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Regeneron Pharmaceuticals Inc. (REGN)

Q2 2012 Earnings Call

July 25, 2012 8:30 am ET


Dr. Leonard Schleifer – President, Chief Executive Officer

Murray Goldberg – Chief Financial Officer

George Yancopoulos – Chief Science Officer, President – Regeneron Research Labs

Robert Terifay – Senior Vice President, Commercial

Dr. Michael Aberman – Vice President, Strategy and Investor Relations


Steve Byrne – Bank of America

Alethia Young – Deutsche Bank

Chris Raymond – Robert W. Baird

Terence Flynn – Goldman Sachs

Jim Birchenough – BMO Capital

Yaron Werber - Citigroup

Biren Amin – Jefferies

Mani Mohindru – ThinkEquity

Joseph Schwartz – Leerink Swann

Ted Tenthoff – Piper Jaffray

Phil Nadeau – Cowen & Company

Geoff Meacham – JP Morgan



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Good morning ladies and gentlemen and welcome to the Regeneron Pharmaceuticals conference call to discuss the second quarter 2012 financial results. My name is Kevin and I’ll be your coordinator today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this conference call. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Dr. Michael Aberman, Vice President of Strategy and Investor Relations for Regeneron. Please proceed, Dr. Aberman.

Dr. Michael Aberman

Thank you, Operator, and good morning and welcome to Regeneron Pharmaceuticals’ second quarter 2012 conference call. An archive of this webcast will be available under Events and Presentations for 30 days. Joining me on the call today is Dr. Leonard Schleifer, the Founder, President and Chief Executive Officer; George Yancopoulos, Executive Vice President, Chief Scientific Officer and President of Regeneron Research Labs; Murray Goldberg, Chief Financial Officer, and Robert Terifay, Senior Vice President, Commercial. After our prepared remarks, we’ll open the call for Q&A.

I would also like to remind you that remarks made on this call that are not historical in nature may be forward-looking statements about Regeneron and are subject to a number of risks and uncertainties. Actual events and our actual results may differ materially. Such remarks may include but are not limited to those related to Regeneron and its products and business, sales forecasts, financial forecasts, development programs, collaborations, finances, regulatory matters, intellectual property and competition, all of which involve a number of risks and uncertainties. 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, or SEC, including its Form 10-K for the year ended December 31, 2011 and Form 10-Q for the quarter ended June 30, 2012 which we filed this morning. Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law.

GAAP and non-GAAP measures will be discussed on today’s call. Information regarding our use of non-GAAP financial measures and a reconciliation of these measures to GAAP are available in our financial results press release, which can be accessed on our website. Once our call concludes, myself and the IR team will be available to answer further questions.

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

Dr. Leonard Schleifer

Thanks, Michael. Good morning to everyone. In terms of the agenda for today, following my brief introductory remarks, George Yancopoulos, Chief Scientific Officer, will provide an update on our pipeline. Bob Terifay, Senior Vice President of Commercial, will then provide an update on the EYLEA launch, and Murray Goldberg, our Chief Financial Officer will wrap up with financial highlights before I offer some concluding remarks and we open the call for questions and answers.

Today we are happy to report a very successful quarter as our team continues to execute on the ongoing launch of EYLEA, also known as intravitreal aflibercept injection. We saw strong quarter-over-quarter growth with U.S. net sales of $194 million, representing a 57% increase over the last quarter. Given the trajectory of the launch to date, tempered by the potential for less frequent dosing as doctors increase the interval between injections of EYLEA, we are increasing our full-year U.S. EYLEA net sales forecast to between 700 and 750 million from a prior 500 to 550 million. If we achieve this new forecast, EYLEA will become one of the best drug launches in the history of the biotechnology industry. In a few minutes, Bob Terifay will go into some more details on the launch.

Importantly, the strong EYLEA sales growth translated into even stronger earnings growth where we saw non-GAAP net income rise more than 2.5-fold from $40 million last quarter to slightly over $100 million in the second quarter of 2012, which translated into non-GAAP fully diluted earnings per share of $0.90. Obviously we are pleased by both the performance of EYLEA as well as its ability to fuel the Company’s earnings. The ability to translate sales growth into strong earnings growth while still investing heavily in our robust and internally discovered pipeline that includes 10 antibodies into addition to our three traps, highlights our relatively unique business model.

Our PDUFA date in the U.S. for our SBLA for EYLEA for CRVO is September 23, and an approval would further expand the EYLEA opportunity. As a reminder, the strong commercial results for EYLEA only reflect the launch of EYLEA in the U.S. Outside the United States, our partner Bayer Healthcare has already receiving marketing approval in two countries – Australia and Colombia – and we are awaiting regulatory decisions in the EU, Japan, and other countries. We expect the global launch to start toward the end of the year.

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