Welcome to the Regeneron Pharmaceuticals' Q2 2017 Earnings Conference Call. My name is Jason, and I will be your operator. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Also please note this conference is being recorded. I would now turn the call over to Manisha Narasimhan. You may begin.

Thank you, Jason. Good morning and welcome to Regeneron Pharmaceuticals' second quarter 2017 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 CEO; Dr. George Yancopoulos, Founding Scientist, President, and Chief Scientific Officer; Bob Terifay, Executive 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 today include forward-looking statements about Regeneron. Such statements may include, but are not limited to those related to Regeneron and its products and business, sales and expense forecasts, financial forecasts, development programs, and related anticipated milestones, collaborations, finances, regulatory matters, intellectual property, pending litigation, 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 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 June 30, 2017, which was filed with the SEC this morning. Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. 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 is available in our financial results press release, which can be accessed on our website at www.regeneron.com. We are aware that there are some technical issues with our externally hosted website, which we hope will be resolved shortly. 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, Manisha. Good morning, everyone, and thank you for joining us on the call and webcast today. It has been an incredibly productive first half of the year for Regeneron with the launch of two important new medicines and we are looking forward to continued progress in the second half of the year. EYLEA, a flagship anti-VEGF drug for the treatment of a variety of retinal diseases, delivered strong results in both the U.S. and ex-U.S. markets. In the U.S., we experienced an 11% year-over-year growth in net sales during the quarter. We are proud that U.S. EYLEA net sales have grown steadily since the launch in 2011 without ever having taken any price increases. This growth has been driven by new patients and new indications. The launch of Dupixent, our breakthrough IL-4/IL-13 inhibitor for the treatment of moderate-to-severe atopic dermatitis, is underway. Though it is still early, we are happy to report that the launch continues to progress extremely well, and most important, we have been very pleased with the positive reception that Dupixent has received from patients and physicians, along with the progress we have made with payers. In terms of the pace of the launch, we have seen a steady flow of both prescriptions written for new patients, as well as prescriptions filled for new patients, without any evidence of a bolus effect. We know from patients that atopic dermatitis can have a terrible impact on their lives, so we are glad that we are hearing positive anecdotes about how patients are responding to Dupixent in a manner consistent with the effect we saw in our clinical trials program. The teams at Regeneron and Sanofi have been working together to improve patient and physician awareness, and ensure that those eligible for Dupixent are able to receive…

Thank you, Len, and a very good morning to everyone who has joined us today. We believe Regeneron is a very different type of company, in that it was founded by and is led by physicians and scientists dedicated to a science-first approach to bringing new medicines that can make important difference in patients' lives. This commitment, supported by a talented and longstanding team of scientists and strategic investments in internal technology development, has today produced what many believe is one of the best pipelines in the industry. And as Len mentioned, all of our approved and investigational therapies were discovered in our own labs by our own people. I will provide a general update on our R&D progress today and highlight two Phase 3 programs, for which we expect to have data readouts in the second half of this year. These are dupilumab in asthma and REGN2810, our PD-1 antibody in cutaneous squamous cell carcinoma. I'd like to begin with one of our most exciting late-stage program, Dupixent, also known as dupilumab, our interleukin-4 and interleukin-13 blocker, which was approved in March by the FDA for the treatment of moderate-to-severe atopic dermatitis in adult patients whose disease is not adequately controlled with topical prescription therapies or when these therapies are not advisable. In addition to the FDA approval, we have recently granted a positive opinion by the European Medicines Agency's Committee for Medicinal Products for Human Use, or the CHMP for the treatment of moderate-to-severe atopic dermatitis in adults who are candidates for systemic therapy. We expect to receive EU approval in the third quarter of 2017. In the pediatric atopic dermatitis setting, we are currently enrolling a Phase 3 study of dupilumab in patients 12 to 17 years of age. In the second half of the year, we…

Thank you, George, and good morning, everyone. EYLEA continues to be the market leading product among FDA approved anti-VEGF agents for all that's approved indications in the United States, with a 73% market share in terms of dollars in the second quarter of 2017 compared to 69% market share in the second quarter of 2016. In the second quarter of 2017, U.S. net sales of EYLEA, or aflibercept, were $919million versus $831 million in the second quarter of 2016, which represents growth of 11% year-over-year. Ex-U.S. net sales of EYLEA in the second quarter of 2017 were $542 million compared to $486 million in the second quarter of 2016, which represents growth of 12% on a reported basis. For the second – six months ended June 30, 2017, U.S. EYLEA net sales grew 10% year-over-year compared to the first half of 2016. The overall branded anti-VEGF market in the U.S. grew by 7.4% in the first half of 2017 compared to the first half of 2016. These numbers indicate that EYLEA growth is driven by overall growth in the market, as well as an increase in market share. As George noted, we're preparing for the submission this year of data to the FDA from the second year of our Phase 3 wet AMD studies, which shows that approximately 50% of patients were able to be treated with every 12-week dosing. We are also continuing to enroll patients in a Phase 3 study, a non-proliferative diabetic retinopathy. Turning now to the recent launch of Dupixent, or dupilumab, in the U.S. for the treatment of adult patients with moderate-to-severe atopic dermatitis. As reported by our collaborator, Sanofi, global net sales for Dupixent in the second quarter were $29 million. These sales largely reflect end-user demand in the United States, with negligible contribution…

Thanks, Bob, and good morning, everyone. Regeneron posted strong second quarter 2017 financial results driven from the continued strength of our global EYLEA franchise. We're particularly pleased with achieving these results during a period where, together with our collaborator Sanofi, we have launched in the U.S. and are preparing to launch ex-U.S. two significant products, Dupixent and Kevzara. During today's call, I will discuss our financial results and highlight changes to our full year 2017 guidance line items. In the second quarter of 2017, we earned $4.17 per diluted share from non-GAAP net income of $487 million. This represents a year-over-year increase in both non-GAAP diluted EPS and net income of 48%. Regeneron's second quarter 2017 non-GAAP net income excludes non-cash share-based compensation expense and the loss on extinguishment of debt, and includes the income tax effect of non-GAAP reconciling items. A full reconciliation of GAAP to non-GAAP earnings is set forth in our earnings release, which can be found on our website. Total revenues in the second quarter of 2017 were $1.47 billion, which represented year-over-year growth of 21% over the second quarter of 2016. Net product sales were $924 million in the second quarter of 2017 compared to $834 million in the second quarter of 2016. EYLEA net product sales in the United States were $919 million in the second quarter of 2017 compared to $831 million in the second quarter of 2016, which represents an increase of 11%. For the six months ended June 30, 2017, EYLEA net product sales in the United States were $1.77 billion versus $1.61 billion for the six months ended June 30, 2016, an increase of 10%. We are raising our estimated full year 2017 U.S. EYLEA net product sales growth guidance to approximately 10% over 2016. Similar to the first quarter…

Thank you, Bob. Jason, we'd now like to open the call for Q&A. In the interest of time, we request that you limit yourself to one question. We will be available in the office after the call for follow-up questions.

Thank you. Our first question comes from Ying Huang from Bank of America Merrill Lynch.

Hey. Good morning. Congrats on strong quarter and thanks for the question. I want to ask about EYLEA. It sounds like your competitor, Lucentis, in the U.S. is experiencing actually quarter-over-quarter sequential decline in the sales in 2Q. So I was wondering what contributed to the strength in EYLEA and also what has changed since you guided single-digit growth in the beginning of the year. And then quickly on Dupixent, any reason why we should see a strong inflection of additional patients add every week, instead of just steady NRx every week? Thank you.

Bob, do you want to handle the EYLEA question?

Yeah. EYLEA, as we pointed out earlier, has grown due to a growing in the market, which is partially related to the demographics in the marketplace, and also has grown in terms of market share. We believe some of that growth in market share is related to the positive data we've seen with EYLEA in diabetic macular edema. And in terms of a decline in Lucentis, there is multiple factors that could contribute to it, including any discounting they're doing, which relates to gross-to-net differences. With regards to Dupixent, we have payers coming onboard on a regular basis. As I said, we expect broad market access by the end of the year. Patient claims are still making their way through the pipeline in many cases, so we do expect more perceptions being dispensed. And we continue to educate on disease awareness to let patients, who've been disenfranchised from the system, get back into their physicians and benefit from the product.

Yeah, Ying, let me just amplify a little bit on the Dupixent question there. Remember, the first question that we all were interested in, would there be a bolus, would there be a large number of patients who would get a prescription very soon after launch, and then the number of prescriptions written go down dramatically. We did not see that. We've seen a very steady number of prescriptions written, as we indicated, somewhere – over the last couple of months it's been very steady on a weekly basis. The way that number could – so we are very pleased that there's no bolus. Obviously, this is what the system, if you will, can churn out right now. How could that grow? We can see in – I'm just talking about on the written prescription side, not the filled side, that that could go – obviously, if we see an increase in the number of prescribers, which takes time, but we are starting to see that, or whether or not the prescribers start to write prescriptions for patients who are not just more severe patients. We're seeing from what we can tell and hear that, as you would expect with the launch of a new class of drug, that patients who have been prescribed the drug, typically are the most severe of the patients. So those are ways that the number could up, but first stop in this was to make sure there wasn't just a bolus and it was all going down, which we can now say at least over the first period of this launch, that's not the case. Next question...

Operator, next question please.

Len, I think it is important to mention that now as these patients are coming back to their physician, we're hearing many of these patients are having very, very positive results in terms of reduced lesions and improved itch, and that is really contributing to patient satisfaction.

Yeah, I just wanted – this is George. I want to point out a couple things. Despite the mechanics of the healthcare system and reimbursement and rebates and all this, I'd like to think that physicians and patients are still driven quite a bit by how the drugs are actually performing and making a difference in their lives. So I'd like to think that one of the reasons that EYLEA is growing in market share is because of the recognition by physicians and patients of what a difference it's making in their experiences. And I think as Bob points out, we hope to see that the same will continue to be true as we're seeing from the early reports on Dupixent. And I think another very important thing to realize about Dupixent is also the long view. As I noticed in my remarks, we are developing this for a very large number of allergic indications. The data right now, the early data and including pivotal study data is all very promising, so long-term growth in dupilumab is going to be by the recognition that it may be an important drug for many different allergic conditions, starting with asthma and going onward, and moreover that in a single-patient, hopefully, we'll be able to show in convincing way that in single patient it will able to simultaneously benefit multiple of their allergic conditions. And so we think that if the medicine is doing and bringing the sort of benefit that we think it's doing to the patients that that recognition will drive, of course, use because of the benefit it provides.

Operator, next question please.

We have Chris Raymond from Raymond James. Christopher Raymond - Raymond James & Associates, Inc.: Hey. Thanks. I've got a question on the pipeline. So, Len, I heard you say in a recent meeting – I heard you highlight REGN2810, your PD-1, when you were asked to talk about which pipeline program excites you the most. So I think we know the clinical plan that you guys have outlined is unique. You guys have seized on what looks like a pretty novel and quick path to market. But maybe if you could talk about the biology of the molecule that makes you think that sort of head-to-head this should be better maybe than other more advanced PD-1s. Just maybe talk about what drives you to highlight that molecule as the most exciting pipeline drug.

Yeah. I'm going to let George field with that question, but before I turn it over to him, I just wanted to point out that this is tough business. And if you look at each of our programs and what's been going on around us, it's been quite remarkable. If you just think about it, in the PD-1 space, which George will get into in a bit more, we've seen failures of PD-L1 to deliver survival benefits where PD-1 agents have. We've seen a failure of a PD-1 agent where another PD-1 agent was successful. In the PCSK9 space, we've seen the failure of one agent to get to market because of issues in, from what I understand, immunogenicity. In the IL-4/IL-13 space, we've seen people historically have failed with even going after the right target and people having failed by going after the wrong target, such as going after IL-13, and maybe people not getting even optimal results going after IL-5. If you think about EYLEA, we've seen lot of explanations about why people shouldn't be able to get long-term benefit in it. The savior for this was going to be PDGF. An anti-VEGF therapy was banned. You've heard George, I think, put out a very convincing case that that's just not the case and the PDGF has fallen by the wayside. Just yesterday in the IL-6 space, you've seen a group of people who chose IL-6 ligand instead of the IL-6 receptor, and that didn't seem to go so well, at least based on the vote of the advisory panel. So I just want to say that there is a lot that goes on and maybe the guy who makes all these choices for us and seems to have gone pretty good in the batting average can comment on the PD-1 space. George?

Yeah. I was going to actually bring up a lot of the same examples as Len just did. In terms of pointing out how really difficult this business is, how it really is so challenging, and it's really such a industry of failure, because the bar is rightfully set so high. I mean, we want to be bringing forward important, effective, and safe medicines to patients, and that, frankly, is probably the single hardest thing that we as a society actually do in terms of discovering and developing products. And while I was reading my comments, I have to say I was shocked and stunned at how productive our people have been over so many years to produce so many product candidates and, as Len said, I'm a big track record guy. Over and over again, we've made the right decisions about which targets, about picking and selecting the right – out of many candidates, the right candidates to bring forward. And over and over again, we more likely than not have been proven right. And I think that this is something that is incredibly vastly underappreciated in this industry, how much of a role institutional knowledge plays and having a senior experienced leadership team that has the capability to over and over again make these decisions and pull on their collective memories to help make these sort of decisions. And if you go anywhere else and you look how long the people who are making these decisions have been around at that particular place, and it's just a couple of years. Here, our senior management team at all levels – I'm not just talking about me and Len and the other most senior people, but we have in general people 15, 20 years who have been leading various efforts and we have enormous collective memory and institutional memory here. And it's only with that then you can have that sort of track record that can lead to the discovery of dozens and dozens of product candidates and be moving them forward, and in more cases than not be making the right decisions and making your bets. And whether it's picking PD-1 as opposed to PD-L1 and picking the right PD-1 antibody or picking IL-6 receptor versus IL-6 and picking the right IL-6 receptor antibody, or picking the right antibody for PCSK9 or picking the right target in the field of allergy, which nobody else happened to have picked in the entire world. This all comes from incredible internal genius and institutional memory that is very rare and, as I said, represents one of the hardest things we do as a society. The track record in the rest of the world is overwhelmingly one of failure. And, no, not everything we do will work, not anything we do will succeed. We have an amazing track record because of this institutional memory and the genius that we have here.

Operator, next question, please.

We have Geoff Porges from Leerink Partners.

Thanks very much. I just wanted to follow up on the questions about Dupixent, particularly the launch. You mentioned that 13,000 patients have been prescribed Dupixent. But could you tell us how many of those have converted to filled prescriptions? And then secondly, Bob, could you give us a sense of what – of the patients that have had one filled prescription, what proportion of them are filling a second and ideally a third prescription, i.e., what's the treatment persistence after patients have started on Dupixent? Thanks very much. Just want to try and clarify how this is going.

Well, Geoff, this is Len. I mean, I think that Bob can comment if he has the number on how many patients we think have actually converted. There is obviously a lag. I think the interesting metric for us is that the number of new prescriptions written over the last several months, each week has been in the steady range of around 750 new patients per week, and there's been a steady new patients to the brand, as judged by IMS-type data, of over 500. So, that gives you a little bit of an idea. That's, obviously, not the same – it's not the 750 that got the prescription this week are the ones that are getting the prescription filled. But that gives you an idea of where the launch is sort of – how it's at least been behaving on a weekly basis for the last several months. Bob, do we have an idea of how many patients are actually on product at this time?

I think it's fair to say that most patients have received one or two prescriptions based upon the timing of the launch. So to talk about adherence, it's too early to get into the specifics of that.

Okay.

Operator, next question, please.

We have Alethia Young from Credit Suisse. Alethia Young - Credit Suisse Securities (USA) LLC: Hey, guys. Thanks for taking my question. Congrats on the quarter. I guess just one on the complement program, when might we be in the position to get some of the early data and how are you kind of thinking about dosing in that program or is maybe that's something you're going to find out in the Phase 1? Thanks.

Yeah, it's a little bit early to tell you much about that, but we – of course, we'll try and get all the information we can out of that Phase 1 program. When we have it, we'll make it available. Next question.

Operator, next question.

We have Robyn Karnauskas from Citigroup.

Hi, guys. Thanks for taking my question. So just a question on the asthma study. So I know you mentioned that patient populations are different, but are there – or similar, but are there any differences between the Phase 2b and the Phase 3 that you think are notable? And I think you're stratifying patients by use of eosinophil counts. What happens if you are only successful in high eosinophils but not among the low eosinophil counts? Thanks.

Yeah, I think that, as I described in my comments, the populations are actually very similar. Obviously, when you have such a successful study, you do your best to reproduce it with the least number of modifications and changes. I mean, our first study was rather standard. It wasn't that we did anything so special, other than that we studied both the all-comer population, and then we looked in both the high and the low Eo subset. We designed our study to look in the all-comer population, but we also designed to look in the high Eo population. If our data is limited to the high Eos, it would be a little less differentiating perhaps than we think it might be compared to other agents that are out there in development right now. But as you know, the real excitement is if it's positive in the all-comer population, nobody else has data that shows that a biologic can really affect the all-comer population.

Okay. I think we have time for just one more question today.

We have Carter Gould from UBS.

Good morning, guys. Thanks for taking the question. For Bob, I guess, thanks for all the color. I guess, I recognize it's early in the launch, but generally speaking, for those plans that have opened up access, how satisfied are you with step edit, prior authorization criteria in place? And for those that have yet to open up access, can you characterize how those conservations are going? Is it really just sort of inertia from the plans focused on rebates or step edits versus them sort of just taking a dug-in stance? Thank you.

So just very quickly in the interest of time, we can say about a third of the places where decisions have been made, they've been made according to the label and we're very pleased. About another third, just roughly speaking, have made decisions which is slightly more restrictive. They might have – require topical calcineurin inhibitor as opposed to just a topical corticosteroid. A few of those required systematic steroids. And there's still another 35-or-so percent that we're working on, which some of them have automatic blocks and some it just takes time, but we hope to, as we said, get broad access towards the – by the end of the year. Sanofi and Regeneron are working very hard at this, and I think I would have to characterize this based on other metrics we looked at other launches that's going very well in this modern era. Okay.

All right. I know many of you were in queue and didn't get a chance to ask your questions. Just send us an e-mail and we'll make sure to follow-up with you. Jason?

All right, operator. Thank you.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.