Welcome to the Regeneron Pharmaceuticals Fourth Quarter 2021 Earnings Conference Call. My name is Michelle, and I'll 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 Mark Hudson, Director of Investor Relations. You may begin..

Thank you, Michelle. Good morning, good afternoon, and good evening to everyone listening around the globe. Thank you for your interest in Regeneron, and welcome to the fourth quarter 2021 conference call. An archive of this webcast will be available on our website. Joining me on the call today are Dr.

Len 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; and Bob Landry, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will open up the call for Q&A.

I'd also like to remind you that remarks today may 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 milestone, 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-K for the period ended December 31, 2021, which we are planning to file with the SEC early next week.

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 IR 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..

Thanks, Mark, and thanks to everyone joining today's call. The fourth quarter of 2021 capped off a terrific year for Regeneron. Our performance was driven by strong execution across the organization, despite the ongoing challenges posed by COVID-19.

We're all proud of the incredible work and dedication of our employees who continuously deliver on our mission to bring important medicines and novel medical breakthroughs to patients in need. Throughout 2021, we delivered strong top and bottom line growth.

Revenues, excluding our COVID antibody cocktail, grew 19%, a testament of our diversified and strengthening core business. Our innovative and world-class pipeline advanced across a wide variety of diseases.

We also unveiled initial clinical data and pipeline advancements from our Regeneron Genetics medicines portfolio, which has the potential to unlock significant long-term value. Additionally, we returned substantial cash to shareholders in the form of share buybacks. In '21, we spent approximately $1.7 billion repurchasing over 3 million shares.

For EYLEA, 2021 global sales grew 19% to $9.4 billion. Even after 10 years on the market and millions of injections later, we continue to view EYLEA as an enduring product, with significant future opportunity, despite new market entries.

In the second half of the year, we look forward to the results from our Phase III aflibercept 8-milligram high-dose program.

If those data continue to support that aflibercept 8 milligrams provides extended dosing duration without compromising on safety and efficacy, aflibercept 8 milligrams has the potential to complement and enhance our retinal franchise. With Dupixent, we are delivering on a goal of transforming the treatment of type 2 inflammatory diseases.

2021 global sales of Dupixent were $6.2 billion, representing 53% growth for the year. Looking ahead, Dupixent's outlook is bright.

There are significant opportunities to increase market penetration rates in approved indications, and we are in the midst of a wave of new data submissions and launches in potential new indications, further fueling Dupixent's growth. In oncology, Libtayo continues to thrive in the approved non-melanoma skin cancers.

We look forward to potential Libtayo plus chemotherapy approval later this year in the broader population of non-small cell lung cancer patients. Our oncology footprint continues to expand.

We have advanced many candidates and combinations into the clinic with a range of antibodies, bispecifics and co-stimulatory bispecifics across many cancer settings.

This year, we look forward to sharing what we hope will be groundbreaking data in difficult-to-treat solid tumors, such as prostate cancers and ovarian cancers, both of which are conditions with historically low response rates to immunotherapy. We also remain encouraged in the progress of our maturing CD3 bispecifics.

We are confident in the overall safety and efficacy profile for odronextamab, our CD20xCD3 bispecific. We are forging ahead with REGN5458, our BCMAxCD3 bispecific, which we believe will play an active role in the treatment of multiple myeloma given its competitive profile.

Last but not least, we are immensely proud of our rapid response efforts against COVID-19. In 2021, REGEN-COV, our antibody cocktail, was administered to millions of people globally, making a major impact during the darkest days of the pandemic.

Based on preclinical data, we recently announced that REGEN-COV is highly unlikely to be active against the Omicron variant. Appropriately, the FDA amended the emergency use authorization for REGEN-COV, limiting its use in the U.S. in light of the Omicron variant being dominant. Regeneron remains committed to helping fight the COVID-19 pandemic.

We are progressing next-generation antibodies that are active against Omicron, Delta and other variants of concern. We are scaling up manufacturing efforts and completing the necessary requirements to begin clinical trials for next-generation candidate in the coming months.

Concurrently, we are working closely and collaboratively with the FDA and other global regulatory authorities to establish and define clinical pathways to bring additional safe and effective monoclonal antibody treatment options to patients as quickly as possible.

As one of the leaders in the fight against COVID-19, our VelociSuite platform of technologies makes us uniquely positioned to promptly develop and deliver potentially life-saving medicines.

As the COVID-19 story transforms from pandemic to endemic, we believe there will remain a significant opportunity to use our next-generation monoclonals as a prevention for those immunocompromised individuals who do not respond adequately to COVID-19 vaccines.

In addition, monoclonal antibody therapy is likely to play an ongoing role in treatment for infected individuals. In conclusion, 2021 was another high-performance year for Regeneron.

With strong commercial results from our in-line marketed products, 30-plus pipeline candidates progressing through clinical trials, our discovery efforts firing on all cylinders, a growing portfolio of highly productive external collaborations and our strong financial position with over $12 billion in cash and marketable securities, Regeneron is extremely well positioned for the future.

Now I will turn the call over to George..

Thanks, Len. I'll start by briefly addressing our novel monoclonal antibodies for COVID-19. As Len mentioned, we are rapidly developing next-generation antibodies that retain potency against Omicron and other variants of concern.

Early in 2019, we anticipated that the virus would mutate and, thus, began generating large pools of virus-neutralizing antibody candidates from both human survivors and our VelocImmune mice.

We have continually evaluated and refreshed this pool and now have next-generation candidates that, based on preclinical studies, effectively neutralize Omicron and other variants of concern. We're on track to initiate clinical trials with the first of these in the coming months.

In addition, we are in discussions with the FDA regarding how to streamline the development program for monoclonal antibodies, considering the unwavering unmet need and demand for these medicines, especially with potential future virus variants in mind.

As Len already highlighted, since we believe that monoclonal antibodies will continue to play an especially important role in the treatment of future protection of the several million immunocompromised people in the United States alone, we are committed to undertaking a development pathway that will make this possible in the near future.

Moving on to ophthalmology. At the upcoming Angiogenesis meeting, we will present the final Phase II data from the aflibercept 8-milligram CANDELA study in patients with wet AMD.

In this study, aflibercept 8 milligram, given at the same protocol-specified dosing schedule, as currently approved EYLEA 2-milligram met its primary safety endpoint, with measures of drawing numerically favoring the 8-milligram dose over the 2-milligram dose.

These two -- these Phase II results give us more confidence that the upcoming Phase III readouts has a potential to show that the higher 8-milligram aflibercept dose can at least match the efficacy and safety of EYLEA, but with more convenient dosing. Moving on to Dupixent.

Building on the outstanding clinical success Dupixent has shown so far across a wide spectrum of allergic or type 2 inflammatory diseases, the second Phase III study in prurigo nodularis recently met primary and key secondary endpoints, making Dupixent the first and only systemic medicine to demonstrate such success in this indication.

These data confirm the results from the first Phase III trial, where 60% of Dupixent patients met the primary endpoint of its reduction compared to 18% of placebo patients at 24 weeks. Nearly 3x many Dupixent patients experienced reduced skin lesions compared to placebo as well.

Prurigo nodularis marks the sixth disease for which Dupixent has demonstrated profound benefit for patients, providing convincing evidence that the IL-4 and IL-13 pathways inhibited by Dupixent are the key drivers of the type 2 inflammation underlying all of these diseases.

We have to appreciate how remarkable the Dupixent story is in terms of the important benefit it provides for the many patients across this diverse set of clinical conditions, together with its well-established safety profile, and highlights how Dupixent is delivering on its promise of providing a pipeline in a product.

At the upcoming AAAAI meeting, in addition to the other important Dupixent updates, we will present pivotal results for the recent top line studies in eosinophilic esophagitis, or EOE, and for the first chronic spontaneous urticaria, or CSU study.

EOE is a complex disease, and we are excited to share these data with the scientific community and patients. Our first regulatory submission for EOE in adolescents and adults is underway, with regulatory submissions for prurigo nodularis also starting in the first half of this year. Anticipated flow of Dupixent-related clinical data update continues.

We are planning on reporting results in an additional Phase III study in CSU this time in omalizumab experienced patients and also for the chronic cold-induced urticaria indication in the second half of this year. These represents more difficult-to-treat patients or condition and present a higher bar for Dupixent.

We're looking forward to results of these pivotal studies. Moving on to oncology and first Libtayo. Progress in our oncology portfolio includes pivotal readouts and regulatory filings for Libtayo presented an anticipated data readouts for our bispecifics as well as multiple upcoming milestones with novel diversified pipeline entrants.

As Len mentioned, the Libtayo chemotherapy combination for patients with non-small cell lung cancer is under review at the FDA with a PDUFA date of September 19, 2022, which could address a larger portion of the patients with lung cancer.

In hematology, at the American Society of Hematology Annual Meeting, we presented encouraging data for REGN5458, our BCMAxCD3 bispecific, investigated for relapsed or refractory multiple myeloma, with safety data that has shown no grade 3 or higher cytokine release syndrome to date and strong efficacy data.

We believe our investigational agent is promising and has the potential to be competitive in this indication.

We are planning on investigating this product for earlier lines of myeloma therapy, in combination with standard of care, and are excited about the combination with an appropriate co-stimulatory bispecific, which could further enhance responses.

Odronextamab, our CD20xCD3 bispecific, has the potential for a best-in-class efficacy profile in both follicular lymphoma and diffuse large B-cell lymphoma, and our updated step-up dosing protocol may mitigate safety concerns and decrease the need for hospitalizations to manage cytokine release syndrome.

In terms of progress of our bispecifics for solid tumors, as previously disclosed, we are observing early signs of activity for our MUC16xCD3 bispecific monotherapy developed for late-stage ovarian cancer, and we are excited to be sharing these early data later this year.

In addition to monotherapy, the MUC16xCD3 bispecific is being investigated in combination with Libtayo and in a first of its kind in a combination trial with a MUC16xCD28 bispecific. These combinations are in early stages that are advancing through dose escalations.

Later this year, we are hoping to share initial results for a unique biparatopic METXMET antibody studied in advanced non-small cell cancer patients with MET protein alterations.

Early signs of clinical activity we have observed so far with the naked METXMET bispecific antibody, especially in patients with MET overexpression, bode well for our follow-on agents, the METXMET bispecific antibody drug conjugate, which is now enrolling patients in a Phase I study.

We are also excited about our early-stage EGFRxCD28 co-stimulatory bispecific program for lung and other cancers. For prostate cancer, we are expecting initial readouts from our first co-stimulatory bispecific PSMAxCD28 later this year as well. PSMAxCD28 is progressing through dose escalation in combination with Libtayo.

We are excited about the potential of our broad oncology portfolio, which includes multiple Phase I, II and III assets, as many are beginning to believe the future is going to involve the right combination of targeted immunotherapy agents.

Concluding with our Regeneron Genetic medicines efforts, we and our collaborators have made significant strides in expanding the capabilities and scale of our groundbreaking work in genetics medicines.

In terms of our siRNA collaboration with Alnylam, ALN-HSD is progressing through healthy volunteers, and initial data in NASH patients are anticipated by the middle of this year.

With the C5 siRNA and the antibody combination, another first of its kind, healthy volunteer data were presented at ASH, demonstrating PK and PD results supportive of the monthly subcutaneous dosing regimen selected for pivotal studies. Phase III studies of the combination for paroxysmal nocturnal hemoglobinuria, or PNH, were also initiated.

Recall, in PNH, we are planning to test our combination in both naive and switch patients tested against standard of care therapies, including ravulizumab and eculizumab. Also Alnylam has recently announced submission of the CTA application for ALN-APP, the industry's first-ever investigational RNAi therapeutic for CNS diseases.

This agent will be evaluated in both the relatively rare disease driven by amyloid precursor protein, known as cerebral amyloid angiopathy, or CAA, as well as in early-onset Alzheimer's disease. Finally, later this quarter, we and Intellia will provide our -- an update on our joint TTR CRISPR-based knockout program for transthyretin amyloidosis.

This will include additional ascending dose interim clinical data from the polyneuropathy arm of the ongoing Intellia 2001 Phase I study. We have also expanded the study to include patients with transthyretin amyloidosis with cardiomyopathy, which we believe will address an even broader patient population.

We are very excited by our large and diverse pipeline of siRNA candidates that we are advancing with Alnylam, ranging from targeting the liver, the brain and the eye, as well as our CRISPR-based approaches in collaboration with Intellia and our viral-targeted gene delivery programs, such as with Decibel.

While still early, we think these groundbreaking approaches have the potential to change the practice of medicine. And with that, I will turn the call over to Marion..

Thank you, George. Our fourth quarter business performance demonstrated the strength and resilience of our in-line brands and creates a foundation for commercial success as we prepare for future launches. Starting with EYLEA. We recently announced fourth quarter U.S. net sales of $1.55 billion and $5.79 billion in 2021.

This represented 17% year-over-year U.S. growth for the full year, which is noteworthy for a brand 10 years post launch. EYLEA reached record share across all approved indications and is the recognized leader in a category that continues to grow due to favorable demographic trends.

EYLEA remains physicians' top choice for patients with indicated retinal diseases due to its demonstrated efficacy, safety, dosing flexibility and unsurpassed real-world experience, with more than 40 million administered injections worldwide.

We are also excited about ongoing strategic initiatives that position our retinal franchise for future growth, such as our educational efforts in place across existing indications where many patients don't receive the treatment they need.

Beyond EYLEA, we are encouraged by promising early results for high-dose aflibercept 8 milligram, which, if supported by Phase III clinical results, potentially represents next-generation treatment for a range of eye diseases.

Turning to Libtayo, where global net sales in the fourth quarter were $121 million, in the U.S., net sales reached $81 million. In advanced cutaneous squamous cell carcinoma, which currently drives majority of performance, Libtayo is the #1 systemic treatment, and we saw steady growth as the market continued its post-COVID recovery.

In advanced basal cell carcinoma, Libtayo is also rapidly being established as standard of care in patients who have progressed or are inappropriate for hedgehog inhibitors, building on our strength in non-melanoma skin cancers.

In advanced non-small cell lung cancer, we are making progress in the launch of our monotherapy indication with a steadily growing prescriber base. There is also significant opportunity in the chemotherapy combination setting.

And if proved, Libtayo would be available for a much broader range of first-line lung cancer patients than for monotherapy alone. Our experience is that medical oncologists consider combination treatment first and reserve monotherapy for a much smaller group of patients, which, in part, has limited Libtayo uptake in lung cancer to date.

Briefly turning to our cardiovascular franchise. Evkeeza, our treatment for patients with HoFH, was successfully launched in 2021 and is already the standard of care. We continue to see initiations in both switch and category naive patients. In 2021, we are focused on employing innovative efforts to identify patients not currently diagnosed with HoFH.

On to Dupixent, which grew 51% in global net sales in the fourth quarter year-over-year to $1.77 billion, in the U.S., net sales grew 46% to $1.35 billion.

Dupixent is well positioned for ongoing rapid growth based on significant unmet need in existing and potential new disease areas, with anticipated expansion into even younger age groups and new geographies worldwide. In atopic dermatitis, prescribing trends are strong across the spectrum of moderate to severe disease.

Dupixent is health care specialists' first-line systemic treatment of choice due to several highly differentiating product characteristics, including its dual anti-IL-4 and IL-13 mechanism of action, compelling efficacy and rapid symptom relief, well-established safety profile, with no risk of serious infections due to immunosuppression and clinical data in children as young as six months.

If approved, we look forward to expanding Dupixent's skin indications to include babies and young children with atopic dermatitis as well as two new dermatologic indications. There are no currently approved biologic medicines for prurigo nodularis, where we estimate approximately 75,000 patients may benefit from Dupixent in the U.S. alone.

We're also progressing an important opportunity to help chronic spontaneous urticaria patients. Dupixent is also steadily growing in the highly competitive asthma space.

We see ongoing potential to differentiate Dupixent in moderate to severe disease through its competitive profile, including a broad label that allows use in uncontrolled steroid-dependent patients, regardless of their eosinophil levels, as well as use in patients as young as six years of age.

Dupixent is also the preferred treatment of ENTs and allergists in chronic rhinosinusitis with nasal polyps, regardless of prior surgery and contributes meaningfully to our business. We are also progressing our launch plans for eosinophilic esophagitis, a gastrointestinal disease with substantial unmet need.

We estimate at least 50,000 patients in the U.S. could benefit from Dupixent if approved. We've received positive feedback from key opinion leaders on the strength of our data and lack of suitable treatment alternatives for this serious disease. In summary, in 2021, our commercial team delivered strong growth across the portfolio.

Our momentum and new launch opportunities position us well for the future growth. Now I'll turn the call over to Bob..

Thanks, Marion. My comments today on Regeneron's financial results and outlook will be on a non-GAAP basis where applicable. Regeneron's fourth quarter capped off a strong year. In the quarter, we delivered top and bottom line growth driven by strong execution within our core business. Fourth quarter total revenue grew 104% year-over-year to $5 billion.

Excluding revenues related to the COVID-19 antibody cocktail, total fourth quarter revenue grew 17% year-over-year to $2.7 billion, demonstrating continuing strength of our core business. Fourth quarter total diluted net income per share was $23.72 on net income of $2.7 billion. Starting with REGEN-COV.

In the fourth quarter, we delivered the remaining 1.1 million doses from our September 2021 U.S. government supply agreement and recognized $2.3 billion of U.S. net sales.

In accordance with our global collaboration with Roche, the amount of manufactured products supplied by each party to the global market resulted in the recognition of a true-up payment related to Roche's share of profits.

As a result, in the fourth quarter, we recognized a $260 million charge in cost of goods sold and recorded no Roche collaboration revenue. As mentioned, we completed all deliveries under the September 2021 U.S. government supply contract in the fourth quarter.

With the FDA's recent amendment to REGEN-COV's emergency use authorization, we do not expect to record any U.S. REGEN-COV sales in the first half of 2022. I will now move to our collaborations, starting with Bayer. Fourth quarter 2021 ex-U.S.

EYLEA net product sales as reported to us by Bayer were $934 million, growing 9% on a reported basis and 12% on a constant currency basis. Total Bayer collaboration revenue was $372 million, of which we recorded $354 million for our share of net profits from EYLEA sales outside the U.S.

Total Sanofi collaboration revenue was $518 million in the fourth quarter of 2021. Despite seasonally higher fourth quarter operating expenses, our share of the profits from the commercialization of Dupixent and Kevzara was $388 million, which compares favorably to our share of profits of $230 million in the fourth quarter of last year.

Moving now to fourth quarter 2021 operating expenses. R&D decreased slightly to $639 million primarily due to lower spending on REGEN-COV development as compared to the fourth quarter of 2020. SG&A expense increased 30% year-over-year to $495 million primarily due to cost related to growth initiatives for EYLEA and higher head count-related costs.

Cost of goods sold were $559 million primarily related to REGEN-COV manufacturing costs and, as I mentioned earlier, the recognition of the $260 million true-up payment to Roche for their share of profits related to the COVID antibody cocktail. Finally, the fourth quarter 2021 effective tax rate was 12.7%.

Shifting now to cash flow and the balance sheet. For the year, Regeneron generated $6.5 billion in free cash flow and ended the year with cash and marketable securities less debt of $9.8 billion. In the fourth quarter 2021, we exhausted the remaining balance on our $1.5 billion share repurchase authorization.

And in November, we announced a new $3 billion share repurchase authorization. Across both, we've repurchased approximately 850 million of shares in the fourth quarter of 2021. We continue to be opportunistic buyers where we see dislocation between our stock price and our intrinsic valuation.

Now let me conclude with our initial 2022 outlook and guidance. As I mentioned earlier, we do not expect to record any U.S. REGEN-COV sales in the first half of 2022. For U.S. Praluent throughout 2021, we observed significant category and competitive pressures. We expect these pressures to accelerate throughout 2022. And now for our 2022 expense guidance.

For R&D, we forecast our 2022 R&D expense to be in the range of $2.8 billion to $3 billion.

As we highlighted throughout 2021, critically important development programs are advancing in 2022, including the late-stage randomized studies versus branded comparators for the LAG3 Libtayo combination, BCMAxCD3 and C5 programs in development expenses to advance next-generation antibodies against COVID-19.

For SG&A, we forecast our 2022 SG&A expense to be in the range of $1.65 billion to $1.77 billion. Based on our initial plan, we expect SG&A expenses to be spread evenly across the quarters in 2022. For COGS, we forecast 2022 product gross margin on our percentage of net product sales to be between 90% and 92%.

We expect cost of collaboration manufacturing to be in the range of $750 million to $830 million driven by continued growth in our Dupixent franchise. And finally, we anticipate our 2022 effective tax rate to be in the range of 13% to 15%. A complete summary of our full year guidance is available in our press release issued earlier this morning.

In conclusion, our core business continues to advance and strengthen. With growth continuing across our existing portfolio and investments in our R&D engine supported by our strong balance sheet, we remain well positioned for sustainable long-term growth..

Thanks, Bob. Michelle, that concludes our prepared remarks. We now like to open up the call for Q&A. Please go ahead, Michelle..

Our first question comes from Evan Seigerman with BMO. Your line is open..

You touched on your solid tumor oncology franchise, specifically the METXMET in MUC16xCD3 bispecifics that we're supposed to get this year.

Can you elaborate a little as to kind of what we should be expecting with these data readouts and how that could inform potentially pivotal trials or a registration path?.

Yes. These are both being evaluated in late-stage patients who have essentially failed all existing therapies. And obviously, the excitement would be if one saw evidence of convincing objective responses that were durable in these settings, then those would certainly inform how would we move forward on these.

And we've already announced that we've been observing encouraging early signs of efficacy, and we will be elaborating on these and giving the details in these future presentations..

Our next question comes from Carter Gould with Barclays. Your line is open..

Maybe I'll just take on the elephant in the room. For Len and Marion, would love to get your thoughts on -- as you think about the EYLEA franchise in the context of what looks like a very accommodating label on faricimab and their pricing, as we think about the implications for your high-dose label and commercial positioning..

Yes. I'll let Marion get into the details. But we don't see faricimab as a transformative therapy of any kind, notwithstanding any label. It's very hard to see when you look at it dispassionately any scientific evidence for the contribution of Ang2 blockade.

People forget, nobody has a greater interest and would love to see Ang2 blockade being a value given that George and his colleagues were the ones who discovered and cloned Ang2, the first in the world on that. But there's really no evidence that we can see where you've separated that out.

So what we're seeing here is a higher dose of faricimab relative to Lucentis and possibly on a moral basis relative to EYLEA. We remind everybody that there are a lot of lessons learned here. One of the biggest lessons is efficacy is super important, but well beyond that is safety.

And nothing right now contract the, I don't know, almost 50 million injections that have been given worldwide with EYLEA. So we feel pretty good. The competition is always good. Obviously, competition is going to eat into a product. We suspect that faricimab may take a lot of the -- of its share initially from Lucentis, but we'll see.

Marion might want to elaborate..

Yes. Thank you, Len. Certainly, to give some very early market feedback, the comment that we're getting from key opinion leaders is that they don't see first met via product that potentially is a game changer and that the dosing is complex. And there are remaining questions on the clinical trial design and, of course, as Len mentioned, safety.

More importantly, I'll go back over to EYLEA, where we certainly are establishing the product as standard of care and more across indications with great flexibility of dosing, indications, experience, real-world evidence, prefilled syringe and busy times.

So we look forward to strong performance going forward on EYLEA, and we're very optimistic about what could be a next-generation product with our own aflibercept 8-milligram high-dose product if the Phase III data works out..

Our next question comes from Tyler Van Buren with Cowen. Your line is open..

So for your next-generation COVID antibody cocktail, looks like it's -- you said it's entering the clinic in the coming months. So was there a slight delay versus the prior Q1 guidance? And you referred to FDA streamlining development of monoclonal antibodies.

So can you give us your latest thoughts on how long it might take to get to market? I noticed Bob mentioned that there won't be sales in the first half, so just curious if we could see something in the second half..

Yes. George can comment on what he thinks is necessary, but I just want to be clear. I don't think there's any delay, whether we come in just at the end of this quarter or early in the next quarter or thereabouts. It's tough to exactly estimate when we'll start. But we're scaling up, and we're rolling forward.

George can comment on some of the global and U.S. regulatory considerations and guidances that we know about thus far..

Yes. There's not much to add. I mean, we're continuing to discuss with regulators what the program is and what are the abilities as was done with vaccines to expedite the development programs compared to what was necessary for the first-generation agents developed using the same platform. So we will update that as we learn more..

George, there's some confusion, just so you could clarify it. Our next-generation antibody work on just -- Omicron on is a work on all of them. Yes, George, go ahead..

As I mentioned in my script, so obviously, we have one of the largest collections of antibodies to choose from. And what we do as a variant emerges is we select new candidate antibodies that will work against the new variant, but will also retain their activity against the previous variants of concern.

And that's exactly the candidates that we're advancing right now. They work against Omicron, but they work against Delta. They work against all the other variants before. ..

And anything -- any comment on stealth Omicron, do you think it will work there, too?.

Well, yes. Obviously, we take all these things into consideration. And so when a new variant that looks like it could be coming along that might be important, we certainly have made sure that the candidates that we're advancing now are going to be active against all of those as well..

Our next question comes from Salveen Richter with Goldman Sachs. Your line is open..

Could you just speak to the RNAi programs? I think we're going to get first data this year from ALN-APP from that program.

And how do you think about the optimization of delivery to the brain here and what we might see and how the C5 program could be differentiated?.

Okay. So you're asking about the brain and CNS and the APP program, but you're always asking about C5. Okay. So yes, with the brain, obviously, as we all know, there have been disappointing results with antibodies that have been delivered to try to decrease APP levels. They work in a fundamentally different way.

One of the problems that they cause, they cause the famous inflammatory syndrome that may complicate activity. So obviously, the hope of siRNA programs is they work by a completely different mechanism.

They will actually decrease the production of APP and allowed to be cleared by normal mechanisms as opposed to letting it be made continuously at the normal rate and then trying to remove it by artificial mechanisms that they themselves may be toxic, i.e., the antibody efforts. So that's why they may be fundamentally different.

Importantly, we're exploring this not only in Alzheimer's disease, as we all know. It's not as if the early results in Alzheimer's disease are going to really address the important endpoints, that is cognition and efficacy in slowing down cognitive decline and so forth. They're going to be looking at levels of biomarkers and so forth.

That's why we're also excited that we are developing the same exact agent, in some ways, a much more rapidly progressing, though albeit much rare disease known as cerebral amyloid angiopathy, or CAA, because there, the ability to both look at the biomarkers, but also, more importantly, look at important efficacy parameters is going to allow us to proceed much faster and much smaller numbers of patients.

And therein, we may be, over the next couple of years, able to establish both definitive efficacy, but maybe even get authorization approved in those indications, and that will certainly be quite in advance for the entire field of these types of diseases, and particularly for the first siRNA that's going into these diseases.

So we are very excited about these programs, and we have a very large pipeline of other CNS diseases and targets that we are going forward in addressing with Alnylam.

So it's a very important part of our collaborative efforts with them, which also include a large number of targets in terms of genetic targets, genetically validated targets,and diseases in the eye, let alone outside of the eye such as, for example, in the liver, and that brings us to the C5 that you asked about.

So as we all know, people are taking single types of approaches to target C5. Some people might have an antibody. There's now some other types of approaches and so forth. What we realized is that if we could combine an siRNA with an antibody, we might have really not only combine the unique advantages of both, but incredible synergies.

And what do we mean? Antibodies have the highest effectiveness because, essentially, they can bring down activity levels almost to zero.

But because of the high target load, you have to give these antibodies, and these are all the existing approved antibodies and those that are under investigation by other sponsors, you have to give them a relatively large amount of them and relatively frequently. So antibodies are great.

But by themselves, you need to give a lot of antibodies to deal with a high target load. siRNAs are great at reducing the target load, but they don't get you to really almost zero activity, and that creates problems. We already know that. By putting the two together, you now get the best of both.

You reduce the target load, and you allow now a much smaller amount of antibody to control activity hopefully completely. So there really is tremendous synergy with this. This is the first of its kind that is combining siRNA with antibodies.

We think there's very exciting potential for this to deliver best-in-class, both efficacy but also convenience and dosing regimen. We're going for convenient subcutaneous self-administration once a month, which would really, I think, be game changing for the field and for these patients.

But we're also moving these programs also to other related indications as well. So we're very excited about this combination approach for C5 and for these types of indications. But once again, just like what we're doing in CNS, just like what we're doing with eye, these are really franchise and portfolio opportunities.

I mean, you can just imagine, if combining -- and there are so many other settings where this could be very useful, combining the benefits of siRNA and antibodies and bringing them together could really begin changing not only in this area, but in many, many other areas.

And who better to do this than bringing together the leading siRNA company and the leading antibody and biologics company, Alnylam and Regeneron.

So we are very excited about the individual programs with some of these siRNA, but also these incredible combination opportunities, bringing these two incredible technologies together, taking the advantages of both..

Our next question comes from Ronny Gal with AllianceBernstein. Your line is open..

One is for Marion. Can you talk a little bit about the VEGF market? It seems that we've been coming close to a year for a better than 10% growth. And I was wondering how much of this is catch-up versus how much of this is just higher natural market growth rate versus what we're expecting.

And then can you talk a little bit about the dynamics of what it takes to compete in this market, kind of like how long to get a J code, how long to have contract with different practices? Essentially, when will -- how long will take a competitor coming online, whether innovative or biosimilar, to really be able to effectively compete in that market?.

Sure. Ronny, happy to take it, and I'm going to take the end of your question first.

And I first would say that a competitor or a new entrant to the market's ability to compete is really going to be based on the differentiation of their product profile, the quality of their studies and the confidence and enthusiasm that the key opinion leaders have on the product as it comes in. So I do think differentiation matters quite a lot.

In the case of EYLEA, certainly, our growth in the past year has been quite pronounced. We've captured not only the market growth, but we've also captured competitive share gain more than any other products, so that our market share today for EYLEA is approaching 50% of the overall category and 75% of the branded category.

And we picked up several share points in the last year in this very large category. Let me go back now to new entrants. You're asking about timing of J codes, and that is important. Quality of product, as I mentioned, reflects confidence in how well it performs, but it is a six-month period before a new product receives a permanent J code.

So in that window of time, especially in a product which is buy and bill, there's always the concern on reimbursement. There's not experience, not with the product, but there's also not experience with applying for reimbursement under the J-code. That period of time is six months.

And to my earlier comment, product confidence will vary based on profile. I hope I've covered, Ronny, most of what you had in that. The only thing I think I probably missed is anti-VEGF category growth going forward. That is a little bit complicated because we're comparing to recovery in the market opposite the COVID period to some extent.

However, there is growth of the category because of patient demographics and because of education. I'll give you an example of patients who are diagnosed with DME, only about 47%, 48% of those patients are treated.

And those are -- and of those that are diagnosed, there's only -- if you took all DME patients that exist, only about 25% of those patients are treated.

So there still is tremendous unmet need in the marketplace, and we certainly will work hard through educational initiatives to make sure that we perform very well as we have been on an ongoing basis on all of our indications. I hope that helps, Ronny..

Can I just add one thing, Ronny, on that? It's just that it seems like it's been every single year for the last decade there has been a threat to EYLEA that a variety of number of people have predicted would be the next thing to displace EYLEA. And along the way, the barriers have changed.

And the most important barrier that I think now exists is safety, and that safety, even for a biosimilar, the same product safety for a new product with purported differences, people have learned that the eye is a very sensitive place. And having given scores of millions of injections of EYLEA, there's a great deal of confidence out there.

I think it's going to take a matter of time beyond J codes and meeting with practices before that level of confidence is significantly displaced..

Our next question comes from Robyn Karnauskas with Truist. Your line is open..

This is Nicole on for Robyn. Just a really quick question on yesterday's report, the Adicet Bio disclosing their general exercising option to license an allo CAR-T.

Can you just comment on the move towards allo CAR-T and why this particular happened?.

Could you repeat the end of the question? It was a little hard to hear the question..

The Adicet?.

Yes.

But what was the question? Can you repeat it?.

Why does that matter? What's the importance of it?.

So well, as you already referred to it, I mean, this is an advance in the CAR-T space because, obviously, so far, the approved approach and upcoming approaches are all dependent on giving customized individualized autologous CAR-T cells.

And the results coming from this relatively novel gamma delta approach is the first gamma delta data in the world show that you could give allogeneic cells and get very remarkable -- in very small numbers, a very remarkable response rate.

And so this would take the customization autologous approach and take it to the autologous to the non-autologous allogeneic way, which will really could potentially revolutionize the treatment paradigm here. And so we've been long-term collaborators with Adicet, and we're pretty excited about this allogeneic approach. And so we're investing in it..

Our next question comes from Matthew Harrison with Morgan Stanley. Your line is open..

I was hoping for one on co-stim. I know we're supposed to get some data this year.

Can you just maybe help us think about dosing levels, how you're thinking about safety currently? And just in terms of initial data, what should we expect to see, whether it's just about safety or we should really start to have some idea on efficacy as well?.

Yes. That's a great question. And as we all know, this pathway was explored many years ago now and led to, unfortunately, very dramatic safety concerns to patients, and that sort of killed the field.

And so because of those concerns and that we were reexploring utilization of this very, very powerful co-stimulatory pathway to add to -- in combination with other immunotherapies, the FDA appropriately asked us to move very, very slowly. So the first endpoint of most concern was the safety endpoint, of course, first do no harm.

And I think that what we've announced is that in our ongoing dose escalation study, it's only been recently that we have achieved what we think are therapeutic dose potential levels.

And now -- and we have -- I think the thing that we have said publicly is we successfully crossed in terms of getting to these dose levels, this very concerning and potentially game stopping safety hurdles. And so now that we're at the potentially therapeutic dose levels, we are now hoping to focus on efficacy.

And remember, in several of these programs, for example, our prostate program, we're going in a setting where, at least if properly identified, there are essentially no or very rare responses to PD-1 in these types of very carefully characterized prostate patients.

I mean, there has been very little hope, except for rare subsets of characterized patients that have mutations and so forth, for the PD-1 immunotherapy class.

So if we can show essentially almost any responses in these types of very recalcitrant and hard-to-treat patients with PD-1 alone in our combinations with our co-stim for prostate cancer, I think there's real reason to believe that our scientists have successfully figured out a completely novel way of taking advantage of this long known, very exciting and powerful, but dangerous pathway that we may have figured out a way to take advantage of it and done it in a safe manner.

So this is what we're hoping to see this year that now that we are at these levels, we've gotten there without activating these huge safety concerns that were previously seeing. Essentially seeing any objective responses in this setting would really be potentially game changing.

And so we're looking forward to being able to tell you about this possibility later this year..

Our next question comes from Cory Kasimov with JPMorgan. Your line is open..

Wondering if you could frame expectations for the pending update on your program with Intellia that we're getting here near term.

What new might we see relative to last summer's preliminary data disclosure?.

Yes. We don't want to get too far in front of our partner. George's remarks already indicated the kind of things we'll see, but we should leave it up to Intellia to comment beyond what George said about looking at the dose escalation and including the safety and knockdown of the TTR. But Intellia should have the benefit of making some comments..

But maybe just a couple of obvious points that's not stealing anybody's thunder. But obviously, the initial results were incredibly exciting and revolutionary.

Obviously, the first systemic case CRISPR therapy, I mean, all this excitement for almost 20 years, Nobel prizes and all this, I mean, it is incredible that, together with our Intellia colleagues, I mean, this represents the first-ever systemic use of CRISPR to actually modify human genetic gene.

But obviously, one of the most important things that one will see is the whole promise of this approach is duration, that is you are modifying the gene. And hopefully, you will never have to treat that patient again, okay? And that's part of the dream and the hope with these genetic cures.

And so this is, of course, one important thing that we hope that we'll be seeing from the follow-up data, the duration, which is what is really game changing. You can permanently cure these patients. That's the theory here by permanently changing their genes.

And so the longer you follow them up, the more you can validate the duration with, of course, the appropriate safety and continue to keep the dream alive that this whole new approach could really be game-changing for important and appropriate clinical indications..

Our last question comes from Mohit Bansal with Wells Fargo. Your line is open..

And congrats on the progress. Maybe another one on faricimab.

And given that your competitor also has Lucentis, which is facing biosimilar this year, are you seeing any rumblings of potential bundling or attractive pricing for those both products combined, that could be played as a strategy to take on EYLEA? And how much does payer versus provider matter in this market?.

Sure. So at a high level, I'll share just and talk about our own business is, certainly, we have strong market understanding and work closely with all of our customers across the market segments. When it comes to how another company might be looking at their pricing or strategy, it's probably best I let them comment.

But I appreciate the interest in the category and the question..

Thanks, everyone. That concludes today's conference call, and thanks for your interest in Regeneron. The IR team and Bob Landry is here to take any questions that you may have. Everyone, have a nice day..

This concludes the program. You may now disconnect..