Regeneron Pharmaceuticals, Inc. (REGN) CEO Leonard Schleifer on Q1 2021 Results - Earnings Call Transcript

Call Start: 8:30 January 1, 0000 9:31 AM ET

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)

Q1 2021 Earnings Conference Call

May 6, 2021 8:30 AM ET

Company Participants

Justin Holko - Vice President, Investor Relations

Leonard Schleifer - Co-Founder, President and Chief Executive Officer

George Yancopoulos - Co-Founder, President and Chief Scientific Officer

Marion McCourt - Senior Vice President, Commercial

Robert Landry - Executive Vice President, Finance and Chief Financial Officer

Conference Call Participants

Terence Flynn - Goldman Sachs

Chris Raymond - Piper Sandler

Cory Kasimov - JPMorgan

Geoffrey Porges - SVB Leerink

Yatin Suneja - Guggenheim Partners

Robyn Karnauskas - Truist Securities

Alethia Young - Cantor Fitzgerald

Mohit Bansal - Citigroup

Yaron Werber - Cowen and Company

Kennen MacKay - RBC Capital Markets

Carter Gould - Barclays

Operator

Welcome to the Regeneron Pharmaceuticals First Quarter 2021 Earnings Conference Call. My name is Mary and I will be your operator for today's call. 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.

I will now turn the call over to Justin Holko, Vice President, Investor Relations. You may begin.

Justin Holko

Thank you, Mary. Good morning, good afternoon, and good evening to everyone listening around the globe. Thank you for your interest in Regeneron Pharmaceuticals, and welcome to the first quarter 2021 conference call. An archive of this webcast will be available on our website.

Joining me on the call today are Dr. Leonard Schleifer, Founder, President and Chief Executive Officer; Dr. George Yancopoulos, Co-Founder, President and Chief Scientific Officer; Marion McCourt, Executive Vice President and Head of Commercial; Bob Landry, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will open the call for Q&A.

I would also like to remind you that remarks made on today's call include forward-looking statements about Regeneron. Such statements may include, but are not limited to, those related to Regeneron and its products and business, financial forecasts and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement issues, intellectual property, pending litigation and other proceedings and competition.

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. 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-Q for the period ended March 31, 2021, which we filed with the SEC earlier today. Regeneron does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

In addition, please note that GAAP and non-GAAP measures will be discussed in today's call. Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our financial results press release, which can be accessed on our website. Once our call concludes, Bob Landry and the Investor Relations team will be available to answer further questions.

With that, let me turn the call over to our President and Chief Executive Officer, Dr. Len Schleifer.

Leonard Schleifer

Thank you, Justin, and thank you to everyone joining today's call. We were off to a strong start in 2021, again delivering double-digit growth on the top and bottom lines. I am immensely proud of all that Regeneron continues to accomplish in the fight against COVID and for patients suffering from a variety of diseases.

Our performance highlights the continued evolution, diversification and durability of our business as we enter a new phase of growth and new product launches. Strong performance begins with differentiated products that deliver real value for patients.

Starting with EYLEA, global net sales were nearly $2.2 billion growing 17%, compared to the prior year. In the U.S., sales grew 15%, reflecting continued positive momentum and execution on our strategy. We are confident in the EYLEA business and expect it will remain a key growth driver for Regeneron for years to come.

We are also very pleased with the performance of Dupixent in the quarter where global sales approached $1.3 billion and grew 48%. The brand is now annualizing sales in excess of $5 billion. Yet believe there remains considerable room for further market growth and penetration in atopic dermatitis, asthma and chronic rhinosinusitis with nasal polyposis.

With several additional potential indications in Phase 3 trials such as eosinophilic esophagitis and COPD, we are still in the early days of realizing the full potential of this unique pipeline in a product. In oncology, we are making steady progress with Libtayo as global net sales reached $101 million and grew 35% from the prior year.

Importantly, in February, we secured two new FDA approvals to Libtayo in basal cell carcinoma and in non-small cell lung cancer, which we anticipate will help fuel a new period of growth for this product that is a foundation to our oncology strategy. While still in very early days with these new launches, we are seeing encouraging signals on a variety of leading indicators from thought leaders, prescribers, payers and patients.

And last but not least, we were able to deliver significant Phase 3 outcome data for our REGEN-COV program aimed at treating and preventing COVID-19 infections. As George will outline momentarily, we have now shown that our antibody cocktail dramatically reduces hospitalizations or death in non-hospitalized COVID infected patients and reduces symptomatic infections when given as a preventative measure.

We are seeking to update our emergency use authorization to reflect these new data and uses, as well as the lower 1.2 gram dose. Thinking longer-term for REGEN-COV, we see an ongoing global need for treatment and climate prevention of COVID disease despite high rates of vaccination, it’s estimated that tens of millions will remain unvaccinated in the U.S. alone and that those who are vaccinated, significant numbers will not mount a protective response, such as those who are immunocompromised or immunosuppressed.

It is important to recognize Regeneron’s and the biopharmaceutical industry at large responds in ongoing actions in combating COVID-19. Breakthrough vaccines and treatments are having a profound impact on the health and well-being of people in the United States and around the globe.

In addition, safe and effective vaccines and treatments are enabling economic recovery. All of these critical benefits come as a result of investments that have been made in technologies over decades, by both the public and private sectors. These profound effects highlight the importance of a healthy biopharmaceutical industry that full incentivizes innovation, so that new solutions to emerging disease can rapidly be invented and deployed.

We’ve also learned that these extraordinary approaches to preventing and treating COVID-19 can work only if people actually receive the vaccines or drugs. For example, an internal health economic analysis projected that tens of thousands of lives in the United States could be saved over the next several months if REGEN-COV were fully deployed and given to all appropriate patients who are diagnosed with COVID-19 and at high risk of hospitalization or death.

And this is a case where cost of patients is not an issue and so government is providing the drug free of charge. Clearly, we have to better understand why a drug that has demonstrated overwhelming evidence for its ability to reduce hospitalizations or deaths by 70% is an ample supply has been endorsed by the NIH; has been authorized under an EUA by the FDA and it’s free of charge to patients is not being taken full advantage of.

Regeneron is committed to collaborating with our healthcare partners to take optimal advantage of the REGEN-COV cocktail potential health benefits.

Overall, we are pleased in all that Regeneron has accomplished in the first three months of the year and look forward to continued momentum and progress across our diverse pipeline in the months to come.

Now, I will turn the call over to George.

George Yancopoulos

Thank you, Len. With the COVID-19 still in the headlines, I will start with our monoclonal antibody treatment, the REGEN-COV cocktail. We recently reported data from the large Phase 3 outcomes trial in the outpatient setting confirming that REGEN-COV reduced the risk of hospitalization and death by 70% with both the 2.4 gram and the lower 1.2 gram doses.

We are pleased that based on these data, the NIH guidelines were updated in early April to include a strong recommendation for monoclonal antibody combinations to treat outpatients with mild or moderate COVID-19 as defined by the EUA criteria. We have also recently reported data from a large two-part Phase 3 trial of REGEN-COV with Part A in the preventative setting and Part B in the recently infected patients.

In Part A of the trial, REGEN-COV prevented 81% of symptomatic COVID-19 infections with 93% prevention after the first week. A supportive study in healthy volunteers that explored chronic dosing showed a similar 92% prevention of infection. Notably, these results were achieved with the convenient subcutaneous formulation.

Chronic prevention with our antibody cocktail may have proved to be critical in the ongoing battle against this virus. Despite high rates of vaccination, it is estimated that tens of millions of Americans will remain unvaccinated thus at risk of future infections. In addition, it is estimated that millions of Americans will not mount an adequate response to vaccines.

For example, immunocompromised individuals or organ transplant patients who suffer from certain cancers such as lymphomas, leukemias and myelomas or in immunosuppressant therapies for their autoimmune diseases might all be candidates for chronic prevention using our antibody cocktail.

Part B of this Phase 3 trial in recently infected patients show that the subcutaneous administration of the 1.2 gram dose was also effective in reducing symptomatic disease and shortening disease duration. We are anticipating the existing EUA will be expanded based upon the above data to include the 1.2 gram REGEN-COV dose to allow the cocktail to be used for prevention and to include the subcutaneous formulation for ease of use. We believe the current data is supportive of a potential formal BLA approval by the FDA.

I would like to remind everyone that outside the United States where some countries have an even more ongoing darn need for COVID-19 medicines, our partner Roche is rapidly expanding availability of the treatment. Last year, we anticipated that certain variants will likely to emerge and therefore designed our current cocktail to be active against these variants.

Experimental evidence suggest that our cocktail is indeed active against all current variants of concern and similarly, in anticipation of future variants that may emerge, we are bringing additional antibodies to the clinic shortly.

Moving on to EYLEA. A recent NIH sponsored protocol W trial in non-proliferative diabetic retinopathy patients confirmed results of our own PANORAMA study. After two years, EYLEA reduced vision threatening complications by 6% to 8% compared to a group of patients who delayed through. A recent Regeneron’s follow-up analysis in the similarly designed PANORAMA trial found that delay in treatment resulted in three times as many patients suffering prolonged vision loss compared to those receiving preventative EYLEA treatment during the two year period.

A similar analysis has not yet been conducted for Protocol W. Protocol W is the second study in diabetic retinopathy showing benefit of a less frequent EYLEA dosing regimen and we are planning and filing to expand the U.S. EYLEA label by adding the 16 week dosing interval for appropriate patients in the second half of this year.

By year end, we are expecting first data from the Phase 2 study, testing a high dose of EYLEA in wet AMD. From this data, we can expect early reads on anatomic differences and drawing between a higher and lower dose at 8 and potentially 12 week intervals. While the study date will not be definitive on drug readily measures, the Phase 2 study will help provide insights on what we might expect from the Phase 3 studies, which are testing dosing intervals out to 12 and 16 weeks.

Importantly, in the 106 patients dosed in the open-label Phase 2 study so far, we haven’t seen any concerning safety signals. The Phase 3 studies in wet AMD, and in DME are expected to be fully enrolled by the second half of this year.

Moving on to Dupixent in our immunology and inflammation portfolio. Dozens of recent presentations at key dermatology meetings highlight the ever increasing scope of Dupixent’s efficacy and safety in patients as young as six years old including rapid itch relief and sustained improvement in disease severity and overall quality of life.

Importantly, Dupixent is not an immunosuppressant. We have not seen an increased risk of serious infections with Dupixent. This mounting world of data and physician experience fortifies our belief that Dupixent will remain the preferred choice for multiple type 2 inflammatory diseases.

In the first quarter, we submitted data to support the use of Dupixent in children 6 to 11 years old with moderate to severe asthma. The BLA supplement has an FDA action date of October 21 of this year. A similar application has been submitted in the EU. We previously announced positive data in the Part A part of our Phase 3 trial in eosinophilic esophagitis and Part B of this trial is fully enrolled.

In addition, two Phase 3 trials of Dupixent in Type 2 COPD are actively enrolling patients. Our complementary program with our anti-IL-33 antibody, Itepekimab in a different group of COPD patients, former smokers is progressing with those Phase 3 trials now enrolling. We believe that this broad COPD program including Dupixent and Itepekimab may provide real benefits for many patients.

Turning now to our novel approach to treat allergy by using cocktails of monoclonal antibodies to directly bind and inactivate the allergen. These cocktails are designed to act immediately and would be long-lasting. And to replace currently cumbersome approaches to allergy desensitization that involves years of multiple weekly injections.

The anti Bet v 1 antibody cocktail bind and inactivates the Bet v 1 allergens that causes birch pollen allergy, one of the most common seasonal allergies that occur in the spring. Following Phase 2 data show immediate and long-lasting effects against allergen challenge, we initiated a Phase 3 study and results are expected later this year.

Assuming success in the current study, we are planning to conduct a second Phase 3 study during an upcoming birch pollen season.

Regarding our similarly designed Fel d1 antibody cocktail for cat allergy, Phase 2 data were presented earlier this year at a AAAAI Meeting showing the single administration of the antibody cocktail prevented early asthma reactions in allergic patients and prevented lung function decline upon cat allergen exposure when compared to placebo.

Following this positive data update, a first Phase 3 trial in cat allergy is planned for later this year. We are enthusiastic about these novel additions to our inflammation and immunology portfolio that could represent new groundbreaking ways to treat allergy diseases.

Moving on to Libtayo and our oncology portfolio. In the first quarter, Libtayo was approved for the first-line treatment of certain patients with non-small cell lung cancer and for advanced basal cell carcinoma, each being crucial early milestones for our oncology strategy.

In addition a Phase 3 study of Libtayo in second-line cervical cancer was stopped early for an overwhelmingly positive overall survival benefit, a first for any systemic treatment in these patients. These data will be shared in upcoming medical meetings and regulatory submissions are planned for this year.

Additionally, we look forward to sharing expanded dataset of Fianlimab, our anti LAG3 program at the upcoming ASCO meeting. Fianlimab is being studied in combination with Libtayo in first-line melanoma. In the second half of this year, we anticipate results of an interim analysis for overall survival in our Phase 3 Libtayo lung cancer chemotherapy combination study.

Moving on to our bispecific portfolio. In multiple myeloma, our BCMA x CD3 bispecifics for which we now hold exclusive development rights is continuing through dose escalation and dose expansion. We expect to initiate new combination studies in earlier lines of multiple myeloma later this year. Regeneron is uniquely positioned to mix and match multiple modalities and targets, with a hope of increasing deep responses, we are already observing with the CD3 bispecifics.

We are planning to add a costim bispecific to our option of clinical-stag multiple myeloma investigational therapies early next year.

Moving to lymphoma, responses to our CD20xCD3 bispecific Odronextamab demonstrates increasing durability. Regarding the partial clinical hold on this program, we have agreed with the FDA submitted the updated protocol and are expected to hear back on lifting the partial hold in the very near term.

Enrollment of the follicular lymphoma and diffused large B-cell lymphoma cohorts of the Phase II pivotal intent trial should resume quickly thereafter.

Additionally, testing of the Odronextamab subcutaneous formulation will start later this year and the paired costim bispecific combination is also on track to initiate within the next twelve months.

Regarding our solid tumor aspects with our bispecific ovarian cancer is the first indication for which we are already clinically testing two different types of bispecifics for the appropriate tumor target MUC16. Dose escalation of our MUC16xCD3 bispecific is ongoing, we are hoping to share initial data next year if not sooner.

In the MUC16xCD28 costim study, patients are dosed in combination with Libtayo and dose escalation is ongoing. Combination of the CD3 and CD28 costim bispecifics targeting MUC16 will start later this year and it has the potential to be a game-changing strategy for treatment of these solid tumors.

In prostate cancer, PSMAxCD28 is in dose escalation studies with Libtayo and we hope to share initial data next year or sooner. As seen in other programs, we are planning on introducing a potentially complementary CD3 bispecific to the clinic later this year, running out a powerful and unique toolkit for prostate cancer, currently considered unresponsive to immunotherapies.

Regarding our early efforts in lung cancer and other solid tumors, our EGFRxCD28 costim bispecific is in dose escalation phase and patients are now dosed in combination – are now being dosed in combination with Libtayo. Our MET x MET bispecific antibody is in the dose expansion stage. Recall, that this study is enrolling non-small cell lung cancer patients with a broad selection of patients including MET exon 14 gene mutations, gene amplification and/or elevated MET protein expression.

We believe our oncology portfolios we are in the most exciting in the field and has the potential to revolutionize the treatment of diverse, difficult to treat cancers.

Finally, I would like to highlight our capabilities regarding the Regeneron Genetic Center in our genetics medicines efforts. In addition to being able to discover and validate targets that we can address with our VelociSuite antibody platform, we are working with our collaborators to develop three additional platforms that have the potential to generate new classes of genetics-based medicines.

First, gene editing. We are eagerly awaiting initial results from the first systemic-based CRISPR approach to be announced mid-year by our collaborator Intellia. If positive, these results will validate this gene editing platform for a host of genetic targets identified by the Regeneron’s Genetic Center and being investigated under our collaborations Intellia.

Second, we are also excited about our Alnylam collaboration with its validated siRNA platform approach that can similarly address complementary genetics targets. Our Alnylam target ALN-HSD directed to HSD 17B13, a target discovered by the Regeneron Genetic Center is now enrolling NASH patients.

Additionally, we and Alnylam are collaborating a series of follow-on targets. While the technology is currently validated for linear directed therapeutic approaches, we are set to extend to eye and central nervous system targets. Our fair genetic medicines approach involves biogene therapy delivered and it’s a novel approach of significant interest and excitement at Regeneron.

Our first gene therapy programs in collaboration with Decibel focusing on targeting the ear. We and Decibel are planning to enter the clinic with DB-OTO next year in addition to the AAV’s target in the year we are developing a platform for use in multiple other tissues of interest.

With that, I would like to turn the call over to Marion.

Marion McCourt

Thank you, George. We are off to an exciting start in 2021. Our expanded commercial portfolio includes three recent product and indication launches and we continue to grow our largest brands, EYLEA, Dupixent and Libtayo based on competitive and differentiated profiles.

Beginning with EYLEA, first quarter global net sales grew 17% year-over-year to nearly $2.2 billion. In the U.S., EYLEA net sales grew 15% year-over-year to $1.35 billion based on increased demand and a favorable comparison to the early weeks of the pandemic in the first quarter of 2020. EYLEA is capturing category growth and continues to be the preferred treatment option.

In the branded anti VEGF category, EYLEA has approximately 75% share and is approaching 50% of the combined branded and unbranded category. EYLEA is differentiated by the combination of its efficacy, safety, dosing flexibility in range of indications. In addition, physicians have considerable real-world experience with more than 40 million injections administered worldwide.

Across the broader category, demand continues to improve in 2021 as patient flow normalizes and new patient volume grows, we are confident in our near and longer-term outlook based on favorable patient demographics, physician preference for EYLIA, growth opportunities in diabetic eye disease and future opportunities with our high dose clinical program.

Turning to Libtayo, first quarter global net sales grew to $101 million with U.S. net sales of $69 million. The vast majority of first quarter sales were in cutaneous squamous cell carcinoma where Libtayo is the number one systemic treatment. We are excited by the recent approvals in non-small cell lung cancer and basal cell carcinoma or BCC, both of which represent meaningful growth opportunities for Libtayo.

In April, we deployed our expanded and highly experienced sales force across these indications to extend our Libtayo promotional impact.

In lung cancer, we have heard from oncologists that Libtayo is highly competitive based on the strength of our compelling clinical data and overall value proposition. Early launch indicators are encouraging with uptick evidence at top academic and community-based practices. We are advancing formulary placements, securing favorable peer coverage decisions and growing overall market awareness. Importantly, Libtayo was rapidly included in the NCCN guidelines with a Category 1 preferred rating.

The NCCN guidelines have also been updated to include Libtayo in BCC as the category to a option, Libtayo is the only anti-PD1 approved in advanced disease for this indication. Early feedback has been encouraging as physicians are eager to prescribe Libtayo based on its efficacy and tolerability.

Hedgehog inhibitors despite being used in its first-line treatment may not be suitable for patients for long-term or routine use. Libtayo is an important new care alternative for BCC patients.

In summary, our lung and BCC launches are progressing according to plan and we are highly focused on ensuring that appropriate patients benefit from Libtayo.

Turning now to EVKEEZA, which has also proved in the first quarter of 2021 and is in the initial launch phase. EVKEEZA represents a novel and effective treatment for patients with Homozygous Familial Hypercholesterolemia and is recognized by treating specialists as an improvement over the current standard-of-care. Patient demand is steadily building with multiple patients already initiated on therapy.

Moving to Dupixent, global net sales in the first quarter were $1.26 billion, representing 48% growth compared to the prior year. In the U.S., broad based growth across all the proved indications generated net sales of $962 million with new patient starts now higher than pre-COVID levels.

In atopic dermatitis, Dupixent’s largest indication prescribing continues to be strong across the moderate and severe disease and across age groups following our adolescent and pediatric launches. There is significant for continued growth based on remaining unmet need among eligible patients. Dupixent is the number one dermatologist prescribed biologic based on the depth and breadth of its long-term efficacy and safety profile.

Turning to asthma, where we are actively preparing to launch in pediatric patients as young as six years of age later this year. Among adolescents and adults, we continue to meaningfully expand the number of Dupixent patients initiations driven by our extensive provider and patient educational efforts.

In addition, demand is strong among E&Ts and allergists for patients with nasal polyps. Dupixent is the fastest-growing biologic and respiratory disease in our approved indications with substantial room for growth.

I’d also like to highlight efforts supporting our antibody cocktail REGEN-COV. In the first quarter, we recorded U.S. net sales of $262 million under the first contract with U.S. government. REGEN-COV is currently authorized under an EUA in patients based on age and risk factors which represent close to 40% of all adults diagnosed with COVID-19.

We are focused on reducing bottlenecks and increasing utilization, particularly in states with high infection rates. Efforts include, direct support to key facilities, medical education for REGEN-COV, partnering with third-party stakeholders and educating consumers on the availability of antibody treatments.

As George mentioned, we are preparing for a potential update of the REGEN-COV EUA to include prevention as we hope to be able to address an unmet need for millions of patients who may be candidates for ongoing preventative treatment. Preventative care may also be important for those who have known COVID exposure and requires very rapid protection.

In summary, we delivered robust performance across our portfolio in the first quarter of the year. There is strong positive momentum from our inline business, encouraging early signals from our recent launches and substantial opportunity for continued diversified growth.

Now I’ll turn the call over to Bob.

Robert Landry

Thanks, Marion. And good morning and afternoon to everyone listening to the call. My comments today on financial results and outlook will be on a non-GAAP basis where applicable.

As Len stated, Regeneron is off to a strong start in 2021 as we continue to execute across the business delivering double-digit top and bottom line growth in the first quarter.

For the first quarter, total revenues grew 38% year-over-year to $2.5 billion, driven by growth in global EYLEA sales; increased Sanofi collaboration profitability driven by Dupixent and sales of our REGEN-COV antibody cocktail.

Diluted net income per share grew 50% year-over-year to $9.89 on net income of $1.1 billion. Excluding revenues related to REGEN-COV, Regeneron achieved 20% total revenue growth versus the prior year. As you’ve heard from Marion, we completed our initial contract to supply REGEN-COV to the U.S. government in the first quarter assuming that we secure an updated EUA for the 1.2 gram treatment dose we expect to deliver at least 1 million of REGEN-COV at $2100 per dose for our follow-on contract with the U.S. government in the second quarter.

I will now move to collaboration revenues, which were $754 million in the first quarter of 2021, compared to $528 million in the first quarter of 2020. Starting with the Bayer collaboration, Ex-US EYLEA net product sales reported to us by Bayer were $824 million for the first quarter of 2021, representing growth of 21% on a reported basis and 12% on a constant currency basis compared to the prior year. Total Bayer collaboration revenue was $323 million, of which we recorded $309 million for our share of net profits from EYLEA sales outside the U.S.

Total Sanofi collaboration revenue was $365 million in the first quarter. Our share of the profits from the commercialization of Dupixent and Kevzara was $261 million, which compares favorably to profits of $171 million in the prior year driven by Dupixent. We recorded initial Roche collaboration revenues of $67 million for our share of gross profits from the distribution of the antibody cocktail by Roche outside of the U.S.

Other revenue to $50 million in the first quarter, compared to $63 million in the prior year. In 2021, we expect this line to be less than half of what we recorded in 2020 due to lower border reimbursements with the EBOLA and COVID-19 programs.

Moving on to our operating expenses, and starting with R&D. R&D increased 28% year-over-year to $673 million, primarily due to continued clinical development costs for our REGEN-COV antibody cocktail.

Next, SG&A expense increased 16% year-over-year to $355 million. The year-over-year increase was driven by commercial investments for Libtayo, cost related to the roll out of REGEN-COV and higher employee-related expenses.

Cost of goods sold increased versus the prior year from $70 million to $173 million due to REGEN-COV manufacturing costs and Praluent manufacturing cost in the in the U.S. which were recorded by Sanofi in the first quarter of 2020.

Additionally, in other operating income and expense, we recorded $4 million expense, compared to $25 million of income in the prior year. This is driven by interest expense related to our $2 billion debt issuance in August 2020 and lower investment returns on our existing cash and marketable securities.

Finally, the effective tax rate was 10.5% in the first quarter of 2021. Included in this rate is the benefit achieved by a reduction in uncertain tax position liabilities related to the IRS audits of the 2015 and 2016 tax years.

Shifting now to cash flow and the balance sheet. In the first quarter of 2021, Regeneron generated $553 million in free cash flow and ended the quarter with net cash and marketable securities of $5.1 billion. In the first quarter, we utilized $323 million of our $1.5 billion share repurchase authorization and we remain opportunistic buyers in the market.

I would now like to provide select updates to our 2021 guidance. A complete summary of our latest full year guidance is available in our press release published earlier this morning. We are updating full year 2021 guidance for COCM to be in the range of $660 million to $730 million, the lower guidance range is related to the timing of contract manufacturing of Praluent for Sanofi. We are also updating guidance for our 2021 non-GAAP effective tax rate to be in the range of 13% to 15%. The increase from prior guidance is driven by higher forecasted delivery of REGEN-COV under our second U.S. government contract, which is passed at the U.S. statutory rate.

In Regeneron is off to a strong start in 2021 and continues to execute across all aspects of the business. We are well positioned for the remainder of 2021 and continue to make those investments necessary to ensure long-term growth.

With that, I'd like to turn the call back to Justin.

Justin Holko

Thank you, Bob. Mary that concludes our prepared remarks. We'd now like to open the call for Q&A. With several callers in the queue and to ensure that we were able to address as many as possible, we will answer just one question from each caller before moving to the next. Please go ahead, Mary.

Question-And-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Terence Flynn of Goldman Sachs. Your line is now open.

Terence Flynn

Great. Thanks so much for taking the question. I guess, with respect to the competitive landscape for Dupixent, the JAK inhibitors have been delayed, but assuming that it do reached the market later this year including at the high dose. How are you guys thinking about that as a competitive headwind to Dupixent? And maybe, if you think about the longer term market opportunity, you could walk us through kind of where penetration stands right now in the adult and the adolescent setting? Thank you.

Leonard Schleifer

Go ahead, Marion.

Marion McCourt

Sure. So, I am having to start off, first, let me say that we are seeing tremendous experience with Dupixent in the marketplace today. And this obviously is a cost indications including atopic dermatitis. And also very importantly, across age categories which demonstrate not only the efficacy, the speed of action, the safety, the tolerability, we pay really close attention to competitors coming into the marketplace.

And certainly in the case of these JAK inhibitors we are well aware of the multiple delays, also recent clinical data that is calling into question issues of safety, especially at the higher doses, but even at the lower doses and the continuation of Blackrock’s warnings, we hear from our key opinion leaders who use Dupixent and see it as their main stay of therapy currently and going forward with great confidence in the safety profile.

This is a chronic therapy and certainly the risk of hematologic effects, malignancies, infection and so on are just not something that is tolerable for these patients when they have a tremendous alternative. So I think we feel very confident in our competitive profile going forward. And also remind that Dupixent, obviously, based on its mode of action, has great efficacy across Type 2 disease and other indications. Patients do sometimes have concomitant conditions. So, on balance, we’ll stay very close to this and to our key opinion leaders and specialists who are very, very confident in the profile of Dupixent.

Leonard Schleifer

Yes, I would just add two points that, one is the safety will be particularly concerning, I think for the long-term treatment of children. And so, I think, as the safety profile that Dupixent has shown is really, frankly – it’s almost unparallel in terms of what you can do with the ageing on the efficacy side and not have any significant concerns on the safety side.

The other point in terms of the penetration, even if you look at how these markets have evolved, when more agents have come on for rheumatoid arthritis and for psoriasis, the penetration is so low here that, even with competition there is room for market growth rather than direct fighting it out in terms of a fixed amount of market share.

So, we expect our profile, safety as Marion says to be really firm on treating physicians’ minds and we do think the low level of penetration thus far does leave room for growth nonetheless.

Justin Holko

Great. Next question please.

Operator

Next question comes from the line of Chris Raymond of Piper Sandler. Your line is now open.

Chris Raymond

Yes. Thanks. Just maybe another question on Dupixent. So, our checks indicate there is a lot of interest in AD with regard to add-on therapy and that there is a lot of Dupixent patients who may not be necessarily optimally managed, but are not exactly failing.

So, there is a lot of interest I guess with, maybe looking at atopical JAK or some other therapy. Just kind of curious if you guys have thought about maybe proactively looking at some combo work just to sort of ensure that Dupixent maintains its role as a core? Thanks.

Leonard Schleifer

Well, George, you might want to comment if we have any interest in that, but in terms of the commercial side of this, when you talk to patients, the kind of patients we are treating moderate to severe atopic dermatitis, they have lesions over large fraction of their body.

I can remember exactly what it was in our trials, what we are seeing out there commercially is large fractions of their body are affected by this disease. And so, I think that adding topical perhaps, but people actually trying to get away from – trying to get away from having to lather up over their entire body.

The other thing about Dupixent that we can never forget is that, the broad aspects of approvals across lots of allergic diseases and with the growing number, it’s very important because these diseases do tend to run in groups. There are many people who have asthma and atopic dermatitis or asthma and nasal polyposis or atopic dermatitis and other allergic diseases which we are studying. So, I think that our broad profile across lots of other diseases is also going to give us a very strong competitive position.

Justin Holko

Next question please.

Marion McCourt

Yes, I just - just going to add real quickly, this is Marion, on that question, I just wanted to share as well that, in the market experience, we do and obviously look at this very carefully to market research and have a very high level of satisfaction with Dupixent for patients with atopic dermatitis. So I just want to make sure that there is not an impression left that there lot of patients necessarily looking for something more who are treated with Dupixent for atopic dermatitis.

Justin Holko

Next question please.

Operator

Next question comes from Cory Kasimov with JPMorgan. Your line is now open.

Cory Kasimov

Hey, good morning guys. Thank you for taking my question. I wanted to ask on the COVID front. Do you have a sense of the remaining hurdles and anticipated timing for the low dose emergency authorization for REGEN-COV and are you continuing to ship high doses to antibody cocktail as you wait on it? Thank you.

Leonard Schleifer

Right. Thanks for that question, Cory. We’ve been active discussions and productive discussions with the FDA. Obviously, one never knows what they are going to do exactly and when they are going to do it. But we anticipate an action by the FDA over the next – sometime in the next several weeks in terms of the lower 1.2 gram dose.

I think from there, they will turn their attention to the prevention data which they have in front of them as well as the subcu data, as well as the chronic prevention opportunities. So, I can assure you the FDA has been working really hard. We are in constant contact with them answering questions, going over things and as I said, we expect something to – anticipated decisions sometime in the next several weeks.

Cory Kasimov

Great. Thank you.

Justin Holko

Next question please.

Leonard Schleifer

And Cory, I am sorry, of course, we are continuing to supply the market and there is no shortage of product out there in terms of people needing to be treated now can be treated with the 2.4 gram dose and there is ample product available.

Cory Kasimov

Perfect. Thanks.

Operator

Next question comes from Geoffrey Porges of SVB Leerink. Your line is now open.

Geoffrey Porges

So many things to ask questions about in such a little time. But, operating margin 48% to 49% the last couple of quarters, what would that have been without the COVID 2, the antibody and is it sustainable at the current level and I would squeeze in, and if the tax rate sustainable at the current level as well? Thanks.

Robert Landry

Yes, I mean, I’ll talk about the tax rate. I mean, certainly there is a lot to be played out with regards to what’s going to happen on the tax rate. You heard what I said, we are obviously moving well within our full year guidance. We did have favorable outcome with regards uncertain tax positions that we are able to reverse, which kind of drove a little lower in the quarter on that front.

On operating margins, Geoff, you know, I guess, the one piece that’s not so transparent everybody is, we are still incurring a lot of R&D as it pertains to REGEN-COV with regards to the trials, the enrollment numbers. So, I don’t want people to come our way and say, you know, as a result of the Roche benefit we got in the REGEN-COV product sales that without that the margins would have been as good.

But we did incur a lot of expenses pertaining to that that are within the R&D line that we just don’t specifically talk about. The business on its own, excluding REGEN-COV it was 20% top-line and 35% EBI, okay? So, again, it shows you the underlying strength as you’ve heard from Len at the very beginning of his words in terms of how we are performing.

We think the operating margin is – continue to stay at that and improve at that level. I mean, certainly, it’s the leverage on Dupixent, right? To the extent you saw that Sanofi did a terrific job ex U.S. where we are starting to get a little momentum in terms of ex U.S. sales. So, to the extent that that will continue to play out, we’ll continue to get good operating margins associated with that and then that will drive our overall margins.

Geoffrey Porges

Great. Thanks, Rob.

Robert Landry

Thanks, Geoff.

Justin Holko

Next question please.

Operator

Next question comes from Yatin Suneja of Guggenheim Partners. Your line is now open.

Yatin Suneja

Hey guys. Thank you for taking my question. I have a question on the deployment of cash. Could you maybe talk about the top priorities? Are there areas where you would like to collaborate or bring in capabilities? And how should we think about BD? Thank you.

Leonard Schleifer

Bob?

Robert Landry

Sure. Our cash balance on a net cash basis sitting at $5.1 billion and we are roughly at $7 billion on a gross basis. And again, we like the flexibility that it affords us. I always need to make sure that internally, we have enough to obviously support the internal R&D of which we continue to go after different modalities and that’s kind of tied into our second leg of the stool where we don’t have kind of in-house capability on everything.

It’s great that we have the capability for George and the BT team to go out and get other technologies whether it be the Intellia-driven technology on CRISPR or Alnylam and alike. And we are continuing to play heavy in that space and we need to make sure that things we go after are most likely going to be early-stage.

We are not looking for kind of transformative kind of M&A deals on that front as of right now and we continue to stay hungry in that place with the right opportunities. And then as you saw, we did $325 million share buybacks. We have a $1.5 billion program that we authorized in January.

We are opportunistic buyers and we think the intrinsic value of where we see it compared to where the market is currently playing we are going to take advantage of that delta and we did such that in the first quarter and we are continuing to do that on that front. And that continues to be an active play for us.

Yatin Suneja

Okay. Thank you.

Justin Holko

Thanks, Bob. Next question please.

Operator

Next question comes from [Indiscernible]. Your line is now open.

Unidentified Analyst

Hey guys. This is Alex on for Jeff. Thanks for taking our question. Just one on EYLEA, obviously, scrips and sales are holding up fairly well despite COVID-19 and new market entrants in wet AMD. But, looking to lifecycle management over the next few years, do you see this primarily coming from the high-dose formulation? And on this, is there a venue or an update on timing for data from the CANDELA study? Thanks.

Leonard Schleifer

Yes. I think that the lifecycle management continues to beat from more data that kind of data that we generated in diabetic retinopathy with the PANORAMA and Protocol W, which George reviewed, I think are very important results. And so, I think that will drive more treatment in that area. In terms of the high dose, I think you heard from George, that we’ll get some of the preliminary Phase 2 data later this year. And then, for next entrants, we have readying for the clinic a newer version, if you will, which we will unveil for you when we get that into the clinic.

Justin Holko

Next question please.

Operator

Next question comes from Robyn Karnauskas of Truist. Your line is now open.

Robyn Karnauskas

Guys thanks for taking the question. I am scared to ask this question, but, what is your latest thoughts on counterdetailing faricimab? What are you hearing from the specific centers that you think might be more likely utilize the product? And how do you counterdetail to prevent that from taking any share from EYLEA? Thanks.

Marion McCourt

Sure. So, let me say, first of all, obviously, the product you mentioned is not approved and still at the stage where the clinical data is being reviewed. As I mentioned to some of you who were on the last call, as we look at the clinical profile today of faricimab, we do not see a threat to EYLEA.

Certainly, some of the recent data had some questions on clinical profile and certainly with an increase in IOIO rate, question on the safety profile. I think the net conclusion on the key opinion leaders that I spoke to in retinal community was that they didn’t see an obvious benefit to the product and perhaps even questions in matching the safety, durability, and clinical profile of EYLEA across indications.

I’ll mention that certainly with EYLEA, when an important attribute is the ability to treat and extend therapy and there is some elements of that clinical trial designed to constrain EYLEA’s dosing interval, we actually hear on a regular basis that one of the reasons why EYLEA is performing so well in the first quarter of 2021 and frankly performed so well last year is because of its efficacy and the ability to treat and extend for patients. We remain very confident in EYLEA’s profile against the competitive product you mentioned.

Justin Holko

Next question please.

Operator

Next question comes from Alethia Young of Cantor Fitzgerald. Your line is now open.

Alethia Young

Hey, guys. Thanks for taking my question and congrats on all the progress this quarter. I just want a couple of about the 6 to 11 asthma expansion indications. Just can you kind of talk about how you are thinking about uptake there. It feels like it could be pretty robust in light of the safety profile and the fact that kids are on their atopic march as well. So, just wanted to get your perspective on that thing?

Marion McCourt

Sure. You mentioned something that we look forward to and will be very much prepared for the pediatric launch for Dupixent in the asthma market later this year. We do see this as a tremendous opportunities for these really young patients, age six and up, who are struggling today and will benefit tremendously from the Dupixent ability to improve their airway function and reduce exacerbations and help these patients and their families with these children living more normal and healthy lives.

It’s very important and then, at the same time, recognizing Dupixent’s safety profile. So, at the same time, we take care of the asthma and as Len mentioned before the possibility of concomitant diseases associated with type 2 disease. So we do feel that this will be a very important indication launch. We look forward to and it once again confirms the efficacy and the safety of Dupixent.

Justin Holko

Thanks, Marion. Next question please.

Operator

Next question comes from Mohit Bansal of Citigroup. Your line is now open.

Mohit Bansal

Great. Thanks for taking my question and congrats on the progress. One more question on the high dose EYLEA. So, we do know that back in the days, Roche also ran a trial, HARBOR trial, which you talked about [Indiscernible] I understand that this trial is designed to be little bit different. It is not a superiority trial that you are running.

But, could that be helpful is my first question. And then, I mean, scientifically, why would a high-dose would result into some kind of better benefit in your opinion that give us some confidence there. Thank you.

George Yancopoulos

Yes, I think that basically a higher dose will simply - the notion is extend the duration of action. That would be the primary thing that we are looking at. So, obviously, it allows for longer duration of action because, you will go longer until you achieve the minimally effective dose. So, the notion is, is, can we show that we will now have increased numbers of patients, who can do well with every 12-week dosing or every 16-week dosing? So, that’s the major goal of testing the higher dose.

Leonard Schleifer

Yes. And as George was saying that, you’re trying to extend the action, but, if you look at an interval where in some patients, let’s say, you take them at an every eight weekend, but, there is still some people who are not completely dry, because the drug probably isn’t lasting the full eight weeks even. And so, you might see more drying as a manifestation of the longer action. So there is couple of ways to slice, but, surely, you’re looking to put more drugs and having it last longer.

Mohit Bansal

Got it. Super helpful. Thank you.

Justin Holko

Next question please.

Operator

Next question comes from Yaron Werber of Cowen. Your line is now open.

Yaron Werber

Great. Marion, maybe for you on asthma. Can you give us a sense of what’s the share now for Dupi in asthma? And we understand that some physicians for Centerra has been very aggressive on pricing. What can you do to offset some of that growth into Centerra? Thank you.

Marion McCourt

Sure. Happy to take your question. First, I’ll say, we are very pleased with the performance of Dupixent, both in terms of initiations and total scrips. We haven’t given details of share by indications. So I’ll stay away from that specificity today. But, as you can see from our total performance and the data shared, we certainly are performing very, very well in the asthma marketplace.

I am not going to comment on other company’s pricing strategies, but what I can say is, when we look at the data comparing Dupixent uptake either initiations or total scrips, it compares very favorably to the IL-5s and we know that this is a result of the clinical profile, the safety profile and the value that not only pulmonologists, but also allergists are seeing in Dupixent for asthma. And as you know with allergists also treating patients with concomitant diseases.

Justin Holko

Next question please.

Operator

Next question comes from Kennen MacKay of RBC Markets. Your line is now open.

Kennen MacKay

Hi, thanks for taking the question. One on Dupixent maybe also for Marion. It seems like Dupi is growing much faster in asthma than in AD. But, it just seems like that because derm has such a larger sales basis. So, Marion, just wondering if you can frame what percent of Dupixent’s quarter-over-quarter growth is coming from asthma versus derm? Thank you.

Marion McCourt

Sure. So let me talk about the total indications that I can share with you is that, the dermatology, atopic dermatitis business in Dupixent is about 75%, about 25% in respiratory disease both asthma and nasal polyps, asthma, of course, being the larger of the two in respiratory disease. Both are growing very, very strongly.

And remember that we launched in atopic dermatitis several years before we did in the asthma marketplace. Both are growing very, very strongly and certainly, as we look at the future potential for Dupixent in atopic dermatitis, we have a long way to go. There is still tremendous unmet need across all age groups, the youngest patients, adolescents and adults.

And then, the asthma marketplace as well, it’s important to note that today, about 75% of the patients in asthma going on Dupixent are biologic-naive. So, we’re getting these new starts. There is tremendous opportunity and Dupixent has been one of the growers of the overall asthma biologics marketplace.

As mentioned the - in response to the earlier question, we look forward to - with an FDA approval to launch in pediatrics later this year, but, among adults and adolescents, there’s still tremendous opportunity in asthma as well. Both are growth engines for the product.

And this is without even the many indications I look forward to launching in the future related to type 2 disease like eosinophilic esophagitis and some of the other areas in allergy that George mentioned in his update today.

Justin Holko

Mary, we have time for two more questions. We are going to try to squeeze them in quickly.

Operator

Sure. Next question comes from Brian Skorney of Baird. Your line is now open.

Unidentified Analyst

Thank you for taking our question. This is [Indiscernible] dialing in for Brian Skorney. Our question is based on your partnership with Intellia. I see that we are anticipating the first in vivo CRISPR data pretty soon and we’ve seen good success here with the ex-vivo approach. Maybe, you can share your thoughts on in vivo approach and how we should think about it in terms of looking at the safety of this approach, not just for the ATTR indications, but more broadly for the proof-of-concept for the street? Thank you.

Leonard Schleifer

George, do you want take that?

George Yancopoulos

Yes, I think that is the most important aspect of this for us is, this is a platform. And as we’ve said, we have multiple targets that might be amenable to this platform that we’ve already identified through our Regeneron Genetic Center. And so, of great interest will be does it work and what will be the safety and the tolerability profile? So, we think that this will be a platform determining sort of a result, depending on how it turns out.

Justin Holko

Thanks, George. We have time for one more question.

Operator

Next question comes from Carter Gould of Barclays. Your line is now open.

Carter Gould

Great. Congratulations on the quarter and thanks for all the progress in tackling COVID and for taking the question. As you think – how should we think about - how do you think about appropriate REGEN-COV2 production in an increasingly sort of post-vaccination world and any read into how countries and healthcare systems are approaching supply and stockpiling?

And I guess, in answering that question, can you just clarify kind of where you and Roche stand in terms of capacity given the efficacy of lower doses and continued improvements in efficiency and scale? Thank you.

Justin Holko

Len, do you want to take that?

Leonard Schleifer

I don’t think we are really in a position. It’s better for Roche to comment on how the market is developing outside of the United States. But, I do know that they are working on a lot of different discussions with a lot of different jurisdictions. And there is, as we speak now, adequate supply. But, obviously, the pandemic changes pretty quickly. So, I think Roche is probably going to be better positioned to answer that, unless Justin has anything more specific for you.

Justin Holko

No, that’s it. Well, thank you for everyone joining the call today. We still have several callers in the queue that we didn’t get to; we apologize for that. We will follow up with you after the call. Thanks to everyone for dialing in. Be safe and have a good day.

Operator

Thank you for your participation in today’s conference call. This concludes the presentation. You may now disconnect. Good day.