雷傑納榮製藥 (REGN) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen.

Welcome to the Regeneron Pharmaceuticals Q4 2014 earnings conference call.

(Operator Instructions) As a reminder, today's conference is being recorded.

I would now like to introduce your host for this conference call, Dr. Michael Aberman, Senior Vice President of Strategy and Investor Relations.

You may begin.

Thank you, operator.

Good morning and welcome to Regeneron Pharmaceuticals' fourth-quarter and year-end 2014 conference call.

An archive of this webcast will be available on our website under Events and Presentations for 30 days.

Joining me on the call today are Dr. Leonard Schleifer, founder, President, and Chief Executive Officer; George Yancopoulos, founding scientist, President of Regeneron Laboratories, and Chief Scientific Officer; Bob Terifay, Senior Vice President, Commercial; and Bob Landry, 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 this call include forward-looking statements about Regeneron.

Such statements may include, but are not limited to, those related to: Regeneron and its products and businesses; sales and expense forecast; financial forecasts; development programs; collaborations; finances; regulatory matters; intellectual property; and competition.

Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially in such statements.

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-Q for the quarter ended September 30, 2014, and Form 10-K for the year ended December 31, 2014, which is expected to be filed with the SEC later this week.

Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events, or otherwise.

In addition, please note that 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 those measures to GAAP are available in our financial results press release, which can be accessed on our website at www.Regeneron.com.

Once our call concludes, 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, Michael.

And although it is a small part, it was a part; the way you read that forward-looking statement did contribute to Michael's recent promotion to Senior Vice President.

So Michael, congratulations.

Anyway, a very good morning to everyone who has joined us on the call and webcast today.

2014 was another great year for Regeneron.

As many of you know, we founded this Company more than 25 years ago with a simple but challenging goal: to build a Company that can consistently and repeatedly bring important new medicines to patients in need.

With the potential approval of PRALUENT, our PCSK9 antibody, later this year, maturation of our antibody pipeline, and continued growth of our flagship product EYLEA, we believe now is the time where our vision increasingly becomes reality.

Regeneron is evolving into a Company with the potential for multiple significant revenue streams across a variety of therapeutic areas.

To that end, last month Regeneron and Sanofi announced that our regulatory applications for PRALUENT were accepted for review by the US and EU authorities.

We have been granted a priority review in the US with a PDUFA date of July 24 of this year.

Pending FDA review, we look forward to potentially being the first to bring the promise of this exciting new class of therapy to people with hypercholesterolemia.

We are working very closely with Sanofi to prepare for a successful launch in the second half of this year.

In addition to a very exciting year for our PRALUENT program, we also anticipate reporting new Phase 3 result, sarilumab, our IL-6 receptor antibody for rheumatoid arthritis, and submitting a US regulatory application later this year.

We also continue to make strong progress with dupilumab, our IL-4/IL-13 blocking antibody, in a number of serious allergic diseases.

We have an ongoing Phase 3 program in adult atopic dermatitis and are beginning new studies in pediatric atopic dermatitis.

We are also making important progress in our asthma pivotal development program, and George will share some exciting details in a moment.

In addition to an ongoing mid-stage program in chronic sinusitis with nasal polyps, this month we are launching a mid-stage trial in a new indication, eosinophilic esophagitis, an allergic inflammatory condition of the esophagus.

Our earlier pipeline continues to advance, and we now have 15 antibodies in clinical development for serious diseases including cancer, retinal conditions, chronic pain, and a life-threatening infection.

Two of these antibodies -- Regeneron 2222 for respiratory syncytial virus or RSV; and fasinumab, our anti-NGF therapy for chronic pain -- have the potential to move into pivotal studies this year, which would bring us to a total of five late-stage antibodies across several important diseases.

Turning to our sales and earnings performance, EYLEA continues to exhibit strong growth both in the US and worldwide.

In the fourth quarter, US EYLEA net sales were $518 million; and full-year sales were $1.74 billion, representing an approximate 23% growth year-over-year.

Based on fourth-quarter sales, EYLEA is now the market-leading branded anti-VEGF therapy for the treatment of retinal diseases in the United States.

We look forward to another year of growth for EYLEA in 2015, bolstered by the recent approvals in diabetic macular edema, or DME, and retinal vein occlusion.

We expect increased use of EYLEA in DME driven by both overall expansion of the DME anti-VEGF market and the anticipated publication of results from the NIH-funded Protocol T study conducted by the Diabetic Retinopathy Clinical Research Network.

In this study, EYLEA showed significantly greater gains in visual acuity than both Lucentis and Avastin.

In 2015, a number of elements may impact EYLEA growth, including the Protocol T data publication, potential changes in compounding regulations, and other factors.

We saw US EYLEA growth last year of 23%.

In 2015, we expect an increased rate of growth, which we anticipate will be in the approximate 25% to 30% range.

Outside the United States, sales of EYLEA were $297 million during the quarter and $1.04 billion for the full-year 2014, representing 120% growth over 2013.

Our collaborator, Bayer HealthCare, continues to drive new approvals and geographic expansion which we believe will continue to generate strong ex-US growth of EYLEA.

Before turning the call over to George to discuss R&D progress, I want to take a moment to touch on important investments in our business infrastructure and operations.

We continue to expand our biologic productions capabilities in both upstate New York and Ireland.

In Ireland, we are making strong progress in our buildout of a world-class 400,000 square foot biologic production and supply chain facility.

We have also significantly expanded our R&D and corporate offices in Tarrytown, New York, where we plan to open two new buildings later this year to keep pace with our growth.

Just last month we welcomed our 3,000th employee at Regeneron and anticipate continuing to add important new talent in 2015.

A key focus will be the significant expansion of our commercial organization in support of the potential PRALUENT launch.

This will be a year of critical growth and important pipeline advances for Regeneron.

We are committed to making the right capital and operational investments to ensure we fully maximize the value of our business this year and in the long term.

With that, let me turn the call over to Dr. George Yancopoulos, Regeneron's Chief Scientific Officer, who will discuss our pipeline and our clinical and research progress in greater detail.

He will be followed by Bob Terifay and then Bob Landry.

George?

Thank you, Len, and a very good morning to everyone who has joined us today.

I echo Len's sentiments that we are at a transformational stage in our Company's history.

From an R&D perspective we had a landmark year of pipeline progress, and we are poised to make significant strides in a variety of therapeutic areas.

I'd like to begin with EYLEA and our retinal franchise.

In March, we look forward to US FDA action on our supplementary BLA for EYLEA in diabetic retinopathy in patients with DME.

As you will recall we received Breakthrough status and priority review for this indication, given the strong prospective results seen in the subset of patients with diabetic retinopathy in our VIVID and VISTA Phase 3 DME trials.

Len mentioned the results from the NIH-sponsored DME study called Protocol T that looked at the comparative safety and efficacy of EYLEA versus ranibizumab and bevacizumab.

We are very encouraged by the data.

In this study EYLEA showed significant gains in efficacy when compared to both alternative therapies.

We look forward to the full data publication and presentation by the DRCR, which we anticipate in the near future.

We continue to invest in R&D that can bolster and protect our retinal disease franchise.

The initial Phase 1 data for EYLEA combined with our PDGF receptor antibody were presented for the first time just this past weekend and demonstrated our ability to safely combine the two compounds in a single, well-tolerated intravitreal injection.

We expect to begin Phase 2 trials in the first half of this year.

Our combination study of EYLEA formulated with our ANG2 antibody in a single intravitreal injection entered Phase 1 development for ophthalmologic indications late last year.

On PRALUENT, our PCSK9 antibody for lowering LDL cholesterol in people with hypercholesterolemia, we submitted the BLA during the fourth quarter based on data from 10 PHASE 3 clinical trials, the largest program for a PCSK9 inhibitor in an initial BLA submission.

We received a Priority Review Designation with a July 24 PDUFA date.

We also presented positive pivotal Phase 3 data at the American Heart Association meeting in November with six of these registrational trials, which all met their primary efficacy endpoint of a greater reduction in LDL cholesterol at 24 weeks than either active comparator or placebo.

In January, we reported top-line results from the first monthly dosing trials of PRALUENT, ODYSSEY CHOICE I and CHOICE II.

Both studies met the primary endpoint, demonstrating that a monthly dose of PRALUENT at either 150 milligrams or 300 milligrams was effective at significantly reducing LDL cholesterol from baseline at 24 weeks.

Detailed results from these studies will be presented at the upcoming American College of Cardiology meeting in March.

While these trials are not part of our initial registration package, we anticipate submitting data for monthly dosing to the FDA in the future.

Turning now to sarilumab, our IL-6 receptor antibody, which is in Phase 3 for rheumatoid arthritis, or RA.

We believe sarilumab is positioned to provide an important treatment option for the RA community, where patients often cycle through multiple medicines during the course of their disease.

In the fourth quarter, we presented additional analyses from the SARIL-RA-MOBILITY study at the annual meeting of the American College of Rheumatology.

This year we expect results from three additional Phase 3 studies in SARIL-RA program, which are evaluating sarilumab in combination and as monotherapy.

Dupilumab, our antibody that blocks both interleukin-4 and interleukin-13 signaling, continues to make significant progress across a number of serious allergic diseases.

In the fourth quarter we shared top-line results from our Phase 2b study of dupilumab in moderate to severe uncontrolled asthma.

In the dose-ranging study of 776 adults, dupilumab in combination with standard of care therapy demonstrated a significant improvement from baseline in forced expiratory volume over 1 second, or FEV1, a standard measure of lung function, as well a significant reduction in severe exacerbations, or asthma attack.

This positive response was seen in both the patient population with high blood eosinophils -- thought to be a marker of allergic disease -- as well as the overall study population.

We think this is a very exciting finding for uncontrolled asthma patients, who have a high unmet need, often struggling with daily symptoms and recurring asthma attacks despite the use of inhaled steroids, long-acting beta agonists, and rescue medication.

We look forward to presenting the full results later this year.

In addition, we recently had a very productive end of Phase 2 meeting with the FDA to discuss the potential asthma indication.

Based on these preliminary discussions we believe that our Phase 2b trial will be considered a pivotal trial, and that we will only need a single Phase 3 efficacy trial to support a potential asthma BLA submission.

We anticipate beginning this Phase 3 study in the first half of 2015.

We continue to enroll patients in the Phase 3 program for dupilumab in adult atopic dermatitis.

As Len mentioned, we are in the process of initiating a Phase 2 study in pediatric atopic dermatitis this month.

In addition we look forward to presenting details from our Phase 2a chronic sinusitis with nasal polyps study this year and discussing a potential Phase 3 program with the FDA.

Also this month, we have initiated a Phase 2a study of dupilumab in eosinophilic esophagitis, an allergic inflammatory condition of the esophagus that is being diagnosed at increasing rates in both adults and children.

Eosinophilic esophagitis can make for difficult swallowing, pain, and impaction of food in the esophagus due to swelling and inflammation.

This year we also anticipate advancing two of our earlier pipeline programs.

The first is Regeneron 2222, an antibody to RSV, the most common cause of bronchiolitis and pneumonia in children under the age of one in the United States, an important cause of respiratory distress in older adults.

We are completing Phase 1 trials and are in discussions with regulatory authorities to move directly into Phase 3 trials in the second half of this year.

The second program we believe may be ready for pivotal investigation later this year is our NGF antibody for chronic pain, fasinumab.

We have had productive discussions with the regulators over the last several months about the Clinical Hold status; and based on preclinical data we submitted to the FDA have been allowed to conduct clinical studies of up to four months' duration in osteoarthritis.

We plan to submit additional preclinical data in the first half of 2015 that we hope will completely remove the Clinical Hold status.

As such, we are anticipating initiating larger and longer studies in osteoarthritis later this year.

Turning to our pipeline and immuno-oncology, we initiated Phase 1 clinical studies for two new antibodies: our CD20/CD3 bi-specific antibody, also known as Regeneron 1979; and our PD1 antibody, Regeneron 2810.

This continues to be a key area for future innovation, and we have a very active discovery and early development program.

In summary, we've had a tremendous amount of progress with our very exciting, entirely homegrown, antibody pipeline.

Before turning the call over to Bob, I wanted to share that I recently joined other scientific leaders at the White House to discuss President Obama's precision medicine initiative.

One key priority in the initiative is a proposal to sequence 1 million Americans and to link this genetic information to their electronic medical records, so as to provide greater insight into human disease and to spur the discovery of new diagnostics and therapeutics.

We share the President's vision and, in fact, already embarked on a related effort through our Regeneron Genetics Center, or RGC.

Together with our partners, including Geisinger Health System, we are on track to sequence 0.25 million individuals over the next few years and to link this information to their de-identified digital health records.

We are already seeing valuable insights from this effort and look forward to sharing updates with you as we go forward.

With that, let me now turn the call over to Bob Terifay.

Thanks, George, and good morning, everyone.

It's been a very busy time for the Regeneron commercial team as we build on our leadership position for EYLEA injection, which recently became the number-one FDA-approved anti-VEGF therapy for retinal disease in terms of dollar sales in the United States, and as we prepare for a potential launch of PRALUENT, or alirocumab.

I'd like to begin my comments with EYLEA.

Fourth-quarter US EYLEA net sales to distributors were $518 million, which represent a 29% increase over the fourth quarter of 2013.

According to a survey of 201 retinal specialists conducted in December 2014, the market share for EYLEA in wet AMD in the United States is higher than that for ranibizumab.

FDA-approved therapies currently hold about 56% of the overall wet AMD market.

EYLEA was approved by the FDA in July 2014 for the treatment of DME.

We estimate that approximately 600,000 eyes are diagnosed with centrally involved diabetic macular edema in the United States, a similar number to those with wet AMD.

Of these eyes diagnosed, only a minority are currently treated with anti-VEGF therapy.

Because EYLEA has been approved using the same single strength 2-milligram dose per injection for all indications, it is difficult to give you an estimate of the proportion of our sales coming specifically from DME versus wet AMD.

We've made significant progress with coverage and paid claim confirmation across the payer space for EYLEA in wet AMD -- or in DME.

Currently all Medicare jurisdictions have coverage and evidence of paid claims for EYLEA in DME, and 98% of commercial lives have coverage for EYLEA for DME.

Market dynamics in DME could be favorably impacted when the data from the NIH-DRCR Protocol T comparative safety and efficacy study of the VEGF inhibitors are publicly presented, and with a potential FDA approval for diabetic retinopathy in patients with DME.

We are also working to generate unbranded disease awareness among diabetics to support patient screening, with an annual dilated eye exam so that DME is better diagnosed and more likely to be treated by retinal specialists.

Lastly, we continue to expect growth in macular edema following retinal vein occlusion, based on our broadened indication for all forms of RVO in October of 2014.

It should be noted, however, that the macular edema following RVO market for anti-VEGF therapy is much smaller than the wet AMD and DME markets, with 74,000 eyes treated each year.

Turning to the ex-US EYLEA business, where we split profits with our collaborator, Bayer HealthCare, fourth-quarter 2014 ex-US EYLEA sales were $297 million.

Ex-US EYLEA sales continue to be an important driver of growth, and the launch outside the United States is making significant progress, with continued regulatory approvals and registration.

In the fourth quarter, Bayer achieved Japanese DME approval and last month received a positive EU opinion in macular edema secondary to BRVO, with anticipated EMA regulatory action later this year.

There is also significant ex-US growth potential for EYLEA.

The annual market for the two approved anti-VEGF therapies combined is approximately $3.5 billion, based on a run rate observed in the fourth quarter.

EYLEA currently has approximately a 34% dollar market share of the ex-US approved anti-VEGF market, as compared to a 53% dollar share of the US FDA-approved anti-VEGF market.

Therefore, there is ample opportunity for growth through approval in additional indications, further geographic expansion, and market share gains.

With respect to PRALUENT, or alirocumab, we and our worldwide collaborator, Sanofi, are busy preparing for potential third-quarter 2015 US launch.

We believe that there is a significant underserved market of US patients at high risk who are not at their LDL-cholesterol target despite standard of care therapy.

These high-risk patients include those with familial hypercholesterolemia, those that are statin-intolerant, and those who are at high risk because of a previous cardiovascular event or other comorbidities.

In the US, we estimate this high-risk market size to be approximately 11 million adults.

This will be a market that requires significant development, given that PRALUENT represents one of the first biologics for chronic cardiovascular disease and has a novel mechanism of action.

We've already begun important educational work with physicians on the significant unmet medical need for further cholesterol reduction in patients not at goal, and the role of PCSK9 in cholesterol metabolism.

Regeneron and Sanofi share in all internal strategic and tactical planning and execution including marketing, market access, health outcomes, and medical affairs.

We will also share salesforce promotion for PRALUENT in the United States.

Sanofi will initially be responsible for sales promotion at launch outside of the United States.

Our hiring and infrastructure scale-up is well underway and is on track.

We are also completing important pricing and reimbursement analyses.

We continue to be committed to value-based pricing and ensuring strong patient access to therapies.

Overall, we are undertaking a substantial commercial investment to fully maximize this exciting opportunity and reach appropriate patients who can benefit most from treatment.

Bob Landry will provide more detail on the financial impact.

With that, let me turn the call over to our Chief Financial Officer, Bob Landry.

Thanks, Bob, and good morning to everyone who has joined us today.

Overall, we are pleased with both our fourth-quarter and full-year 2014 performance.

In the fourth quarter of 2014 we earned $2.79 per diluted share from non-GAAP net income of $328 million; and for the full-year 2014 we earned $10.00 per diluted share from non-GAAP net income of $1.18 billion.

This represents growth in non-GAAP diluted EPS and net income of 25% and 27%, respectively, for the fourth quarter and 22% and 26%, respectively, for the full-year 2014 compared to the same periods of 2013.

Regeneron's 2014 non-GAAP net income excludes non-cash share-based compensation expense; non-cash interest expense related to our senior convertible notes; loss on extinguishment of debt in connection with conversions of a portion of our convertible notes during 2014; a third-quarter incremental charge related to our Branded Prescription Drug Fee; and income tax expense.

A full reconciliation of GAAP to non-GAAP earnings is set out in our earnings release.

Total revenue in the fourth quarter were $802 million and $2.82 billion for the full-year 2014, which represented growth of 31% for the three months and 34% for the full year.

Net product sales were $522 million in the fourth quarter and $1.75 billion for the full year of 2014, compared to $406 million in the fourth quarter and $1.43 billion for the full-year 2013.

EYLEA net product sales in the United States were $518 million in the fourth quarter and $1.74 billion for the full year of 2014, compared to $402 million in the fourth quarter and $1.41 billion for the full year of 2013, which represented an increase of 29% and 23%, respectively.

There was a modest increase in US EYLEA distributory inventory levels as compared to the third-quarter 2014, although inventory remained within our normal 1- to 2-week targeted range.

Overall, inventory levels in terms of units at the end of 2014 were unchanged from the end of 2013.

Ex-US EYLEA sales were $297 million in the fourth-quarter 2014 as compared to $184 million in the fourth quarter of 2013.

Ex-US EYLEA sales for the full-year 2014 were $1.04 billion compared to $472 million for 2013.

Product revenue from ex-US EYLEA sales is recorded by our collaborator, Bayer HealthCare.

Please keep in mind that our reported ex-US EYLEA sales will not be exactly the same as the ex-US numbers that Bayer HealthCare report.

This is because for Japan Bayer reports their sales to their distributor, Santen, while we report Santen's in-market sales.

In the fourth quarter of 2014, Regeneron recognized $88 million from our share of net profits from EYLEA sales outside the United States, after repayment of $14 million in development expenses, and $301 million for the full-year 2014 after repayment of $57 million in development expenses.

While we did experience some foreign exchange headwinds this quarter, our exposure to currency movements currently remains limited due to the fact that the bulk of our revenue is US-based.

Additionally, we have partially offsetting European operating expenses from our Irish plant startup, Sanofi-incurred PRALUENT launch expenses, and European clinical trial expenditures.

Bayer HealthCare collaboration revenue for the fourth quarter was $137 million.

This included two $15 million sales milestones.

We are expecting to earn another $15 million milestone during the first half of 2015, which will be our final milestone to be earned from Bayer relating to our ex-US EYLEA sales.

Total Sanofi collaboration revenue was $135 million for the fourth quarter and $541 million for the full-year 2014.

As we've said previously, the Sanofi collaboration revenue line primarily consists of reimbursement of Regeneron-incurred R&D expenses; our share of profits or losses in connection with the ZALTRAP; amortization of upfront and other payments received from Sanofi; and our share of profits or losses in connection with commercialization of antibodies.

There is an additional fifth component in Sanofi collaboration revenue that we will be separately reporting for the first time this quarter: the reimbursement of Regeneron commercialization-related expenses, which can be seen in Table 4 of the press release.

This item, which was $12 million in the fourth quarter, is the reimbursement we receive from Sanofi for commercialization expenses that Regeneron incurs in connection with our antibody collaboration.

In essence, we get reimbursed for certain antibody-related commercialization expenses that we incur and which are predominantly embedded within our SG&A line.

While we get reimbursed for these commercial expenses, these, along with the commercial expenses that Sanofi spends on the antibodies, are included in the antibody P&L statement which we then recognize as our share of the antibody profit and loss.

Turning to that item, our share of losses in connection with commercialization of antibodies was $24 million in the fourth quarter of 2014 and $41 million for the full-year 2014; again, shown in Table 4 of our earnings release.

Please keep in mind that as we approach the potential approval and launch of PRALUENT, under our antibody collaboration with Sanofi we expect our share of losses in connection with commercialization of antibodies to substantially increase.

However, once PRALUENT and eventually other antibody products are launched and become profitable, we expect this component to become positive revenue as it will reflect our share of antibody commercialization profits.

Turning now to expenses.

Non-GAAP R&D expenses were $301 million for the fourth quarter and $1.09 billion for the full-year 2014.

Our unreimbursed R&D expense -- which is calculated as the total GAAP R&D expense, minus R&D reimbursements we receive from our collaborators, and R&D non-cash share-based compensation expense -- was $159 million in the fourth quarter and $508 million for the full-year 2014.

Our press release includes all the information that's required to calculate unreimbursed non-GAAP R&D expense.

For 2015 we'd like to reiterate our previously provided guidance on non-GAAP unreimbursed R&D to be in the range of $525 million to $575 million.

Our non-GAAP unreimbursed R&D spend is driven by three factors: our obligation to pay for 20% of the Phase 3 clinical development expense following the first positive Phase 3 results of our partnered antibodies; advancing our unpartnered pipeline; and proprietary R&D initiatives such as those in the area of human genomics.

Non-GAAP SG&A expenses were $114 million for the fourth quarter and $344 million for the full-year of 2014.

We expect non-GAAP SG&A expense in 2015 to be in the range of $650 million to $725 million.

We note that this growth in SG&A is due primarily to the prelaunch and commercialization expenses associated with PRALUENT and overall operational growth of the Company.

As I mentioned, a portion of the SG&A expense will be offset by the reimbursement of Regeneron commercialization-related expenses recorded within Sanofi collaboration revenue.

Non-GAAP cost of goods was $37 million in the fourth quarter and $126 million for the full-year 2014.

With regard to 2014 taxes, due to our net operating loss and tax credit carryforwards and deductions related to employee stock option exercises, we did not pay significant cash income taxes.

On a GAAP basis, the effective tax rate in the fourth quarter was approximately 50% and for the full-year 2014 was approximately 55%.

As a reminder, moving forward into 2015 we expect to begin paying material cash income taxes.

However, these cash payments will be significantly below our GAAP effective tax rate.

As a result, we anticipate that our non-GAAP tax rate beginning in the first quarter of 2015 will represent a blended rate based on an estimate of the cash taxes paid or payable for the full year.

We remind you that we previously provided guidance for the cash tax as a percentage of non-GAAP pretax net income to be between 10% and 20% for 2015.

Our capital expenditures for the full year ended December 31, 2014, were $333 million, which was more than double our capital expenditures in 2013.

These capital outlays will play an integral role in helping to ensure that we have the necessary infrastructure in place to launch our next generation of product candidates.

We expect capital expenditures to be between $650 million and $800 million in 2015, representing a significant increase from 2014, which is primarily attributable to our expansion and construction of R&D facilities and corporate offices in Tarrytown and our product supply facilities in Rensselaer and Limerick, Ireland.

The Irish site represents the largest capital investment.

The buildout is well underway, and we are currently on track to begin manufacturing validation batches in the second half of 2015.

We ended 2014 with cash and marketable securities of $1.4 billion compared to $1.1 billion at December 31, 2013.

With that I would like to turn the call back to Michael.

Thank you, Bob.

That concludes our prepared remarks.

We'd now like to open the call to Q&A.

As we'd like to give as many people a chance to ask questions as possible, we request that you limit yourself to one question.

Our IR team, which is now back to full strength as Manisha is back and includes Colleen Mackey, will be available in our office after the call for follow-up questions.

Thank you, and operator, please open the call for questions.

(Operator Instructions) Ying Huang, Bank of America.

Hey, morning, you all; thanks for taking my questions.

First of all, can you share a little bit thought behind your 2015 guidance?

It seems that finally the branded Lucentis and EYLEA now have more than 50% share of patients in AMD; and also you have achieved higher share then Lucentis.

So should we expect EYLEA to grow more than the market in AMD segment?

Then for DME segment this year, are you providing any patient assistance, given that there is a bigger component for commercial insurance here?

And do you think Protocol T will be the drivers for 2015 DME growth here?

How many questions is that, Ying?

(laughter)

One.

Any more, Ying?

We want to get them all before we don't answer them.

Bob, maybe you can start with the assistance for DME.

Yes.

In terms of patient assistance, if someone is a commercial patient we do offer assistance to patients for -- if they have no insurance we offer free goods.

And if they have insurance but they have a co-pay that they cannot afford, we do offer co-pay assistance.

In terms of government pay patients, we do provide funding to foundations who can help patients with their co-pay if they are government paid patients.

Okay, great.

As far as our forecast, Ying, our forecast is what it is.

As you know, the science of forecasting is not the strongest science in the world.

Just look what's been going on with the Storm of the Century that was supposed to hit New York but hit Boston.

Forecasting is a tough business.

But our growth forecasts of 25% to 30% represent our best estimates as of today.

Next question, Mike.

Matt Roden, UBS.

Hi, guys.

Thanks very much for taking the questions.

I think Yogi Berra said that he hates to make predictions, especially about the future.

So with that, I wanted to also ask about the guidance, just to put a little bit more meat on the bone.

At the top end of the range, we calculate that represents about 9% growth over the annualized 4Q sales of $518 million, where you say that the inventory range is normal.

This implies also sequential growth at the top end of the range throughout 2015 of about 3.5% per quarter.

That's obviously a slowdown from the 7% average last year.

And now you have the full-year DME and you have the Protocol T data behind you, so I'm just trying to understand why philosophically there should be a slowdown?

I think that we in consensus might've thought that it's going to go the other way.

So any additional color you can add would be helpful.

Thank you.

Yes, so, a couple things.

First of all, the actual growth rate is going to be higher this year over last year, versus last year over the year before.

We grew at 22% there in 2014, and we expect to grow between 25% to 30% this year.

We recognize that some of those points you mentioned are forks in the road.

And we're going to stick with what Yogi said: when you get to those forks, you should take them.

And we're going to go on to the next question.

Thanks.

Jason Kantor, Credit Suisse.

Morning.

This is Jeremiah in for Jason.

Thanks for taking the questions.

Going to the trajectory for DME, how do you see that shaping up for 2015?

Do you expect more a slow and steady growth rate, or is it more -- you see more of a step-up at some point?

Also regarding the Protocol T study, besides the direct comparison with Avastin and Lucentis, will you be able to speak to new patient subsets in your marketing efforts that weren't adequately studied in previous studies?

Bob, do you want to handle that?

Well, starting with the Protocol T, obviously that is not going to be in our labeling.

So from a promotion perspective, my sales reps are not going to be able to speak to specific subsets.

As you know in the retinal community, however, there are a number of presentations each year at medical meetings.

So there will be medically relevant discussions of Protocol T. But right now we can't talk about anything specific to Protocol T until it's presented publicly.

In terms of the DME growth, as we pointed out last quarter the DME market is a little different than the wet AMD market.

It's not a market where there is an urgency to immediately treat patients with the most aggressive therapy, given that the threat to vision is slower.

So we do expect the DME growth to be very gradual over time.

We continue to educate on the need for dilated eye exams, the need to get to a retinal specialist.

Our results of our clinical studies are very encouraging.

We do expect to see growth in DME, but it's going to be gradual.

Robyn Karnauskas, Deutsche Bank.

Hi, guys.

Thanks for taking the question.

With all the debate I hate asking this question, because I'm nervous about your response, with a no comment.

But with all the debate around pricing -- and I know you won't comment on PCSK9 pricing -- but a lot of the discussions happened well ahead of the launch of Sovaldi and Harvoni.

And I was wondering if you could just give some -- any color you can give as, like, how aggressive payers are being in those negotiations and general thoughts.

And then my second one, if you won't answer it is: so dupilumab is the new PCSK9; what will be the new dupilumab?

Like, what's hot in the pipeline that you'd like us to focus on that maybe is not being talked about right now?

Thanks.

Okay.

In terms of pricing, Robyn, of course we're not going to get into what discussions we have or haven't had, and what our pricing thoughts are in terms of any specific terms.

But what I have said and we've all said publicly is that our goals are really not that different than the PBMs'.

Our goals are to try and get our product, if it's approved, to patients who could benefit from it and get it to them in a way that they can afford and have access to it.

The way we get to that point may be a little bit different.

Perhaps incentives are a little bit different for the PBMs, whether they are looking for a revenue stream purely on a discount or something like that, I don't know.

That's really their business.

Our business is that we would like to come up with a fair price.

And we would like that price to be the price that would allow patients who could benefit from our drug to get access from it.

In terms of the pipeline, George, you want to comment on any place you want to point Robyn for paying attention?

Well, we like to not focus on any one thing, but on the depths and numerous opportunities that we have.

Just today, I guess, we talked about the fact that we could be into two additional pivotal programs by the end of the year.

That's very exciting to us.

Either one of those could turn out to be very, very important to patients and to us.

And we also pointed to our emerging effort in immuno-oncology, which has a lot of depth and is very comprehensive.

You mentioned that dupilumab could be the next PRALUENT.

Yes, we are very excited by that because we see this incredible growth opportunity there, both within indications and amongst additional indications.

We think that this could really be an important drug for very different assortments of allergic-related diseases.

Certainly the asthma data that we just announced the top-line results, and which was very well received at our end of phase 2 meeting with the FDA, is a lot of reason for excitement.

The fact that we will be able to go forward with a single Phase 3 trial is very exciting to us.

Matthew Harrison, Morgan Stanley.

Great.

Good morning; thanks for taking the questions.

I wanted to ask one on the pipeline.

Obviously, we saw the PDGF combo data over the weekend.

You've highlighted ANG2 as an interesting compound in the past; and now that that's in the clinic and we have some sort of clinical bar in terms of the PGF combo to look at, what sort of clinical differentiation do you think we should be looking for in terms of that ANG2 combo?

And any thoughts on timing around when we might be able to see first clinical data out of that program?

Thanks.

George?

I guess you're asking for differentiation between the ANG and the PDGF or versus EYLEA.

I think in all of these settings, what we are looking for is either increased durability and/or some sort of functional benefit supplied by the additional agent.

These have different biologies.

There's been very interesting preclinical work with both of them.

So we are looking forward to both of these.

In terms of the timing of the programs, I don't think we give too many specifics on that.

Chris Raymond, Robert Baird.

Guys, I do have a pipeline question and it may be more of a leading question.

I think someone asked if you could highlight what you think is most exciting.

There is a -- Regeneron 1033 I think you talk about in your regulatory filings; but I don't think you've really talked about it too much on your calls.

But as I see on clintrials.gov, it looks like there is a Phase 2 trial that should wrap up next month in sarcopenia.

Could you talk a little bit about this opportunity?

How should we be thinking about it?

And maybe since it is sort of mid-stage why it's not something that you guys highlight in this venue?

Thanks.

Well, as I said, it's very hard to highlight 15 different programs.

As you said, we have proof of concept data coming out with this GDF-8 antibody that you refer to that could be important for overcoming muscle atrophy in a variety of settings.

I guess we're going to wait for the proof of concept data to decide next steps and how exciting it will be.

But I think what we are really excited about is the depth and the breadth of all of our programs, having 15 antibodies, and the fact that so many of them are addressing important unmet needs and could be making such important differences in patients' lives.

Yes.

Just to add to that, even though there is individual programs, 15 different ones, some of them go across multiple disease areas, obviously.

And some of them potentially -- as George has talked about in other forums -- represent franchise opportunities.

For example, the bi-specifics that George and the team have now realized in terms of making them and putting them into clinical trials, if we can get that franchise going there is some real opportunity for us to become real leaders in the field of immuno-oncology.

Because obviously you can use a plug-and-play strategy there, where the first one may be targeting CD20 but the others could target whatever target you might be interested in.

Some of that will be part of work we do with Sanofi.

So we're actually pretty excited about just one of these representing another whole order of magnitude of franchise behind it.

Thank you.

Adnan Butt, RBC Capital Markets.

Thanks for taking the question; and congrats, Michael, on the promotion.

The one question I'd like to ask is that in terms of Regeneron's participation in the commercial infrastructure, would you be breaking out details?

In terms of deciding which projects to participate in, is that a project-by-project decision?

Or will you be in sarilumab and dupilumab as well?

Thanks.

We actually make a project-by-project decision, and we have not announced our decision for sarilumab and dupilumab at the current time.

Yaron Werber, Citi.

Hi.

Thanks for taking my questions.

Quick question on your 222 antibody, the anti-RSV.

Give us a little bit of a sense: is this going -- is this ready to move into kids?

And is this looking at prevention?

How is it differentiated from Synagis?

Well, as we said, we are talking about moving into a pivotal trial this year here for this program; and that, of course, will be in children.

We think that it could be quite differentiated from the existing treatments out there in terms of which populations are actually targeted, the number of treatments that might have to be given to cover the individuals, and also potentially the extent of the efficacy.

So we are quite excited about this program.

Usually when you move into kids you've got to do a challenge first.

But this is an antibody, so it sounds to me like you don't feel like you need to do a challenge first; you can go right into a pivotal for kids.

Well, we of course have been discussing and dealing with the FDA on all of this, and when we move forward it's all with the -- all these communications and discussions with the FDA.

Okay, great.

Thank you.

Terence Flynn, Goldman Sachs.

Hi, thanks.

Maybe just one clarification, and then one question.

With respect to Matt's question on the EYLEA guidance, can you just clarify if favorable Protocol T data is actually factored into your guidance, or if that's something that you would consider once we see the full data?

Then on dupilumab, was just wondering if you can share any more details on the pediatric program for atopic dermatitis, if that would actually be a registration-enabling trial, or if you are talking more of a PK/PD program first before you go into a registration trial.

Thanks.

In terms of Protocol T and our guidance, everything we know went into the mix, and what came out was our best guess.

But obviously until we see how -- we are very excited about Protocol T, but till we see how it gets received and how quickly it might or might not influence behavior -- we hope it will -- things could change.

So it's our best information, guess, on the future that we have as of the moment.

The second question, I don't think that the first trial in pediatric atopic dermatitis will be a pivotal trial.

But of course, we are in a full-blown pivotal program right now with multiple Phase 3 trials going on in parallel, enrolling well, in atopic dermatitis.

We are very, very pleased with how that program's getting kicked off.

It's just a recent start.

Obviously we are going into pediatrics with the hope of eventually getting a label in that age group as well, because there are a lot of kids there that could potentially benefit.

Of course, don't forget we have Breakthrough status.

So obviously we're going to work closely with the FDA and take full advantage of what that affords us.

Cory Kasimov, JPMorgan.

Hey, good morning, guys.

Thanks for taking my question.

Wanted to follow up on dupilumab.

For that program in asthma, so now that the FDA considers the Phase 2b sufficient to be a pivotal study, is it safe to assume that the single Phase 3 trial will be designed in a very similar fashion, just more centers and more patients?

Thanks.

George?

Yes, I guess, as you said -- everything you said makes sense.

We won't go into specifics, but it --

We try not to take additional risk, obviously, in these programs.

Geoff Meacham, Barclays.

Morning, guys; thanks for the questions.

I know you're obviously not giving specifics for DME for guidance.

But I just wanted to get some color from you all on market dynamics since the launch in DME and things like treatment experience of new starts.

Then on the R&D side, there are a lot of disruptive therapies on the horizon in retinal that aren't frequent intravitreal injections -- like gene therapies, subcu, things like that.

How are you thinking about these approaches when you prioritize your pipeline in retinal?

Thanks.

Right.

Thanks for the question, Geoff, and glad to hear you at your new forum.

Good luck.

In terms of -- Bob, you want to take the first question?

Yes, as I said, Geoff, it's hard to tease out the DME portion of our business relative to the AMD business.

We are seeing a pickup in reported usage in DME; but I can't give a precise market share right now.

And so in terms of, Geoff, your question about R&D, there is a lot going on in R&D world.

We are obviously in it.

You've heard George talk about our PDGF program; you've heard him talk about our ANG2 program.

There are other things internally that we haven't talked about.

We also have a collaboration with Avalanche in gene therapy.

We've looked at some of the systemic programs that you talk about.

Obviously, systemic inhibition of VEGF, we've known from the very earliest of early days that it's likely to be something that could work.

But the question is: can it work with the right therapeutic index?

We in fact -- George, did you want to add anything to that?

Right.

Some of our first studies actually in the AMD field were done systemically using systemic approaches.

And of course the concern is the benefit/risk with more widespread blockade.

Certainly most of us have decided that that's not going to lead to a satisfactory benefit/risk.

But as Len says, we are very active in this area.

We consider ourselves leaders in this area.

We certainly see a lot of excitement here, though we don't see that any of these approaches are really going to be widespread approaches that are going to be replacing the current standard of cares.

They are going to -- for at least the initial periods of times going to be, we think, including some of the areas that we are going into, addressing perhaps more niche areas that maybe perhaps over time could grow.

Phil Nadeau, Cowen and Company.

Good morning; thanks for taking my question, and congratulations, Michael, on your promotion.

My question is on the Amgen lawsuit with PRALUENT.

What's the update there?

What has happened over the last few months?

And then looking forward, I believe Amgen has asked for you guys to be barred from the market.

How is that going to be decided over the next five months?

Is there a public hearing, or what can we look for to see the preliminary injection be determined?

Yes, we're not going to comment on the ongoing lawsuit; but I am unaware that Amgen has asked for us to be barred from the market with a preliminary injunction.

Jim Birchenough, BMO Capital Markets.

Yes.

Hi, guys.

Congratulations on the quarter.

Notwithstanding your comments about Yogi Berra, can you give us some sense of how to think about the PRALUENT launch and benchmarking it against other biologics launches?

We've got the example of Prolia into the osteoporosis space; we've got cancer drug launches you are familiar with.

How do we think about it just qualitatively, your expectations for the launch?

Qualitatively we're hoping for a good launch.

I don't know if that's going to be helpful to you, Jim.

But it's really (multiple speakers)

Well, I guess, benchmarking it, Len, against some -- a Prolia launch versus something that goes a little steeper like an oncology drug launch.

How should we think about that?

Jim, I think obviously you've hit the nail on the head.

This is a unique marketplace.

We are entering a primary-care-type market for a biologic.

So I think what you can expect is that the reimbursement will go slowly and it will be a gradual build.

But as Len has always said, I was wrong on EYLEA; I don't know where we're going to go with PRALUENT.

And I hope I'm wrong on PRALUENT.

Right.

I mean for us, we've got our eye on the long term, and the potential that this product has to make a difference for people who really can't get their cholesterol down and need to get their cholesterol down.

If this class of product gets approved, I think it could provide a real additional -- an important addition to the therapeutic armamentarium.

That's what we are focused on.

And over the long term, if you can bring a product to market that really makes a difference to patients, I think you'll have an advantage.

I do believe there will be two parts to this launch.

The first part of the launch will be what we anticipate will be the rapid adopters: people whose doctors want to get in early on a new type of approach for patients who really need it; perhaps the familial hypercholesterolemics who have had cholesterol all their lives.

There was an interesting article that just came out in Circulation that suggests that having a high cholesterol is not the only thing.

It's how long you have had a high cholesterol seems to really matter.

It's like area under the curve or pack years of smoking that seems to be driving this.

There are people out there who have had a lifetime, decades of high cholesterol for genetic reasons and no matter what they do can't get it down.

I expect they will be early adopters in that area.

There will be others who will want to wait until the OUTCOMES studies come out.

And then I think you'll see a relaunch of the product.

So I think this has a possibility to be a nice, steady -- initially driven by the early adopters and the really high need, and then the OUTCOMES studies will perhaps drive another leg up.

Michael, we have time for any more?

We have time for one last question.

Okay.

John Newman, Canaccord.

Hi, guys; thanks for taking the question.

I promise to only ask one.

Given the seems like almost daily attempts to read through on the pricing situation with Gilead's HCV drugs, many other products that are launching, is it reasonable to think that payers are going to think differently about a product with a price tag at the Harvoni level and the Sovaldi level, versus a product that could have a much lower price tag?

Yes.

Is there more to that question, or am I missing something?

Also, do you think that payers are more concerned about the individual drug cost?

Or do you think that they are more concerned about just the total potential long-term cost, and that's how they are going to --?

You know, it's interesting.

Not all payers are the same and not -- even within a payer, their financial incentives are not always the same in terms of which book of business that you look at.

There are some big books of business where they are at risk, a payer, for example, a PBM.

And when they are at risk, they really care about total cost, because they are taking the risk and they have to bear the risk of the total expenditures.

On other books of business or other PBMs, they are simply there to be a good negotiator.

And actually they are somewhat -- from their own bottom line -- they may have a societal interest, but from their own bottom line they have less of a concern about the absolute price, and then other than getting a discount from whatever the price may be.

All that, as I said, is their business.

Our business is to try and get the drug out at a fair price.

And clearly we have to take into consideration what the payers think is a fair price but, as importantly, what the doctors and the patients can believe is a fair price, what they can afford with co-pays.

And we want to -- we don't want to get in a situation where these products are commoditized, because we think there are differences between the products.

We want to get in a situation where doctors and patients can make choices.

Remember what President Obama and Dr. Yancopoulos discussed last week at the White House was precision in individualized medicine.

You can't have individualized medicine if you don't have doctors making choices for individual patients.

So fundamentally we think that's a good thing, and that's where we would like to wind up.

Okay, Mike?

Great.

Well thank you, everybody.

This is going to conclude our call for today.

We appreciate everybody; and as I mentioned the IR team is available for follow-up.

Just send us an email or drop us a line and we'll get (technical difficulty)

Ladies and gentlemen, this does conclude today's presentation.

You may now disconnect and have a wonderful day.