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Operator
Welcome to the Regeneron Pharmaceuticals fourth quarter of 2022 earnings conference call. My name is Shannon and I will be your operator for today's call. At this time, all participants are in a listening mode. Later, we will conduct a question and answer session. Please note that this conference is being recorded. I will now turn the call over to Ryan Crowe, Vice President of Investment Relations. You may begin.
Ryan Crowe
Thank you, Shannon. Good morning, good afternoon, and good evening to everyone listening around the globe. Thank you for your interest in Regeneron and welcome to our fourth quarter 2022 earnings conference call. An archive of this webcast will be available on our investor relations website shortly after the call ends. Joining me today are Dr. Leonard Schleifer, co-founder, president, and chief executive officer, Dr. George Yonkopoulos, co-founder, president, and chief scientific officer, Marion McCourt, executive vice president and head of commercial, and Bob Landry, executive vice president and chief financial officer. After our prepared remarks, we will then open the call up for Q&A. I would like to remind you that remarks made on today's call may 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 forecasting 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 to differ materially from those projected in that statement. A more complete description for these and other material risks can be found in Regeneron's filings with the United States Securities and Exchange Commission, including its form 10K for the year ended December 31, 2022, which we expect to file with the SEC on Monday, February 6. Regeneron does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, please note that GAAP and non-GAAP measures will be discussed in today's call. Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our financial results press release and our corporate presentation, which can be accessed on our website. Once our call concludes, Bob Landry and the IR team will be available to answer any further questions you may have. With that, let me turn the call over to our president and Chief Financial Officer Len Schleifer. Len? Happy Chief Executive. Sorry, Chief Executive Officer.
Len
But it's okay. Good morning to everybody, and for those of you experiencing the Arctic freeze, I hope you're staying warm. Our strong fourth quarter performance captured a remarkable year of Regeneron, highlighted by significant achievements that better positioned the company to deliver sustainable growth and shareholder value. Fourth quarter 2022 revenue increased 14% compared to the prior year when excluding the impact of contributions from Regenco and Ronaprieve, underscoring the commercial strength and increasing diversity of our business. We also made several important advances across our pipeline during the quarter, notably the submission of a biologic license application for a flip reset eight milligrams in neo vascular age-related macular degeneration or wet A and D, as well as diabetic macular edema or DME, positioning us for a potential U.S. launch in late August of this year. Additionally, we received FDA approval for liptio in combination with chemotherapy as a first line treatment for advanced non-small cell lung cancer, making liptio only the second PD-1 or PD-L1 antibody approved in this setting, regardless of a patient's histology or PD-L1 expression level. We also presented data from a rapidly advancing oncology pipeline, including for Fiannulomab, our LAG3 antibody, in combination with liptio in advanced non-small cell lung cancer. Oginxumab, our CD20 by CD3 bispecific in B-cell lymphomas, and Limvosteltumab, our BCMA by CD3 bispecific in multiple myeloma. Finally, Dupixant was approved for Pyraigo nodularis in Europe. Briefly reflecting on 2022, we entered the year with three strategic comparators that we felt we had to accomplish in order to position the company for long-term growth. First, we had to fortify the medium and long-term outlook for our retinal franchise. Based on the positive results that we reported in September 2022, we believe a FlibroCept 8 milligrams has the potential to change the treatment paradigm for patients with wet AMD and DME by becoming the new standard of care for these patients, positioning Regeneron for prolonged leadership in this category. Second, we needed to maintain and grow Dupixant leadership across a variety of type two allergic diseases. 2022 turned out to be a phenomenal year with Dupixant global net product sales approaching 8.7 billion and growing 44% at current concurrency. Despite new competition, Dupixant maintained a leading market position in atopic dermatitis, asthma, and nasal polyps, and was also approved in new indications, geographies, and younger populations, which George will detail shortly. Collectively, these 2022 approvals meaningfully expanded the Dupixant commercial opportunity, allowing the addressable population to increase by approximately 225,000 patients, bringing the total addressable population to over 7 million patients globally. Third, we wanted to make significant progress towards becoming a leader in immunoncology, and 2022 turned out to be a crucial year. Key to this long-term goal was requiring Sanofi's share of global rights to Lib-Tile, an antibody discovered by Regeneron, which was a necessary step towards realizing the full clinical and commercial potential of this foundational therapy. It also enables us to unlock combination opportunities from promising candidates in our oncology pipeline, including with our LAG3 antibody, our co-stimulatory bispecifics, and our CD3 bispecifics. Looking ahead, we expect 2023 to be another notable year, with significant incremental progress across these imperatives, as well as in other areas of our business. We are preparing for a potential US launch for a -a-Sep 8 milligrams in late August, given prescribers decade-plus experience with ILIA, and now with the 48-week data for a -a-Sep 8 milligrams, which demonstrated comparable efficacy and safety to ILIA, but with longer treatment intervals, we believe that over time, there is an opportunity for a -a-Sep 8 milligrams to become the new standard of care for wet AMD and DME. We expect to PICSIM to continue to strengthen its leadership position across approved type 2 allergic diseases based on its differentiated mechanism of blocking both interleukin 4 and interleukin 13. In 2023, we have an opportunity to reach even more patients with potential regulatory approvals in new diseases, geographies, and younger populations that could add another approximately 500,000 patients globally to the biologically eligible population. Additionally, we look forward to the upcoming readout of our first phase 3 study of DUPICIN and COPD in the first half of this year. In oncology, we expect to continue rapidly advancing our pipeline. For our lag 3 combination with liptio, we are moving forward with expansion beyond melanoma to include lung cancer and potentially other solid tumors. For our co-stimulatory bi-specifics in combination with liptio, we are continuing dose expansion in our phase 1-2 PSMA by CD28 program in advanced prostate cancer. We also expect to report additional phase 1 data from our EGFR by CD28 program in solid tumors and to present initial clinical data for our MUX16 by CD28 program in recurrent ovarian cancer. And within HEMONC, we anticipate second half regulatory submissions for ogenexamab and follicular lymphoma and diffuse large B-cell lymphoma as well as lymphoceltamab and refractory multiple myeloma. In 2023, we also plan to rapidly move forward with clinical development of our next generation COVID-19 antibody, which we believe could help protect the millions of vulnerable patients who are unable to mount a sufficient immune response from vaccination and treat those who require other alternatives. Activities enabling clinical manufacturing have commenced and we expect to enter clinical development later this year. In closing, 2022 was a pivotal year of regeneron and we expect to continue making significant progress in 2023. Our strategy remains focused on investing in our internal R&D capabilities, which has historically generated a high rate of return. We remain confident in our near and long-term growth prospects with approximately 35 pipeline candidates currently progressing through clinical trials. We will also continue looking for opportunities to complement these internal efforts by exploring potential collaborations. With our commercial capabilities continue to drive revenue growth and our strong financial position, regeneron is extremely well positioned to continue delivering breakthroughs for patients and value to shareholders. Now, I will turn the call over to George. Thanks,
George
Len. I would like to briefly walk you through our pipeline's progress in 2022 and touch upon what lies ahead in 2023. In ophthalmology, we presented positive pivotal results for a flibrocephalate milligram in wet AMD and DME. These trials showed that a flibrocephalate milligram extended dosing intervals to every 12 or even 16 weeks for the vast majority of patients through 48 weeks without compromising the visual improvement or safety seen with ILEA. These are truly unprecedented and potentially game-changing results which have not been achieved using any other anti-VEGF agents. Moving to Depixin, in 2022, Depixin became the only biologic approved in atopic dermatitis for infants as young as six months of age. The first treatment for pyrogynoidularis and the first treatment in the United States for eosinophilic esophagitis. And just this week, we obtained the European Commission approval for eosinophilic esophagitis as well. In addition, we submitted a supplemental BLA for chronic spontaneous uricaria and shared positive phase three data in children with eosinophilic esophagitis. Depixin is now approved in five related type 2 allergic conditions. And our data show that these diseases are mediated by IL-4 and IL-13 driven type 2 inflammation. Because many patients suffer from systemic type 2 inflammation, they often suffer from several of these diseases concurrently. And thus, Depixin has the potential to holistically address these patients multiple type 2 conditions for which Depixin is approved. While many other immunomodulators are associated with worrisome immunosuppression and carry boxed warnings, Depixin's safety profile supports its approval in infants. In 2023, we are looking forward to the initial results of Boreus, the first Depixin phase three study in patients with chronic obstructive pulmonary disease or COPD. Our Depixin COPD phase three studies have enrolled patients with elevated blood eosinophils aiming to select the patients with COPD driven by type 2 inflammation. The Boreus study passed an interim futility analysis in 2020, an encouraging event which triggered the start of the replicate phase three notice study. We are looking forward to the readout of Boreus with the primary endpoint of annualized rate of acute, moderate and severe COPD exacerbations expected in the first half of 2023. Moving on to oncology. 2022 was an important year for oncology programs. Leptile was approved by the FDA in combination with chemotherapy and first line non-small cell lung cancer, irrespective of histology or PD-L1 expression levels, an achievement met by only one other PD-1 or PD-L1 targeting agent. Leptile is also emerging as an essential backbone of our oncology pipeline. Several programs in combination with Leptile are starting to yield encouraging data. First, I'll discuss our LAG3 antibody, thiaminamab, in combination with Leptile, where we have recently shown positive data from a second confirmatory cohort of PD-1 naive metastatic melanoma patients and reported encouraging results from a smaller data set in non-small cell lung cancer patients. These initial results suggest that the thiaminamab-Leptile combination has a potentially -in-class profile in melanoma, and we are advancing broad pivotal programs in both melanoma and lung cancer. Phase III studies in metastatic melanoma and adjuvant melanoma are already enrolling, and we have plans to soon initiate another phase III study in perioperative melanoma, as well as phase II-III studies in first line, advanced as well as perioperative non-small cell lung cancer. Other notable Leptile combination used from this year was the early but very encouraging data with our PSMA by CD28 co-simulatory bi-specific in advanced metastatic castrate-resistant prostate cancer, a tumor type considered immunologically cold, with multiple recent phase III failures demonstrating that prostate cancer is largely unresponsive to -PD-1 therapy as well as in other types of chemo combinations. In our -of-concept study of our PSMA by CD28 co-simulatory bi-specific, we observed first evidence that combining this new class of bi-specifics with -PD-1 can confer profound responsiveness to tumors previously thought to be cold and unresponsive to -PD-1 therapy, with three out of the four patients treated at the highest dose levels showing greater than 90% reductions within six weeks of initiating combination therapy in the prostate cancer biomarker PSA. Following up on these early but exciting results, we're continuing to enroll patients in this study, and we are planning to present additional data at medical meetings in 2023. We also presented our first clinical data for a CD3 bi-specific in a solid tumor. For Uvamadamab, our MUX-16 by CD3 bi-specific in development for advanced ovarian cancer. As a single agent in a phase I dose escalation study in heavily pre-treated recurrent ovarian cancer patients, we observed a 4% overall response rate with a 31% response rate in a small subset of patients with high MUX-16 expressing tumors. We expect initial dose escalation data later this year for Uvamadamab with Liptyop, as well as for our MUX-16 by CD28 costumatory bi-specific with Liptyop in advanced ovarian cancer. We also expect updated clinical data for our EGFR by CD28 costumatory bi-specific in combination with Liptyop in various solid tumors later this year. Moving on to our hematology oncology pipeline. At the American Society of Hematology, or AASH, annual meeting, we presented new data from Odrinextamab, our CD20 by CD3 bi-specific, as well as Limbus-Seltemab, our BCMA by CD3 bi-specific. For Odrinextamab, we presented pivotal phase II ELM2 data. Odrinextamab in third or later line relapsed or recurrent follicular lymphoma has a potential best in class efficacy profile with 82% of patients responding and 92% of these responders achieving a complete response with encouraging durability. Our optimized step-up dosing regimen has improved Odrinextamab's safety profile while retaining efficacy similar to the prior dosing regimen. In third or later line relapse or recurrent diffuse large B-cell lymphoma, Odrinextamab demonstrated efficacy regardless of prior CAR T experience and a safety profile generally similar to that seen in follicular lymphoma. We are planning regulatory commissions in the second half of 2023 for both indications, which we hope will support potential accelerated approval. In 2023, we anticipate initiating several phase III studies in follicular lymphoma and diffuse large B-cell lymphoma including in earlier lines of therapy. These trials will serve as confirmatory studies which could potentially support conversion to full approval. We also expect to initiate a proof of concept study of our CD22 by CD28 co-stimulatory bispecific in combination with Odrinextamab in diffuse large B-cell lymphoma, which we hope could further add to the anti-cancer benefit for these patients. For Limbosalcomab, our BCMA by CD3 bispecific antibody, we presented efficacy and safety data from our pivotal phase II study in third or later line multiple myeloma at ass. Early, deep and durable responses were observed in patients with high disease burden and these responses may improve with longer follow-up. In 2023, we plan to initiate a confirmatory phase III study of Limbosalcomab in second line multiple myeloma and are on track for a BLA submission in the second half of the year. As with Odrinextamab, we plan to initiate combination studies for Limbosalcomab with co-stimulatory bispecifics in the near future. I'd also like to update some additional clinical programs. Our antibody blocking factor 11 for anticoagulation and our antibody that activates the NPR1 receptor for heart failure are both completing proof of mechanism trials. Moving on to Regeneron Genetics Medicine. Regarding our collaboration with Elnylum and SiRNA Therapeutics, we're planning a broad and multi-pronged approach to develop treatments for NASH, non-alcoholic steatohepatitis. We're initiating a phase II study of ALN HSD in NASH patients with genetic risk factors. We also dosed first subjects in the first in human study of another SiRNA medicine in development for NASH, ALN PNP, which targets a different gene and can be potentially combined with ALN HSD in appropriate patients. We have discovered additional NASH targets which we have validated using our Regeneron Genetic Center, including side B, which will potentially be the next NASH therapeutic candidate to enter the clinic. With regard to our collaboration with Elnylum for central nervous system targets, our initial dose escalation study is ongoing. Our collaboration with Intelli on CRISPR-based therapeutics is expected to progress further in 2023, building on continuing data readouts from the phase I study of NTLA 2001 in trans-thyretin amyloidosis in both cardiomyopathy and neuropathy patients, which provided the first demonstration in humans that CRISPR-based technologies can deliver up to 90% reduction of a pathological gene product for over a year. Regarding our gene therapy efforts, our collaborators at Decibel Therapeutics recently announced that a clinical trial has been authorized by both the US FDA and the UK MHRA for DBOTO, a virally delivered gene therapy designed to restore hearing to individuals with otopheralin-related hearing loss. A phase I-II study in patients two years of age and younger is expected to initiate in the first half of 2023 with initial data from the first course of patients anticipated in the first quarter of 2024. I'd like to conclude with our next generation COVID-19 efforts. As we recently announced, we have identified a potent, broadly neutralizing COVID-19 antibody, which unlike other neutralizing antibodies, finds outside of the so-called receptor binding domain or RBD of the spike protein. This antibody retains activity against all the viral variants seen throughout the pandemic because it binds to an epitaph that has remained highly conserved, greater than .9% across all known variants. The vast majority of antiviral antibodies generated as a result of vaccination or due to natural infection, target the RBD domain, which results in overwhelming selective pressure and driving the emergence of these resistant variants. We hope that by targeting this unique and conserved epitope outside of the RBD, this antibody will also retain its activity in the face of future variants. We plan to initiate clinical trials to test this antibody this year, and we are looking to develop it in both treatment and prophylactic settings. In conclusion, Regeneron's R&D engine continues its productivity, including the early stage pipeline. Just in the first weeks of this year, we have initiated clinical studies for two new drug candidates, and we anticipate clinical trials starting, or IND submission, for up to 10 new therapeutic candidates this year, as well as for additional indications for candidates that are already in the clinic. So with that, I will turn it over to Maryam.
Intelli
Thanks, George. The fourth quarter capped off a strong year of execution and growth, delivering results across our commercial portfolio. We expanded into new indications, which coupled with our existing business, is expected to drive meaningful growth in 2023 and beyond. We look forward to several important potential approvals and subsequent launches this year, providing additional opportunities for growth. Starting with ILEA, where we announced in January, fourth quarter U.S. net sales of 1.5 billion, full year 2022 net sales were 6.3 billion, representing 8% -over-year growth and outpacing total growth of the anti-VEGIP category for the year. At the end of the fourth quarter, ILEA category share was approaching previous levels of approximately 50% of injections. This followed the short-term shift earlier in the quarter where ILEA was negatively impacted by a temporary increase in use of off-label compounded avastin. During this time, there was a short-term closure of a -for-profit patient co-pay assistance fund, which reopened later in the quarter. We believe we have substantially recovered from the issue encountered in the fourth quarter. We continue to expect competitive pressures, but remain confident in Regeneron's overall retinal franchise as we look forward to our potential upcoming of Flibersep 8-milligram launch. In summary, our retinal franchise leads the anti-VEGIP category, with ILEA as the current standard of care and a Flibersep 8-milligram, if approved, offering a differentiated clinical profile that can potentially shift the treatment paradigm. Turning to Lib-Tio, total fourth quarter global net sales were 169 million, growing 44% on a constant currency basis. In the US, net sales grew 36% to 110 million, with contributions across all indications. In advanced non-melanoma skin cancers, we continue to build our leadership position in the PD-1 class. In lung cancer, Lib-Tio continues to see steady growth in utilization and prescribers. Customer ordering has accelerated following the chemotherapy combination approval last November. We're working to maximize launch uptake by increasing depth and depth of prescribers. Early launch indicators are positive. Community and academic centers have welcomed Lib-Tio's expanded role as an important treatment option in advanced non-small cell lung cancer. There are more than 200,000 new cases of lung cancer per year in the US alone, for which Lib-Tio is an important treatment option. Outside the US, Lib-Tio net sales grew 60% on a constant currency basis to 59 million, driven by steady demand growth and additional launches as we secure access and reimbursement globally. We continue a targeted approach to extend our global commercial footprint in priority international markets, designed to maximize opportunities for Lib-Tio and potential future medicines. Finally, turning to Depixent, we're in the fourth quarter, global net sales grew 42% on a constant currency basis to 2.45 billion. In the US, net sales grew 44% to 1.94 billion, with strong growth continuing across atopic dermatitis, asthma, nasal polyps, with additional contributions from recent launches in the synephyllic esophagitis and prognodularis. Depixent is well positioned to expand market penetration and drive revenue growth across established new and potential future indications in 2023 and beyond. Atopic dermatitis, Depixent's largest indication, continues to rapidly grow across all age groups, firmly establishing Depixent as the preferred systemic therapy for patients with moderate to severe disease. There continues to be rapid uptake in younger populations, further confirming Depixent's differentiated efficacy and safety profile. We've also seen meaningful early adoption in prognodularis, where Depixent is the only FDA-approved medicine for this debilitating disease. We expect ongoing uptake of Depixent as the launch progresses and physicians identify patients in need. Depixent continues to perform well in the highly competitive biologic asthma space, with steady market share gains and strong growth in total prescriptions and new patient starts. In nasal polyps, Depixent's differentiated clinical profile continues to drive uptake as the leading first-line treatment option in patients requiring systemic therapy. In the synephyllic esophagitis, the launch is going exceptionally well, finally offering physicians and their patients a treatment to effectively manage the underlying mechanisms of their disease. Patients treated with Depixent have experienced dramatic improvements in their symptoms and quality of life. We've seen rapid uptake across both gastroenterologists and allergists. We also continue to advance our clinical efforts in younger patients, where there is also substantial unmet need. Outside the US, Depixent's net sales worth $513 million, growing 37% on a constant currency basis, driven by rapid uptake across approved indications and launches in new geographies. In Europe, Depixent was approved for pyragonidulurs in December, and earlier this week, Depixent was also approved for esophagitis. We expect these new indications to contribute to Depixent's ongoing international growth. In summary, during 2022, we executed on our core focus to deliver life-changing medicines to patients. Our commercial initiatives and strategies are driving increases in market penetration for inline brands and optimizing the potential of new and upcoming launches. Taken together, we are confident in Regeneron's future and are well positioned to deliver long-term and sustainable growth. Now I'll turn the call to Bob.
Bob
Thank you, Marion. My comment today on Regeneron's financial results and outlook will be on a non-GAAP basis, unless otherwise noted. Regeneron ended 2022 with a strong fourth quarter with continued execution driving positive results across the business. Excluding contributions from RegenCove and RonaPrieve, fourth quarter total revenues increased 14% year over year to three billion, driven by growth across our core brands. Fourth quarter diluted net income per share was $12.56 on net income of 1.4 billion. Beginning with collaboration revenue and starting with Bayer. Fourth quarter 2022 XUS Aylia net product sales were $839 million, up 7% on a constant currency basis versus fourth quarter 2021. Total Bayer collaboration revenue was $355 million, of which $324 million related to our share of Aylia net profits outside the US. Total Santa Fe collaboration revenue was $836 million in the fourth quarter, in group 61% driven by Depixen. Our share of profits from the commercialization of Depixen and Kevzar was $619 million, an increase of 60% versus the prior year. We also recognized a $50 million sales-based milestone in the fourth quarter of 2022 due to achievement of 2.5 billion of XUS sales of antibody collaboration products on a rolling 12 month basis. Finally, we recorded Roche collaboration revenue of 396 million in the fourth quarter for our share of gross profits from XUS sales of Rhonaprive related to a previously signed contract. Moving now to our operating expenses. Fourth quarter 2022 R&D expense increased 43% year over year to 911 million driven by the impact of the Liptio transaction, which with Regeneron now recording all R&D expense for Liptio and our full 50% share of antibody collaboration R&D spend for Depixen and Ittepecumab, as well as additional costs incurred in connection with the company's late stage pipeline, an increase in clinical manufacturing activities and higher head count related costs. SG&A expense increased 17% year over year to 579 million due to higher head count and related costs, incremental costs to fully support the global commercialization of Liptio and higher contributions to an independent -for-profit patient assistance organization. Product gross margin in the quarter increased to 93% as compared to 86% in the prior year. The improved gross margin was driven by a favorable change in product mix in no longer having to pay Santa Fe for their share of US Liptio gross profits. Finally, fourth quarter 2022 effective tax rate was .3% compared to .6% in the prior year. Shifting now to cash flow in the balance sheet. For full year 2022, Regeneron generated 4.4 billion in free cash flow favorably impacted by a first quarter 2022 payment from the US government for sales of Regenco that were recorded in the fourth quarter of 2021. We ended 2022 with cash and marketable securities, less debt of 11.6 billion. We continue to deliver on our capital allocation priorities in 2022 by deploying approximately $3.4 billion towards business development and share repurchases while continuing to fund our internal R&D efforts. In 2022, we executed approximately 1.3 billion in business development initiatives, including the acquisitions of CheckMaid Pharmaceuticals in the exclusive worldwide rights to Liptio. We also purchased approximately $2.1 billion of our shares in 2022, including 431 million in the fourth quarter. This morning, we announced a new $3 billion share repurchase authorization, reflecting our continued confidence in our business in our pipeline. We remain buyers of our shares at current levels and this new authorization enables us to continue returning capital directly to shareholders. I'd like to conclude with our initial financial guidance and outlook for 2023. We expect 2023 SG&A spend to be in the range of 2.13 to 2.28 billion. This primarily reflects the full year impact of global Liptio commercialization expenses, the build out of our international commercial infrastructure in select markets and higher headcount to support our growing organization. We expect our 2023 R&D expense to be in the range of 3.725 to 3.925 billion. As George mentioned, we have numerous strategically important development programs advancing in 2023, including late stage studies for our Ipheanolumab, Liptio combination in melanoma and lung cancer, and confirmatory phase three studies for Oginxumab, both in FL and DLBCL, and Limbus-Elkumab in myeloma. In addition, we continue to advance programs in our early pipeline across multiple therapeutic areas, including with collaborators such as Elnylam and Intelia, positioning us for long-term growth. This range also includes the full year impact of the Liptio transaction. We are now recording all development expenses for Liptio and recognizing our full 50% share of development expenses for Tepixen and Ittepecumab. COCM is expected to be in the range of 720 to 800 million, similar to 2022, reflecting the gradual phase in of a new Regeneron developed manufacturing process for Tepixen that is designed to improve drug substance yields. We expect our capital expenditures in 2023 to be in the range of 825 to 950 million. These expenditures will support the continued expansion of our manufacturing facilities, including ongoing construction of a fill finish facility, as well as the previously announced expansion of R&D facilities at our Tarrytown, New York headquarters. Finally, we anticipate 2023 gross margin to be between 90 to 92% and our effective tax rate to be in the range of 11 to 13%. In addition to our full year financial guidance, we expect higher interest income in 2023, given our greater cash balance plus higher interest rates as compared to last year, which will favorably impact other income and expense. We also expect 2023 other revenue to be slightly lower than 2022. Finally, as I said in November, we no longer expect to record any material other operating income or expense in 2023 or beyond absent a new transaction. In conclusion, Regeneron continue to deliver robust financial results in 2022, and we are well positioned to drive continued growth in 2023 and beyond. With that, I will now pass the call back to Ryan.
Ryan Crowe
Thank you, Bob. Shannon, that concludes our prepared remarks. We'd now like to open the call for Q&A. To ensure we are able to address as many questions as possible, we will answer one question from each call before moving on to the next. Shannon, please go ahead and poll for questions.
Operator
Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Kyler Van Buren with Cowan, your line is now open.
spk14
Hey guys, good morning and congratulations on the results and thanks for the question. Regarding Aylia, it'd be great to hear the latest on what you're seeing in the marketplace with respect to a Bebismo. Apparently, Roche is not seeing switches from Bebismo back to Aylia, despite what we are hearing from the KOL. So any additional color there would be helpful.
Intelli
Hi, Kyler, yes, and let me comment that, certainly Aylia performance in the market, as I reported, continues to be very strong. Quick reminder on the year, growing at 8% to 6.3 billion and certainly a very strong competitive performance. We're conscious of competition in the marketplace, but to give a bit of an update, we continue to hear that Fristenab use has been modest and results in some cases have resulted in patients switching back to other agents, including Aylia, probably most frequently Aylia. Certainly we look forward to continued efforts on Aylia this year as the standard of care. And as you know, from many of us talking to KOLs, they're incredibly enthusiastic about the launch, potential launch of the Flippersib eight milligram coming later this year.
Operator
Thank you. Next question
spk15
please.
Operator
Our next question comes from the line of Matthew Harrinson with Morgan Stanley, your line is now open.
Len
Matt, we don't hear you.
Matt
Sorry, could you not hear me, Len?
Len
We can hear you now. Now we can.
Matt
Okay, all right, sorry. So I was just wondering if you could comment on COPD and what you view as clinically meaningful in terms of a result there. Other companies have reported sort of 15%, but I think in the past you've talked about that as not being a particularly high bar, so maybe you could just talk about how you view clinical meaningfulness. Thanks.
George
Well, we powered our futility analysis as well as our clinical trial to deliver what we believe would be clinically meaningful benefit if the study proves positive, which we hope it will. And remember, we're gonna be looking at both exacerbations but also improvement in lung function. So it'll be a sort of integration of the benefit that patients can receive from both those measures. I remind you that in other settings, in asthma in particular, depixin has distinguished itself from other immunomodulators in delivering pretty substantial improvements in pulmonary lung function. So it's not only all about exacerbations, but we hope to have significant improvements in exacerbations as well as in lung functions, which will hopefully provide important benefits to patients.
Ryan Crowe
Thank you. Next question, please.
Operator
Our next question comes from the line of Carter Gould with Barclays, your line is now open.
Carter Gould
Hi guys, thank you very much for taking the question. You do have some APP data on the horizon here with Alnylam. We'd love to kind of hear your thoughts on how you're thinking about that and if we should be thinking about that as more of just a proof of concept or as a potential product opportunity, even with intracirculated delivery. And if I guess more of the former, how much of this is sort of a gating factor to really kind of expanding the effort here potentially dramatically across a number of CNS diseases?
George
Thank you. Well, as you say, the important thing about that aspect of the Alnylam collaboration is together, we were hoping for the first time to see if we could develop technology that would actually allow us to do what's been done now by Alnylam and others in the liver to bring it to other tissues, particularly to the central nervous system in this case. So the first study, which is focused on APP, is really a proof of concept that can we get this technology to work? We view it as a potential sort of platform enabler, meaning that if we see anything here, and obviously, these are challenging things to be first and to do something that nobody's ever done before and is obviously very early in the program. But the goal is to establish proof of principle that this type of technology, which looks like it can be pretty effective in the liver, can it work outside of the liver, particularly in this CNS? So this would be a platform enabler. Thanks, George.
Ryan Crowe
Next question, please.
Operator
Our next question comes from the line of Brian Abrams with RBC Capital Markets. Your line is now open.
Brian Abrams
Hey, guys, congrats on all the progress and thanks for taking my question. So with the potential approval coming this summer, I'm curious how we should be thinking about the launch cadence for high-dose safe livercepts, just considering some elements like the introduction of pre-filled syringe, a J code, and maybe your overall strategy and how you're thinking about converting market segments and where you're initially focused.
Len
Give us a second. We'll disconnect all the Roche people on the call so we can get you our strategy. In all seriousness, obviously, there's a lot of thought that's gonna go in between now and what we hope will be our late August approval on pricing, on rollout, on targeting, on strategy, et cetera, et cetera. But we're working on that. We have to get our label. We have to get it approved. And we'll have everything else ready to go. The initial launch will be with a vial, and then we hope down the road, not too far with a pre-filled syringe. Marin, I don't know if you wanna give away any of your secrets.
Intelli
I would just say that we have a highly experienced team in commercialization, and we certainly will be ready for the launch. And in the meantime, we're very focused on our participation in the market today with Aelia, but certainly more to come. And we absolutely will look forward to the potential launch of 8-milligram.
Len
Very good. Obviously, the, the Vibismo launch has not turned the market sideways on us. Real competition. But that, I think, there's a window that's sort of closing for them to compete against 2-milligrams, we hope, and then 8-milligrams, we hope, could become the standard of care. So lots to look forward to later in the year. Certainly.
Ryan Crowe
Thank you. Next question, please.
Operator
Our next question comes from the line of Evan Seigerman with BMO Capital Markets. Your line is now open.
Evan Seigerman
Hi, guys, thanks for the question. Maybe a follow-up to Matt's question. Can you just speak to what you saw in the pre-specified interim efficacy analysis of the Boreas trial, and just any additional color on the level of benefit versus placebo that triggered the initiation of the Notish trial? Thank you.
George
You know, all I can say is that we powered it to deliver what we thought would be a clinically significant improvement. It was a combination of measures of exacerbations and lung function improvement, and we haven't disclosed what those numbers were.
Ryan Crowe
And we remain blinded to that interim analysis, Evan. So next question, please.
Operator
Our next question comes from the line of Salvin Richter with Goldman Sachs. Your line is now open.
Salvin Richter
Good morning. Thanks for taking my question. With regard to the oncology portfolio, what do you consider the most meaningful milestones for the next 12 months, and, you know, particularly here, the PSMA CD28 asset? Thank you.
Len
Well, we obviously have some important submissions we need to get in later in the year, as we mentioned, for CD3 bispecifics. And we need to continue to get data later in the year with more patients with PSMA by CD28 bispecifics, as well as from some of the other cost and bispecifics. And we have to move aggressively in rolling the additional studies we plan for lag three. So, and we have to make Lib-Kyle even more successful, we hope, in the marketplace and around the world. So lots to do. I don't know if George or Marynne have anything else to add there.
George
Yeah, I think it was really critically important for us to validate individual agents in each class. That was our strategy. We wanted to develop the best in class checkpoint inhibitors such as our PD1 antibodies, Lib-Kyle, such as our lag three antibodies, the Anomab. We wanted to establish CD3 bispecifics that were best in class, and that were working in hemong settings, but also in solid tumor settings. And then of course, we wanted to validate that this incredible principle of co-simulatory bispecifics that we introduced into the world, which were truly magical in animal studies, with essentially working like turnkey agents to synergize with the other two classes in animal studies, that we could reproduce that sort of activity in humans. And so us, obviously it takes years to get to that point, but we feel we're in a very exciting position right now, because as I said, the individual classes are validated. We're starting to see impressive combination opportunities. We talked about combining two checkpoints, combining our lag three with PD1, where it looks like we have maybe taken first line melanoma to a different point where patients can get a lot more benefit from this combination. And now having validated those, we're expanding much more broadly. Same thing with the CD3 bispecifics, we're growing that franchise now that we've shown that our platform works, and we're working both in hemong and outside in solid tumor settings. And the fact that our first costum bispecific delivered the sort of exciting early data that it delivered, really gets us very excited about the possibility now that we have this whole rollout. We have several of these costum bispecifics in the clinic, clearing their dose escalation safety settings, and we're now gonna be rolling out data from these combinations. More data from the PSMA, costum bispecific and prostate cancer and more patients, but we're also gonna be reporting on a series of other costums, including not only in combinations that we already talked about in solid tumors, but in the hemong space, where we're very excited obviously about our CD20 by CD3 bispecific by itself and our BCMA by CD3 bispecific by themselves. As Len said, we're both filing for those hopefully by the end of the year, but also initiating earlier line studies. But just as importantly, we're gonna be initiating combinations with these costum bispecifics, which we think yet again, if these continue to work like they work, not only in the animal models, but now how they're looking in the early human studies, these could really leapfrog the individual agents to a whole new place where they're really changing the practice of medicine and delivering much more benefit to patients, which is what we're all about.
Len
Yeah, I don't think George's point can be overstated. Cancer cures in serious advanced tumors are still far and few between and there's still tremendous need, which makes this a very dynamic treatment marketplace because people want that extra benefit because it's not like they're getting cures, we haven't cured lung cancer or we haven't cured most serious cancers. So the ability to have foundational individual treatments and then get more by combining them really does position us to leapfrog, to use George's word, in the treatment paradigm out in the world because patients and their doctors are very sensitive to improve outcomes because there's still tremendous, tremendous need. Thank you. Next question, Shannon.
Operator
Our next question comes from the line of Mohit Bansal with Wells Fargo, your line is open.
spk15
Great, thank you for taking that question. Maybe staying with COPD. So talking to some KOLs and reading some papers, it seems like IL-13 has some implications into fibrosis as well. Now, so the question is, do you think there could be a beneficial effect of IL-13 blockade and its impact on fibrosis on COPD over and above blocking inflammation? And if yes, do you think a one-year trial would be enough to see that?
George
I think you bring up really interesting points. We were actually involved in some of the experiments years ago that showed that IL-13 could actually cause fibrosis in animal models. And certainly we do believe that long-term, like in many of the diseases that we've studied so far, that the benefit of dupixin and blocking both IL-4 and IL-13 can continue to accrue for the patient in terms of preventing the chronic inflammation that results in so much of this remodeling that you talked about. We believe this may be true in asthma and we're actually involved in programs and studies to show that some of the same things that you're talking about will also benefit in that you will prevent long-term remodeling that decreases lung function over time with structural changes in the asthmatic patient. And we believe that that may also be true, of course, in COPD. But first we need, as you say, the shorter-term studies to be positive. But we do believe that if they produce the type of data that we're hoping, if dupixin produces the type of data we're hoping it could in COPD, that longer-term studies, like you say, could end up showing even longer-term benefits in terms of exactly the type of remodeling and fibrotic changes that result in permanent loss of function, lung function in these patients. So we think that you're totally right, but it will probably, as you say, take longer-term studies to actually pick that up.
Ryan Crowe
Thanks, George. Next question,
Operator
Shannon. Our next question comes from the line of Colin Burstow with UBS, Jelani Southin.
Colin Burstow
Hey, good morning and thanks for taking the questions. I wanted to sort of push a little more on the dupixin COPD readout and just try and understand what's underpinning your confidence here. It certainly feels like you're more enthusiastic than what we're hearing out of Europe. Is this primarily based on the threshold set for Boreus interim and these were sufficiently robust that you just, you feel good about the ultimate result or is there something else you can point this to? Thanks.
Len
Yeah, I wouldn't over or under read our situation right here and it almost doesn't matter because Regeneron is a data-driven enterprise and we're all gonna see the data coming up, we hope, later this quarter. We are totally blinded to the evaluation that was done on the interim analysis. We have said we set it at a reasonable bar but it was only a fraction of the patients so you never know how this is gonna turn out. We would not be as confident about something like this compared to another classic type two inflammatory disease. So you have that on the negative side but on the positive side you do have the fact that we've selected patients who have high eosinophils and we have the interim analysis. Bottom line is we look forward to the data as well as you do.
Ryan Crowe
Thanks, Len. Next question, John.
Operator
Our next question comes from the line of Chris Raymond with Piper Sandler. Your line is now open.
Chris Raymond
Thanks. Maybe a broader question on the vet-jess retinal market. Last year at AAO there was a lot of discussion and debate around the potential impact on retinal specialist practices. If the intravitreal therapies for geographic atrophy are approved. And some folks were talking about just back of the envelope this could drive pretty sizable like 30 some percent increase in injection volume of practices just from treating geographic atrophy patients. As you guys think about this dynamic, we've heard some KOLs sort of offer up potential fix to that. That they would move in more accelerated fashion to longer duration, longer acting therapies for wet AMD. Are you guys seeing that? Is that something that we should be thinking about in terms of a driver from short acting to longer acting?
Len
Yeah, I mean, I think despite all these practice aspects, the primary driver will be that patients would prefer to get a needle in the eye less frequently. With every time you put a needle in the eye, there is a risk of inflammation or more serious complications, hemorrhages, detachment, things like that. So the less you have to do that and get the same benefit is better for the patient from the needle in the eye perspective and it's better for the patient from the number of times they have to come to the doctor's office, these are elderly patients frequently they have to have a caregiver. From a practice perspective, certainly many doctors offices are overwhelmed by the number of injections that they're giving and that they could free up time if you could get the same result from a practice point of view with less frequent injections, certainly that would free up more time and would drive them. But I believe at the end of the day, docs do make the decision with their patient on this primarily because less injections in the eye are just safer and more convenient for the patient.
George
Well, we also shouldn't lose sight of the fact that if treatments for geographic accuracy become much more, take off and become much more prevalent that they do have a side effect. They're actually increasing levels of macular edema in these patients which will of course necessitate treatment there as
Ryan Crowe
well. Thanks. We have time for two more questions, Shannon.
Operator
Our next question comes from the line of Chris Schott with JP Morgan. Your line is now open.
Chris Schott
Great. Thanks so much for the question. Just on the COSTEM platform, I guess once you land on the right dose for these products, do you expect that there could be accelerating filing pathways given the few options available for most of these patients or do we still need to think about needing to go slowly even with the registrational studies as you're kind of balancing safety versus efficacy? Thank you.
Len
Well, we certainly believe that when you're in something where there's tremendous medical need and no alternatives, that there will be opportunities to move for accelerated approval. We're all aware of the new FDA guidelines that they want you to be underway with your pivotal studies, well underway I think is the phrase they use. So we're taking that into account. But there's no question that there's a lot of room for improvement. There's no question that if we can reproduce the efficacy that we saw in these late stage prostate cancer patients, there's not only the need, but there will be a mechanism to get that to patients as quickly as possible. Remember that the main issue as you referred to is being mindful of the safety. And of course we're doing everything we can to mitigate that. But remember, thus far, for the most part, there's been an extremely tight linkage of safety and efficacy. That is the adverse events occurred in those patients who were having the substantial benefit. So that makes the risk reward even more attractive from a regulator's and a doctor's and frankly a patient's perspective. So the short answer is we think we're not gonna go too fast where one would be reckless, so we have to be careful. But we do think there is an opportunity for an accelerated approval if we follow the new
Ryan Crowe
approach
Len
the FDA has laid out.
Ryan Crowe
Thanks, Len. Last question, please, Shannon.
Operator
Our last question comes from the line of Robin Kornoskis with Truist, your line is now open.
Robin Kornoskis
Great, thank you for squeezing me in. So just a follow up on the prior question. So for your MUX-16 CD28 and MUX-16 CD3 combination, what are you expecting regarding the safety profile and how do you think about that type of combination, efficacy and safety-wise versus a CD28 CPI combo? And just to follow up with that, I know the FDA was concerned back in the day about dosing up with CD28, it's super agonist. Like, do you think that your initial data might alleviate some of the needs of the dose, such low doses for CD28 by specifics?
George
Thanks. Well, a lot of good questions in there. As I'll start from the end first, for sure when we started the program, there was very serious concerns about previous experience with general CD28 activators that activated all over the body that resulted in really horrific situations for patients which almost killed the field. We invented this new approach to tightly limit where we were limiting CD28 activation right at the tumor surface and so forth. And of course, there was concern from the FDA, which is why, as you said, they made us employ a very, very conservative dose escalation program. We had to go through five or six dose levels just to get to where we thought were the active dose levels, where we then started to see the rather dramatic anti-tumor activity that we began to report. We are hoping that as we get more experience and show that what we had demonstrated pre-clinically is really holding true in humans, in fact, the side effects that Len was talking about, immune-related adverse events are totally unrelated to the sort of toxicities that were seen with nonspecific CD28 super agonists in the past. They were really much more on target and on mechanism. That is, we were generating a presumably a polyclonal T-cell response against the tumor and some of that cross-reacted to tissues in the patients and that's what we were seeing. So we're hoping, we're hoping that increasingly we might be able to move a little bit more quickly through some of these dose escalation stages to get to the active doses with these other agents. What we're seeing so far as we've presented in our posters on MUX-16 by CD3 that right now it's having an acceptable safety margin. And we also hope to see that when combined, either the CD3 combined with the MUX-16 by CD28 or when the MUX-16 by CD28 is combined with Leptire that we will see the same sort of things that we saw with the PSMA by CD28 that we'll be getting hopefully market synergy and increase in the anti-tumor activity with hopefully a satisfactory safety window. And that remains to be seen and that's why we're carefully going through the combination studies and the dose escalation studies. But once again, I mean, just to say how, I mean, exciting it is for those of us who've been working on these programs for over 10 years to be at this point where the individual agents and the individual classes are now validated and we now get to mix and match these things. And as Len said, the history of the field is when you have active agents and you start combining this, you can then leapfrog and get to the next level that would change the practice of medicine for these cancers. That's what we're aiming to do, to try to save more lives, extend more lives and it's an exciting place to be in.
Ryan Crowe
Thanks, George. That's all the time we have for today. Thanks to everybody who dialed in and for your interest in Regeneron. We apologize to those remaining in the queue that we did not have a chance to get to. As always, the IR team is available to answer any questions you may have. Thank you once again and have a great day and a nice weekend.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
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