Regeneron(REGN) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2025, total revenues were $3 billion, driven by higher collaboration revenue from Sanofi and increased U.S. net sales of EYLEA HD compared to the prior year [41] - Diluted net income per share was$ 8.22, with net income of $928 million [42] - Gross margin on net product sales was 85%, reflecting higher inventory write-offs and a change in product mix [45] - Free cash flow generated in Q1 was$ 816 million, with cash and marketable securities totaling $17.6 billion and debt of approximately$ 2.7 billion [46] Business Line Data and Key Metrics Changes - EYLEA U.S. net sales were $736 million, down 39% year-over-year, primarily due to lower physician demand and increased competition [7][29] - EYLEA HD U.S. sales were$ 307 million, up 54% year-over-year, with physician unit demand growing by 5% [8][30] - DUPIXENT achieved global net sales of $3.7 billion, representing a 20% year-over-year increase, with U.S. sales growing 19% [32] - Libtayo's global net sales grew 8% year-over-year to$ 285 million, with U.S. sales reaching $193 million, up 21% [38] Market Data and Key Metrics Changes - The branded anti-VEGF category contracted due to increased usage of low-cost off-label repackaged Avastin, which gained approximately 6 percentage points in market share [7][28] - EYLEA and EYLEA HD captured 41% of the anti-VEGF category, maintaining market leadership despite competitive pressures [28] - DUPIXENT continues to lead in new-to-brand prescription share across all approved indications, except for chronic spontaneous urticaria [11][34] Company Strategy and Development Direction - The company aims to capitalize on multiple near-term opportunities across its portfolio, including product enhancements and new medicine launches [27] - Significant investments in R&D are planned, with approximately 45 product candidates in clinical development [12][41] - The company is focused on maintaining leadership in the anti-VEGF category while promoting the adoption of EYLEA HD as the new standard of care [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a mixed performance in Q1 2025, with challenges in the retinal franchise but positive developments in other commercial areas and pipeline advancements [6][7] - The company remains committed to investing heavily in R&D and delivering scientific breakthroughs while maximizing growth opportunities from existing brands [13] - Management expressed confidence in the potential for EYLEA HD and DUPIXENT to continue delivering significant growth [12][34] Other Important Information - The company plans to return capital to shareholders through share repurchases and dividends, with$ 1.1 billion worth of shares repurchased in Q1 [48] - A new agreement with Fujifilm Diosynth Biotechnologies will invest over $3 billion to nearly double U.S. large-scale manufacturing capacity [46][47] - The company updated its 2025 gross margin guidance to be in the range of 86% to 87% due to higher-than-expected inventory write-offs [49] Q&A Session Summary Question: Can you elaborate on the EYLEA HD CRL for the prefilled syringe? - Management explained that the FDA's questions relate to a third-party component supplier, and they believe the key issue is being addressed. They expect a resolution could be quick, similar to previous CRLs [52][56] Question: How does the company prioritize indications for Factor XI antibodies? - The company prioritizes indications based on the potential to demonstrate benefits in anticoagulation and bleeding risk profiles, with plans to enroll in phase three studies this year [61][63] Question: What are the updated thoughts on foundation funding for EYLEA? - Management discussed the complexities of patient assistance funding and the potential for a matching program to stimulate contributions from others, emphasizing the need for broader support [66][71] Question: Is there acknowledgment of unsatisfactory regulatory performance? - Management took responsibility for the CRLs, attributing them to increased scrutiny by the FDA on contract manufacturers and expressing confidence in their regulatory team's capabilities [87][90]