitement, but they're not really definitive as we've seen from our own data, but also from our friends who have other related programs going on. So, I really, you know, point to the pivotal melanoma data. If that really emerges as the new standard of care in melanoma, it's going to...
Terrence Flynn: I think it's going to provide a lot of interest and excitement in other cancer settings as well. I see Bank of America is back in the queue, so we will take our final question from them as promised.
Speaker Change: Our next question comes from the line of Tim Anderson with Bank of America.
Hi, thank you. This is Alice Somphotan.
Speaker Change: So back to my question on ILEA, we talked to one big purchaser of ILEA recently who said that Regeneron essentially hasn't sweetened the contract terms on standard dose in an effort to compete with Amgen's product yet.
Speaker Change: So can we infer from this that you are likely to hold the ground on price and pricing concessions with the goal being that doctors will start using high dose more once the label and product enhancements come through. Thank you.
Speaker Change: Alice, thank you for your patience. We don't comment on pricing strategy, but I certainly will compliment our very talented market access and pricing team, but no comment.
Speaker Change: With that, we will conclude the call. Thank you. And thanks to everyone who dialed in for today's call. We apologize to those remaining in the Q&A queue. We did not have enough time to hear from you, but we're always happy to follow up. We're available to answer any remaining questions you may have. Thank you once again. Have a great day.
Speaker Change: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.