Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)

Piper Jaffray Healthcare Conference

December 03, 2013 08:30 AM ET

Executives

Michael Aberman - VP of Strategy & Investor Relations

Bob Landry - CFO & SVP, Finance

Analysts

Ted Tenthoff - Piper Jaffray

Operator

Ted Tenthoff - Piper Jaffray

Great so I think in the interest of thing on time we’re going to start with our next presenting company Regeneron. My name is Ted Tenthoff, I’m a Senior Biotech Analyst here at Piper Jaffray and before I begin I’m required to point out certain disclosures regarding relationship between Piper Jaffray and Regeneron which refers to both at back of the room and also at the registration desk. Also it's my pleasure to introduce Joshua Schimmer who I’m going embarrass him for a second who has just joined Piper Jaffray doing the Biotech here and actually Jeff and I are going to be co-covering Regeneron so he is really the brains behind the operation to help me refine the story of what’s frankly being one of the strongest perform in biotech companies in 2013 and a lot of this was driven initially by the U.S. launch of EYLEA and the company is actually now achieved a market capitalization of $40 billion and I just have to say that it's such fantastic performance and congratulations to you guys. We actually continue to expect Regeneron shares to trade higher in particular with the DME (indiscernible) label expansion for EYLEA also really importantly O.U.S. EYLEA profit share and partner Bayer which is going to drive EPS acceleration and one of the richest antibodies pipelines in all of biotech. So here from the company someone that you guys probably know very well Michael Aberman who is Vice President of Strategy & Investor Relations. Also joining us is Bob Landry who has just taken over as Chief Financial Officer for Murray Goldberg who is not well for a long time and Bob it's really nice to get to meet you and thanks for joining us today.

So I’m going to start the ball rolling but as you can see we don’t have the slide presentation so if there are any questions don’t hesitate, just wave your hand and we will work in. So as EYLEA continues to grow phenomenally well up 49% annual again in the third quarter upto 363 million, give us update there what’s really driving the continued strong growth. Is it share gains either Lucentis or Avastin? Is it new patients who are going directly on to EYLEA, what’s really driving that growth?

Michael Aberman

So first before I get started let me just remind people that I may make forward-looking statements and (indiscernible) there is risks and uncertainties. You can full list of our risk factors in our recent SEC filings and Form 10Q and 10K for the year which is available on our website and in our SEC filings. So please look at those.

So EYLEA, you know EYLEA has been phenomenal product for so many reasons. You know it's one of the best launches in each of our industry driven in large part based on this great product profile. You know there was clearly unmet need for another option for patients in the (indiscernible) and we continue to grow based on taking market share from Lucentis and in our most recent quarter while our surveys are more qualitative and quantitative in nature we did see for the first time in that qualitative survey that we surpassed slightly Lucentis on a market share basis. But roughly speaking the market is straight [ph] between 50% off level of Avastin use and this is the DME market, 25% slightly higher than that for EYLEA and another 25% Lucentis. So splitting branded market roughly even and you know there is tremendous opportunity for continued growth with EYLEA as you mentioned for variety of reasons. One is continue to go into AMD market itself is growing, it is a disease of the elderly and with the aging population that will grow. In addition as you may be aware, one of the places where we had growth in the past the Avastin market share when we first launched was in the 60% plus range is now down to 50% range and there was recent law that was signed by President Obama just before the Thanksgiving holiday that strength in the regulatory oversight over the compounding pharmacies is where you get the Avastin and the FDA just put up some guidance yesterday so we’re reading those guidance just to understand what that means by clearly there will be some increased oversight over these compounding pharmacies if you think could just some share changes.

Ted Tenthoff - Piper Jaffray

Yes I agree on that I think that’s really important, obviously you guys have gone through the FDA process to put in place that manufacturing process so I think that’s a really important development. I think this guidance for 2013 to 1.35 billion to 1.375 billion which implies kind of flatter even currently fourth quarter. So help us understand what’s going into this guidance. Is this a conservative guide or are there factors that we should be considering going into the fourth quarter like holidays and things like that?

Michael Aberman

Yeah I think the holidays are the main driver, I mean you have got Thanksgiving holiday, you have got the Christmas holiday. So really you know we don’t try to give conservative guidance or you know we try to give our best estimate as we approach especially at the end of the year where we have now arranged the best estimate for what we can see going forward. So it really is a reflection of what we expected the fewer selling days in the quarter.

Ted Tenthoff - Piper Jaffray

So you and partner Bayer recently recorded some very impressive data from the Phase III VISTA and VIVID trials and diabetic macular edema. You have already submitted the supplemental BLA application for DME. So when do you anticipate the label being (indiscernible) expanded to include DME and what does it really do to the U.S. market opportunity? How many diabetics patient ultimately progress to experience macular edema, how much does this increase the size of your current market?

Michael Aberman

Sure. So just to take a step back so we’re talking about EYLEA again which has been a great franchise, for have really driven our move to profitability and our growth and one of the beautiful things about the product is that their multiple potential indications and that’s sort of one of the drivers of the growth. So our first indication was what age related to (indiscernible) generation were leading cause of blindness in the developed world and the elderly. We also got a separate indication for central retinal vein occlusion and more recently as Ted mentioned we reported positive Phase III data for diabetic macular edema and submit an application for FDA approval and there we haven't said specifically when the PDFUA date is and we will hear back from the FDA typically 60 to 90 days and we hear back from the FDA when the PDFUA date is and we will obviously let the world know when we do hear that.

But diabetes you think in the market is as large as wet AMD market is similarly to 400,000 to 600,000 patients with diabetic macular edema you know actually about 40% of them are treated right now with anti-VEGF therapies that have the potential to growth. Unlike wet AMD where anti-VEGF when we launched was the standard of care and we came in and really took a market where we were going up against the Lucentis and Avastin’s in established market, DME is a little newer only more recently was Lucentis loss and diabetic macular edema market. There is an entranced standard of care which is being put aside with this laser therapy. Our trial was head to head against laser, it really showed that the superiority in both trials and at recent medical conferences some of them (indiscernible) experts are saying that the role for laser is diminishing as the data emerge on VEGF as a better potential therapy for, so we’re really looking forward to that.

The (indiscernible) dynamics about diabetic macular edema was make it slightly different than wet AMD that it's a younger patient population so there is a potential here not only of being a large patient numbers but these patients staying on therapy for longer and lastly there appears to be a higher incidents of bilateral disease so while the patient (indiscernible) is slightly lower than age related macular degeneration. The bilateral disease suggest there may be (indiscernible) as much.

Ted Tenthoff - Piper Jaffray

Great, I appreciate that. So among that you guys have partnered with Bayer [ph] globally EYLEA O.U.S. what are the economics of this alliance, I think it's a fantastic deal and how much do you guys still need to look [ph] at there. So how can this profit share ultimately impact your earnings?

Michael Aberman

Bayer is a great partner let say that, and they are doing a great job outside the U.S. The launch is progressing well, dozens plus countries we have been approved and we’re launching the initial launches in Japan, Australia and Germany others have gone exceptionally well. This is a 50-50 profits outside the U.S., as you mentioned it is a repayment obligation we update that number once a year. But you can sort of back type [ph] based on what we paid 5% per quarter the development on each quarter and it's around 40 million – 50 million for quarter. So we’re already you know that the profits from this collaboration is already exceeding that so we’re already seeing it impacted the bottom-line for EYLEA.

Ted Tenthoff - Piper Jaffray

And we’re really getting up to speed in Europe which I think is an enormous market opportunity.

Michael Aberman

Absolutely.

Ted Tenthoff - Piper Jaffray

So fantastic. Is there any questions from the audience as we progress here?

Michael Aberman

I just want to make a comment, there is something like as Leo [ph] mentioned the other day as well you know there is just a great partner in terms of going after and you real compete, this is a very competitive marketplace outside the U.S. unlike the U.S. where it's been (indiscernible) outside the U.S. is Novartis and they have been very aggressive in trying to go after, and try to sell the story sort of outplace story linking EYLEA honestly to (indiscernible) and the way they do they take cherry picked data out of the European assessment and Novartis is actually recently attainted by a strong authority where they were sending emails out to the physicians there and typically the way this works is you try to fight it out and they actually raised this to the Australian health authorities and as a result Novartis had to pay fine for that and actually send an email correction for stating how what they said was not appropriate. So those type of marketing activities it's great partner for us out there fighting battle and I think it's really clear just like when you ask for you know it was taking a lot of market share we have really good potential outside the U.S. But we think we have a better product.

Ted Tenthoff - Piper Jaffray

Yeah and it really is a global opportunity. So I want to make sure we take time for some of the reps for the programmed in the pipeline. I think actually one of the conferences, at one of these conferences a few years ago when the expansion of alliance of Sanofi. You’re currently working on seven [ph] partnered antibodies with them and six of them are wholly owned. We just reported some data on our PCSK9 antibody Alirocumab and on the Phase III obviously monotherapy that’s really good. So tell us about that data and tell us a little bit about the monstrously huge typical program to get this novel therapy for cholesterol to the market.

Michael Aberman

Sure. So cardiovascular disease despite the availability of statins with lower LDL cholesterol which is leading this factor for having cardiovascular disease whether it's (indiscernible) or atherosclerosis stroke et cetera remains a leading causes and got some disability in the developed world. So it's clearly unmet need for additional therapies. The data the PCSK9 drug goes back to genetic data where researchers primarily led by team down in Texas discovered that patients with mutations in this protein for PCSK9 not only have significantly lower LDL cholesterol but lower cardiovascular events and that started to raise for developing parts against PCSK9. We have been talking about this for couple of years and I think the world is cut up to us with ourselves and Pfizer and other racing to the finish line with products and specifically antibodies that won't bind this protein PCSK9 and that results in increased of receptor on liver cells call the LDL receptor which is the primary mechanism that the body clears the bad cholesterol, the LDL cholesterol from the blood. So by blocking PCSK9 what happens is as you lower your LDL cholesterol it turns out this is the same mechanism by which statins lower cholesterol and that’s important because there is some debate or controversy over whether or not when we now come to study it's really less of a controversy as we have been saying all along the regulatory authorities have told us approval can come on LDL if it's also good [ph] at end point, but it's safe and there is no major change in the view of LDL and is out of (indiscernible).

But we have shown already in our large Phase II program and now we’re in the first Phase III program that blocking PCSK9 can lower LDL or bad cholesterol by 50% to 70% depending on the patient population. But in monotherapy which was the first trial we just released where we had a 47% reduction compared to 15% with ZMI which was the competitor and in our Phase II program all of our trials were on top of statins and again on top of statins lowering the LDL bad cholesterol by 50% to 70%. So tremendous reduction in LDL cholesterol we’re embarking on a large Phase III program while one of the trials we read out that was relatively smaller trial when we’re talking about 12,000 patients overall program, 8000 of that is in a cardiovascular outcome trial that’s underway and mainly 4000 is our LDL lowering primarily trials and that’s 10 or so trials and including number of different patient population that are high risk of cardiovascular disease. Those that are high risk (indiscernible) the patients who have had prior heartaches, patients that are diabetes and still has LDL that are not optimal about 70 or above 100 depending on the patient population. In addition the, heterozygous familial hypercholesterolemia patients, these are patients with one new patients in their LDL receptor they have tremendously high LDL and even on rich statins and other therapy, they LDL cholesterol is still in the 120 to 140 range. So another area of higher met need and they are obviously an importantly in our anticipation in tolerant to statins. So there is 1 million to 1.5 million patients in U.S. alone who are unable to tolerate this statin therapy for one reason and that is primarily the muscle side effects associated with statin. So that’s another patient population we’re studying.

Ted Tenthoff - Piper Jaffray

It's a really exciting program. Was there a question?

Question-and-Answer Session

Unidentified Analyst

(Indiscernible).

Ted Tenthoff - Piper Jaffray

Questions on the dosing regimen and how it's administered.

Michael Aberman

Yeah it's a great question. We get both sides, most people ask us why wouldn’t they take an injectable when they have oral. Someone will also take the statin and sometimes doesn’t remember until the end of the day. You’re right there are some advantages in terms of compliance, in terms of, we’re dosing every two weeks primarily to up titration across, we started actually very (indiscernible) some of the trials are up titration, you started 75 milligrams and then you go up to 150 milligrams depending on specific LDL trigger. We also have trials in patients where you start at the higher dose, primarily we’re studying every two week dosing subcutaneous. It is very easy auto injector, self-administered. We’re also looking at a four week dosing and the choice program which trials start a little bit later that are currently in rolling. So you’re right there are people who are going to prefer giving every two weeks subcutaneous injection not having to remember every day. Clearly we’re looking to do on top of statins primarily, we will do both. But there is a large patient population for example diabetics, which our partner Sanofi is very familiar with. So I think we are really happy with our partner in terms of not only expertise and development in helping to roll-out this global program which has been great having a partner like Sanofi but also their expertise in the patient population both with their experience with products which is Plavix which is a leading cardiovascular drug as well as experience in diabetics and injections et cetera. So we believe this could be obviously an exciting program for us.

Unidentified Analyst

So you’ve since reported data from the first and Phase III mobility study and this is a sarilumab to treat rheumatoid arthritis. Walk us through this data and when should we get additional assays [ph] and I guess the real question that I get sometimes is do we real need another (indiscernible) receptor antibody in a crowded space. I think the data was very compelling and just wanted your comment.

Michael Aberman

Yes so rheumatoid arthritis unfortunately a disease where a lot of patients despite the availability of multiple-TNF inhibitors as well as (indiscernible) and novel therapy and typically only a fraction of patients actually get an ACI-50 or 70 which is you know 50% or 70% decrease in science in sensing a disease. So and overtime patients lose efficacy and they cycle through therapy. We know that because even if second, third, TNF inhibitors to the market, our multi-billion products. So it truly is well it's a crowded space, it's a big market and unfortunately patients and they have long time with this kind of disease and a local therapy. Currently there is only one approved (indiscernible) on the market that is (indiscernible). They have only recently launched a subcutaneous formulation drug sarilumab is developed completely in it's Phase III program and it's subcutaneous formulation dose every two weeks. We believe the data that emerge as we mentioned and first we are very competitive with the existing rheumatoid arthritis therapies and have the potential of being important new option for patient assuming we get to the remainder of Phase III program and approval. You know we don’t make cholesterol comparisons and this is all kinds of issues with that. Nonetheless we do look at our data and think about it in the context of what’s out there and we believe we have a competitive, powerful trial.

Unidentified Analyst

So forgive me if I didn’t bring up. It is still compound in the clinic dupilumab which was actually just an innovation in the year by (indiscernible). You’re currently a multi-Phase 2b studies. Tell us a little bit about the biology there, because this is a very exciting antibody with very broad stability.

Michael Aberman

So we think Joshua is 100% right on that because we’re actually really excited about dupilumab and so allergies have become an increase in the developed world. I think we think back to our childhood and we really didn’t really hear much about peanut allergies or food allergies much now, almost every school you’re not allowed green peanut butter at school because of the increase in food allergies, asthma is increasing, other allergic type of diseases, atopic dermatitis, we don’t exactly why but this singles what’s happening is there is a shift in more diseases that are “TH2 type” immune response being over reactive and our scientist thought that blocking IL-413 [ph] pathway which is upstream in the regulation of the immune response is shifting it towards the TH2 could be an important trigger point or pressure point in that system and if we block our IL-413 [ph] pathway you can move people away from that stenotype or that symptomology and so that’s what we did, we developed a block or block out IL-4 receptor, block both pathway and this excludes the work and I guess it's so exciting is that we have tested it in two very different diseases, asthma one in early inflammation, atopic dermatitis is skin disease and skin rash, what’s common about those diseases is that they both have an allergic component and have the TH2 type component. It turns out that we’re very compelling early stage results in both those programs, Phase II and Phase 1b data on the asthma data we published in journal the atopic dermatitis I presented in multiple medical conferences. So we have been very encouraged by those results, we have embarked on our Phase II program, 2b program in asthma and atopic dermatitis. We’re doing a Phase II trial nasal polyposis another disease and with stronger potential in several other allergic type diseases. So we agree with Josh and I think we share his enthusiasm, 2 - 3 years ago we talked about the PCSK9 and say everyone is going to be talking about that.

We think that the next big one that we are going to be talking about is going to be dupilumab, so we’re really excited about that program.

Ted Tenthoff - Piper Jaffray

So Bob I feel I missed if I didn’t ask you at least one question. So I think you ended third quarter with 775 million in cash and you’ve a $400 million convert outstanding. What’s your overall comment on balance sheet generating cash flow at this point, how does that become a strategic asset for you guys?

Bob Landry

We have been getting asked a lot about our capital structure and I guess the way I look at it is the way Mike look at it. We’re still kind of a one product company, you know we have a lot in the pipeline as we just discussed with (indiscernible) you know at this stage we’re looking forward in terms of what we can do once we get more out there but again you know personally I do think as a one product company it's tough to start making you know bold capital move. We do like where we are, our cash is growing at $770 million at the end of period September 30. It's only to get larger going forward you know as you can tell on our public information. This product is very, very, very profitable and that’s on top of having it say Genentech, a royalty associated with that which will go away in 2016. So again we love the fact that this product is basically going to help finance in addition to all the R&D products and programs that we have in the pipeline so we’re basically able to launch PCSK9 and sarilumab and dupilumab over [ph]. You know it's a great time and great source [ph].

Ted Tenthoff - Piper Jaffray

Well thank you all very much for joining us. Mike and Bob thank so much. Keep up the continued success and we’re looking for a great 2014.

Michael Aberman

Thanks.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Regeneron Pharmaceuticals Management Presents at Piper Jaffray Healthcare Conference (Transcript)
This Transcript
All Transcripts