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Operator
to regenerate pharmaceuticals Q4 2019 earnings conference call. My name is Sylvia and I'll be your operator for today's call. At this time, all participants in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then 1 on your touchtone phone. Please note that this conference is be recorded. I will now turn the call over to Justin Holcomb. Justin, you may begin.
Justin
Thank you, Sylvia. Good morning, good afternoon, and good evening to everyone listening around the world. Thank you for your interest in regenerant pharmaceuticals and welcome to the fourth quarter 2019 conference call. An archive of this webcast will be available on our website. Joining me today are Leonard Schleifer, founder, president, and chief executive officer, George Yankopoulos, founding scientist, president, and chief scientific officer, Marion McCourt, senior vice president and head of commercial, and Bob Landry, executive vice president and chief financial officer. After our prepared remarks, we will open the call for Q&A. I would also like to remind you that remarks made on today's call include four looking statements about Regeneron. Such statements may include, but are not limited to those related to Regeneron and its product and business, financial forecasts and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement issues, intellectual property, pending litigation, and other proceedings and competition. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in 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-K for the year ended December 31, 2019, which you are planning to file with the SEC tomorrow. 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 reconciliation of those measures to GAAP is available in our financial results press release, which can be accessed on our website. Additional information about those measures is also available on the investor and media section of 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.
Len Schleifer
Thank you, Justin. Thank you to everyone for joining our call today. The fourth quarter capped off a strong 2019 for Regeneron. Our three growth drivers, Aylia, Dupixent, and Libtayo, drove double-digit growth on the top and bottom lines while we continued to make substantial investments in our innovative R&D pipeline. In the quarter, Aylia global net product sales grew 11% to $2 billion, including U.S. Aylia net sales growth of 13% to $1.22 billion, even with the launch of a new competitor. For the full year, global net sales of Aylia grew 12% to $7.5 billion. We remain confident as we expand our leadership position in wet AMD and diabetic eye diseases. Dupixent sales are now annualizing at $3 billion as we expand our footprint in the treatment of type 2 inflammatory diseases. Global net product sales grew 136% to $752 million in the fourth quarter. And just last week, we announced that the FDA accepted for priority review our filing in pediatric atopic dermatitis, which, if approved, will represent a breakthrough for children 6 to 11 years old suffering from this debilitating disease. We are still in the early days of Dupixent, with many global launches just starting and several potential new indications in late-stage development. As expected, the profits from our antibody collaboration with Sanofi continue to increase, creating further revenue and earnings diversification for Egeneron. On the strength of Dupixent, we generated profits of $104 million for the fourth quarter and $209 million for the full year. Despite the losses associated with Pryorant and Kevzara. To that end, we have been working hard to address Pryorant and Kevzara performance to further enhance profitability of the collaboration. In December, we in Sanofi announced a major restructuring of the alliance that will improve profitability, increase efficiency, and enhance focus on Dupixent. We remain on track to close the transaction in the first quarter. In oncology, we continue to make progress both commercially and in R&D. Sales for Lib-Tio, our -PD-1 therapy, grew to $75 million in the fourth quarter. In the U.S., we extended Lib-Tio's leadership position as the number one systemic treatment in cutaneous squamous cell carcinoma. As we look to 2020 for Lib-Tio, we are excited about the late-stage data readouts in basal cell carcinoma and the interim analysis for our pivotal monotherapy study in non-small cell lung cancer. We are also making significant progress on our biospecifics program in oncology. We had a strong showing at the American Society of Hematology meeting in December where we presented initial data for our BCMA by CD3 antibody, as well as updated data for our CD20 by CD3 antibody. While each of these programs could be important individual treatments over time, they also represent validation of our biospecifics program, which, along with Lib-Tio, form a diverse and powerful toolkit to potentially address malignant diseases. Regeneron has a track record of tackling some of the world's most challenging health issues while creating long-term value for shareholders. Looking back at 2019, we achieved six important regulatory approvals across our growth drivers of Ilea, Dupix, and Lib-Tio. Beyond these approvals, we made significant advances in our pipeline, which George will discuss. Additionally, I would like to call your attention to the global health crisis on coronavirus. We have answered the call for help and are responding diligently with HHS to develop potential treatments. George will also further outline this effort. Regeneron is ending 2020 from a position of financial strength. We have the necessary capital to advance and expand our wholly-owned R&D pipeline. Additionally, we continue to seek value-creating business development with a focus on technologies that enable and accelerate our own technologies in drug discovery and development. And when market conditions create opportunity, we will continue to buy back shares under our share repurchase program, where we continue to see a significant dislocation between our share price and the long-term value of the company. In conclusion, we are pleased with our continued operational and financial execution that is creating near and long-term value. We are ending 2020 with strong momentum, and we remain confident in our strategy and in our business. Now I'll turn the call over to George.
George
Thank you, Len. I will provide an overview of our diverse pipeline, which is made possible by our foundational technologies that allow us to rapidly identify and validate genetic targets and go quickly and efficiently to turnkey therapeutic solutions, whether through internally developed approaches, such as Velocigene, Velocimune, and the Regeneron Genetics Center, or important new collaborative capabilities, such as those with Alnylam, Intelia, Bluebird, and others. Starting with ILEA, this weekend at the Baskin-Palmer angiogenesis meeting, we will present the two-year data for the panorama study in nonproliferative diabetic retinopathy, which showed a marked reduction in the risk of developing vision-threatening complications. At the same time, we will discuss the rationale for clinical testing of high-dose ILEA currently in a Phase II trial in wet AMD that will provide initial safety and efficacy data. A Phase III trial in DME will begin mid-year, closely followed by a Phase III study in wet AMD. Moving on to Depixin, our dual blocker of both the interleukin-4 and interleukin-13 pathways, which is changing the lives of so many people suffering from allergic diseases such as asthma, atopic dermatitis, and chronic rhinocynositis with nasolapals, with more than 125,000 patients treated globally since launch. Just last week, we announced that the FDA has undertaken a priority review to extend approval of Depixin to children aged 6 to 11 years suffering from moderate to severe atopic dermatitis, with a target for due date of May 26, 2020. If approved, this will be the first biologic indicated for these children. We would hope that this approval will continue to reflect the remarkable efficacy and safety profile of Depixin, as evidenced by the absence of a black box warning or any associated serious infection risks, which are often seen with other immunomodulatory biologics and kinase inhibitors. While Marion will update you on Corley performance, I would like to highlight other near- and long-term opportunities for Depixin. Eosinophilic esophagitis, or EOE, is a currently underdiagnosed but increasingly recognized serious allergic condition with limited effective treatment options. Following up on our promising proof of concept study, we will read out on the Phase II portion of our Phase II-III study in adults and adolescents mid-year, while the Phase III portion continues to enroll. Additionally, we are studying a Phase III study in pediatric EOE patients in the second half of the year. On a related front, we are excited about our collaborator Amian's recent approval for Pellphorzia, an oral immunotherapy for peanut allergy. But there is still an enormous need for therapies for the treatment of food allergies, as many of these patients are at risk for EOE and other allergic conditions. We think Depixin, studied in combination with Pellphorzia, has the potential to further improve the outcomes for these patients. I'm also pleased to share the pivotal studies for Depixins in the new indications we announced last November are kicking off. Studies for chronic spontaneous urticaria, prurigo nodularis, and bullous pemphigoid have already started. The study in allergic bronchopulmonary aspergillosis will commence in the first half of this year. Now let's turn and spend a few moments on immuno-oncology, where we are strategically positioned to compete, enhance, and extend the benefits of immunotherapy to many more patients than are currently benefiting today. With liptio, we have an important opportunity to compete in the PD-1 treatment landscape. Combining liptio with other antibodies from our Velocitgine and Velocimune-derived toolkit, including bispecific antibodies, we are looking to enhance responsiveness for more than half the patients that do not respond to PD-1 therapy alone. Moreover, such combinations have the potential to extend our reach to patients with cancers such as breast, colon, pancreatic, and prostate, which show very limited response to checkpoint inhibition at this point. For liptio, in addition to being foundational to our combinatorial approach in oncology, we are expecting some near-term milestones. Later this year, the Independent Data Monitoring Committee will conduct pre-specified interim analysis assessing overall survival for the pivotal liptio monotherapy study in non-small cell lung cancer. At the last quarterly update, we announced that an interim analysis of the first 361 randomized patients, The confirmed objective response rate, as determined by investigators, was 42% for liptio versus 22% for chemotherapy. Although promising in terms of indicating profound clinical activity for liptio and lung cancer, objective response rate is not a validated endpoint for regulatory approval in this setting. Our other pivotal lung cancer study, in which liptio is being tested in combination with chemotherapy, is more than 50% enrolled and is expected to fully enroll by mid-year. While we are investigating different combination approaches with liptio and melanoma skin cancers, where less than half the patients benefit from PD-1 therapy alone, we believe patients with non-melanoma skin cancers still remain underserved, and we are working to expand the available treatment options for these patients. Liptio remains the first and only approved therapeutic in advanced glimicellocrosonoma of the skin, or CSCC, with a safety profile that is similar to that of the other approved PD-1 or PD-L1 inhibitors. Following on recent promising results with liptio in neoadjuvant CSCC, which we recently announced, we are now enrolling a registrational study in the adjuvant study setting, as well as a follow-up neoadjuvant CSCC study. We are also looking forward to the potentially pivotal data readout for basal cell carcinoma of the skin in mid-2020. If the data are positive, we are hoping to proceed with the regulatory filing this year. And we continue to make exciting progress with our Bi-Specific Antibody Platform. At the American Society of Hematology, or ASH, meetings, we presented data from our first class of these antibodies, the CD3 Bi-Specifics that are designed to bring a killer T cell to a tumor and trigger the so-called signal 1 in the T cell activation process, leading to tumor cell destruction. For Regeneron 1979, our CD20 by CD3 Bi-Specific, we reported 95% overall response rates, with 77 complete response rates in 22 late-stage follicular lymphoma patients. In late-stage diffuse large B cell lymphoma, we observed 71% overall response rates, all of which were complete responses in seven CAR-T naive patients. Moreover, and quite remarkably, we saw a 50% overall response rate in 12 patients who had failed CAR-T therapy, with three of these patients achieving a complete response to treatment with Regeneron 1979. Clearly, this Bi-Specific has demonstrated promising single agent clinical activity in late-stage patients and supports initiation of potentially pivotal Phase II program for Regeneron 1979 in several monotherapy studies, including relapsed refractory follicular lymphoma, relapsed refractory DLBCL, as well as several other non-Hodgkin's lymphoma subtypes. We are also planning to initiate chemotherapy combination studies this year in earlier lines of non-Hodgkin's lymphoma. At the same ASH meeting, we presented preliminary data for our second CD3 Bi-Specific, Regeneron 5458, our BCMA by CD3 Bi-Specific, in late-stage multiple myeloma. Remarkably, the first patient in this program was dosed at the beginning of 2019, and we were able to show initial efficacy and safety data at the ASH meeting later the same year. In the higher of the two initial doses, objective responses were observed in three out of four patients, two of which achieved MRD negativity. These were all very advanced patients who had failed immediately in several lines of prior systemic therapy, including anti-CD38. We are currently enrolling higher dose escalation cohorts. This year, we also advanced our novel second class of Bi-Specifics into the clinic. These Bi-Specifics are referred to as CD28 or COSTIM Bi-Specifics because they activate the CD28-mediated COSTIMatory signal, also known as signal two, that is normally required to optimize cell killing by T cells. Researchers have avoided targeting this T cell activation pathway for almost 15 years, ever since the disastrous clinical trial involving a CD28 super agonist, which indiscriminately activated T cells in the bodies of healthy volunteers, leading to cytokine storm and severe toxicity. In contrast, our CD28 Bi-Specifics are designed to avoid this problem by locally engaging T cells only at the tumor site, as validated by our preclinical studies, some of which were published a few weeks ago in Science Translational Medicine, and which demonstrated synergistic activity when COSTIMs were combined with Leptire or with other Bi-Specifics, even for tumors historically unresponsive to PD-1 blockade. At the end of last year, we enrolled our first patients in the clinical trial of our first COSTIM, PSMA by CD28, in combination with Leptire in advanced prostate cancer patients. We expect additional COSTIMs to enter in the clinic in 2020. Now I'd like to move on to the rest of our pipeline. With the C5 blocker pozzolimib, our goal is to achieve a more complete blockade of inappropriate complement activation compared to the currently available therapies, and to do this with a more convenient, self-administered subcutaneous dosage form. Results from an initial six-patient cohort of our Phase II study in paroxysmal, nocturna, hemoglobinuria patients, announced in December showed that our subcutaneous weekly regimen of pozzolimib maintained lactate dehydrogenase, a biomarker for red blood cell damage, at normal levels at week eight. Importantly, we are uniquely positioned to test a novel approach by combining pozzolimib with our partner, LNILAM's anti-C5 siRNA, which has the potential to maximize efficacy while further significantly reducing dosing frequency. This will be the first in a series of opportunities for combination of our antibodies with siRNA. We will be initiating our potentially pivotal program with pozzolimib, as well as combinations with the siRNA, this year. I'd like to provide an update on a few other late stage programs. Earlier this year, we top-lined results of the Phase II study of Gartosomab, our active in a antibody for fibro-displasia ossificans progressiva, a devastating orphan disease in which patients' muscles, tendons, and ligaments are progressively replaced by bone, forming a second skeleton that traps them in their own bodies, often leading to asphyxiation. In the 44-patient study, Gartosomab demonstrated a nearly 90% reduction in formation of new bone lesions compared to placebo. This treatment has the potential to transform the course of this disease. We plan to discuss the data with regulators, as well as initiate a study in pediatric patients. In 2020, we are also planning a regulatory submission for Evanacumab, our ANGPTL3 antibody for homozygous familial hypercholesterolemia patients. We are also anticipating readout of the Fascinumab, or anti-NGF, studies in osteoarthritis pain, including the long-term safety study, as well as Phase III studies comparing it to naproxen and NSAIDs. Finally, I'd like to finish by discussing our partnership with BARDA, part of the Office of Preparedness and Response for the Department of Health and Human Services. Together, we hope to exploit our rapid response capabilities to address emerging infectious disease outbreaks. We initially built this program and worked with BARDA to address the 2012 MERS epidemic. MERS is a coronavirus closely related to the Wuhan virus that is causing the current global public health emergency. Then in 2014, we turned our rapid response capabilities to focus on Ebola, working together with BARDA and the World Health Organization, progressing therapeutic candidates in just six months and resulting in the potential cure, even for the sickest Ebola patients, as was recently published in the New England Journal of Medicine, and allowing for an ongoing rolling submission to the FDA for approval of our life-saving antibody cocktail. As BARDA announced just this week, we are now extending our collaboration with them to address the Wuhan coronavirus. We are already scaling up one set of potential antibody treatments that could be available for testing or for compassionate use in patients within a few months, as well as a new set of treatments that could be available soon thereafter. With that, I will turn the call over to Mary.
Mary
Thank you, George. We closed out 2019 on a high note with continued commercial execution across our portfolio. Our core ALIA and Depix and Biz are the best partners in the world in terms of veterans, commercial veterans and oncology. Starting with ALIA, in the fourth quarter, we recorded our best performance in terms of volume and net sales since launch in 2011. Global net sales grew 11% year over year to more than $2 billion, and U.S. net sales grew 13% to $1.22 billion versus the prior year. Growth was driven by increases to both market share and market expansion. ALIA's sales grew in diabetic eye disease and in wet AMD, despite a new anti-VEGF market entrant. Also, while not a material driver of performance in the quarter, we introduced the ALIA pre-filled syringe in mid-December and anticipate full market supply in March. The overall anti-VEGF market continues to grow at a steady -to-high single-digit pace, underpinned by the aging population and increasing prevalence of diabetes. Our renewed strategy and incremental 2019 investments enhanced wet AMD leadership and drove further penetration in diabetic eye disease, which has ALIA growing faster than the market across all indications. As we have seen for the last several quarters, the growth rate in diabetic eye disease exceeds the growth rate in wet AMD. Accordingly, the wet AMD business represents less than 60% of total U.S. ALIA net product sales. In 2020, we have significant opportunities to advance ALIA's leadership position. In wet AMD, we are executing initiatives designed to position ALIA as the preferred first-line treatment. Beyond wet AMD, we see tremendous opportunity in diabetic eye disease, as patients remain largely underdiagnosed and undertreated. We're investing in targeted initiatives with physicians and consumers to increase diagnosis and treatment rates, as well as applying technologies to support screening and diagnosis. The totality of our clinical profile, safety record, dosing flexibility, breath of indications, and established reimbursement give us confidence in the future for ALIA. Turning to Liptio, fourth quarter global net sales were $75 million. In the U.S., where sales were $61 million, we've quickly established Liptio as the leading systemic treatment for advanced cutaneous squamous cell carcinoma, or CSCC. Approximately 60% of CSCC patients now receive -PD-1 therapy, and in the -PD-1 class, Liptio has nearly 90% share of new patients. In 2020, we're investing to increase our commercial presence, including expanding our field force to strengthen Liptio's position as the standard of care in CSCC. Additionally, launch preparations for a potential approval in basal cell carcinoma are underway. Outside the U.S., initial CSCC launches are ongoing and led by our collaborator, Sanofi. We're encouraged by early prescribing trends and continue to see progress with access and reimbursement. Overall, we're very pleased with the early impact we have made with Liptio. And finally, to the depictions, global net sales in the fourth quarter were $752 million. In the U.S., net sales reached $605 million, representing 134% growth as compared to the prior year. We continue to see strong prescribing trends across all indications, with total prescriptions growing approximately 18% compared to the third quarter. Weekly new to brand prescriptions at quarter end were approximately 1,500 patients per week. Atopic dermatitis remains a significant growth driver for depictions. The brand continues to outpace other biologic launches in dermatology, and there is significant room for further penetration. We're expanding the market through increased prescribing across both moderate and severe disease. Additionally, the recent adolescent launches contributing to growth, aided by physician experience and comfort with depictions efficacy and safety profile. As Len mentioned, we eagerly await the potential FDA approval in 6 to -year-olds, where there is significant disease burden for young patients and their families. In asthma, depictions is outperforming other recent biologic launches. With nearly 80% of depixant asthma patients being new to biologic treatment, we continue to demonstrate that our strategy to grow and compete in this market is working. There is significant opportunity to advance depictions market position with less than 15% of eligible patients currently receiving biologic treatment. We recently began the rollout of our Asthma Direct to Consumer TV campaign, although early our campaign is generating positive results from leading indicators. Finally, our launch in chronic rhinocytosis with nasal polyps is off to a strong start. Patients are initiating on depixant regardless of prior surgery. Prescribing is being driven by both allergists and ENTs, including many new depixant prescribers. We see tremendous growth potential with depixant and remain committed to advancing depixant prescribing to many more patients by way of expanded indications, age groups, and geographies. In closing, we delivered strong growth across our core commercial franchise in the fourth quarter and throughout 2019. We are entering 2020 with significant momentum and confidence to drive the future. I'll turn the call over now to Bob.
Bob
Thank you, Marion. For the fourth quarter 2019, Regeneron delivered another quarter of strong revenue and EPS growth. Fourth quarter 2019 revenues grew 13% to $2.17 billion, driven by continued growth of our core brands, Aylia, Liptio, and Depixant. Non-GAAP diluted net income per share grew 10% year over year to $7.50 on non-GAAP net income of $858 million. Let me remind everyone, when comparing to the prior year, the fourth quarter 2018 revenues included $149 million catch-up benefit related to the modification of the IO discovery agreement with Sanofi, which makes this quarter's growth even more impressive. Since Marion discussed our U.S. Aylia results, I will start with our Bayer and Sanofi collaborations. Starting with the Bayer collaboration, -U.S. Aylia net product sales, which are reported to us by Bayer, were $783 million, representing growth of 8% on a reported basis and 9% on a constant currency basis. Total Bayer collaboration revenue for the fourth quarter of 2019 grew 6% year over year to $321 million, of which $298 million was derived from our share in net profits from Aylia sales outside the U.S. Total Sanofi collaboration revenue in the fourth quarter was $427 million. Regeneron recognized a profit of $104 million from the commercialization of non-IO antibodies, compared to a loss of $44 million in the prior year period. Increases were driven primarily by higher depixent net sales, partially offset by the rollout of the Depixent Asthma DTC campaign, as well as incremental costs to support ongoing global depixent launches. Moving to our expense base, starting with R&D. Non-GAP R&D expenses were $581 million for the fourth quarter of 2019, an increase of 9% compared to prior year. Non-GAP unreimbursed R&D expense, which is calculated as the total non-GAP R&D expense less reimbursements from our collaborators, was $393 million for fourth quarter 2019, an increase of 13% compared to the prior year. Higher R&D expenses result from broadening and advancing our pipeline of wholly owned drug candidates, particularly in oncology. We're also funding jointly developed molecules with strategic external partners. In November, we announced a research collaboration with Viriad, focusing on the development of new oncolytic virus-based treatments for cancer. Taken together, we continue to expect 2020 R&D expenses to increase. Next, non-GAP SG&A expense was $446 million for the fourth quarter of 2019. This represents a 9% -over-year increase driven by higher headcount and related costs in commercialization expenses related to both ILEA and Depixent. We expect non-GAP SG&A expenses to increase in 2020 as we invest for further growth in our three core brands, ILEA, Depixent, and Leptio. In the fourth quarter of 2019, combined non-GAP cost of goods sold and cost of collaboration and contract manufacturing were $208 million compared to $109 million in the fourth quarter of 2018. The -over-year increase in cost of goods sold was primarily due to the company's obligation to pay Sanofi its share of Leptio US gross profits, third-party royalties on Leptio US sales, and higher inventory reserves and write-offs. The -over-year increase in cost of collaboration and contract manufacturing was primarily due to recognition of manufacturing costs associated with higher sales of Depixent. Shifting to cash flow and the balance sheet. For full year 2019, Regeneron generated $2 billion in free cash flow. We ended the year with cash and marketable securities of nearly $6.5 billion. Recall, last November, we announced a $1 billion share repurchase program. In the fourth quarter, we repurchased approximately $250 million worth of shares in open market transactions. We continue to repurchase shares opportunistically. Now, let me take a minute to discuss the restructuring of our antibody agreement with Sanofi. As we previously disclosed, the anticipated benefits of this proposed restructured agreement are improved profitability, increased efficiencies, and simplification. Upon closing the deal, we expect this transaction to be immediately accreted to Regeneron. We are working diligently to ensure an expedient close to the transaction this quarter. As such, we will provide annual guidance by the end of the first quarter to account for the various line items impacted by the restructured antibody agreement. Given the expected timing of the transaction closing, continue to model Regeneron's financials for the first quarter as you have historically. Note that our first quarter non-GAAP EPS results are typically lower than the fourth quarter of the prior year due to trends in tax rate and other seasonal market dynamics. We are generally comfortable with consensus non-GAAP EPS estimates for the full year. However, our quarterly reported increases from the beginning of the year to the end of the year will be more pronounced than what current consensus reflects. In conclusion, the fourth quarter capped off a strong year for Regeneron. We are pleased with our financial results and operational performance. We look forward to providing more details on the restructure and antibody agreement in 2020 annual guidance later this quarter. With that, I'd like to turn the call back to Justin.
Justin
Thank you, Bob. We'd now like to open the call for Q&A. To ensure we are able to address as many callers as possible, please limit your questions to one or two questions. Please go ahead, Sylvia.
Operator
Thank you. We will now begin the question and answer session. If you have a question, please press star, then one, and a touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. Once again, if you have a question, please press star, then one, and a touchtone phone. And our first question comes from Terrence Bland from Goldman Sachs.
spk09
Hi. Good morning. Thanks for taking the questions. Maybe just two for me. One on the first is with respect to bispecifics, maybe George, what gives you confidence that these will be successful and solid tumors? I know you guys have a number of different targets you're going after and waiting to see the data, but just maybe remind us what gives you confidence there. And then just on DUPI, can you give us the sales split by indication or maybe the prescriber mix? Thank you. George, why don't you start and then Marion can take the DUPI question.
George
Okay. So first of all, we have no reason to think that they wouldn't be. I know that there's a lot of speculation, but it hasn't really been tested with reagents like our bispecifics to see whether solid tumors are indeed more resistant or not. But that, notwithstanding, in case single agent therapy is not as effective for solid tumors, that is why we are preparing for that possibility with our various combinations. And our combinations include both combinations with these new classes of bispecifics called COSTEMs, which dramatically increase the response at least in preclinical models in the solid tumor setting. But also combinations with LVTIO and other kinds of checkpoint inhibitors and immunomodulatory agents. So the notion is, though we're hopeful for single agent activity, we are prepared that just like in many other cancers and many other treatment settings, that combinations are going to be the key to success. And we have a real exciting set of combination opportunities in the solid tumor space setting, as I said, particularly with our COSTEM bispecifics added to our CD3 bispecifics as well as our PD-1 but other additional immunomodulatory agents. I'll turn the next question over to Marion about the DUPIXIN. Oh,
Mary
sure. Happy to turn. And this relates to your question on the breakdown of sales and performance for DUPIXIN. You know, first I just have to comment that we're seeing strong performance and sales growth and NBRX across all the indications. We haven't specifically given a breakdown by indication. Again, I confirm strength and strong performance and competitive performance in areas where we have competitors. But I can give you a little bit of in terms of how we're seeing the majority of our sales and NBRXs in atopic dermatitis. That's then followed by asthma. And then third would be the nasal polyps, where we're also seeing encouraging performance.
Justin
Next question.
Operator
Our next question comes from Jeff Mietje from Bank of America.
Jeff Mietje
Hey, guys. This is Alec on for Jeff. Thanks for taking our questions. I have two, one on Ilea and one on Pryolin. So for Ilea, how are you guys thinking about the ongoing BoVu launch, specifically do you view the earlier 12-week dosing as driving drug choice by prescribers and any color you can give on ongoing or anticipated impact to rebate to provide for Ilea to maintain formulary status? And then on Pryolin, we've noted that the price reductions for the CSK9 class have had an outsized benefit to repatha volumes. Could you talk about the sales efforts you and Sanofi have been taking in the US and what was the feedback from physicians and payers? And I guess ultimately, how do you hope bringing these efforts entirely in-house will help drive volumes for Pryolin? Thanks. Sure. Marion?
Mary
Sure. So let me first comment on Ilea performance. And certainly we worked very hard and have been in a competitive market with Ilea for many years and certainly have established a very strong market leadership position. It's very early days for the newest competitor in the marketplace, but what I will affirm is that Ilea has a profile that is incredibly well received and is referred to as the standard of care by our retinal specialists and injectors. Specifically, it's things like the clinical profile as it relates to impact on visual acuity, multiple indications, experience not only clinically but with an established safety profile, reimbursement, dosing flexibility, and also now dosage delivery with the pre-filled syringe. So Ilea has an incredibly compelling profile. As to competition, both competition historically and future competition, it becomes a matter of physicians determining what is the risk benefit of using a different product. And certainly there will be ample opportunity for retinal specialists to make the choice in prescribing that's best for them. But to date we hear very, very positive feedback in Ilea. Certainly our most recent indication in diabetic eye disease, diabetic retinopathy is very important. As we described, we did put forward earlier in 2019 a new strategy to make sure that we were making very firm our position in the wet AMD marketplace and then also expanding in diabetic eye disease. So I think we feel really good about the performance that we saw in 2019. But we also see an awful lot of work ahead because, as I mentioned, there's tremendous unmet need in disease burden and diabetic eye disease that we have not impacted yet. So a lot of work going forward. You also outgassed a question related to pricing in Ilea. We don't give information on our pricing strategies. But I will say that we are very committed to physicians having choice of prescribing in all the categories in which we have competition. And it's really important that doctors make the right choice for their patients. So we'll continue to take that position in the marketplace. I'll move over to ProwlUent quickly. You know, as was announced in the restructuring of our arrangement with Sanofi, Regeneron is now very pleased to be running the ProwlUent business in the U.S. It's early days. In the future, certainly we'll have more to say about our positioning in the market and our strategy in the marketplace. But I think at this point it's probably best that we let it go till the end of the restructuring agreement and the finalization of that transaction.
George
And just to add to Marian's points, she mentioned benefit-risk for Ilea and also safety for Ilea. And I think it's very important to mention that physicians, of course, are very sensitive to this. And in settings where efficacy and durability are considered similar, they're going to pay very close attention to things like inflammation. And certainly in the -to-head studies, Ilea was shown to have about four-fold lower levels of inflammation. And these are the sort of things that physicians pay close attention to when efficacy and durability are considered rather similar.
Justin
Great.
George
Next question.
Operator
Our next question comes from Chris Raymond from Piper Sandler.
Chris Raymond
Thanks. Just a couple. So just maybe first, maybe continuing on the Ilea front, I think I heard you guys say that there was no stocking benefit in Q4 from the availability of the pre-filled syringe. So maybe can you talk about, does this mean there's a tailwind potentially for the first quarter? And maybe if you can put some brackets around that, that would be helpful. And then maybe for Bob, I think I heard you say, Bob, in your prepared remarks that you were comfortable with 2020 EPS consensus. And so I know you guys are still in the process of trying to figure out how you're going to guide in the parameters, et cetera. But should we view this as a signal that maybe you guys are comfortable guiding to EPS at some point? Thanks.
Bob
Go
Mary
ahead, Mary. So let me take the first part on Ilea. And yes, you did hear me correctly that while we introduced the pre-filled syringe for Ilea in mid-December, it did not have an impact, a material impact. And certainly we were at normal stocking levels, days on hand in the fourth quarter. One thing I'll describe to you is we very deliberately have introduced the pre-filled syringe in a staggered way. And this was obviously with such a large product so that there would be market experience and we would have a gradual introduction. We do plan to have availability of full market supply by the March timeframe. And then physicians and offices will be able to make the decision as to whether they choose to use the pre-filled syringe, which does have tremendous convenience and has a very positive early market feedback. But the vial will be available as well if there are instances where an office or a physician would like to use the vial. We do anticipate, however, though, that the pre-filled syringe will be very popular in the marketplace and over time will be the majority of our use. But it has been a staggered introduction.
Bob
Chris, with regards to your question on guide, you know, we are in a unique situation. By now, you know, we would have given guidance at JPMorgan. We would have reconfirmed it on this call. And we just wanted to give you a sense, a little bit of direction instead of everyone driving blind with regards to where 2020 is expected to come. So, again, you know, we did our analysis and determined that we are comfortable with current consensus as it exists for full year EPS. And we are not envisioning to give full EPS guidance at the end of the quarter. We will give other guidance as has been typical with maybe a few enhancements included.
Chris Raymond
Okay. Thank you.
Operator
Our next question comes from Evan Seagerman from Credit Suisse.
Evan Seagerman
Hi, all. Thank you for taking my questions and congrats on the progress last year. So on Liptio and non-small cell lung cancer, what gives you confidence that this trial will hit on the OS interim in high PD-L1 patients? And if successful, would you file on this data? And how would you potentially position Liptio versus other checkpoint inhibitors?
Justin
George, why don't you start?
George
Yeah. So as we said, response rates are not a regulatory approval endpoint. However, historically, they've been shown to be a very good indicator for the activity. And in the setting of checkpoint inhibitors, they tend to correlate pretty well with what you see in terms of overall survival. And so our already reported response rates, where we've almost doubled the response rate, certainly suggests profound clinical activity and is a real positive indicator. Of course, until we see the interim data, we won't know. But I think that that would put Liptio in a very small space of agents that are now showing profound monotherapy activity in PD-L1 positive settings. So it would be a very exciting position to be in on top of this already demonstrated impressive -in-class activity in the non-melanoma skin space. Next question, please.
Operator
Our next question comes from Jeffrey Porges from SVP Learing.
Jeffrey Porges
Thank you very much. Bob, just on the comment about accretion, could you just give us a sense, if the status quo prevailed, would your operating margin be consistent with last year or better? And then presumably, the intention of the agreement is that we would see operating margin improvement, and that's how you get to it being accretive. So could you just comment on that? And then just a second question for George. You mentioned the COSTIM program, and I think we're all interested in seeing the first clinical data from that. That's not on your 2020 highlights, so should we be assuming that we don't see any clinical disclosure on the PSMA program until next year? Bob, you want to start?
Bob
So, George, Jeff, I would concur with the assumptions that you made. I mean, certainly we've mentioned that Kevzar and Pralulin have been a sizable drain with regards to the alliance profitability that we've shown. So certainly, you know, the changes that are going to be made and coupled with, you know, the incoming royalties that we expect to get will certainly help our going forward margins.
George
And George? Well, as Jeff, you probably followed closely with our first class of bispecs. Whenever you have a new class of agents and you're working with the FDA, of course, the first purpose is to be moving as carefully and as safely as possible. And so for our first bispec, it took a long time to get to efficacious dose levels. When we finally got there, we had actually shown that we have gotten there with a pretty safe approach, which now other people are trying to emulate. And then we were able to pretty rapidly, as I described, with our second dose level, get to efficacious dose levels with our second CD3 bispecs. So now the CD28 class represents once again a new class. We are hoping that we're going to repeat that sort of experience. And the timing of it, of course, is dependent on so many factors. So depending on how it goes, we may reach effective dose levels sooner rather than later and get data sooner rather than later. But the major point is that we're working with the FDA and with our collaborators to make sure that we use this innovative new approach as safely as possible. So it all depends on how the dose escalation goes and when we get to what we think are the effective dose levels. And it could be sooner or it could be a little later. And all we're hoping is that we're going to see the same sort of profound activity that we saw with our first class of bispecs, which is really suggesting that they may be best in class. And if we can now layer on a completely new class that has synergistic activity, I think that'll be very exciting and important for patients for all these settings where they're not responding right now to immunotherapy or where their responses are not as optimal as we would want.
Justin
Great. Thanks for the
George
question,
Justin
Jeff. Next question.
Operator
Our next question comes from Yain Sunija from Guggenheim Partners.
spk01
Good morning, everyone, and congrats on a very good quarter. Just a question on a C5 antibody that you have. Give us a little bit more insight into how you are thinking about broadening the development. Are there disease indications that you could potentially prioritize which might not be as competitive and might be a little bit broader? And then a quick one for Bob on the Sanofi collaboration. Relative to Q3, are there particular factors that might have impacted the results in Q4? Thank you.
Justin
Thank you. George, why don't you start at C5 and then Bob. Yeah.
George
As you said, we agree with you. We believe that there are a lot of settings for C5 beyond the PNH setting. I think that what we've disclosed so far and what we're talking about right now is the PNH. Why? Because the data are so clear cut in terms of what the high bar that we have to reach to believe that we have something that could be a real improvement for patients and for the class. And so once we hit that bar there, we would be pretty confident then that it would also continue to maybe be a real advance for patients and best in class in all these other settings that you referred to. So we're certainly not ignoring those. But what we're talking about and focusing about right now is the really well-understood space of PNH.
Justin
Great. Bob? Yeah,
Bob
the question with regards to whether or not the Santa Fe deal has given us benefit versus in Q4, I would say, you know, we continue to go after operating expenses for Praline and Kevzar, and we did see some of that in Q4. Again, this is, you know, this is an issue that we've been going after, and we've had some success in terms of lowering the operating expenses associated with that. We did take a restructuring charge in Q4, and you'll see that outlined in our earnings announcement that was issued earlier this morning. And the big benefits you will begin to see will take place kind of effective Q1, where, you know, as we speak right now, we're changing the operations of the businesses. I just
George
wanted to add to my comments on the C5. As I said, we set a pretty high bar for ourselves with just our antibody, and as we've announced, the data suggests that that antibody is meeting that high bar by itself on its own, which I think puts us in a very, very exciting position because now we have the opportunity to even take it to a completely new level with this exciting collaborative opportunity with the aniline siRNA. So the fact that our antibody by itself is looking like it might be meeting this high bar of being a -in-class agent, providing big advantages to patients on its own, having the opportunity to then combine it with the sRNA really, I think, is very exciting for the field and for patients.
Bob
Yeah, let me just clarify one other thing. With regards to Q4 on the Alliance profitability, we did incur significant expenses associated with the asthma DTC campaign, which had a rollout effective in Q4, and I'm sure a lot of people have seen that throughout the quarter. Great. Thanks for the question, John. Next question.
Operator
And the following question comes from Yaron Werber from Cohen.
Cohen
Yes, hi. Thanks for taking the question. So I have a couple of questions. The first one is, George, maybe for you on Liptio, and maybe help us understand a little bit as you think about the hazard ratio versus what Keynote showed. And if I recall correctly, Keytruda was able to get stopped early. Obviously, there was no PD-1 approved then, and that study had about 305 patients. The hazard ratio was 0.5. Do you think you got sufficient power with a bigger sample to essentially match or beat that hazard ratio? And then maybe Bob, for you, it sounds like you're comfortable with consensus you mentioned for this year. When we're looking at consensus, non-GAAP is around 25.90 in earnings. Are you comfortable with that including the restructuring, or are you comfortable with that even excluding the restructuring? Thank you.
Justin
Go ahead,
George
George. Yeah. Well, as you said, we have the power, and the expectation is that if we were to hit an interim, we would have a hazard ratio that would be comparable, analogous to those seen by Keytruda in its monotherapy first-line lung studies. So that is the expectation. The power is there to potentially see that in the interim analyses.
Bob
Bob? To the question on comfortability in the restructuring, we are comfortable with the consensus with the restructuring built into that. And again, let me remind you, as I stated on the call, the first quarter non-GAAP EPS results are typically lower than the fourth quarter of the prior year due to trends in tax rate and other seasonal market dynamics.
Cohen
And maybe, George, just for you, when the interim initially in that study was based on 361 patients, Keytruda stopped with the same response rates based on 305. So are you thinking that the next 240 patients are going to have a better response than the first 361 in the study to be able to match the hazard ratio? Or is there, it depends on how many patients are in that interim analysis, and there could be another one.
George
When you're talking about ratios,
Len Schleifer
what? Once I can, George, before you get into it, I just wanted to comment. So there's no misunderstanding. You cited a hazard ratio of 0.5, and I think that was for the chemo combo therapy. In 2014, the overall survival hazard ratio was 0.6, and in 42, just to double check, it was 0.69. So I just want to make sure we have the right hazard ratios out there. Sorry, go ahead,
George
George. Well, yeah, I was going to say, well, the hazard ratio actually was 0.63 for Keynote 24 and 0.69 for Keynote 42. But you also mentioned the ratio. So the first 361 patients in that interim analysis, what we announced was the response rates. And our ratio for response rates in those patients was actually better than the ratio of any response rates that had been reported by Cotruda in first-line lung setting. However, the data was immature. That's response rate data. The hazard ratio that you're referring to is overall survival. That requires much more mature data where you're following patients out for, obviously, survival. So the early data, it was that, obviously, we were reporting on the more mature response rate data, which are pretty close or should reflect what the ultimate data will look like. The survival data, we have to wait and see for those events to start accruing. And what we said is the ratio of the response rates is very favorable when you compare that because in all the studies that have either succeeded or failed, the response rate data ends up being pretty predictive of the overall survival hazard ratio. And what we are saying is that as the data is maturing now, we have the power, if we have overall survival hazard ratios akin to those sorts of between 0.6 to 0.7 numbers, that as the data matures, we will have the power to see that.
Justin
Great. Thanks for the question, Yaron. We have several callers still in the queue. I'm going to ask that each caller ask one question. We'll try to get to two or three more if we can.
Operator
Our following question comes from Moab Bansal from Citigroup.
Moab Bansal
Great. Thanks for taking my question. And it's pretty amazing to see double-digit growth in ILEA after so many years. Could you please help us characterize this growth a little bit further in terms of AMD versus non-AMD indications? I know you have been putting more effort in the diabetic IEDs, so as we go forward, how do you envision that segment growing over time, actually? Thank you.
Mary
Very good. Sure. So I'm happy to comment. You know, as I mentioned, the overall market is growing, obviously driven by demographics, and then also the diabetic population, sadly, is growing as well. I really don't have specificity to give you on market growth, particular by indication, but I can give you some of the trends that I think will be helpful. We are seeing greater growth in our ILEA business coming from diabetic IEDs while still growing and performing very competitively in wet AMD, not only in the fourth quarter but through the entirety of last year. You know, in terms of going forward, though, as I mentioned before, the source of business is shifting somewhat. So as we looked at the fourth quarter performance, I shared with you that our ILEA business for wet AMD is just under 60% of the business. So that's a migration to a greater source of business coming from diabetic eye disease. And then if we looked at the overall business, I would also add in probably, you know, if you do the math, that leaves maybe about 30% of business coming from diabetic eye disease and approximately 10% of business coming from retinal vein occlusion.
Justin
Great. Next question.
Operator
Our final question, I call them Corey Casimaw from JP Morgan.
Corey Casimaw
Hey, good morning. Thanks for taking the question. Another one for Marion. Can you just talk about how the commercial approach for DUPI for kids age 6 to 11 with atopic derma might be different than the older populations you currently serve and what your market research suggests about the potential pent-up demand in the segment?
Mary
Sure. So, you know, as I reflect on atopic dermatitis for adults, adolescents first, you know, I share with you that we're in the early days. For atopic dermatitis with adults, we've only really captured about 20% of the population of moderate to severe patients that are in need. Adolescents obviously has been a more recent launch. The adolescent population is approximately maybe half or so of the adult population for atopic dermatitis. As we come into pediatrics, obviously we don't have an indication there. We're doing our final preparation work for the launch. We're very excited about this population because these very young patients are suffering tremendously, as is their entire family. I think the experience that we've had with adults and adolescents bodes well for our ability to be very successful with the pediatric indication as soon as we have the approval. So we'll look forward in the future to giving more insight and more content on our strategies, size of population, and our go-to market profile. But we feel very, very, very positively about what's happened to date in atopic dermatitis and where we're going in the future. Frankly, we, you know, FDA willing, we cannot wait for this indication so we can help more patients.
Justin
Thank you. We're bumping up at the top of the hour. We're going to go with one more question.
Operator
Our final question comes from Hartsat Singh from Oppenheimer Company.
spk16
Great. Thank you for the question. I just wanted to ask Bob one question. Bob, I know you had indicated that for 2020 you would see increases in the non-GAAP, SG&A, and R&D. And I think you've already given some sort of guidance, you know, thinking about consensus earnings. But could you sort of flesh that out a little bit as to whether, you know, you expect that to go, you know, below, I guess, revenue and sort of differentiate between the two? Thank you very much.
Bob
Yeah, Hattaj. Thanks for the question. I'm going to wait until we iron that out with regards to, you know, at the end of Q1 where we give our guidance related to that. There's a lot of moving parts associated with exactly what the CEVs are and probably responsibilities are going to look. The deal closing timing associated with that and possibly, you know, the related modification of the agreement, which may allow us to change the financial presentation associated with that. So there's, again, a lot of moving parts. So if you can just kind of park that question until the end of March. Thanks. Great.
Justin
Thanks, Bob. Apologies to folks in the queue who we did not get to and for running late here on the call this morning. The IR team and Bob will be around after the call to take any of your questions. Thank you.
Operator
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
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