Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`Q2 2012 Earnings Call
`
`Company Participants
`
`George Yancopoulos
`, EVP, Chief Scientific Officer, President
`, President, CEO
`Leonard Schleifer
`Michael Aberman
`, VP Strategy & IR
`Murray Goldberg
`, SVP Finance & Administration, CFO
`, SVP Commercial
`Robert Terifay
`
`FINAL
`
`Other Participants
`
`, AnalystBiren Amin
`
`, AnalystChris Raymond
`
`Jeff Meachum, Analyst
`Jim Birchenough
`, Analyst
`, AnalystJoseph Schwartz
`
`Mani Mohindru
`, Analyst
`, Analyst
`Phil Nadeau
`
`, AnalystSteve Byrne
`
`, AnalystTed Tenthoff
`Terence Flynn
`, Analyst
`Unidentified Participant
`, AnalystYaron Werber
`
`
`Presentation
`
`Operator
`
`Good morning, ladies and gentlemen, and welcome to the Regeneron Pharmaceuticals
`conference call to discuss the Second Quarter 2012 financial results. My name is Kevin and
`I will be your coordinator today. At this time all participants are in a listen-only mode. We
`will conduct a question-and-answer session towards the end of this conference call. As a
`reminder, this conference is being recorded for replay purposes. I would now like to turn
`the call over to Dr. Michael Aberman, Vice President of Strategy, Investor Relations for
`Regeneron. Please proceed, Dr. Aberman.
`
`Michael Aberman
`
`{BIO 6989908 <GO>}
`
`Thank you, operator and good morning and welcome to Regeneron Pharmaceuticals
`Second Quarter 2012 conference call. An archive of this webcast will be available on our
`website under events and presentation for 30 days. Joining me on the call today is Dr.
`
`Page 1 of 20
`
`Bloomberg Transcript
`
`Exhibit 2135
`Page 01 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`Leonard Schleifer, the Founder, President and Chief Executive Officer, George
`Yancopoulos Executive Vice President, Chief scientific Officer and President of Regeneron
`Research. Murray Goldberg, Chief Financial Officer, and Robert Terifay, Senior Vice
`President, Commercial. 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 that are not historical in
`nature may be forward-looking statements about Regeneron and are subject to a number
`of risks and uncertainties. Actual events and our actual results may differ materially. Such
`remarks may include but are not limited to those related to Regeneron and its products
`and businesses, sales forecasts, financial forecasts, development programs, collaborations
`finances, regulatory matters, intellectual property and competition all of which involve a
`number of risks and uncertainties.
`
`FINAL
`
`A more complete description of these and other material risks can be found in
`Regeneron's filing with the United States Securities and Exchange Commission or SEC,
`including its form 10-K for the year ended December 31, 2011, and form 10Q for the
`quarter ended June 30, 2012 which we filed this morning. Regeneron does not undertake
`any obligation to update publicly any forward-looking statement whether as a result of
`new information future events or otherwise unless required by law. GAAP and non-GAAP
`measures will be discussed on today's call.
`
`Information regarding our use of non-GAAP financial measures and a reconciliation of
`these measures to GAAP are available in our financial results press release which can be
`accessed on our website. Once our call concludes, myself and the IR team will be
`available to answer further questions. With, that let me turn the call over to our President
`and Chief Executive Officer, Dr. LenSchleifer.
`
`Leonard Schleifer
`
`{BIO 1463677 <GO>}
`
`Thanks Michael. Good morning, to everyone. In terms of the agenda for today, following
`my brief introductory remarks George Yancopoulos, Chief Scientific Officer will provide an
`update on our pipeline, Bob Terifay, Senior Vice President of Commercial will then
`provide an update on the EYLEA launch, and Murray Goldberg our Chief Financial Officer,
`will wrap up with financial highlights before I offer some concluding remarks and we open
`the call for questions and answers.
`
`Today we are happy to report a very successful quarter as our team continues to execute
`on the ongoing launch of EYLEA, also known as intravitrial aflibercept injection. We saw a
`strong quarter-over-quarter growth with U.S. net sales of $194 million representing a 57%
`increase over the last quarter.
`
`Given the trajectory of the launch to date tempered by the potential for less frequent
`dosing as doctors increase the interval between injections of EYLEA, we are increasing
`our full year U.S. EYLEA net sales forecast to between $700 million and $750 million from
`a prior $500 million to $550 million. If we achieve this new forecast, EYLEA will become
`one of the best drug launches in the history of the biotechnology industry.
`
`Bloomberg Transcript
`
`Page 2 of 20
`
`Exhibit 2135
`Page 02 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`In a few minutes, Bob Terifay will go into some more details on the launch. Importantly the
`strong EYLEA sales growth translated into even stronger earnings growth where we saw
`non-GAAP net income rise more than two-and-a-half fold from $40 million last quarter to
`slightly over $100 million in the Second Quarter of 2012, which translated into non-GAAP
`fully diluted earnings per share of $0.90.
`
`Obviously, we are pleased by both the performance of EYLEA, as well as its ability to fuel
`the Company's earnings. The ability to translate sales growth into strong earnings growth
`while still investing heavily in our robust and internally discovered pipeline that includes
`ten antibodies in addition to our three TRAPs highlights our relatively unique business
`model.
`
`FINAL
`
`Our PDUFA date in the U.S. for SBLA for EYLEA for CRVO is September 23rd, and an
`approval would further expand the EYLEA opportunity. As a reminder, the strong
`commercial results for EYLEA only reflect the launch of EYLEA in the U.S.
`
`Outside the United States, our partner, Bayer HealthCare has already received marketing
`approval in two countries, Australia and Columbia, and we are waiting regulatory
`decisions in the EU, Japan and other countries. We expect the global launch to start
`toward the end of the year. To that end, during the Second Quarter Bayer HealthCare
`consummated an agreement with Santen, the market-leading opthalmology company in
`Japan to co-promote EYLEA in Japan. We think this will accelerate the launch and further
`bolster the opportunity in Japan.
`
`Beyond EYLEA we await FDA action on our application to market ZALTRAP or aflibercept
`injection for intravenous infusion in combination with a FOLFIRI chemotherapy regimen
`for patients with metastatic colorectal cancer that was previously treated with an oxali-
`platinum-containing regimen. We are also advancing our robust pipeline including our
`late stage phase three programs Sarilumab targeting the IL-6 receptor, and Regeneron727
`targeting PCSK9.
`
`Let me highlight PCSK9 briefly because that is a program that is generating a lot of
`excitement not only within Regeneron, but within the clinical community and
`pharmaceutical industry. Surely we have a lot of competitors, but we believe we are in the
`lead and are committed to trying to stay in front. We and our partner, Sanofi, just
`announced that we have initiated our broad 22,000 patient phase three program known
`as ODYSSEY.
`
`In addition, Sanofi has formed a dedicated development unit for the program
`emphasizing their commitment to this important investigational agent. With that, let me
`turn to our Chief Scientific Officer George Yancopoulos to highlight some important
`achievements in our pipeline during the Second Quarter.
`
`Bloomberg Transcript
`
`George Yancopoulos
`
`{BIO 1463723 <GO>}
`
`Thanks, Len. Our clinical and regulatory teams continue to be extremely busy with three
`BLAs currently under review at the FDA and regulatory decisions expected in the next few
`
`Page 3 of 20
`
`Exhibit 2135
`Page 03 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`months. First, ZALTRAP for the treatment of previously treated metastatic colorectal
`cancer has a PDUFA date of August 4. We are only a few days away from the PDUFA date
`and are hopeful for a timely approval. While we do not have a substantial development --
`while we do have a substantial development cost repayment obligation to Sanofi that will
`limit our recognition of any profits for ZALTRAP for some time, ZALTRAP potentially
`represents our first commercial foray into oncology.
`
`As a reminder, we have been pioneers in the field of angiogenesis, so it's particularly
`satisfying to be able to look forward to making ZALTRAP or VEGF trap available to
`patients. Moreover, in our clinical pipeline are two antibodies -- two novel angiogenesis
`targets, angiopoietin-2 and Dll4 that have the potential to improve upon VEGF inhibition
`alone.
`
`FINAL
`
`Second, we have previously submitted our SBLA for EYLEA for the treatment of central
`retinal vein occlusion or CRVO which has a September 23rd PDUFA date. We also will be
`following the upcoming FDA Advisory Committee meeting on anti-VEGF therapy for DME
`very closely as both of our phase three trials for EYLEA and DME, VISTA-DME and VIVID-
`DME, are fully enrolled.
`
`As a reminder, outside the U.S., approval in DME can come within one year of efficacy
`data while in the U.S. current FDA guidance requires two years. We have also started
`enrollment in a phase three trial for branch retinal vein occlusion or BRVO.
`
`And finally, we are less optimistic for the supplemental BLA for ARCALYST or rilonacept,
`for the prevention of gout flares in patients initiating uric acid-lowering therapies, which
`has a PDUFA date of July 30th. As most of you know arthritis advisory committee
`convened by the FDA voted against the approval of ARCALYST in this indication. While
`the advisory committee's decision is not binding on the FDA, we have low expectations
`for an approval in this indication at this time and are working to determine the
`appropriate path forward. We continue to market ARCALYST for the treatment of CAPS.
`
`Turning to our antibody pipeline, we now have advanced two antibodies from a broad
`antibody collaboration with Sanofi into phase three testing. Regeneron727 for cholesterol
`lowering and Sarilumab for rheumatoid arthritis. As Len mentioned, Regeneron727 is our
`cholesterol-lowering PCSK9 antibody which continues to garner a great amount of
`interest in the clinical community as potential first in class new treatment for high
`cholesterol.
`
`During the Second Quarter, we presented positive phase two data at a late-breaking
`session of the European Atherosclerosis Society and also announced publication of these
`data in the Lancet. Our phase two program as a whole showed Regeneron727 can
`significantly reduce LDL cholesterol, also known as the bad cholesterol, up to more than
`70% in a variety of settings, including in patients who are not at goal on maximum doses
`of other background lipid-lowering therapies such as high dose statins. In the phase two
`program, injection site reactions were the most common adverse events and rare cases of
`hypersensitivity reaction were also reported.
`
`Bloomberg Transcript
`
`Page 4 of 20
`
`Exhibit 2135
`Page 04 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`With that in mind, Sanofi and Regeneron announced just a few days ago at the launch of
`the 22,000 patient global phase three program for PCSK9 called ODYSSEY which will
`consist of more than 10 clinical trials to evaluate the safety and efficacy of Regeneron727 in
`a broad range of patients. This will be the first phase three program evaluating a PCSK9-
`targeted therapy. As described in our press release last Friday, the phase three program
`will test the efficacy and safety of Regeneron727 in a variety of patients with high unmet
`medical needs such as patients with familial hypercholesterolemia, and those with
`elevated cardiovascular risk who cannot reach their LDL cholesterol goals with current
`standard lipid-lowering therapies.
`
`The market opportunity is large with 10 million patients in the U.S. alone who are not at
`goal despite being on existing therapies. LDL cholesterol lowering remains the primary
`objective for the management of hypercholesterolemia and this has been supported by a
`large body of data.
`
`Based on our end-of-phase-two discussions with the U.S. and European regulatory
`authorities during the Second Quarter, we expect LDL cholesterol to be the primary end
`point for our regulatory filings and the basis for our initial approval. Obviously this
`depends on an acceptable safety profile in the phase three studies and no sea change in
`the regulatory view around LDL as a valid surrogate endpoint. The ODYSSEY program
`includes a large cardiovascular outcomes trial that will enroll approximately 18,000
`patients and will start later this year. We expect this trial to be well under way at the time
`of the BLA filing for Regeneron727 but we do not anticipate that the final results of that
`trial will be a prerequisite for filing.
`
`Sarilumab our subcutaneous IL-6 receptor antibody for rheumatoid arthritis continues to
`enroll patients in the phase three mobility trial. There's growing excitement about the IL-6
`class of drugs given data recently presented for Actemra or tocilizumab, an approved IL-6
`receptor antibody in a head-to-head study VS Humira or adalimumab, the leading anti-
`TNF for the treatment of rheumatoid arthritis. There are 2.7 million patients treated
`worldwide for RA each year. We look forward to initiating additional Sarilumab phase
`three studies with our partner Sanofi later this year.
`
`Another positive development for our pipeline, as we mentioned on our last call, was a
`FDA advisory committee's unanimous vote in favor of a role for the ongoing development
`of anti nerve-growth factor, antiNGF agents for pain associated with osteoarthritis. Pain
`represents an enormous unmet need and it is estimated that 25 million patients
`worldwide suffer from moderate to severe osteoarthritis and about 4 million of them are
`intolerant to or poorly responsive to existing therapies.
`
`We also can report that we have had discussions with the FDA and look forward to
`updating you on the clinical development plans for our antiNGF antibody, Regeneron475
`once they are finalized. As a reminder we have full sole rights to Regeneron475. I would I
`now like to turn the call over to Bob Terifay to provide an update on the EYLEA launch
`
`FINAL
`
`Bloomberg Transcript
`
`Robert Terifay
`
`{BIO 4342122 <GO>}
`
`Page 5 of 20
`
`Exhibit 2135
`Page 05 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`Thank you, George. Our commercial organization is thrilled with the reception that EYLEA
`received in the wet AMD market, as evidenced by the 57% growth in our net product sales
`for the Second Quarter to $194 million. We believe that there are several factors that have
`contributed to the continued strength of our launch. Our market research suggests that
`EYLEA enjoys an increasing level of market awareness.
`
`This market awareness, combined with the facts that EYLEA offers clinically equivalent
`efficacy to monthly Lucentis or ranibizumab, with the convenience of less than monthly
`dosing, and secondly, that many doctors continue to switch patients from Lucentis, and
`off-label Avastin or bevacizumab, to EYLEA has allowed us to establish what we believe is
`a very strong foot hold in the wet AMD market. Based on qualitative market research
`surveys that we conducted towards the ends of June of 2012, EYLEA has now been used
`in approximately 90% of all accounts where Lucentis has been used up from the 70% that
`was reported in the First Quarter. Clearly, this indicates that some of our growth this past
`quarter came from an increase in the number of accounts that are using EYLEA.
`
`FINAL
`
`In terms of penetration and/or market share within these accounts, our market research
`suggests that EYLEA has now captured approximately 14% of the overall wet AMD, anti-
`VEGF market by volume. This is an increase from the 10% market share that we estimated
`on our First Quarter earnings call. Based on qualitative market research survey results we
`estimate that at the time of our survey, patients continuing on EYLEA represent
`approximately 40% of our sales. 35% comes from wet AMD patients new to anti-VEGF
`therapy and the remaining 25% come from patients switching from other anti-VEGF
`therapies.
`
`In terms of our switchers, our new market research indicates that about half of the
`switches are coming from Avastin. Both efficacy and the convenience of less than monthly
`dosing are cited as the key drivers for starting a naive patient and switching a patient to
`EYLEA from either Avastin or Lucentis. In order to better understand the dynamics of this
`market, including the reason why patients switch to EYLEA, we look forward to the
`upcoming American Society of Retinal Surgeons meeting in Las Vegas in August where
`there will be a special session devoted to independently prepared presentations from
`several retinal practices around the country reporting on their initial experiences with
`EYLEA in this specific patient population of switches.
`
`There are several factors that influence a successful drug launch. One of the key drivers
`for a buy-and-build product such as EYLEA is successful reimbursement. To this end,
`we've made an effort to streamline and facilitate the reimbursement process. We continue
`to see successful reimbursement from all of the regional Medicare carriers, secondary and
`supplemental insurers and commercial and private pairs. All targeted commercial pairs
`are now covering EYLEA with several commercial pairs now having published coverage
`policies. We have also seen broad adoption by hospital formularies.
`
`We expect to receive our permanent J-code in January 2013 and I anticipate this will
`further streamline the automated EYLEA claims process and provide an additional degree
`of comfort to those accounts who might have been sitting on the sidelines awaiting
`confirmation that reimbursement would not be an issue for them. In the meantime, on the
`
`Bloomberg Transcript
`
`Page 6 of 20
`
`Exhibit 2135
`Page 06 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`first of July, our temporary Q-code for EYLEA went into effect. A Q-code is a temporary
`but specific code for EYLEA, that result in automated reimbursement.
`
`To ensure as seamless transition as possible to the Q-code from the miscellaneous J-
`code, we have in place a team of regional business managers who are working closely
`with physician office managers to facilitate reimbursement. We've already seen that
`certain Medicare carriers who had slow processing turn around times for claims submitted
`using a miscellaneous J-code have already processed claims more quickly using the
`EYLEA-specific Q-code that only became available on July 1st. While these sales metrics
`are reassuring and we expect continued growth in EYLEA usage, we are mindful that it is
`unrealistic to expect this pace of growth to continue for the remaining two quarters of the
`year.
`
`FINAL
`
`With more and more of our sales coming from patients continuing on EYLEA treatment,
`we do expect an impact from patients moving from the monthly loading dose phase to
`less monthly dosing regimens, including the every other month dosing regimen
`recommended in the EYLEA prescribing information. We also expect to see a decline in
`the number of patients available in each practice to be switched to EYLEA from other
`VEGF inhibiters. In addition, since we've now penetrated about 90% of the accounts that
`are known to have used Lucentis, we expect a slowdown in the rate of new account
`growth. On the other hand, as doctors gain experience with EYLEA in both naive patients
`and switches, we also expect further share gains in both of these segments. Bottom line is
`that we expect continued growth for EYLEA but at a slower rate in the second half of the
`year.
`
`As a result, we are increasing our full year EYLEA U.S. sales -- net sales forecast to $700
`million to $750 million. If our new forecast is achieved, it would make EYLEA one of the
`top bio-pharmaceutical launches of all times. Turning outside the United States, which we
`expect to be a significant contributor to EYLEA growth in 2013 and beyond, EYLEA was
`recently approved for the treatment of wet AMD in both Australia and Columbia.
`
`In addition, our partner, Bayer HealthCare has filed for the wet AMD indication in Europe
`and Japan and we anticipate approval and launches on a country-by-country basis in
`Europe and Japan starting at the ends of this year and continuing throughout 2013. Bayer
`has also announced that they plan to submit a filing of the CRVO indication shortly
`following Ex-US wet AMD approvals. As Len mentioned earlier, Bayer entered into a
`copromotion agreement with Santen in Japan.
`
`We and Bayer expect this agreement will allow EYLEA to have broader and faster reach
`into the Japanese ophthalmology community. As part of this agreement, we have
`converted our profit split in Japan into a tiered royalty of between 33.5% and 40% on
`EYLEA net sales in Japan. While the EYLEA launch is only just beginning, its initial early
`success increases our confidence that EYLEA can continue not only to deliver near term
`growth through the continued launch in wet AMD in the United States and shortly outside
`the United States, but also long-term revenue growth through expansion into new
`indications globally. Now let me turn it back to Len
`
`Bloomberg Transcript
`
`Page 7 of 20
`
`Exhibit 2135
`Page 07 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`Leonard Schleifer
`
`{BIO 1463677 <GO>}
`
`Thanks, Bob. Before moving to Murray to review financial results, let me take a moment to
`address the competitive landscape in wet AMD and our long-term vision for Regeneron in
`opthalmology. EYLEA represents the culmination of years of internal research and
`development for Regeneron in the field of angiogenesis. Where we were early pioneers
`and made seminal discoveries.
`
`We were not the first anti-VEGF to reach the market for the treatment of eye diseases. In
`fact EYLEA is the third approved anti-VEGF product after Macugen and then Lucentis.
`However, our goal is for EYLEA to become the global market leader.
`
`FINAL
`
`Given this history, we are very aware that research and innovation will not stop at EYLEA
`and patients and physicians will be looking for the next innovation in treatment of wet
`AMD. Thus we continue to invest in research to not only find ways to improve EYLEA but
`also to find novel approaches and targets to treat wet AMD and other eye diseases. For
`example, in the Sanofi collaboration we are developing an angiopoietin-2 antibody for
`cancer that's based on preclinical data may also have potential to be developed for
`treatment for diseases of the eye. Over the last several years our scientists have also been
`exploring the role of platelet derived growth factor or PDGF, in angiogenesis. We
`currently have a high-affinity PDGF antibody in preclinical development that we expect to
`be in the clinic in 2013.
`
`As reminder, Sanofi has certain option rights to our antibodies. It is important to note that
`a blocking PGDF does provide an added benefit over VEGF inhibition alone in diseases
`of the eye. We believe it is important to try and develop a potent inhibiter, combine it with
`a best VEGF blocker, and attempt to development as a single coformulated injection if
`possible. Importantly, we know first hand how long and difficult the road to the market
`can be as it took approximately four years from the first patient enrolled in our phase
`three EYLEA program to our initial launch in the U.S.
`
`As such, from what we see in the competitive landscape now, we don't expect any new
`entrants to the wet AMD market before the 2017, 2018 time frame. That said, we are
`committed to investing to maintain our leadership position through continued innovation.
`With, that I would now like to turn the call over to Murray who will review our Second
`Quarter financial results.
`
`Murray Goldberg
`
`{BIO 1463711 <GO>}
`
`Thank you, Len, and good morning everyone. I'm very pleased to discuss our financial
`results for the Second Quarter of 2012, which brought Regeneron to a new milestone with
`over $100 million of non-GAAP profit in a quarter. Total revenues in the Second Quarter
`were $304 million. This included $194 million of EYLEA net sales and about $6 million of
`ARCALYST net sales.
`
`The gross-to-net adjustment for EYLEA sales was similar to last quarter at approximately
`7.5%. For EYLEA, this quarter's distributer inventory remained consistent with prior
`
`Bloomberg Transcript
`
`Page 8 of 20
`
`Exhibit 2135
`Page 08 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`quarters at about one to two weeks of inventory on hand. As a result, EYLEA net sales
`included a modest increase in distributer inventory of about $10 million.
`
`Collaboration revenue was $98 million in the Second Quarter. This primarily included
`Sanofi's reimbursement to us of $92 million for antibody and ZALTRAP R&D expenses that
`we incurred offset by approximately $8 million in pre-commercialization expenses for
`ZALTRAP that Sanofi incurred and that we reimbursed them for. Our reimbursement to
`Sanofi is accounted for as contra revenue.
`
`Looking forward in 2012, this line would include growing pre-commercialization expenses
`for ZALTRAP in preparation for potential launch in a variety of countries at the end of this
`year and next year. Our share of these pre-commercialization expenses would potentially
`be at least partially offset by the approval mile stone of $50 million. If we were to receive
`regulatory approval from the FDA.
`
`Bayer HealthCare collaboration revenue was about $9 million in the Second Quarter and
`primarily represents Bayer's cost sharing of some of the EYLEA development expenses
`that we incurred. As EYLEA launches globally, Bayer HealthCare collaboration revenue will
`also include our share of the pre-commercialization expenses and our share of the profits
`and losses from commercialization outside the United States, as well as potential approval
`and sales milestones from Bayer.
`
`Costs of goods sold in the Second Quarter was $22 million or 10.9% of net product sales
`overall and about 10.5% for EYLEA. This includes royalty expense in connection with our
`Genentech license agreement relating to opthalmic sales of EYLEA in the U.S. It also
`includes inventory write-offs and reserves of approximately $6.5 million that increased
`costs of goods sold for the quarter. Non-GAAP R&D expense was $136 million for the
`Second Quarter this year, about the same as in the Second Quarter last year.
`
`If we back out R&D reimbursements from our partners during the quarter from our R&D
`line, our net non-GAAP unreimbursed R&D expense for the Second Quarter was $37
`million compared to $34 million in the First Quarter. We anticipate that this net R&D
`expense will continue to trends upward through the remainder of 2012 and would
`increase much faster if antibodies outside the Sanofi collaboration such as our NGF
`antibody Regeneron475 move into advanced stage clinical trials.
`
`Non-GAAP SG&A expenses were $40 million for the Second Quarter this year compared
`to $20 million in the Second Quarter last year. The increase in SG&A expense versus last
`year is primarily due to the fully-burdened cost of the EYLEA field force and other EYLEA
`commercialization-related expenses. In April, we provided full-year non-GAAP SG&A
`expense guidance of $180 to $210 million. In the event that the FDA does not grant
`approval for ARCALYST for the prevention of gout flares in patients initiating uric acid-
`lowering therapy, which is what we currently expect, our non-GAAP SG&A would be in the
`lower ends of that range.
`
`As a reminder, non-GAAP R&D and non-GAAP SG&A expenses include -- exclude non-
`cash share-based compensation expense. Turning to the bottom line, we reported non-
`
`FINAL
`
`Bloomberg Transcript
`
`Page 9 of 20
`
`Exhibit 2135
`Page 09 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`GAAP net income of $102 million for the Second Quarter, which is equivalent to non-
`GAAP fully diluted EPS of $0.90. Non-GAAP net income excludes non-cash share-based
`compensation expense and non-cash interest expense related to do our convertible
`senior notes. On a GAAP basis, we had net income of $77 million or $0.70 per diluted
`share.
`
`For the full year, we expect to be profitable on both the GAAP and non-GAAP basis. As
`you will note, despite turning profitable for the quarter, we have not provided for a tax
`liability as we have released a portion of our full valuation allowance against our large
`balance of net operating loss carry forwards and other tax credits. When we transition into
`showing consistent profit, we will provide more guidance on the accounting treatment of
`these NOLs and tax credits.
`
`FINAL
`
`On a cash basis we do not anticipate that we will have a cash tax liability for at least
`several years. Our non-GAAP fully diluted shares outstanding in the Second Quarter were
`approximately 115 million shares and include about 16 million shares attributable to stock
`options, restricted stock and warrants accounted for using the treasury method and about
`5 million shares associated with our convertible notes accounted for using the if
`converted method. At June 30, we have $597 million of cash and marketable securities
`compared to $811 million in year-end 2011. The decrease is primarily attributable to the
`extended payment terms on EYLEA sales.
`
`As you'll recall, in connection with the launch of EYLEA, we offered our distributors
`extensive payment terms and they, in turn offered physicians extended payment terms of
`up to six months to provide ample time for physicians to receive reimbursement from
`Medicare and other insurance providers for their EYLEA usage. At June 30, our trade
`receivables totaled about $350 million, almost all related to do EYLEA sales. Now that we
`are in the ninth month of launch those receivables have begun to be paid down though
`the account balance continues to increase because of our growing EYLEA sales. For the
`second half of this year, we currently expect to be cash positive. Thank you, and with that
`I'll turn the call back to Len
`
`Leonard Schleifer
`
`{BIO 1463677 <GO>}
`
`Thanks, Murray, Bob, George. This was truly another great quarter for Regeneron. Let me
`conclude today's call by making a few comments about the bigger picture for Regeneron.
`This quarter marks another step forward towards our goal of becoming a leading
`biopharmaceutical company as well as a long-term growth company for investors both in
`terms of revenue and earnings.
`
`At a time when many large pharmaceutical companies are cutting back their research,
`shutting down major research centers and looking externally for innovative science and
`product opportunities, we are investing in research, investing in our people and
`expanding our manufacturing capacity. We are also seeing our past investments and
`collaborations bear fruit with a robust pipeline that has multiple BLAs under review at the
`FDA, 10 antibodies in the clinic, two of which are in phase three, and addition to
`antibodies expected to enter the clinic by the end of this year and each year thereafter. All
`of these products and product candidates were invented at Regeneron by Regeneron
`
`Page 10 of 20
`
`Bloomberg Transcript
`
`Exhibit 2135
`Page 10 of 20
`
`

`

`Company Name: Regeneron Pharmaceuticals Inc
`Company Ticker: REGN US Equity
`Date: 2012-07-25
`
`scientists and Regeneron laboratories led by George Yancopoulos our Chief Scientific
`Officer and my partner since the founding of the company over 20 years ago.
`
`This is an exciting time for Regeneron and I want to again thank our dedicated employees
`who have helped us achieve our goals, the many investors who stuck with us for a long
`time patiently waiting to see us reach this point, and all the patients, their family members
`and physicians who participated in our clinical trials and will continue to contribute to our
`future. With that, let me turn the call back over to Michael for questions.
`
`Michael Aberman
`
`{BIO 6989908 <GO>}
`
`Thank you, Len that concludes our prepared remarks. We would now like to open the call
`for Q&A. As we'd like to give as many people a chance to ask questions as possible we
`do request that you limit yourself to one question. The IR team will be available in our
`office after the call for follow-up questions. Thank you, and operator, if you could plea