Regeneron Pharmaceuticals : Q1 2023 Earnings Conference Call Transcript

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REGN.OQ - Q1 2023 Regeneron Pharmaceuticals Inc Earnings Call

EVENT DATE/ TIME: MAY04, 2023 / 12:30PM GMT

OVERVIEW:

REGN reported 1Q23 total revenues of $3.2b, non-GAAP net income of $1.2b and non-GAAP diluted EPSof $10.09.

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MAY04, 2023 / 12:30PM, REGN.OQ - Q1 2023 Regeneron Pharmaceuticals Inc Earnings Call

CORPORATE PARTI CI PANTS

George D. YancopoulosRegeneron Pharmaceuticals, Inc. - Co-Founder, President, Chief Scientific Officer & Director Leonard S. Schleifer Regeneron Pharmaceuticals, Inc. - Co-Founder, President, CEO & Director

Marion E. McCourt Regeneron Pharmaceuticals, Inc. - EVP of Commercial

Robert E. Landry Regeneron Pharmaceuticals, Inc. - Executive VPof Finance & CFO

Ryan Crowe Regeneron Pharmaceuticals, Inc. - VPof IR

CONFERENCE CALL PARTI CI PANTS

Akash Tewari Jefferies LLC, Research Division - Equity Analyst

Brian Corey AbrahamsRBCCapital Markets, Research Division - Senior Biotechnology Analyst

Carter LewisGould Barclays Bank PLC, Research Division - Senior Analyst

Christopher Joseph Raymond Piper Sandler & Co., Research Division - MD & Senior Research Analyst

Christopher ThomasSchott JPMorgan Chase & Co, Research Division - Senior Analyst

David Reed Risinger SVBSecurities LLC, Research Division - Senior MD

Eddie Hickman Guggenheim Securities, LLC, Research Division - Research Analyst

Evan David Seigerman BMO Capital Markets Equity Research - MD & Senior BioPharma Research Analyst

Hartaj Singh Oppenheimer & Co. Inc., Research Division - Research Analyst

Mohit Bansal WellsFargo Securities, LLC, Research Division - Senior Equity Analyst

Robyn Kay Shelton KarnauskasTruist Securities, Inc., Research Division - Research Analyst

Salveen Jaswal Richter Goldman SachsGroup, Inc., Research Division - VP

Terence C. Flynn Morgan Stanley, Research Division - Equity Analyst

Tyler Martin Van Buren TD Cowen, Research Division - MD & Senior Equity Research Analyst

PRESENTATI ON

Operator

Welcome to the Regeneron Pharmaceuticals First Quarter 2023 Earnings Conference Call. My name is Josh, and I will be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded.

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

Ryan Crowe - Regeneron Pharmaceuticals, Inc. - VPof IR

Thank you,Josh.Good morning,good afternoon and good evening to everyonelistening around the world.Thank you for your interest in Regeneron and welcome to our first quarter 2023 earningsconferencecall.An archive of thiswebcast will be availableon our Investor Relationswebsiteshortly after the call ends.

Joining me today are Dr. Leonard Schleifer, Co-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 the call for Q&A.

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MAY04, 2023 / 12:30PM, REGN.OQ - Q1 2023 Regeneron Pharmaceuticals Inc Earnings Call

I would like to remind you that remarks made on today's call may include forward-looking statements about Regeneron. Such statements may include, but are not limited to, those related to Regeneron and itsproductsand business, financial forecast and guidance, revenue diversification, development programsand related anticipated milestones,collaborations,finances,regulatory matters,payer coverageand reimbursement issues, intellectual property, pending litigation and other proceedingsand 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 quarterly period ended March 31, 2023, which was filed with the SEC this morning. 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 GAAPand non-GAAPmeasureswill be discussed in today'scall. Information regarding our use of non-GAAPfinancial measures and a reconciliation of those measures to GAAPis available in our financial results press release and our corporate presentation, 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. Len?

Leonard S. Schleifer - Regeneron Pharmaceuticals, Inc. - Co-Founder, President, CEO & Director

Thank you, Ryan, and thank you to everyone joining today's call. Following our significant achievements in 2022, Regeneron is off to a good start in 2023, highlighted by important regulatory and pipeline advances, commercial execution and prudent capital allocation, all of which position better the company to deliver sustainable long-term growth and shareholder value over time.

George, Marion and Bob will cover details of our first quarter performance in a few moments. In the meantime, I would provide an update on our goal of continuing to grow our businesswhile simultaneously diversifying our revenue and earningsstreams, which ispart of our long-term vision for Regeneron.

We have made substantial progresstoward achieving that goal. Over the past 4 years, while total revenueshave nearly doubled, EYLEA accounted for only 57% of total revenues in the first quarter of 2023 compared to 88% of total revenues for the year 2019. Driven primarily by the growth of Dupixent, our Sanofi collaboration accounted for 25% of our total revenuesin the first quarter of 2023 compared to only 6% of our total revenues in 2019. We expect this trend of revenue growth, along with diversification to continue.

For example, assuming the approval and successful launch of aflibercept 8 milligrams, which has a June 27 PDUFA date, EYLEA 2 milligrams is expected to become asmaller share of our revenues,while aflibercept 8 milligramsisexpected to contribute to overall revenuegrowth.In addition, Dupixent remainsin a high-growth mode, with global net product sales up 40% on a constant currency basis compared to the prior year quarter, driven by growth acrossall 5 approved indications.

We believe the positive Phase III results for Dupixent in the subpopulation of COPD patients with evidence of type 2 inflammation, as well as the promising resultsfor our IL-33 antibody,itepekimab,in former smokersrepresent additional significant opportunitiesto accelerate revenue growth as well as diversification.

Our oncology portfolio isalso starting to make a meaningful contribution to our top line, with last year'sacquisition of full global rightsto Libtayo and the recent launch of Libtayo in combination with chemotherapy in advanced non-small cell lung cancer. Moreover, we believe that fianlimab, our LAG-3 antibody, in combination with Libtayo, has the potential to become an important therapy in both melanoma and non-small cell lung cancer, where we have already advanced to pivotal studies.

We are also quite excited about the emerging clinical profile for linvoseltamab,our BCMAxCD3 bispecific.Updated datafor which will bepresented at the upcoming ASCO Annual Meeting. We remain on track to submit a BLA seeking accelerated approval in late-stage myeloma later this year.

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MAY04, 2023 / 12:30PM, REGN.OQ - Q1 2023 Regeneron Pharmaceuticals Inc Earnings Call

Wecontinueto invest in our research and development engineand expect it will deliver new differentiated medicinesthat will driveorganicgrowth over time. Our broad development pipeline of nearly 3 dozen programs spans many different therapeutic areas and modalities, notably our co-stimulatory bispecificsin cancer;our early pipeline in cardiovascular and metabolic diseases;aswell asour collaborationswith Alnylam, Intellia, Decibel and others are expected to drive medium- and long-term revenue growth, profitability and diversification.

Before handing over to George, I'd like to take a moment to recognize the contributions that Dr. Roy Vagelos has made to Regeneron over the nearly 3 decades that he has served as our Board Chair. Over the years, he has provided invaluable guidance and he continuesto inspire usas we work to turn world-classscience into medicines. Roy will retire from the Board after hiscurrent term endsnext month. At that time, in addition to our current rolesin the company, George and I will be appointed by the Board to serve asco-Chairs, and Christine Poon, a member of Regeneron's Board since 2010, will be appointed as the Board's Lead Independent Director.

With that, let me turn the call over to George.

George D. Yancopoulos- Regeneron Pharmaceuticals, Inc. - Co-Founder, President, Chief Scientific Officer & Director

Thank you, Len. The first quarter of 2023 delivered multiple significant milestones for Regeneron and for our collaborations, from the positive Dupixent Phase III COPD data, to progressin our oncology pipeline, as well as exciting new landmarks from our genetic medicines programs.

Starting with Dupixent. In March, together with our Sanofi collaborators, we announced that Dupixent wasthe first new mechanism of action treatment to produce statistically significant and clinically meaningful resultsin aPhase III trial for COPDin over adecade.Our BOREAStrial enrolled COPD patients with moderate to severe disease and evidence of type 2 inflammation.

Dupixent-treated patients demonstrated a clinically meaningful 30% reduction in exacerbations, a significant improvement in lung function as well as quality-of-life benefits, an impressive trifecta in a potential paradigm-changing treatment for this deadly disease. We are looking forward to presenting the detailed BOREASresults in a late-breaking presentation at the upcoming American Thoracic Society Meeting later this month. We also plan to discussthese exciting resultswith regulatory authoritiesand expect to report resultsmid next year for the replicate Phase III NOTUS study.

I would remind you that we are also trying to addressan overlapping COPD population with our IL-33 antibody, which isin Phase III studiesbased on positive Phase II proof-of-concept data. This approach is further supported by genetic analysis from our Regeneron Genetics Center, which demonstrated association of loss of function in interleukin-33 with reduced COPD risk. Similar genetic analyses supported the role for a Dupixent benefit in COPD.

The BOREASCOPD dataindicatesthat Dupixent can help even more patientsbeyond the 5 current FDA-approved indicationsand diseasescaused or exacerbated by type 2 inflammation, including atopic dermatitis, asthma, chronic rhinosinusitiswith nasal polyps, eosinophilic esophagitisand prurigo nodularis.We are also expecting an FDAdecision for Dupixent for chronic spontaneousurticariaon October 22,2023,and we arecontinuing to tailor Dupixent development to patients with other type 2 inflammatory diseases, most likely to be responsive to thismethod.

Moving to oncology. With the progress of our late and early stage pipeline, we are looking forward to several important milestones this year. Starting with Libtayo. In addition to expanded use in lung cancer, Libtayo was recently added to the NCCN guidelines for neoadjuvant treatment of CSCC. The Libtayo U.S. label was also recently updated with more mature CSCC and BCC data, supporting its differentiated clinical profile in these tumor settings and satisfying all post-marketing commitmentsthat require full approval in these indications.

Regarding our exciting new combinations with Libtayo. Starting with fianlimab, our LAG-3 antibodies, for which we are planning a broad pivotal program spanning several cancer indications. These efforts were triggered by our robust and confirmed data in first-line metastatic melanoma patients, which will be presented in further detail at ASCO, suggesting that the fianlimab-Libtayo combination could produce about double the response rates with longer progression-free survival, the anti-PD monotherapy standard. Based on this, we have already initiated pivotal trials in metastatic and adjuvant melanoma, and we will start a study in perioperative melanoma in the second half of the year. In addition, based on

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MAY04, 2023 / 12:30PM, REGN.OQ - Q1 2023 Regeneron Pharmaceuticals Inc Earnings Call

promising data in small patient cohorts, we started a seamlessPhase II/III pivotal study for treatment of metastatic non-small cell lung cancer, and we will soon start a Phase II study in the perioperative setting.

Next to bispecifics for solid tumors, which are being investigated in combination with Libtayo. Earlier this year, at ASCO-GU, we presented initial positive first-in-human datafor our PSMAxCD28 costimulatory bispecific in combination with Libtayo in advanced prostate cancer,atumor type considered immunologically cold and largely unresponsive to anti-PD-1 therapy alone. Over the next 12 months we plan to present updated PSMAxCD28 data in more patients, some of which will have been prophylactically treated with our anti-IL-6 receptor antibody, sarilumab, to potentially reduce the severity of immune-mediated side effects while maintaining or improving antitumor activity. Also during this time frame, we plan to present data in advanced ovarian cancer for both our MUC16xCD3 bispecific and our MUC16xCD28 costimulatory bispecific as well as data in several tumor types from our EGFRxCD28 costimulatory bispecific, all in combination with Libtayo.

Our hematology oncology pipeline continuesto advance. In an oral presentation at the upcoming ASCOAnnual Meeting, we will present updated data for linvoseltamab, our BCMAxCD3 bispecific tested in late-line multiple myeloma. We believe these data will show that linvoseltamab hasthe best-in-class potential with differentiated efficacy, safety and a favorable dosing schedule in the competitive environment of relapsed/refractory multiple myeloma treatment candidates. We remain on track for a regulatory submission in the United States in the second half of this year for linvoseltamab.

For odronextamab, our CD20xCD3 bispecific, we are on track to complete U.S. and EU regulatory submissions for both relapsed or refractory follicular lymphoma and diffuse large B-cell lymphoma in the second half of this year. Odronextamab in late-line relapsed or refractory follicular lymphomahasapotential best-in-classefficacy profile,and our optimized step-up dosing regimen hasimproved odronextamab'ssafety profile without impacting efficacy. Also, we have initiated a first-in-human study of our CD22xCD28 costimulatory bispecific in combination with odronextamab in relapsed/refractory DLBCL, which we hope could further improve upon the anticancer benefit for these patients.

Now to genetics medicines. Starting with our collaboration with Alnylam in siRNA therapeutics. Just last week, we and Alnylam announced an important update for our Alnylam APPprogram in early onset Alzheimer's disease. For the first time, an RNAi therapeutic demonstrated sustained silencing of a pathological gene in the central nerve system in a clinical trial. In their earningscall thismorning, our Alnylam collaboratorsprovided additional details on these results. Our siRNA approach aims to prevent production of amyloid precursor protein as opposed to clearing existing amyloid plaquesafter they have already formed, providing anew way to potentially addressAlzheimer'sdisease,which will still have adevastating impact on patients and their families even with the emergence of amyloid-clearing antibodies.

Patients treated with single doses of ALN-APP experienced dose-dependent, rapid and sustained reduction of up to 90% in APP production as assessed by biomarkersin cerebrospinal fluid. The safety and tolerability profile with single dosing isencouraging so far. While the multi-dose Part Bportion of the study is on partial clinical hold in the United States due to findings observed in prior nonclinical chronic toxicology studies, Part B has already received regulatory approval to proceed in Canada, where the majority of the part A clinical trial patients had been enrolled.

Detailed resultsfrom the study will be presented in an upcoming medical meeting. We are looking forward to advancing additional development candidatesfor the many other neurodegenerative diseasesthat currently have few or no therapeutic optionssuch asother targetsfor Alzheimer's, as well asfor ALS or Lou Gehrig'sdisease, Parkinson's and Huntington's.

In addition to these exciting developments in central nervous system diseases, we are continuing our progress with liver targeted medicines, including our broad and multipronged approach to develop treatmentsfor NASH, or nonalcoholic steatohepatitis. We're enrolling a Phase II study of ALN-HSD in NASH patients with genetic risk factors, continuing clinical development of ALN-PNP, and we are planning to progress additional more recently genetically-validated NASH targets as well.

Finally,I would like to highlight our recently announced collaboration with SonomaBiotherapeutics' discover,develop and commercializeregulatory Tcell therapiesfor autoimmuneand inflammatory diseases.Thiscollaboration will bring together our industry-leading technologiesfor the discovery and characterization of fully human antibodies and T cell receptors, as well as our additional biologics candidates with Sonoma's pioneering approach to developing and manufacturing gene modified Treg cell therapies.

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