雷傑納榮製藥 (REGN) 2020 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Regeneron Pharmaceuticals Q2 2020 Earnings Conference Call. (Operator Instructions) Please be advised, today's call is being recorded. (Operator Instructions) Thank you.

Justin Holko, I will now turn the call over to you.

Thank you, Stephanie. Good morning, good afternoon and good evening to everyone listening around the globe. Thank you for your interest in Regeneron Pharmaceuticals and welcome to the Second Quarter

2020 Conference Call. An archive of this webcast will be available on our website.

Joining me today on the call are Dr. Leonard Schleifer, Founder, President and Chief Executive Officer; Dr. George Yancopoulos, Co-Founder, President and Chief Scientific Officer; Marion McCourt, Senior 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.

I would also like to remind you that remarks made 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 businesses, financial forecast and guidance, development programs and related anticipated milestones, 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 the 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 June 30, 2020, which has been filed with the SEC today. 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.

Thank you, Justin, and thanks to everyone for joining the call. I hope all of you are staying safe and well. We very much appreciate your efforts to join given the pandemic conditions and even on top of that, in Northeast, some power disruption from the storm. But business continues.

We had an eventful and productive second quarter in terms of financial results, business development and corporate accomplishments. In the second quarter, our results demonstrated resilience and strength despite the impact of the ongoing COVID-19 pandemic.

In addition to driving double-digit top and bottom line growth, we continue to deliver meaningful advances in our broad and innovative pipeline as well as in our fight against COVID-19 with our novel antibody cocktail. Regeneron continues to execute well in this unprecedented time for our company, our nation and the world.

Starting with our products. EYLEA global net product sales were $1.75 billion in the second quarter, a modest decline of 6% compared to the prior year. In the U.S., we generated sales of $1.11 billion with a pronounced and sustained rebound in demand in May and June, following the decline in sales we experienced in early April. This rebound has continued into July, and demand is now approaching pre-COVID levels. The efficacy, safety and convenience of EYLEA have proven to be even more valuable in the world of COVID-19. As you'll hear from Marion, EYLEA outperformed the broader anti-VEGF class this quarter.

Demand for Dupixent also proved to be robust in the second quarter with global sales growth of 70% compared to last year. Sales were nearly $1 billion on continued market penetration in atopic dermatitis, asthma and new launches. Adding to the Dupixent momentum, the FDA approved a new indication for atopic dermatitis in children aged 6 to 11. Furthermore, we demonstrated dramatic results in eosinophilic esophagitis where patients reported a nearly 70% reduction in symptoms, further exemplifying the potential of Dupixent to bend the arc of certain Type 2 inflammatory diseases. We look forward to additional Dupixent milestones, including an upcoming Phase III readout in pediatric asthma and enrollment of a second Phase III study in chronic obstructive pulmonary disease. We and our patients and customers have a tremendous amount of enthusiasm for this product, and we are still in the early days of unlocking its full potential with our partner, Sanofi.

In oncology, Libtayo is the leading systemic treatment for cutaneous squamous cell carcinoma. We are seeking approvals in basal cell carcinoma and non-small cell lung cancer with regulatory filings to be submitted imminently. With our chemotherapy combination study in non-small cell lung cancer nearing full enrollment, our excitement for Libtayo continues to grow. Beyond Libtayo, we are broadening and advancing our bispecifics portfolio, generating further momentum for our oncology strategy.

Turning to our efforts to fight COVID-19. We are advancing the development of a novel antibody cocktail known as REGN-COV2 that may both treat and prevent infection from the SARS-CoV-2 virus. We are now in Phase II and Phase III trials and hope to generate initial data by the end of September, as George will discuss in further detail. We also signed 2 major agreements in recent weeks. We announced a $450 million agreement with BARDA and the U.S. Department of Defense to manufacture REGN-COV2. We also signed a 6-year $345 million agreement with BARDA for our novel Ebola antibody cocktail, further demonstrating the potential of our end-to-end technologies to deliver shareholder value in addressing infectious disease threats.

Finally, on the corporate front. We completed a large secondary offering of more than 13 million shares of our common stock held by Sanofi. Using our strong balance sheet, we also repurchased $5 billion or 9.8 million shares from Sanofi, effectively eliminating their ownership position in our company and demonstrating our confidence in the trajectory of our business. For Regeneron shareholders, this transaction provided immediate accretion and removed a significant overhang related to the expiration of Sanofi's lockup period at the end of this year. Regeneron is a business that is indeed firing on all cylinders. We thank all of our colleagues across the company who have been working with resolve and resilience in these extraordinary times of the pandemic. Our strong business performance, cash flow, balance sheet and advancement of the next generation of innovations for important medical needs has us positioned to weather COVID-19 and emerge from the pandemic to drive continued long-term growth.

Now I'll turn the call over to George.

Thank you, Len.

And with all of us still in the throes of the COVID-19 epidemic, I will start with an update on our antiviral antibody cocktail that has the potential to both possibly protect against infection and also treat those already infected. Based on our Ebola program, our new nonhuman primate data for our COVID-19 cocktail as well as our understanding of the immune response, we believe that our COVID-19 treatment is well positioned to help patients prior to an early on infection. We initiated our clinical program in June, barely 5 months after we started this treatment -- developing this treatment. Our rapid time line was possible due to our VelociSuite technologies, which we developed in-house over decades to allow for specific turnkey disease interventions and we recently applied to develop our similar approach against Ebola, which we hope will prove to be the first treatment approved for this disease with a PDUFA date in October.

We are currently conducting 4 trials of Regeneron COV2, our antibody cocktail: one in hospitalized COVID-19 patients; a second, ambulatory study in outpatients who are diagnosed with COVID-19; a third, preventative study in household contacts of COVID-19 patients being carried out in collaboration with the National Institute of Allergy and Infectious Disease; and a fourth multidose healthy volunteer study. Our studies are adaptive in nature as we learn more about the virus in our antibody cocktail, and other studies are being planned as well. All of these studies have passed several safety assessments with no safety concerns observed to date. Despite the challenging environment in which these studies are being conducted, we are targeting to report initial virology and biomarker data from the treatment studies by the end of September with clinical outcome data to follow as enrollment progresses.

In June, we published 2 important papers in Science on our antibody cocktail in which we described the details of how the 2 antibodies in our cocktail block the coronavirus spike protein and importantly, highlighted the significance of using an antibody cocktail versus a single antibody approach. We showed that the cocktail approach avoided viral escape due to viral mutation, which rapidly occurred when using single antibody approaches. In addition, we have recently generated important data in nonhuman primates, which has been posted on bioarchives. These studies showed that in this setting, our antibody cocktail cannot only effectively prevent infection primates, matching or exceeding recently published prevention data achieved with vaccine approaches, but also that our cocktail can treat those already infected by accelerating viral elimination.

I next want to highlight the outside support we have received for our strategy. In addition to conducting our Phase III prevention study in collaboration with the NIAID, which subsequently expands our reach to investigate our cocktail in the preventative setting, we recently signed a manufacturing contract with BARDA as part of Operation Warp Speed to make initial lots of our cocktail at risk so the drug could be available as soon as possible, if proven efficacious and approved by the FDA. While we are all hoping that vaccines prove successful, and we ourselves are partnering on some novel second-generation vaccine approaches, we believe that our neutralizing antibody cocktail could play an important role as a rapid first line in defense in those for whom a vaccine is not available and in the long term, could also provide protection for those least likely to respond well to a vaccine, such as the elderly and immunocompromised. Moreover, unlike a vaccine and as supported by our initial primate studies, our cocktail may not only prevent infection, but could also have the potential to treat those already infected.

Moving on to our efforts outside of COVID-19 and starting with Dupixent. The demonstrated safety and efficacy of Dupixent are further bolstered by the recent FDA approval in children with moderate-to-severe atopic dermatitis, children as young as 6 years old. And we are not stopping there as we are conducting a study in even younger atopic dermatitis patients. And for children with asthma, we plan to submit a BLA supplement for approval in pediatric asthma by the end of the year, pending upcoming Phase III data. We're also enhancing convenience for all patients with the recent FDA approval of our 300-milligram auto-injector. Outside of the United States, Dupixent was approved in China recently, which represents a major milestone as we work to ensure patients everywhere have access to this life-changing medicine.

Our Dupixent clinical program continues to deliver positive results in additional Type 2 inflammatory indications. In May, we announced that we met the primary and key secondary end points in Part A of our pivotal trial in eosinophilic esophagitis. Patients treated with Dupixent demonstrated significant clinical and anatomic improvements with almost a 70% reduction in disease symptoms compared to an approximate 30% reduction for patients on placebo, as demonstrated by the dysphasia symptom questionnaire. We are currently enrolling Part B of this trial and communicating with regulators about filing requirements for this indication. In addition, the first pivotal Dupixent trial in patients with chronic obstructive pulmonary disease typified by Type 2 inflammation, or Type 2 COPD, completed a prespecified analysis by the Independent Data Monitoring Committee requiring a certain threshold reduction in exacerbations, which was met and, thus, triggered opening a second pivotal trial for this potential indication. Approval in Type 2 COPD would unlock another important opportunity for Dupixent to help patients with Type 2 inflammatory disease who currently have limited options.

Moving on to our oncology portfolio and starting with our PD-1 antibody, Libtayo. At the virtual ASCO meeting, we presented a clinically meaningful cutaneous squamous cell carcinoma data follow-up -- followed by a label update as well, as reported at ASCO, with up to 3 years of follow-up. While the overall response rates remain stable, approaching 50%, the complete response rates have climbed to 20% in metastatic CSCC, increasing from the 7% rate reported in the initial primary analysis, providing one of the most dramatic examples of ongoing and prolonged benefit from an immunotherapy treatment. Moreover, these data firmly established Libtayo as first in class for this dermato-oncology cancer setting with compelling long-term clinical data. In addition, last quarter, we announced positive first-in-class data for a second dermato-oncology indication, that is basal cell carcinoma, which we will be submitting for regulatory review.

Finally, we're excited about the opportunity for Libtayo in non-small cell lung cancer based on our recent positive Phase III trial with Libtayo as monotherapy in PD-L1 high patients, which we'll also be submitting for regulatory review. And we have completed screening patients for enrollment in our follow-on chemo combination study in lung cancer. Libtayo is foundational to our oncology strategy, and we are making significant progress with Libtayo on skin cancers, lung cancers and our numerous combination and collaborative studies.

Our CD3 bispecifics clinical program is moving forward despite operational challenges imposed by the COVID-19 pandemic. Regeneron 1979, our CD20xCD3 bispecifics, has shown robust efficacy in both follicular lymphoma and more aggressive diseases, including diffused large B-cell lymphoma. Our potentially pivotal Phase II study continues to enroll globally, and we are having productive discussions with regulators to expand the registrational program with combinations and in earlier lines of treatment. We are preparing to explore novel combinations, including a combination from our novel class of costimulatory bispecifics that is one targeting B-cell specifically. We recently published a second major paper featured on the cover of Science Translational Medicine in June describing how these costimulatory bispecifics can synergize not only with CD3 bispecifics, but also with PD-1 blockers.

Finally, we are actively working on subcutaneous delivery of this potentially important drug candidate. Our BCMAxCD3 bispecific is moving forward, and we are planning to initiate potentially pivotal studies in various multiple myeloma settings. Moreover, we intend to explore standard novel combinations, including with a costimulatory bispecific targeting plasma cells. We expect to provide updates for both our CD20 and BCMA programs at ASH later this year.

I would like to expand a bit on our costimulatory bispecific effort as it represents an important example of the ongoing innovation in oncology for Regeneron. As I said, we are planning on combining such costims with both our CD20 and BCMA bispec programs for lymphoma and myeloma, but our first costimulatory bispecific is already in clinical development. This first-in-humans costim, PSMAxCD28, is in combination with Libtayo for prostate cancer and is continuing to enroll in the dose escalation stage of clinical investigation. We're also excited about 2 additional costim bispecifics scheduled to enter the clinic this year. These new costim trials include EGFRxCD28 in combination with Libtayo, which will be explored in several solid tumors, including lung cancer and head and neck cancer, as well as MUC16xCD28, which will be tested for patients with ovarian cancer as well as in other settings. Our MUC16 costim will be studied in combination with either Libtayo or our MUC16xCD3 bispecific, which is already in the clinic. The span of our toolkit enables us to explore these and many new combinations that based on preclinical evidence could provide meaningful advances for a wide variety of cancer patients.

Moving on from oncology, I would like to provide an update on our fasinumab program. We have previously announced positive top line efficacy data in a fasinumab Phase III FACT long-term safety study or FACT LTS substudy. And today, we are announcing that 2 additional Phase III studies in patients with osteoarthritis pain, FACT OA1 and FACT OA2, met the co-primary efficacy end point for the fasinumab 1-milligram monthly dose versus placebo. The fasinumab 1-milligram monthly dose also showed nominally significant benefits in physical function in both trials and pain in 1 of the 2 trials when compared to the maximum FDA-approved doses of NSAIDs for osteoarthritis. The less frequent dose of fasinumab 1 milligram every 2 months used in an arm of the FACT OA1 trial showed numerical benefit over placebo, but did not achieve statistical significance. In initial safety analysis from the Phase III trials, there was an increase in arthropathies reported with fasinumab. In the FACT LTS substudy, there was increase in joint replacements with fasinumab 1-milligram monthly treatment during the off-drug follow-up period. Although this increase was not seen in the other trials to date, additional longer-term safety data from the ongoing trials is being collected and is expected to be reported early next year.

Finally, I would like to briefly address other exciting developments in our pipeline. We are planning to publish evinacumab results in homozygous familial hypercholesterolemia shortly, and we have submitted our applications to the FDA and to EMA. Regarding our garetosmab program for fibrodysplasia ossificans progressiva, or FOP, we are planning to submit data to regulatory authorities in the first quarter of next year, pending results from the crossover arm of our trial where placebo patients are now receiving active drug. Our hope is to replicate the dramatic 90% reduction in new lesion formation that we saw in the first part of the trial. At the European Hematology Association meeting in June, we presented promising pozelimab monotherapy interim results in paroxysmal nocturnal hemoglobinuria patients. We are hoping to start testing a combination with Alnylam's RNAi treatment, cemdisiran, by year-end. And last, but certainly not least, we are starting to enroll our Phase III studies of high-dose EYLEA in DME and wet AMD. High-dose EYLEA has the potential to reduce dosing frequency while maintaining the efficacy and safety of our medicine that is trusted by doctors and patients worldwide.

To conclude, our broad and diverse pipeline is growing and progressing even in this COVID-19 environment. I could not be prouder that even in these extraordinary and challenging times, our people are continuing to push on every front in our efforts to bring important new treatments to the patients who need them.

I now turn over the call to Marion.

Thank you, George.

Our second quarter business performance reflects the resilience and competitive strength of our core brands. EYLEA, Dupixent and Libtayo. We remain confident in our ability to navigate through COVID-19 and position our portfolio for future growth as demand recovers. I'm going to begin with EYLEA, which had $1.75 billion in global net sales. In the U.S., EYLEA net sales were $1.11 billion, which is just 4% lower than same quarter last year despite the impact of COVID-19.

EYLEA outperformed the overall anti-VEGF market in the U.S. with continued share gains from both branded and unbranded competition. In fact, EYLEA's share of the branded U.S. market reached 73% of net sales for the quarter, solidifying our leadership position in the anti-VEGF market. The impact of COVID-19 on U.S. sales was saw predominantly in April. After this, sales improved throughout May and into June as retina specialists reopened offices and patient volume increased. The combination of 3 EYLEA attributes, differentiated efficacy, safety and dosing flexibility, are highly valuable in easing physician and patient burdens caused by the pandemic. Physicians may treat with extended dosing of up to 12 weeks in appropriate patients, and the recently launched prefilled syringe offers additional efficiencies for patient care. EYLEA demand continues to show steady improvement, and the volume of new patients in the market is approaching pre-pandemic levels. We're closely monitoring the recent resurgence of COVID-19. Under all scenarios, we remain highly committed to supporting the retina community through virtual and in-person platforms to sure the continuity of patient care.

In summary, we're encouraged by the rebound in EYLEA demand in recent months, and we will continue to advance efforts to support our customers and their patients during these unprecedented times.

Turning next to Libtayo. Second quarter global net sales grew to $80 million with the U.S. contributing $63 million. In April, patient office visits declined and some infusion centers temporarily closed. This briefly impacted Libtayo demand, which rebounded during May and June. In the U.S., Libtayo advanced its leadership as the #1 systemic treatment for advanced cutaneous squamous cell carcinoma, or CSCC. Libtayo has experienced rapid growth in advanced CSCC with 70% of patients now treated with anti-PD-1 therapy. We expect future growth as Libtayo -- as the Libtayo competitive profile strengthens with new long-term data demonstrating longer durability, higher overall responses and nearly 3x the rate of complete responses based on additional years of follow-up.

Looking ahead, we are preparing for potential future launches with our collaborator, Sanofi, in both non-small cell lung cancer and basal cell carcinoma, both represent meaningful growth opportunities for Libtayo. The anti-PD-1 and PD-L1 market continues to grow at a significant pace with current annual net sales of nearly $25 billion. Non-small cell lung cancer is the largest opportunity within this market with more than 200,000 new diagnoses of lung cancer in the U.S. each year. Patients, payers and physicians prefer choice in determining the most appropriate treatment. And should Libtayo be approved, it has demonstrated very competitive clinical results to date in the advanced PD-1 positive patient population studied.

Finally, moving to Dupixent. Global net sales in the second quarter were $945 million, representing 70% growth compared to the prior year. In the U.S., broad-based growth across all approved indications contributed net sales of $770 million. Following an initial dip in mid-May, new patient starts have increased as physician offices reopened. Current weekly new patient starts have recovered to approximately 87% of pre-pandemic levels, a sign of robust demand for Dupixent. Dupixent's compelling clinical profile enables the product to thrive even in the current environment, Dupixent is administered at home and does not require laboratory testing or monitoring to initiate most new patients. Importantly, Dupixent is not an immunosuppressant, and we expect the U.S. launch of the 300-milligram prefilled pen in the third quarter, providing additional patient convenience and choice. Atopic dermatitis is Dupixent's largest indication and remains a significant growth driver. We continue to expand physician prescribing across both moderate and severe disease. To date, only a small percentage of biologic-eligible patients have been treated, leaving substantial opportunity for more patients to benefit. Additionally, new long-term data demonstrates sustained efficacy over a 3-year period, along with confirmed safety.

We also continue to expand into younger populations. The U.S. FDA recently approved Dupixent to treat children aged 6 to 11 years with moderate-to-severe atopic dermatitis, which impacts approximately 90,000 children in this country. Dupixent is the only biologic medicine approved for this population, and leading launch indicators are very encouraging. Many children suffering with moderate-to-severe atopic dermatitis are being treated by the same physicians who have extensive clinical experience with their adolescent and adult patients and have great confidence in the Dupixent safety profile.

Dupixent also continues to outperform in asthma as measured by more new patient initiations over the last year compared to other biologic competitors. We see further opportunities to expand patient awareness of Dupixent in our national DTC campaign, which is underway. Among those already on treatment, COVID-19 has limited impact as patients adhere to their therapies to maintain and improve respiratory function.

Finally, we see strong uptake in chronic rhinosinusitis with nasal polyps. Since approval last year, patients have been initiated on Dupixent. Regardless of prior surgery, demand has increased among ENTs and allergists with the limited availability of elective surgeries in the last quarter. Overall, we see great opportunity for Dupixent, which is positioned for significant growth through expanded indications, age groups and geographies.

In closing, our teams and business remain resilient as we execute on our strategy to deliver value for customers and stakeholders. Now I'll turn the call to Bob.

Thank you, Marion.

For the second quarter of 2020, Regeneron delivered strong results on both the top and bottom line. Our continued ability to generate this year-over-year growth is an encouraging signal of our diversified growth potential now and beyond COVID-19. For the second quarter, total revenues grew 24% year-over-year to $1.95 billion driven by higher Sanofi collaboration revenues as a result of increasing Dupixent sales. Additionally, we recorded significant revenues associated with our infectious disease efforts against both Ebola and COVID-19. These revenues are recorded in our other revenue line. Non-GAAP diluted net income per share grew 19% year-over-year to $7.16 on non-GAAP net income of $854 million.

Since Marion discussed our U.S. EYLEA results, I will start with our Bayer and Sanofi collaborations. Starting with the Bayer collaboration. Ex U.S. EYLEA net product sales, which are reported to us by Bayer, were $641 million, representing a decline of 10% on a reported basis compared to the prior year due to the COVID-19 impact. Total Bayer collaboration revenue was $244 million, of which we recorded $231 million for our share of net profits from EYLEA sales outside the U.S. Total Sanofi collaboration revenue was $269 million in the second quarter. Our share of the profits from the commercialization of non-IO antibodies was $172 million. This compares favorably to profits of $39 million in the prior year period, which was driven by higher Dupixent profits.

Before moving to expenses, I will discuss our second quarter 2020 other revenue line item in which we recorded $212 million, up sharply from the $20 million in the prior year period. The primary driver of the year-over-year increase is the recognition of $126 million associated with BARDA for our research and manufacturing efforts for both Ebola and COVID-19. We record R&D reimbursements from BARDA in other revenues.

Moving to our expense basis, starting with R&D. Non-GAAP R&D increased 36% year-over-year to $580 million driven by significant development costs for both our antibody cocktail and Kevzara clinical trials for COVID-19 in addition to higher count and increased clinical manufacturing activities, a portion of which were reimbursed by BARDA.

Next, non-GAAP SG&A expense increased 19% year-over-year to $301 million. The year-over-year increase was driven by the inclusion of Praluent commercialization costs in the U.S., higher contributions to nonprofit patient assistance organizations and higher headcount-related costs. Non-GAAP cost of collaboration and contract manufacturing was $173 million compared to $79 million in the second quarter of 2019. The year-over-year increase is due to manufacturing costs associated with higher Dupixent volumes sold by Sanofi, Ebola production and Praluent supply for Sanofi's ex U.S. markets.

Turning now to taxes. The non-GAAP effective tax rate was 0.9% in the second quarter of 2020 compared to 19.1% in the second quarter of 2019. The lower tax rate versus last year was primarily due to increased tax benefits associated with stock option exercises in the realization of those benefits earlier in the calendar year compared to prior years.

Shifting now to cash flow and the balance sheet. Year-to-date, Regeneron generated $1.34 billion in free cash flow. In the quarter, we spent $5 billion to repurchase approximately 9.8 million shares of our common stock as part of Sanofi's sale of substantially all of their equity stake in Regeneron. As Len mentioned, the secondary offering in repurchase were strategic transactions that provided Regeneron shareholders immediate accretion, removed uncertainty regarding Sanofi's equity position and is a testament to our confidence and the strength of our business now and in the future. We ended the quarter with cash and marketable securities of $5.7 billion and $1.5 billion in debt financing under a bridge loan related to the Sanofi stake repurchase.

Now I'd like to spend a few moments to discuss the financial outlook for the remainder of the year. We maintained or lowered the midpoint of our guidance on several expense items. Please refer to our press release and financial disclosures for our entire updated 2020 guidance. Here, I will discuss the guidance items related to our increased efforts in the fight against COVID-19 as we leverage our end-to-end capabilities of drug discovery, development and manufacturing. We are updating our forecasted 2020 non-GAAP R&D expenses to be in the range of $2.27 billion to $2.37 billion. For COGS, we are raising our forecast for 2020 non-GAAP expenses to be in the range of $445 million to $485 million. The increase in both R&D and cost of goods sold guidance are related primarily to our efforts against COVID-19. For R&D, we anticipate that more than half of the increase to our 2020 R&D guidance will be reimbursed for COVID-19 efforts. Those reimbursements will continue to be recorded in other revenue. We're also providing updated guidance for our tax rate. We anticipate our updated 2020 non-GAAP effective tax guidance to be in the range of 10% to 12%.

In conclusion, Regeneron's business remains healthy, and we continue to deliver strong year-over-year growth despite the global impact of COVID-19. Our strong balance sheet, improved competitive outlook, increasingly diversified commercial portfolio and robust pipeline position Regeneron very well for sustained long-term growth.

Now with that, I'd like to turn the call back to Justin.

Thank you, Bob. Stephanie, that concludes our prepared remarks. We'd now like to open the call for Q&A. (Operator Instructions) Please go ahead, Stephanie.

(Operator Instructions) And your first question is from the line of Terence Flynn with Goldman Sachs.

Thanks for all your efforts on the COVID front. I just had one on the manufacturing side. I was wondering if you can give us any more detail about your manufacturing cost for the antibodies. Or if you could at least confirm that these are well below $100 per gram? And if you won't answer that question, I was just wondering, Marion, if any perspective you can share on the opportunity for Dupixent in China. And specifically, would you guys think NRDL reimbursement?

Terence, it's Len. I don't think we can comment on our COGS. But Marion can certainly comment on China.

Sure. Very happy to. Terence, thank you for the question. We're really excited about the opportunity in China. And I'll also remind that Sanofi has the responsibility for China. We're very encouraged by the progress to date. And as it relates to specifics on reimbursement, I would guide asking our Sanofi colleagues to describe that in more detail. But as you know, tremendous market opportunity, incredible unmet need and a remarkable clinical profile, and we're really excited about the opportunity.

Your next question is from the line of Geoffrey Porges with SVB Leerink.

Congratulations on the results and all the progress in the quarter. Perhaps a few questions on the COVID program. George, you referred to the animal data and the high dose used, 50 milligrams per kilogram, is quite a lot of antibody. Could you give us a sense of, first, is that the dose that you expect to take forward in the pivotal trials for treatment? And how much lower could it be for prophylaxis? And secondly, if that indeed turns out to be the dose, could you give us some indication of the number of causes that you could envisage having supply for this year and the next year given the available capacity now?

Yes. We've modeled the doses and the blood levels from the primate studies in order to design our human studies. And so we are hoping and targeting to achieve similar blood levels in the humans as what we're achieving to achieve the relative efficacies in the primate studies. At those levels, we are at the production level that we could be delivering hundreds of thousands of doses per month for the prophylactic dose level and tens of thousands of doses per month for the treatment levels, assuming they're in those sorts of ranges that we're predicting right now. But of course, all that is all pending the trials and seeing what doses really work. Hopefully, some of the doses work and so forth. So there's still a lot to figure out, but those are the levels that we're targeting and those are the numbers of doses that we're anticipating that we could deliver depending on how all the clinical trials work out.

Your next question is from the line of Yaron Werber with Cowen.

This is Leo Ai for Yaron Werber. Congrats on the side of the quarter and good progress. I just have two questions regarding your COVID-19 program. The first question is regarding the durability and safety of your neutralizing antibodies. It seems that some other antibody developers are kind of modifying the -- actually, demand of their antibody candidates to either extend the half-life or minimize the efficacy [dose-limiting] toxicities. Can you kind of discuss if you made any modifications to your candidates?

And my second question is regarding the prevention study. It seems to me that the ongoing Phase III studies looking at preventing infections in household contacts of the infected individual. I'm just wondering because the trial design looks more like postexposure prophylaxis. I'm just wondering if you can provide any details regarding your plans on the prevention trials. Are you looking at like the pre-exposure prophylaxis in other high-risk populations?

Right. Well, there's a lot of questions sort of in there. So one, in terms of engineering our antibodies, historically, we've had very good success with achieving very good half-lives and duration and durability without making modifications, which, as you know, always come with certain risks. So at least for our first-generation antibodies based on that historical success, we're going with unmodified antibodies.

In terms of the concerns for antibody-dependent enhancement, we have done extensive studies and efforts on that, including with antibodies that we have or have not modified effector function. And based on all of our data and all of our results, we are going forward with antibodies, once again, that are not modified based on the confidence and the data that we've generated with our preclinical experience.

And finally, what was the last question?

The prevention study.

Oh, the prevention study. Yes. So some of those patients will have already been exposed, but there will be ongoing exposure as well. So it's going to be both a pre- and a postexposure prophylaxis effort. And we will be characterizing whether the patient in the household that we're treating have already been exposed in terms of whether they're already infected or not in our analysis.

Your next question is from the line of Chris Raymond with Piper Sandler.

So just on the EYLEA high-dose program. I know from just looking at the -- from trials.gov website, it looks like your larger DME and AMD trials aren't projected to read out until 2022, but there may be a smaller trial I think, CANDELA, reading out in 2021. So I guess the question here is -- and I know you guys haven't really guided to data yet, but will we get a sense of the feasibility of this approach next year and especially given that this is a higher dose and you got to be mindful of inflammation, et cetera? But also maybe remind us why you guys never went the route of using a half-life extension like a biopolymer.

So I'll take the first part, but George, you can take the latter. In terms of the date for -- we really haven't guided. It depends on -- we're sort of trying to do things in parallel, get some Phase II data while we're enrolling the Phase IIIs. So we'll just have to see how that comes along. And George can comment on the difficulties of biopolymer work.

Right. So we have been investing enormously in efforts with biopolymer extension and so forth. And as we all know and has been demonstrated recently with the problems of a major competitor, EYLEA sets a very high bar for safety and for efficacy and particularly from the safety point of view. And in all of our efforts, we have not been satisfied with our biopolymer efforts that those modifications meet that high bar, particularly for safety. And so we have been hesitant to move those programs further into the clinic because of the concerns that we found with those approaches when we compare them and test them in our preclinical settings.

In terms of the high-dose EYLEA, we are hoping that we will be able to maintain that safety, that high safety bar with the high-dose EYLEA, but to extend the dosing, as you know, right now, studies show that depending on the patients, about 50% of the patients can go to 2 12 dosing using the current dose of EYLEA. And what we're hoping is that we may be able to increase the percentage of those patients who can go to longer-term dosing using this higher dose, but to achieve that in as safe a manner as we have historically with EYLEA to date. So that's the basis of our strategy.

Yes. I just might add that we're not sure there's any evidence that there's a dose-dependent effect on inflammation at least with high-quality EYLEA that we make. So I'm not sure that's necessarily going to be the case.

Your next question is from the line of Robyn Karnauskas with Truist.

So a question on fasinumab since you announced your top line data this morning. Can you just give us some sense in the hip and the knee? You talk more broadly about the market, but the hip and the knee, what a monthly dose, what the opportunity might be, given that, that would be profile and your strategy for going after now that you know what that profile is going after other joints?

Well, I think the biggest concern is obviously having to do with the benefit risk and the safety profile. Obviously, there's enormous need for alternatives in the pain field. And there are so many tens of millions of people who are living with osteoarthritis pain with limited options and concerns about all the available medications with all the concerns and problems with opioids, in particular, but also with NSAIDs and so forth, all of these patients are potential candidates for the NGF inhibitors. So we are still awaiting and needing to read out additional safety data from our program. And I think it's going to still be determined in terms of the relative benefit risk as to how important a drug this can be for the so many patients who are in need here.

Yes. Robyn, I just wanted to mention, glad to see you've got a new name there, Truist sounds good. I don't know if it's the truest. We'd like to think Regeneron is the truest. But at any way, the notion of whether the risk benefit is going to work, as George pointed out, I mean to some extent, we're sort of behind the alliance of Lilly and Pfizer in this class, and they've announced that I think that their action date is in December. They recently said there's not going to be an advisory panel. So we'll get to see as we're preparing our file in collecting that's why they will get to see how the FDA views all this and what constraints or restraints they might put or if they will or they won't approve it. So you'll get a little bit of an insight into the class because it does appear that we see the same kinds of adverse events, in general, in terms of arthropathies and these increased joint replacements that we saw off drug that has been seen with the members of the class.

Your next question is from the line of Geoff Meacham with Bank of America.

I had one on Libtayo. Obviously, you guys have basal cell and monotherapy in lung as label expansion opportunities. But I just wanted to characterize your -- the trends in 2Q today and maybe your market share is. Do you feel like you're at saturation today? Or is there still an opportunity in your core indication today?

Sure. So this is still relatively early in the launch for Libtayo. The team has done a great job of establishing Libtayo for these patients with locally advanced and metastatic disease with the alternative of Libtayo. But certainly, there's significant opportunity to expand our utilization and, obviously, as you mentioned, as we potentially get into future indications even more for Libtayo.

Yes. Obviously, the big indication where most of the sales in this space are is lung cancer, non-small cell lung cancer. And so our exciting data, which will be basis of a filing a monotherapy, and we're moving rapidly towards closing out the final patients enrolled in the chemo combination study. So lung cancer is really the bigger future opportunity if we can successfully complete -- compete there.

And of course, ultimately, as we tried to highlight, it is a little disappointing how the PD-1 class has not had as dramatic efficacy as one would have want in so many other cancer settings. And that's why we have our very exciting and innovative collection of bispecifics and other combination opportunities that now that we have our own PD-1 as a foundational component, we can now be trying to increase and add efficacy in all of these other cancer settings where right now, the PD-1 class has not really shown as much benefit as one would want, that maybe we can now really create enormous benefit in these settings by making the right combinations, particularly with our bispecifics, but with other combination opportunities as well.

Your next question is from the line of Ronny Gal with Bernstein.

Congratulations on nice progress. Back to the COVID-19 cocktail, one question I have is about the hospitalization trial, which is how do you monitor against patients mounting the autoimmune response and kind of confounding it that way? And related, does the release of the biomarker data late summer, does that tell us something about the completion of the efficacy readouts? Or is there some relationship there we can follow or maybe in a press release the completion of the enrollment? Just to give us an idea how do we know the antibody efficacy data is coming.

These are all great questions. And in fact, we are analyzing our data exactly with regards to some of the points and concerns that you have. We are measuring -- among the biomarkers, we're measuring patients' endogenous response to their antibody titers. And we're comparing and dividing the patients based on their baseline levels of antibody titers to see whether the patients who respond the best or the people who are not mounting are too early in the course of their disease. And we have this adaptive design. We are going to continue to generate data and evaluate data. We will hopefully be reporting some of that data publicly, but then using that data to make decisions in terms of the adaptive future portions of our design.

Our next question is from the line of Tim Anderson with Wolfe Research.

I have a question on Dupixent and COPD. COPD remains the Holy Grail for asthma biologics, and there have been earlier preliminary COPD data sets with other products that looked good only to fail in Phase III. So I'm wondering if you can put into context the results from the interim look at your COPD trial that you've referenced or at least whether those go, no-go criteria were the same that other biologics have relied on. Or was that interim efficacy bar set higher with Dupixent than with competitor biologics at the same stage of development?

Yes. I'm not sure that the earlier biologics that you're referring to demonstrated much different data in their Phase II and their Phase III programs. And the problems were -- was that at best, they were demonstrating somewhere around a 15% reduction in their exacerbations. And depending on the Phase III studies, those were on the border of achieving clinical significance, and that's why those programs didn't move forward. So what -- we did not release the details of the bar that we set, but we did say that the bar that we set had to do with exacerbations, and we have to achieve a minimum threshold reduction in exacerbations in order to trigger going forward and triggering the initiation of an additional Phase III. So obviously, the fact that we met a threshold bar for reduction in exacerbations I think creates some excitement that assuming that we can continue to achieve these sorts of reductions in exacerbations that this could be an important drug for COPD.

Yes. I just want to echo what George said there because this is a little different than most other sort of futility analysis where you say, well, even if you have a slim chance, sometimes you let the trial go forward. As George said, and I'm just really trying to put an exclamation there, it was a stringent. That means it was hard to pass that bar because obviously Sanofi and Regeneron, we didn't want to take on another whole Phase III program, which is -- obviously takes a lot of time, money and effort unless we were told. And we didn't see the data, we just know that we passed this stringent bar, if you will.

And the bar was for reduction in exacerbations.

Right.

Your next question is from the line of Yatin Suneja with Guggenheim Partners.

Congrats on all the progress. A question on the commercial front with regard to the cocktail approach that you have. Can you comment on how do you see this adoption in light of the recent data that we are seeing with vaccine given that they provide a little bit longer protection? Is that the antibody approach has a lower potential to fail versus a vaccine? Or -- and hence, you are almost guaranteed their protection? Maybe perhaps if you can talk about how the market plays out once you have vaccine available.

I wasn't sure whether there was 2 parts of that question, whether there's some insight on the technical aspect. If George understood that, he can certainly answer that. But from the commercial side, I think it's what's been said for a long time. This -- a passive immunization with an antibody cocktail provides immediate immunity. So in the setting of -- and until there's a vaccine, if this comes first, that would be great. But even after there's a vaccine, there'll be many people who are not vaccinated or whose vaccination effects wore off and they got ill or if they were vaccinated, they didn't get enough of a response. So we think there's a lot of places for this passive immunization with an antibody cocktail.

George, I'm not sure, was there -- did you follow that other point? Or...

No. I think that you got it.

Your next question is from the line of Alethia Young with Cantor.

And I was just kind of curious about what's going on with evinacumab for the ANGPTL3 program. I know that you're filing, but I thought it was a relatively kind of small market opportunity, but just wanted to kind of think about that and what are the potential extension opportunities from there.

Yes. This is ANGPTL3. You said evinacumab. It was a little hard to hear.

Yes. Oh, sorry.

Yes. But yes, I think I got it.

What are the commercial potential and life beyond that indication as well?

Right. We think this is a very important proof-of-concept setting. These are -- if we get it approved, as you said, it's for homozygous FH, it's for a very rare genetic population. And particularly, what we showed was efficacy in patients who have no LDL receptor function. So that means that this drug and this pathway work totally different than all other drugs that lower lipids and cholesterol. And it may have important growth opportunities after this in the sense that since it is lowering lipids, not only cholesterol, but triglycerides by these independent mechanisms, it is entirely possible, and we are thinking about it, about where there's a broader opportunity eventually for this class of drug. But we're also very excited about the near-term opportunity that we hope we're going to get agreement work from the FDA shortly in the homozygous FH population, particularly those who don't respond to any of the existing drugs.

And I'll add just -- you mentioned the size of the population. The -- this is a rare condition. And in the U.S., there's a population of patients, about 1,300 who would be eligible candidates that we feel we'd have an opportunity to help very significantly with this rare and challenging disease. Ex U.S., it's about 1,700.

Your final question will come from the line of Evan Seigerman with Crédit Suisse.

Looking at the antibody data in September, would that be -- assuming it's positive, is that enough to get an EUA from the FDA? And if not, what else do you need to generate and when could we see that data?

Well, it will all depend on the data and how good it looks. So there's so many variables that I think it's really impossible to give a fair answer to that question.

Thanks to everybody dialing in. This concludes our call. Bob Landry and the IR team will be available after the call to answer further questions. Stay well and safe, everyone. Thank you very much.

Thank you. This does conclude today's conference call. You may now disconnect.