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Operator
Welcome to the Regeneron Pharmaceuticals Q2 2019 Earnings Conference Call. My name is John, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you do have a question, press star then 1 on your touch-tone phone. Please note the conference is being recorded. And I will now turn the call over to Justin Holko.
Justin Holko
Thank you, John. Good morning. Good afternoon and good evening to everyone listening around the world. Thank you for your interest in Regeneron Pharmaceuticals and welcome to the second quarter 2019 conference call. An archive of this webcast will be available on our website. Joining me today are Dr. Leonard Schleifer, Founder, President and Chief Executive Officer, Dr. George Yancopoulos, Founding Scientist, President and Chief Scientific Officer, Marion McCord, 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 our remarks made on the 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 businesses, financial forecasts and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement issues, intellectual property, and 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 that statement. A more complete description of these and other material risks can be found in Regeneron's filings with the United States Securities and Exchange Commission, including its Form 10-Q for the quarterly period ended June 30, 2019, which has been filed with the SEC today. Regeneron does not undertake any obligation to update publicly 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 on today's call. Information regarding our use of non-GAAP financial measures and the 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.
Justin
Before we begin, I'd like to extend a warm welcome to Justin, who joined us earlier this summer after completing a 19-year training program at Merck and has immediately hit the ground running here at Regeneron. We're thrilled to have him as part of the team, and we worked hard to make his first quarter a straightforward one. Thanks to everyone for joining the call and turning to our business. We had a great quarter, actually, marked by top and bottom line growth as well as important advances across our innovative R&D engine. Sales of Regeneron products, including those recorded by our partners, grew 32% compared to the second quarter of 2018. ILEA global net sales grew 13% to $1.9 billion, including U.S. ILEA net sales growth of 17% to $1.16 billion. The diabetic retinopathy approval in May continues to build upon ILEA's leadership position in treating retinal diseases, including wet age-related macular degeneration, diabetic macular edema, and retinal vein occlusion. We are also pleased to announce that our antibody collaboration with Sanofi achieved profitability this quarter. We expect profits to continue to increase, driven by growth in dupixin, as well as disciplined cost management across the collaboration to stem losses from Pryor by better aligning investments with revenues. Depiction is fulfilling its potential to improve the lives of patients by transforming the treatment of a variety of type 2 allergic diseases. Global net sales are now annualizing at more than $2 billion. Patient initiations in the U.S. are growing, and many ex-US launches are just beginning. Building on this commercial momentum, in June we received FDA approval for Dupixent in chronic rhinosinusitis with nasal polyposis. In the EU, Dupixent was approved in May for severe asthma in adults and adolescents, and as we announced this morning, was just approved for atopic dermatitis in adolescent patients. We also announced today the strong positive results of our Phase III study in children aged 6 to 11 with severe atopic dermatitis. We are enthusiastic about the current and future prospects for Depixin as a treatment directed at the underlying cause of allergic diseases. Additionally, we are making significant progress towards our goal of building a leading presence in immuno-oncology, The U.S. and EU approvals for libtio and advanced cutaneous squamous cell carcinoma are just the beginning. Our clinical efforts, which now include multiple different immuno-oncology programs, are studying a wide variety of potential drug candidates in several difficult-to-treat cancers, including non-small-cell lung cancer, basal cell carcinoma, cervical cancer, ovarian cancer, non-Hodgkin's lymphoma, multiple myeloma, and prostate cancer. Beyond oncology, we continue to move novel programs forward throughout early and late stage development. George will speak to a few of these programs, and additional data readouts are expected later this year. We've made critical advances that have led both to top-line and bottom-line growth, but we recognize that these advances may be overshadowed by the current policy debates on the affordability and accessibility of innovative medicine. We continue to work with policymakers to develop responsible solutions that address affordability and accessibility while preserving incentives to develop transformative treatments of the future. Now I'll turn the call over to George.
George
Thanks, Len. Let me begin with ILEA, the market leader based on its ability to improve vision across multiple retinal diseases, along with its safety profile established by over 25 million injections. In addition to ILEA's indication for the treatment of wet AMD, for macular edema following retinal vein occlusion, and for diabetic macular edema, or DME, the FDA label for ILEA was expanded in May to include diabetic retinopathy without centrally involved DME, based on the Panorama study. In this diabetic retinopathy setting, our updated label shows that ILEA demonstrated an 85 to 100 percent reduction in the incidence of vision-threatening complications. In addition, we're awaiting FDA action on our resubmitted filing for the ILEA pre-filled syringe. In terms of our future innovation in retinal disease, we are planning to initiate clinical programs with a higher dose formulation of Aflibrisep in wet AMD and in DME by the end of 2019. These studies will test a higher dose of Aflibrisep in 12- and 16-week regimens compared to the recommended ILEA regimen two milligrams every eight weeks. Beyond Aflibicept, we are continuing preclinical development of a new VEGF blocker, gene therapy, and other novel approaches, including with our new collaborators at El Nilo. I'd like to now turn to Dupixit, a breakthrough therapy that is already benefiting many patients in a wide variety of atopic and or allergic diseases. As Len mentioned, we achieved several important regulatory milestones. Beyond the highlighted approvals, An opinion by the European Committee for Medicinal Products for Human Use, or CHMP, for chronic rhinocytositis with nasal polyposis is anticipated by the end of 2019. And just this morning, we announced positive results of the Phase III trial in severe pediatric atopic dermatitis patients aged 6 to 11 years, which we intend to submit to regulators in the coming months. I would like to remind you of the tremendous unmet need in this population. On average, the children in our study had nearly 60% of their body covered with lesions and had suffered from this disease for most of their lives, leaving the children and their families devastated and without much hope. Not only did Dupixent dramatically reduce skin involvement as measured by EASY score by an average of about 80%, but it also improved measures of anxiety, depression, and health-related quality of life for both the children and their families. The study also confirmed Depixin's established safety profile and, once again, numerically reduced skin infections. We are deeply committed to bringing Depixin to patients suffering from a range of type 2 inflammatory diseases driven by the interleukin-4 and interleukin-13 pathways. With that goal in mind, we are actively enrolling patients in phase 3 studies in eosinophilic esophagitis and chronic obstructive pulmonary disease or COPD. As a reminder, we're also exploring the effectiveness of Dupixan in allergy desensitization settings, such as for grass and peanut allergy. While allergy immunotherapy can be effective in the long term, many patients can't complete the prolonged time course required for success because of allergic reactions, which can be severe. We recently completed a small Phase IIa trial with about 25 patients per treatment arm, testing whether dupixin could improve the safety, tolerability, and efficacy of subcutaneous immunotherapy or SCIT therapy for grass allergy. The preliminary results of this study showed that about 30 patients discontinued therapy in the SCIT group, mostly due to clinically meaningful allergic reactions, compared to only a single patient who discontinued SCIT when combined with dupixin and not due to an allergic reaction. And in the primary efficacy analysis, there was no difference in terms of reduction of the allergic symptoms with SCIT or in the combination. Thus, we are encouraged by the potential of Dupixin to increase the tolerability of SCIT therapy, and we're looking forward to presenting the results at a future medical meeting. Earlier this quarter, we reported that Regeneron 3500, our interleukin 33 antibody, met primary and secondary endpoints in a proof-of-concept study in moderate to severe asthma patients. showing that Regeneron 3500 may provide an alternative therapeutic option for asthma, although the Regeneron 3500 results were numerically lower than those for the Dupixin Calibrator-on. In addition, the combination of Regeneron 3500 and Dupixin did not demonstrate increased benefit compared to Dupixin monotherapy in this crowd, although the study was not powered for this comparison. In addition, within the next 12 months, we're expecting interim results from the Phase II Regeneron 3500 studies in COPD, and in atopic dermatitis. I will now shift gears to our immunotherapy efforts to treat cancer. Starting with Leptile. Last month, our PD-1 antibody was approved in the EU for adults with metastatic or locally advanced cutaneous squamous cell carcinoma who are not candidates for curative surgery or curative radiation, making Leptile the first and only approved medicine of any kind for patients with advanced CSCC in the U.S. and Europe. With the goal of making Liptio available for a broader population of CSCC patients, we started a Phase III study in adjuvant CSCC. In addition to an ongoing investigator-initiated study, our study in the neoadjuvant setting is scheduled to start in the fourth quarter. Additionally, our pivotal study of Liptio and basal cell carcinoma, the most common skin cancer, is expected to read out in the first half of next year. Moving on to non-small cell lung cancer. We are pleased by the enrollment for our Leptile Monotherapy Phase 3 trial in high PD-L1 expressors. We have commenced enrollment in Part 2 of our other Phase 3 lung cancer study, which will compare Leptile plus chemotherapy to chemotherapy alone, regardless of PD-L1 status or histology. Beyond checkpoint inhibition, Our investigational bispecific antibody franchise consists of two broad categories based on the T-cell receptor to which the bispecifics bind, the CD3 molecule or the CD28 co-stimulatory bispecifics. In total, we now have four bispecifics under clinical investigation. Our CD20 by CD3, BCMA by CD3, MUX16 by CD3, and notably, the nearest addition is of our first costumatory bispecific PSMA by CD28. Additional candidates are expected to enter the clinic in the upcoming months and years. In June, we presented updated efficacy and safety data for Regeneron 1979, our CD20 by CD3 bispecific. Regeneron 1979 continues to show high response rates in heavily pretreated non-Hodgkin lymphoma patients. In particular, we observed complete responses in four out of seven diffuse large B-cell lymphoma, or DLVCL, patients treated with Regeneron 1979 doses 80 milligrams or higher. Notably, four of these had failed prior CAR-T therapy, and two of which achieved complete responses. Regeneron 1979 has demonstrated manageable tolerability with no discontinuations due to cytokine release syndrome or neurotoxicity to date. Recruitment for a potentially pivotal Phase II trial for Regeneron 1979 is now ongoing. The multi-arm study will enroll several disease-specific cohorts of relapsed refractory non-Hodgkin's lymphoma patients, including follicular lymphoma, DLBCL, and other non-Hodgkin's lymphoma subtypes. Our two other CD3 bispecific antibodies, MUX16 by CD3 for platinum-resistant ovarian cancer, and BCMA by CD3 for relapse or refractory multiple myeloma are in clinical studies that are actively enrolling patients. We plan to present preliminary BCMA by CD3 data by the end of 2019. Finally, recruitment is ongoing for the first costimatory candidate, Regeneron 5678, which finds prostate-specific membrane antigen, or PSMA, on tumor cells, as well as the CD28 costimatory molecule on T-cells. Based on preclinical evidence, we are hoping to see synergy of our co-STEMs with Liptio in disease settings, such as prostate cancer, that have proven resistant to immunotherapy alone. If successful, this innovative approach could open up the possibility of immunotherapy to a large number of patients who do not currently have this option. In addition, we expect a number of updates related to other programs emerging for our pipeline. By the end of 2019, we're planning to present our C5 antibody data in patients with paroxysmal nocturnal hemoglobinuria, or PNH. By the end of this year, we also expect readout of our ANGPTL3 antibody phase 3 study in homozygous familial hypercholesterolemia, as well as a readout of our active in any antibody pivotal study in the rare disease fibrodysplasia ossificans progressiva, or FLP. Phase 3 studies of facinimab are advanced candidate for osteoarthritis pain, are now fully enrolled, and data are expected during 2020. Finally, we just celebrated the fifth anniversary of the Regeneron Genetic Center. To date, we have sequenced 700,000 individuals linking their exome data with detailed medical records. We continue to be excited about our ongoing effort here, including our work to sequence the UK Biobank database in collaboration with a consortium of leading biopharma partners. Mining of the Regeneron Genetic Center database has already discovered and or validated a number of genetic drug targets across several human diseases, which are positively impacting our current development efforts. With that, I'll now turn the call over to Marion.
Regeneron 5678
Thank you, George. In the second quarter, we executed well across our portfolio of existing lines of business and recent launches. Starting with Alia, global net product sales grew 13% year-over-year to $1.9 billion. In the U.S., net product sales grew 17% year-over-year and 8% quarter-over-quarter to $1.16 billion. Alia growth is driven by share gain and market expansion underpinned by the aging population and increase in diabetes prevalence. In the branded U.S. anti-VEGF market, our share increased to 71% of net product sales. In the quarter, a temporary shortage of the vaccine in select geographies modestly impacted ILEA net sales. ILEA continues to help patients with diabetic eye disease, and this represents an important growth opportunity for the brand. In mid-May, the FDA approved ILEA to treat all stages of diabetic retinopathy, and our launch commenced immediately. For this indication, ILEA is the only anti-VEGF approved with two dosing options, allowing doctors to customize treatment to their patients' needs. Our comprehensive plans to develop ILEA's position in the diabetic retinopathy market are underway. We began educating both physicians and patients upon approval, encouraging early intervention for appropriate patients, and ensuring ILEA is the first-line anti-VEGF treatment. It's early days in the launch, but we're pleased with feedback from retina specialists, and we're seeing positive early interest and uptake among major practices. We are investing in Aaliyah's promotional platforms to advance our market-leading position across all indications, including wet AMD, DME, and in diabetic retinopathy. Our expanded and realigned sales force has the dual focus of growing both the diabetic eye disease market and our core wet AMD business. Robust engagement efforts with the retinal community messaging both ILEA's clinical and real-world experience are well underway. Visual outcomes and safety remain the standards by which therapies are compared, and ILEA's rapid and sustained outcomes in improving and protecting vision are unsurpassed. We're committed to further strengthening our leadership position for ILEA through continued innovation, including in dose and delivery. Pending FDA approval, the ILEA pre-filled syringe will be launched in 2019. I'd now like to turn to Libtyo. The launch in cutaneous gramous cell carcinoma, or CSCC, continues to gain momentum, and in the U.S., net product sales were $41 million for the quarter. Brand awareness within the medical community is growing, demonstrated by the breadth of prescribers at major cancer centers and community practices around the country. Since launch, we made further progress in establishing Libtyo as the standard of care in advanced CSCC across all lines of therapy. Market research indicates more than three times as many CSCC patients are now receiving an anti-PD-1 or PD-L1 treatment compared to before Libtyo's approval. We believe Libtyo is poised for continued growth. We have broad payer access. and a 2A recommendation from the National Comprehensive Cancer Network. Liptio is the only checkpoint inhibitor to have this designation in CSCC. Additionally, ex-US launches in CSCC are underway, and we look forward to data that could expand the potential of our dermatologic oncology portfolio into earlier stages of CSCC and beyond. Moving to Praluent, in the second quarter, global net sales were 74 million. In the highly competitive U.S. market, we remain focused on patient affordability and physician ease of prescribing. We are working closely with our collaborator Sanofi to greatly improve brand profitability. Turning to Kevzara, in the second quarter, global med sales were $59 million. In the U.S., Kevzara continues to make headway in the IL-6 subcutaneous class with an estimated 47% share of new patients dispense Kevzara or NBRX and 29% share of total Scripps or TRX. Now for Depixent, which is transforming the lives of patients suffering from the type 2 inflammatory diseases, atopic dermatitis, asthma, and now chronic rhinosinusitis with nasal polyps. Global net product sales in the second quarter were $557 million. In the U.S., net product sales reached $455 million, representing 151% year-over-year growth. Total prescriptions, or TRX, in the U.S. grew approximately 30% compared to the first quarter. This was driven by continued growth in approved indications, adult atopic dermatitis and asthma, as well as the launch in atopic dermatitis for adolescents. Weekly new-to-brand prescription, or NBRX, for the second quarter averaged approximately 1,200 patients per week, up from 950 in the prior quarter. This momentum is further evidence of the positive impact of our commercialization strategy and execution across all approved indications. As we mentioned last quarter, prescribing continues to grow in adult atopic dermatitis as more moderate patients are just prescribed Depixent and more healthcare professionals gain brand experience. Our recent launch in adolescents is going well. As a reminder, Depixent is the first biologic approved for adolescents many of whom remain uncontrolled using topical therapies. Market reaction has been extremely positive. Target physicians are prescribing and excited about the results they're seeing. There is significant uptake about both dermatologists and allergists, and we're making meaningful inroads in reaching target pediatric dermatologists and pediatric allergists. In addition, market access coverage is already at or near levels of the adult population. Asthma is a significant opportunity, and Depixin is well-positioned for continued growth. Depixin's differentiated clinical and safety profile continues to support uptake. The asthma biologic market has expanded 13% since Depixin's launch, demonstrating our ability to compete and grow this market. Allergists who have experience using Depixin in atopic dermatitis now also see its benefit for their asthma patients. Prescribing more Excuse me, prescribing among pulmonologists is also increasing, and they are highly receptive to Dupixent's efficacy, use in steroid-dependent patients, and self-administration. And finally, in late June, Dupixent became the first biologic medicine approved as an add-on maintenance therapy treatment for adults with an adequately controlled chronic rhinosinusitis with nasal polyps. This indication is yet another first-in-class opportunity for Dupixent given the high unmet need. In the U.S., up to 90,000 adults with chronic rhinocytositis with nasal polyps are considered uncontrolled despite prior surgery or systemic corticosteroid use. And about 55,000 patients are those that had prior surgery. Importantly, many patients with this disease have other type 2 inflammatory diseases like asthma. In our two phase 3 clinical trials, almost 60% of patients also had asthma, which was improved with a Depixent treatment. Our commercial efforts are focused on EMTs and allergists, and we're having constructive payer discussions. While early in the launch, we believe this will be a meaningful growth opportunity for Depixent, and we look forward to providing future updates. In closing, we're excited about our near-term performance and confident that our ongoing commercialization efforts will drive long-term growth across core brands and ongoing launches. Now I'll turn the call over to Bob.
Bob
Thanks, Marion. For the second quarter of 2019, Regeneron executed well and delivered solid financial results on both the top and bottom lines. And, as Len stated, we are pleased that the Sanofi antibody collaboration has reached commercial profitability. Total revenues for Regeneron grew 20% year-over-year to $1.93 billion, driven by continued growth of our core brands. Ileana depicts it. Non-GAAP diluted net income per share grew 10% year-over-year to $6.02 on non-GAAP net income of $690 million. Our second quarter GAAP results were impacted by both the Alnylam upfront payment and equity investment. In addition to Marion's earlier comments about ILEA, I want to highlight two additional items related to U.S. ILEA net sales for the quarter. First, inventory movements were immaterial in the quarter. Second, US ILIA net sales were impacted by an increase in sales-related deductions. Moving to our collaboration revenue line items, starting with Bayer. Ex-US ILIA net product sales, which are reported to us by Bayer, were $715 million, representing a 7% reported and a 13% constant currency basis increase year-over-year. Total Bayer collaboration revenue for the second quarter of 2019 grew 10% year-over-year to $289 million, of which $269 million was derived from our share of net profits from ILEA sales outside the U.S. For the Sanofi collaboration, we generated significantly improved results. Total Sanofi collaboration revenue was $349 million, up 47% year-over-year. This increase was primarily driven by improved profitability in the Sanofi antibody collaboration. In the second quarter of 2019, Regeneron recognized a profit of $39 million in connection with the commercialization of non-IO antibodies, compared to a loss of 69 million in the second quarter of 2018. Profitability came from higher global net product sales of Depixent, partly offset by an increase in commercialization-related expenses to support ongoing Depixent launches. Based on our current projections, we anticipate increasing profitability from the commercialization of non-IO antibodies going forward. Turning now to expenses. Non-GAAP R&D expenses were $589 million for the second quarter of 2019, compared to $470 million for the second quarter of 2018, and essentially flat compared to the $583 million recognized in the first quarter of 2019, driven by continued investment in our research platform and pipeline. Our non-GAAP unreimbursed R&D expense, which is calculated as the total non-GAAP R&D expense, less R&D reimbursements from our collaborators was $423 million for second quarter 2019 compared to $286 million for the second quarter 2018 and $419 million for first quarter 2019. The year-over-year increase is primarily driven by higher spend associated with our earlier stage pipeline, clinical trial and manufacturing costs to support ongoing development programs, and lower Sanofi reimbursement as a result of the amended immuno-oncology discovery and development agreement. Based on the current progress in our R&D pipeline and outlook for the remainder of the year, we are tightening our previous full-year 2019 guidance for non-GAAP unreimbursed R&D to $1.625 to $1.71 billion. Next, non-GAAP SG&A expense was $375 million for the second quarter of 2019, a 16% year-over-year increase driven by commercialization-related expenses to support ongoing Depixent launches and ILEA's recent launch in diabetic retinopathy. We are tightening our previous full year 2019 guidance for non-GAAP SG&A to 1.53 to 1.58 billion. Sanofi reimbursement of Regeneron commercialization related expenses, a line item found within Sanofi collaboration revenue was 123 million for the second quarter of 2019. We are lowering and tightening our previous full year 2019 guidance for Sanofi reimbursement of Regeneron commercialization related expenses, to $500 million to $530 million. Turning now to taxes. For the second quarter, our GAAP effective tax rate was 14.1%. We are reaffirming our full-year 2019 GAAP effective tax rate guidance of 11% to 13%. To assist with modeling, principally due to the O'Nylam $400 million upfront exclusion from non-GAAP earnings, the full-year 2019 non-GAAP tax rate will be higher than our full-year 2019 GAAP effective tax rate. Turning next to our balance sheet and cash flow, Regeneron ended the second quarter with cash and marketable securities of $5.55 billion. Through the first six months of the year, we generated free cash flow of $916 million. We calculate free cash flow as net cash provided by operating activities, less capital expenditures. Capital expenditures were $95 million for the quarter and $169 million year-to-date based on our updated data. capital spend plan and year-to-date spending levels, we are lowering and tightening our full year 2019 capital expenditure guidance to $380 to $420 million. In conclusion, we're very pleased with our operational and financial performance this quarter. These financial results, along with the execution on our R&D and commercial strategies, position us for continued long-term growth. With that, I'd like to turn the call back to Justin.
Justin Holko
Thank you, Bob. That concludes our prepared remarks, and we'd now like to open the call for Q&A. To ensure that we are able to address as many callers as possible, please limit your questions to one or two questions. Please go ahead, John.
Operator
And thank you. We will now begin the question and answer session. If you do have a question, press star then one on your touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, press star then 1 on your touchtone phone. And our first question is from Carter Gould from UPS.
Carter Gould
Good morning. Congrats on the Sanofi collaboration tipping over into profitability, and thanks for taking the question. One for George. I wanted to ask around the CD20 antigen loss you observed at disease progression in some of the patients responding to 1979. I was interested in your current understanding of the mechanism in play here, given I believe this was rare with Rituxan, and how you see this potentially ultimately influencing how 1979 may be positioned in the treatment paradigm. Thank you.
George
I have to admit, I didn't quite get your question there.
Carter Gould
Okay. It was around the CD20 antigen loss you saw in some of the patients treated and how you see that ultimately potentially influencing how the drug gets positioned in the treatment paradigm. if it potentially takes away salvage options?
George
Right. Well, I think that we have seen antigen loss of both CD20 and also CD19, which has occurred. So far, it doesn't seem to have, you know, in these very late-stage patients, dramatically affected the response rates or the durability. So, we're seeing, you know, the rates that we responded – we reported, so it doesn't seem like it's, at this point, a major issue.
Carter Gould
Thank you.
Operator
Our next question is from Matthew Harrison from Morgan Stanley.
Matthew Harrison
Hey, good morning. Thanks for taking the question. I guess I wanted to ask on the initial BCMA data that you expect to present towards the end of this year. How should we think about relevant comparisons here? Is this something you would compare against CAR-T, against BITES? I'm just wondering how we should think about that and what the goal here is. Thanks.
Justin
Well, it's fine. Maybe George has more comments. But I would say the best thing is probably to wait for the data. But the way Santa Fe and Regeneron are thinking about that, and this is part of the collaboration, is that Obviously, if we can deliver anything close to what a bispecific can deliver, that a CAR-T can deliver, excuse me, then a bispecific being off the shelf and a pharmaceutical-like drug pricing consideration, things like that, should obviously have a huge advantage in the marketplace. So we would consider our competition more of things like the bites and what have you, Obviously, we have already started out with long-lasting molecules. They're well-designed. We make them straightforwardly through a proprietary approach. So we think that we can compete, and what you should be looking for is what kind of activity we can deliver. So maybe we should just wait for that.
George
Yeah, and I think just to add that I think that obviously we're hoping that it's going to – confirm that our class of CD3 bispecifics are reproducibly sort of top of the class in terms of producing the sort of efficacy that we've already seen with our CD20 by CD3 bispecific. And so that's what we're hoping for. In addition to that, we just want to point out that both with our own pipeline and obviously with our partner's pipeline, there are a myriad of combination opportunities So it's just sort of the beginning to show the activity with the BCMA bispecific. We can then add to it with the right set of combinations with components that both sides in the collaboration have to offer that we're very excited about, including, for example, our COSTIMs, which we have quite a few that could potentially collaborate clinically with the BCMA by CD3 bispecific. Thank you, Matthew. Next question.
Operator
Our next question is from Terrence Flynn from Goldman Sachs.
Terrence Flynn
Hi, great. Thanks for taking the questions. Congrats on the antibody JV profitability as well. Maybe just two on Dupixent. First, I was wondering if you could share your thoughts about the relevant size of the 6 to 11-year-old population here at the topic germ, and then, you know, would the pace of uptake be similar or faster than what we saw with adults in your view? And then on DUPI for grass allergy, thanks for the additional data. Just wondering next steps there for that program if you could give us any more color on the forward. Thank you.
Justin
So why don't we take the commercial question first.
Regeneron 5678
Sure. And Terrence, just to clarify, your question on DUPICS, you were talking about the European populations or were you talking about U.S. populations?
Terrence Flynn
Sure. I mean, both would be great. But, yeah, I know you had the data this morning from 6 to 11. And, again, I don't think you guys have characterized how big those groups are.
Regeneron 5678
Right, right. So, you know, what I wanted to share with you is, you know, obviously with the atopic dermatitis population in the U.S. for adults, you know, we've said about 300,000 to 400,000 patients are at greatest need of therapy. And, you know, I just want to lend the context that at this point, While we're very pleased with uptake and the difference that Dupixent is making in the lives of patients, we've probably only so far reached about, oh, you know, high teens, about 18% of the adult patient population. We're excited about the adolescence launch, and we're seeing nice uptake there early days. Again, a lot more work to do. We haven't yet given a characterization in the size of the pediatric population, but but certainly will in the future as we get further into the data readouts and preparedness for launch of that indication, which certainly I can confirm will be prepared to launch as soon as we have the FDA approval.
Justin
Yeah, just a slight follow-up on that. The uptake of the cream that was fairly brisk, I think, in some of the younger patients. So, We think that market is really one of great unmet medical need. And as George said, these are children we studied that had 60%, 60% of their body covered with lesions, having all sorts of effect on their mental health, their sleeping, the family. the quality of life. So I think that in the severe patients, we would expect a pretty brisk uptake. But it's going to obviously take some work because you're treating children with a biologic. We still have to constantly educate and remind people what George said and contradict a distinction to other biologics where you see an increased infection. Listen carefully, George mentioned that there's actually a numerically decreased Consistent, and we've seen this across our severe and moderately severe atopic dermatitis patients, a numerical decrease. So we think that as people get more and more and more comfortable with the safety and efficacy, this will move lower and lower down into the age groups as we get approval. George, maybe you want to turn to the grass algae and what's next?
George
Yeah. So as I mentioned, we were very excited by the potential a depiction to apparently increase the tolerability of SCID therapy. I may have misspoke. Obviously, if it was 25 patients per arm and I said 30 patients discontinued, it was 30% of the patients discontinued on SCID, which I think is about normal. Obviously, if you do the math, that's about eight patients. That's the exact number. But in any case, so as we noted, the ability of desensitization therapy to work is real, but it takes time and it comes at the cost of tolerability in many patients not being able to get through the therapy because of severe allergic reactions. So it is obviously very exciting to see Dupixen have such an apparent benefit, albeit in an early study in small numbers, on the tolerability of the SCID therapy. We have a number of other ongoing programs in studying allergy, and I think we're going to be looking at all of these together before we come up with our formal, you know, strategy of how to go forward in this. But we do think that this is a very exciting area that can make a lot of difference to a lot of people who are suffering from allergies, so we're pretty excited. Great. Thank you, Terrence. Next question?
Operator
Our next question is from Yaron Robert from Cowan.
Yaron Robert
Okay, great. Thanks for taking my question, and again, nice results. I have, if you don't mind, just two questions. The first one, and Doopie, if you can just give us a sense across between asthma, AD, and obviously chronic rhinocytositis is obviously just getting going, but what really kind of led to the growth this quarter on a quarter-over-quarter basis? And in asthma, where are you getting the majority of sales? Is it new to biologics, or is it switching from biologics? And then just a question on ILEA, whether we're hearing some reports from the field that there is now a slightly higher discounting program from Regeneron, about a 4%, and does that jive with what you're saying? Thank you.
Justin
So before Marion tackles those questions, I'll say it is Justin's first call, and maybe he's being nice to you. We said one question per. That was three. We'll let Marion give you a pass on that and try and deal with these.
Regeneron 5678
Sure. I'm happy to. So I'm going to start with ILEA. And let me first comment that we believe that physicians should make the choice on which anti-VEGF therapy they want to select for their patients. And certainly, ILEA is the standard of care for many prescribers. Further, I'll just say that we're really not commenting on pricing strategy. I'm happy to go on to some of the other items as well. I'll see if I can remember the questions. We haven't given for Dupixent, we haven't. It's early days for many of our indications, so we haven't given breakout of business by indication because it would be premature. But I think your question, there are a couple specifics in there that I can give you. You're asking for a characterization in asthma of the types of patients that are being prescribed Dupixent. And we are getting the majority of our starts from bio-naive patients, about 80% of our business. is patients who are coming on to biologic therapy. And then, of course, the remaining are switches. The characterization I'll give you is that, you know, certainly for the physicians who are prescribing, both allergists and pulmonologists now, allergists obviously had a lot of experience with dipixent from atopic dermatitis, but we are hearing very positive comments. And it's the differentiation of the clinical profile, the safety, The results they're getting in terms of the patient's ability to breathe more easily and to, you know, to go about their lives in the normal way, that obviously coupled with the ability for patients to self or have at-home administration. So certainly asthma was a major contributor to our performance in the quarter, but as was atopic dermatitis. We continue to see substantial growth, and, you know, as I mentioned earlier, there's still so much unmet need, certainly with adults, And now we're very excited to also be helping those adolescent patients who are very much in need. So I think I would round it all up by saying that it's the combination of indications, the expansion of our platform with Depixent, that is contributing to this strong second quarter performance.
Justin
Yeah, thanks, Mary. I just maybe add one thing to emphasize. You said the combination of indications. That's really resonating well. For people, for example, who have both asthma and nasal polyps, which is very commonly coexisting, or asthma and atopic dermatitis, particularly in adolescents, is a common coexistence. So the ability to treat these comorbidities is a real advantage for our product, and I think the allergists in particular, who are the ones that are sort of the center point seeing patients who have multiple comorbidities, are really getting that. Thanks, Jerome. Next question.
Operator
Our next question is from Jeff Borges from SVB Learing.
Jeff Borges
Thank you very much, and congratulations on the quarter. A lot of things that I could ask questions on, but I'll just ask one with ten subparts. On the 1979 study, George, you mentioned that it's going to enroll both DLBCL and follicular lymphoma and presumably also mantle cell. Do you envisage that it could be potentially pivotal in all those NHL subtypes? And will you be enrolling patients who have prior CAR-T failures in that trial? Thanks.
George
Yeah. So basically, the way our total phase two study is designed is with a number of arms actually each one dedicated precisely to exactly some of those subtypes that you're interested in, so that, yes, each one we would consider to have, pending, of course, how active in the data and the durability and so forth, each one would have registrational possibility. And we also have a, in the fiddle phase two, we certainly will have the late-stage follicular lymphoma patients, the late-stage DLBCL patients, but also we have a program where we're focusing an arm specifically on CAR T failures where we think, obviously, in such a high unmet need population where people have failed everything, if one sees the sort of activities that we're seeing in the very small numbers of patients so far being maintained and being durable, that, yes, that could also be a separate approval opportunity.
Justin
There's two out of four... There's two out of four... prior CAR-T that George mentioned with complete responses was very encouraging.
Justin Holko
Indeed. Okay. Thank you, Jeff. Next question?
Operator
Our next question is from Corey Casima from J.P. Morgan.
Corey Casima
Hey, good morning, guys. Thanks for taking my question. I recognize this is probably a difficult one to answer, but we're frequently asked it, so I'll ask you. kind of how are you broadly thinking about the longer-term outlook for ILEA when you balance the possibilities of healthcare reform and Part B exposure, pending competition, what AMD, and then your own new ILEA launches and less exposed indications? Thanks.
Justin
Yeah, well, obviously, it is a difficult question to answer, and we hope you give a good answer to it. Our view is more qualitative. If you look at the brand, we're seeing good growth, and the good growth is not just occurring in the United States. It's occurring, I think it was about 13% outside the United States. For a brand that's this large and this late in the class, that says that the demographics that we predicted would be having a positive impact. So I do think there is plenty of room for growth. In terms of competition, obviously, as I think was mentioned on the call, at the end of the day, vision and maintaining and improving vision is the gold standard. It's what the FDA measures you by. I think it's what most patients care most about, and we are unsurpassed in that. Our long-term safety, I think we've given over 25 million injections. We are expecting action on our patients. prefilled syringe, which we've worked hard at, to come up to for dates coming up pretty soon. So our enormous safety database is, I think, going to work in our favor. It is hard to do this, and you're injecting 20, as we said, now up to 25 million injections into the eye. You have to be able to do that in a very reliable and safe way. If you look at some of the studies out there that have been focusing on, let's say, dryness, there's also, if you look at them, there's some data that's worth inspecting on the reactions in terms of inflammation. So we'll have to see how that all sorts out. Plus, we have the advantage of being able to give the dose monthly as well as every other month. as well as all the indications. So I think we're well positioned for the near term. In terms of your question about health care policy and the overhang, obviously we watch that carefully. We're very involved in Washington. We know what's really important to us. We are sympathetic to the notion that some have that prices in the United States are much higher than prices for the same drugs outside the United States. but we don't think that the solution of tying prices in the United States for a drug like ILEA, where we don't control the price outside the United States, makes a lot of sense. That would be a huge negative to the biotechnology industry as a whole, because so many biotechnology companies license away their rights for survival outside the United States, and they don't control the prices. So we were happy to see in the Grassley-Wyden compromise that that was not in there. It almost got in there in an affirmative way that it couldn't happen. That vote was 14 to 14. We watched that carefully. We're working at it. And so we're hopeful that the policy debates that are taking place will not block innovation or reward the good actors. We haven't had a price increase in ILEA, so the notion of having an inflation rebate would not affect us. So maybe that's a qualitative summary of all the things that we worry about. We worry about competition, obviously. We worry about the environment. We worry about the regulatory and patent exclusivity and so forth.
Regeneron 5678
Next question. I might pick up on one thread in the question. And this was just related to ILEA and our indications and, you know, obviously the growing indications with recently launching in diabetic retinopathy. Today, 60% of our sales are now coming from wet AMD. And with the expansion of our diabetes indications, now over 30% of ILEA sales are coming from the diabetes indications and, of course, recently including diabetic retinopathy and the balance for others.
Operator
And our next question is from Evan Siegerman from Credit Suisse.
Evan Siegerman
Hi, all. Thank you so much for taking the question, and congrats on the progress. One combo for Bob and Marianne. So, Bob, you had mentioned that there was some sort of an investment shortage that may have benefited ILEA sales in the quarter. And then more broadly speaking, how are you positioning ILEA in light of upcoming competitive launches?
Regeneron 5678
Sure. So let me take a start in that if Bob has elements to add. I think first, let me talk a little bit about the second quarter. We certainly had a strong quarter. It was influenced by a few factors, and let me cover those. You know, certainly there's market expansion in consideration. We do see growth from our wet AMD and DME indications. We began launching in diabetic retinopathy. As mentioned, we added customer-facing personnel to focus on our diabetes indications. There was a modest, what we would characterize as a modest impact from Avastin shortages in some geographies in the U.S. And then as well, we were up against a somewhat weaker 2018 second quarter comparison. So I did want to give some relative context there. I think in terms of, you know, as we look forward, we do think that for ILEE as a standard of care with eight years in market, it's important to look at growth rates as the average of several quarters to get a true sense of what the growth profile has looked like historically and may go in the future. And then in terms of preparation for competitive launches, we feel very well positioned to, you know, continue to perform well in the market with ILEA. And certainly we're very excited about the breadth of indications and the profile that Len just covered related to ILEA.
Operator
Next question, please. Our next question is from Yatin Sunje from Guggenheim Partners.
Yatin Sunje
Hey, guys. Congrats on all the progress, and thanks for taking my question. The question is on REGN3500, the IL-33 antibody that you have. Could you maybe talk about the development strategy there, given that DUPI monotherapy was numerically better than IL-33 across all the endpoints that you evaluated in the asthma trial, could you maybe comment on the areas where you think IL-30 might play a differentiated role relative to DUPI?
George
Well, as you say, the hope would be that there might be particular patients who might better respond to, for example, or would like the alternative in IL-33 as opposed to a DUPI in asthma. And, of course, we're also waiting for upcoming data from our atopic dermatitis program and also from our COPD program to really understand how we're going to position this. But we do think that this could be an important alternative option for some patients with asthma just based on the current data, and we're waiting for more data to see how it evolves. Thank you. Next question, please.
Operator
Our next question is from Mohit Manzo from Citigroup.
spk18
Great. Good morning, and thank you for taking my question. Quick question on Praluent. Given that the challenges you are facing in the market, do you think there comes a point where you and your partner take a tough business decision, or you think you can turn it around and achieve profitability for this drug in the long run? Thank you.
Justin
Yeah, obviously, this is a highly competitive space, and we don't want to get too detailed about what our strategies are. Obviously, we said we're trying to match our investments appropriately. We do have some strategies. At the end of the day, heart disease is still a major killer. The PCSK9 is still a terrific drug. So maybe that's all we should say at this point. Thank you.
Operator
Next question, please. Our next question is from Kenan McKay from RBC Capital Markets.
Kenan McKay
Hi, thanks for taking the question. Maybe one for George. I was wondering if you could just comment a little bit more on the high-dose Flibercept trials you're initiating and sort of how high you can go on dose and really what the goals of the high-dose treatment are. Thank you.
George
Well, obviously from our earlier studies, we've seen that about 50% of patients can do well with a morphine prolonged dosing schedule that is on a 12-week interval. And so we're imagining that if we go to a higher dose of Aflibicept, we may be able to push a higher percentage of patients to either a 12-week or maybe even a 16-week regimen. So we're running the studies to actually test these longer intervals and see whether the higher doses will actually do that. So we'll see. Okay. Great.
Alicia Young
Next question, please.
Operator
Our next question is from Alicia Young from Cannon Fitzgerald.
Alicia Young
Hey, guys. Thanks for taking my question. Congrats on a very good quarter. I guess I found the 18% or so number very striking about how much penetration you've had in adults. So maybe can you talk about some of the things that you're doing to drive penetration, or is it just a slow but sure process to get more people in the dressing?
Regeneron 5678
Sure. So this, I believe your question, Alicia, is in reference to the comment on jupixent. in adult atopic dermatitis. That's correct. Yes, just to give context. But my comment is to make the point that while certainly many adults that have very, very difficult moderate to severe disease are now being treated, there is tremendous potential for us to do more with Depixent to help appropriate adults in need of therapy. And to your characterization, I do think that Depixent is gaining momentum in atopic dermatitis, certainly in other indications as well, and it's not unusual for physicians first to prescribe to those patients who are their toughest patients, the most severe patients. We're seeing pickup in breadth and depth of physician prescribing of Depixent, and we also are seeing more moderate, severe patients being treated. So it's encouraging because Depixen is helping these patients in a way that, you know, we hear time and time again is transformational to their lives and as well transformational to the lives of the physicians who are treating them.
Justin Holko
I think we have time for two more questions, John.
Operator
Our next one is from Harthak Singh from Oppenheimer and Company.
Harthak Singh
Great. Thank you for my question. I have one question on the TIO. We had a stronger number than we expected for the second quarter. I think this PD-1 has gotten some really good data, and just from what we've heard, it's being really accepted broadly. Can you just give some color on the commercial rollout and how that is progressing, and any thoughts also on the lung cancer trials, if you've got ongoing? Thank you.
Regeneron 5678
So I will give some comments related to commercial performance. And with Lubtaio, we certainly are making inroads to become the standard of care for CSCC patients as described in our label. Approximately 90% of new patient starts in CSCC within the ENTI PD-1, PD-L1 class are now going to Lubtaio. Further, we have excellent payer coverage that has already been achieved. And further, we'll have our permanent J-code on October 1st. So certainly we've made a strong start in the launch of CSCC for Liptio.
George
About the lung cancer, I guess early on there were a lot of thoughts that the PD-1 space would be commoditized and that there would be, you know, so many PD-1s and it'd be, you know, sort of boilerplate to just make another one. I think that if one fairly looks at the data – These are not behaving the same, and that's obvious for sure in the lung cancer space where Keytruda is the unquestioned leader. And so we're very excited about the fact that we think that RPD1 might have very good activities already demonstrated, as we've heard, in certain settings. So we're excited to see how it's going to perform in the lung cancer setting and whether it will be one of the rare PD-1s that can really provide a lot of benefit to patients there.
Operator
And our last question from Brian Scorny from Baird.
Brian Scorny
Hey, good morning, guys. Thanks for taking the question. Two quick ones. Obviously, Bevacizumab is the most prescribed VEGF therapy despite being off-label. It looks like there's one company planning on actually filing a BLA next year to market a branded Bevacizumab. How do you guys think about the market impact of an active Salesforce marketing Bevacizumab versus the more passive usage right now? And then just real quickly on Regeneron 4461, I know leptin was a pretty well-researched target about a decade ago, never quite realized its promise. Can you just share your thoughts on what makes targeting the receptor with your antibody attractive and how it could overcome some of the prior history? Thanks.
Justin
Sure, just very briefly because we're running out of time, I'll take the bevacizumab question and George will deal with the question on the insulin, I mean on the leptin receptor. So in terms of bevacizumab, obviously you can't have a biosimilar to bevacizumab in terms of approvals because it doesn't have any approvals. So somebody, if they want to get approvals, obviously is going to have to do all the different studies, et cetera. And we already know that in large studies conducted independently by the government, for example, Protocol T, Bevacizumab was inferior, clearly inferior, to ILEA. So I think that the use of Bevacizumab is mainly, one, driven by its off-label, exceedingly low price. So having another competition there with or without a sales force, and the doctors are well aware about this, we wouldn't expect to have a major impact on the market.
George
George, on the leptin. Well, just to remind you, one of the major problems with leptin and metroleptin as it was developed was that it elicited, unfortunately, quite a significant percentage of patients' antibodies against the leptin. And a lot of these patients are patients who actually still have endogenous leptin activity. So, when the antibodies come on board, the patients end up not only neutralizing the injected leptin, but their endogenous leptin, they end up being worse off than they were beforehand, and they're also left with nothing to actually being available to treat them because you now can't give them leptin. So, of course, we are pursuing our leptin receptor activating antibody in that setting, but it would also... provide a better alternative and would allow broader usage. There are other settings where one could have conceived using metroleptin, except one wouldn't have not wanted to elicit this antibody response and have the potential to wipe out the endogenous leptin remaining activity. And so people were reticent to explore it more broadly in other settings. So on top of that, it is one of the first examples of our new activating antibody technology. that allows us to, we hope, create efficient in vivo activating antibodies for growth factors and cytokines and so forth. So for all those reasons, we're pretty excited about our leptin receptor program. But, of course, we'll be starting in the same sort of rare patients where leptin is mostly used right now.
Operator
And I'll now turn the call back over to Justin Hochul for closing remarks.
Justin Holko
Great. Thank you, everyone, and thank you again for dialing in to the call today. The IR team will be around to answer your questions later today.
Operator
Thank you, ladies and gentlemen. That concludes today's conference. Thank you for participating, and you may now disconnect.
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