Michael Aberman - Vice President of Strategy and Investor Relations Leonard S. Schleifer - Founder, President, and Chief Executive Officer George D.

Yancopoulos - Founding Scientist, President, Regeneron Laboratories and Chief Scientific Officer Robert J. Terifay - Senior Vice President of Commercial Robert E.

Landry - Chief Financial Officer and Senior Vice President of Finance

Adnan Butt - RBC Capital Markets Ying Huang - Barclays Capital Chris Raymond - Robert Baird & Co. Jason Kantor - Crédit Suisse Robyn Karnauskas - Deutsche Bank Terence C.

Flynn - Goldman Sachs Carter L. Gould - JPMorgan Yaron Werber - Citigroup Matthew Roden - UBS Joseph Schwartz - Leerink Swann LLC Phil Nadeau - Cowen & Co.

Biren Amin - Jefferies & Co., Inc.

Thank you, operator. Good morning, every and welcome to Regeneron Pharmaceuticals Fourth Quarter and Year End 2013 Conference Call.

An archive of this webcast will be available on our website under Events and Presentations for 30 days. Joining me on the call today is Dr.

Leonard Schleifer, Founder, President and Chief Executive Officer; George Yancopoulos, Founding Scientist, President of Regeneron Laboratories and Chief Scientific Officer; Bob Landry, our Chief Financial Officer; and Bob Terifay, Senior Vice President of Commercial. After our prepared remarks we'll open the call for Q&A.

I would also like to remind you that, remarks made on this call include forward-looking statements about Regeneron. Such statements may include, but are not limited to, those related to Regeneron and its products and business, sales and expense forecasts, financial forecast, development programs, collaborations, finances, regulatory matters, intellectual property and competition.

Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in such statements. A more complete description of these and other material risks can be found in Regeneron's filings with the United States Securities and Exchange Commission or SEC, including its Form 10-K for the year-ended December 31, 2013, which we will filing with the SEC later this week and Form 10-Q for the quarter-ended September 30, 2013, which was filed with the SEC in November 2013.

Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. In addition, please note that GAAP and non-GAAP measures will be discussed on today's call.

Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP are available in our financial results press release, which can be accessed at our website at www.regeneron.com. Once our call concludes, the IR team will be available to answer further questions.

With that let me turn the call over to our President and Chief Executive Officer, Dr. Len Schleifer.

Thank you, Michael, and good morning to everyone. 2013 was another great year for Regeneron.

The EYLEA franchise continue to grow steadily in the U.S. and globally our late-stage pipeline made significant progress, we invested in several new R&D initiatives that we hope will position us for the next leg of growth in the future and we expanded our geographic footprint.

Starting with EYLEA fourth quarter 2013 EYLEA U.S. net sales were $402 million and full year 2013 EYLEA U.S.

net sales were $1.409 billion, representing a growth of approximately 70% from the full year 2012. EYLEA also performed very well outside of the United States with net sales of $184 million in the fourth quarter of 2013 and full year 2013 ex- U.S.

EYLEA sales of $472 million. Bayer HealthCare continues to be strong collaborator and we look forward to their continued execution of EYLEA launch outside the U.S.

as countries in Europe, Latin America and Asia start contributing in 2014. As we look forward to the balance of 2014 there are number of potential growth drivers for EYLEA.

As we have previously announced, in the U.S. we have granted a PDUFA date of August 18th for the diabetic macular edema or DME indication.

Yesterday, we reported positive two year data from the VISTA-DME which George will discuss shortly. We believe that diabetic macular edema could ultimately be a big opportunity as wet AMD based on disease incidence.

And we expect our fourth indication Macular Edema following Branch Retinal Vein Occlusion or BRVO to be filed with the FDA by the end of the first quarter. Taking all these factors into consideration we estimate full year 2014 U.S.

EYLEA net sales of $1.7 billion to $1.8 billion which represents approximately 25% year-over-year growth. We expect that a significant part of that growth will come towards end of the year following potential U.S.

regulatory approval of EYLEA and DME. Our 2014 EYLEA guidance does not include any significant change from the compounding environment.

Based on the continuous strong uptick of EYLEA in ex-U.S. markets where it's been launched so far, and Bayer HealthCare's ongoing rollout of EYLEA around the world plus expansion to new indications, we anticipate continued growth in ex-U.S.

Sales in 2014 as well. You will hear more about the commercial performance of EYLEA from Bob Terifay.

We recognize that EYLEA is a key driver of near-term growth and we are committed to ensuring that this franchise remains strong over the long run as well. To that end, in the first quarter of this year, we initiated clinical development with a combination of EYLEA and an antibody to PlGF receptor in the short co-formulated individual injection and I am happy to report that the first patient has been dosed in this trial.

A similar program combining EYLEA with our antibody to ANG2 also in a single individual injection is expected to start by year end. Turning to research efforts.

We have robust and advancing pipeline that include three late stage antibodies, Alirocumab, our PCSK9 antibody in Phase III trial for lowering LDL cholesterol; Sarilumab, our IL6 receptor antibody in Phase III trials for rheumatoid arthritis and a Phase II study in non-infectious Uveitis; and Dupilumab out IL-4 receptor alpha antibody which blocks both the IL-4 and IL-13 pathways and is in clinical development for asthma atopic dermatitis and nasal polyposis. We anticipate starting a Phase III trial with Dupilumab for atopic dermatitis later in 2013.

With this late stage pipeline and potential new indications for EYLEA, we could have five major regulatory submissions and/or approvals in the next five years. We have also maintained our focus on our earlier stage pipeline and our R&D initiatives.

These include our entry in the field of Immuno-oncology with our bi-specific platform, the commencement of our human genomics initiatives with the launch of Regeneron Genetic Center and our collaboration with Geisinger Health System and our R&D efforts in developing antibody drug conjugates. You will hear more about these programs from George Yancopoulos shortly.

In 2013, we undertook some important measures that further expand Regeneron's footprint in New York as well as globally. We are in the process of enlarging our campus at Tarrytown where two new R&D buildings are under construction.

We started the expansion of our manufacturing facilities in Rensselaer and we are in the process of expanding our manufacturing capacities into Ireland and optimizing our global supply chain. With that let me turn the call over to George Yancopoulos, Regeneron's Chief Scientific Officer who will discuss our pipeline in greater detail.

He will be followed by Bob Terifay, our Senior Vice President of Commercial and then Bob Landry our Chief Financial Officer. George?

Thank you Len and a very good morning to everyone who has joined us today. As Len mentioned, Regeneron's pipeline has been advancing rapidly in the fourth quarter of 2013 witnesses a lot of this progress.

Let me begin with EYLEA. As we have previously reported the FDA has accepted for filing our supplemental BLA for EYLEA in the diabetic macular edema or DME indication and we have been granted a PDUFA date of August 2014.

Our ex-U.S. partner Bayer HealthCare has also submitted an application for Marketing Authorization Europe in this indication.

EYLEA is now approved for two indications, Wet AMD and Macular Edema Following Central Retinal Vein Occlusion or CRVO in the U.S., EU Japan and other countries around the world. In terms of DME, just yesterday we announced the two year results from the Phase III VISTA DME trial.

These results showed that the improvement in vision compared to laser photocoagulation therapy that was seen after one year of treatment with EYLEA 2 milligrams does either monthly or every other month after five initial injections was sustained after two years of treatment. It is important to emphasize that in this long-term study, EYLEA dose every other month resulted in visual acuity benefit that was similar to that achieved with monthly dosing.

It is also worth noting that 43% of the patients in the VISTA study were not treated naïve and in fact had received prior anti-VEGF therapy. In this trial EYLEA was generally well tolerated with a similar overall incidence of adverse events, ocular serious adverse events and non-ocular serious systemic adverse events, across the EYLEA treatments groups and the laser control group.

The types and incidents of adverse events were consistent with what is expected with VEGF inhibition. Additional details from the three years VISTA DME study can be found on our press release that was issued yesterday.

All data will be presented in an upcoming medical conference. In the fourth quarter, we reported positive data from the Phase III VIBRANT trial of EYLEA in macular edema following Branch Retinal Vein Occlusion or BRVO.

We expect our supplemental BLA for BRVO to be filed by the FDA by the end of the first quarter. As Len just mentioned our late-stage antibody programs are also progressing well.

In terms of alirocumab our antibody for lowering LDL-cholesterol in the fourth quarter we reported positive Phase III results from the ODYSSEY MONO trial which studied alirocumab in the monotherapy study. Additional details from the monostudy will be presented at the upcoming Annual Meeting of the American College of Cardiology.

While most of the ODYSSEY program is studying alirocumab dose every other week we have also initiated two studies, ODYSSEY CHOICE I and CHOICE II that explored monthly dosing. As we have said before, we and Sanofi expect to submit an application for alirocumab for regulatory approval in early 2015 outside the U.S.

and later in 2015 in U.S. While this is a very competitive space we believe that our robust [vertically] designed Phase III programs distinguishes us.

Our Phase III program is designed to assess the primary efficacy endpoint at 24 weeks, many of the ODYSSEY trials will continue in a double blinded fashion through 12, 18 and 24 months thus creating substantive data exposure in terms of patient years. Specifically the double-blinded exposure active drug in our Phase III ODYSSEY program excluding ODYSSEY outcome will total approximately 5,000 patient years.

This patient exposure will allow for robust characterization of the safety and efficacy of alirocumab prior to the outcome study. Our program studies treatment with every other week and monthly dosing regimens with the ability to titrate dosing which will allow healthcare providers to tailor therapy to suit individual patient needs.

The ODYSSEY program is studying treatment with alirocumab in several key patients populations including the first study when patients were confirmed to be statin tolerant, those with heterozygous familial hypercholesterolemia where we are studying the largest cohort of such patients as well as those hypercholesterolemia patients with poorly controlled LDL cholesterol despite treatment with current standard of care, which are typically statins. Our studies have been designed to offer important insights in patient populations with high unmet needs.

For example our statin tolerance study also includes the statin exposure component designed to further enhance our understanding of this population and ensure that we have appropriately characterized these patients as truly statin intolerant. We look forward to reporting results to these trials starting in mid-2014.

Turning to Sarilumab our IL-6 receptor antibody, which is in late stage development in rheumatoid arthritis, we reported positive pipeline data from the Phase II MOBILITY study in the fourth quarter of 2013. This study met all three co-primary endpoints, namely, one an improvement in the symptoms of RA at 24 weeks as measured by the HR20 score.

Second an inhibition in the progression of structural damage at week 52 as measured by radiography and three an improvement in physical function as measured by a changing baseline in the [Hack DI] score. Important patient receiving the higher 200 milligrams dose of Sailumab administered every other week showed a 90% reduction in the progression of joint damage as assessed by radiography.

In the MOBILITY trial there was a higher incidence of treatment emerging adverse events leading to withdrawal in the Sarilumab treatment groups compared to placebo and was 13.9% in 2 ml group, 12.9% in 150 ml and 4.7% in the placebo group. Infections were the most frequent reported adverse event and were reported with higher incidence in the Sarilumab group compared to placebo or in combination with methotrexate.

Among patients treated with Sarilumab a dose dependent decrease in mean cancers was observed serious infections were not associated with Grade 3 and Grad 4 neutropenia MOBILITY study. Increases in mean LDL cholesterol and transaminases were observed.

These Phase III findings were consistent with those expected from block data via IL-6 pathway. We believe Sarilumab have the potential to be a very competitive product profile with the flexibility of both low dose and high dose subcutaneous regimen couple with every other week dosing which could offer a good option for patients.

Despite the advanced that TNF-alpha have made in management of patients with RA, approximately 40% of patients are inadequately control as assessed by [HVR 20 and GAS 28 scores]. We believe that there is a significant need for new therapies for the treatment of RA.

We will be reporting full data from the MOBILITY study in an upcoming medical conference. There are also four more Phase III studies of Sarilumab in RA that are ongoing with expected read outs beginning in 2015.

Besides RA, we are also exploring Sarilumab in a Phase II trial in non-infectious Uveitis in the statin study. Turning to dupilumab.

We reviewed this IL-4 receptor alpha antibody as one of most exciting programs in our pipeline. Based on our clinical data so far locking both Interlupin 4 and Interlupin 13 has impressive effects in a variety of PH2 mediated diseases.

In recent years the independence of PH2 mediated disease such as arthritis and atopic dermatitis has increased significantly. Dupilumab is currently in clinical trials for asthma, atopic dermatitis and nasal polyposis.

In 2013 the Phase 2a study of dupilumab in asthma was named the clinical advancement of the year by Scripps and dupilumab is currently in Phase 2b in asthma. We will be presenting data Phase 2a study in atopic dermatitis at the upcoming meeting of the America Academy of Allergy, Asthma and Immunology also known as AAAAI and we expect to see Phase 2b study data in this indication in the second quarter of 2014.

We plan to initiate a Phase 3 trial in atopic dermatitis in 2014 as well. Though not life threatening, a atopic dermatitis can significantly impact the patient's quality of life.

It is estimated there are 2 million patients in the United States with moderate to severe atopic dermatitis. Dupilumab is also currently in a Phase 2 proof-of-concept trial in nasal polyposis.

I would now like to now spend a few minutes talking about our earlier pipeline and our recent R&D initiatives. In the past months there has been growing interest in the fields of immunotherapy and oncology.

We are keenly interested in this area and are exploring use of bio-specific antibody that target tumor antigen and the CD3 receptor on T-cells to harness the oncolytic properties of T-cells. Our first such bio-specific target CD-20 and CD-3 and is expected to enter the clinical later this year.

As Len mentioned we are now investing in tremendously expanding opportunities seen in genomic with launch of Regeneron Generic Center in our collaboration with Geisinger Health System. We intent to sequence and genotype a minimum of 1,000 consent patients volunteer samples in the next few years, making this one of the largest sequencing endeavors undertaken.

We believe with the state-of-the-art sequencing and informatics tools that are now available, our expertise in mass genomic and access to a broad sample of the identified patient records and samples from patients volunteers we're extremely well positioned to validate the relationship between genetics and human disease. Our goal is to turn human DNA sequence into medically actionable information.

We hope this will transform the way that we conduct drug development from early target discovery through to our late-stage clinical trials. We hope this would help to our collaborators such as Geisinger transform their ability to deliver better healthcare to their patients in a more timely and cost efficient manner.

With that, let me now turn the call over to Bob Terifay who will provide further details on the EYLEA commercial landscape.

Thank you George and good morning everyone. In the United States as Len mentioned earlier, EYLEA or intravitreal aflibercept injection net sales in the fourth quarter of 2013 were $403 million and full year 2013 EYLEA net sales were slightly over $1.4 billion.

As we described at a recent investor continue, when we first disclose our 2013 U.S. EYLEA net sales results, the fourth quarter sales based on slowdown for Thanksgiving and Christmas holidays but were also helped by modest inventory build at the end of the year.

Now I will provide more detail on the market dynamics. We will be sharing with you some qualitative data from our market research survey that was independently conducted in the fourth quarter.

As before this data come from physician-based questionnaires, in this case from 200 representative physicians. I will share with you with you the numbers that were reported in this survey.

But I would like to remind you that these numbers of physician reported estimates, based on our survey. Let me begin with the Wet AMD indication.

In the fourth quarter of 2013 according to our surveyed physicians we had approximately half of the branded anti-VEGF market. The branded anti-VEGF market continues to represent about half of the total wet AMD market.

Turning now to the second indication for which EYLEA is approved in the United States, Macular edema following central retinal vein occlusion our data from our market research survey suggest that during the fourth quarter EYLEA achieved over 40% share of the approved anti VEGF products indication. The branded market represents 45% of the overall macular edema following CRVO indication.

As Len and George mentioned earlier the FDA has accepted our supplemental BLA for EYLEA in diabetic macular edema or DME. And we've been granted a PDUFA date of August 18, 2014.

DME could be as a big market opportunity as wet AMD. It is estimated that approximately 600,000 patients are diagnosed annually with clinically significant diabetic macular edema in the United States.

Of these patients about 40% are treated with anti-VEGF therapy. We also expect our supplemental BLA for EYLEA for the treatment of macular edema following branched retinal vein occlusion or BRVO be filed in the United States before the end of first quarter 2014.

In 2014 we expect U.S. EYLEA net sales to be between $1.7 billion and $1.8 billion.

We anticipate continued net sales growth in the United States from a growing number of patients diagnosed with wet AMD increasing market share of Macular edema following CRVO and a potential launch in diabetic macular edema late August 2014. Please keep in mind that as Len mentioned given potential inventory normalization in the first half of the year and the potential DME approval in late August the growth in U.S.

EYLEA net sales may occur more towards the second half of 2014. Turning now to the ex-U.S.

EYLEA business where we split profits with Bayer HealthCare. Fourth quarter ex-U.S.

EYLEA net sales were $184 million. The strong fourth quarter growth is a function of continued ex-U.S.

rollout. EYLEA has approximately 40% to 50% of the market in wet AMD in Germany, Australia and Japan, and has recently launched in additional countries in Europe including the UK and France.

As of the end of 2013 EYLEA has received regulatory approval for the treatment of wet AMD in over 50 countries. EYLEA is also approved in the EU in macular edema following CRVO indication.

Through the remainder of the year we expect Bayer to embark on additional launches in both of these indications following regulatory and pricing approvals. Let's put the EYLEA opportunity outside the United States in to context.

Bayer HealthCare is still in the early stages of launch. Today EYLEA only accounts for about 17% of the overall branded ex-U.S.

anti-VEGF sales. There is a significant opportunity for continued growth outside of the United States.

Bayer has also submitted an application for marketing authorization in Europe for DME. With that let me turn the call over to our Chief Financial Officer, Bob Landry.

Thank you Bob and good morning to everyone. As Len mentioned in his opening remarks Regeneron experienced strong financial performance throughout 2013.

In the fourth quarter we earned $2.24 per diluted share from non-GAAP net income of 259 million and we earned $8.17 per diluted share from non-GAAP net income of $935 million for the full year. This represents growth in non-GAAP net EPS of 52% for the three months and 75% for the full year 2013 compared to the same period of 2012.

As a reminder non-GAAP EPS excludes non-cash share-based compensation expense, non-cash interest expense related to our senior convertible notes and non-cash income tax expense. In 2012 it excluded the release of the valuation allowance.

A full reconciliation of GAAP and non-GAAP earnings is set out in our earnings release. Total revenues were $610 million in the fourth quarter and $2.1 billion for the full year of 2013 which represented growth of 47% for the three months and 53% for the year ended December 31, 2013.

Net product sales of $406 million in the fourth quarter were comprised of $402 million of U.S. EYLEA net sales and $4 million of ARCALYST rilonacept net sales.

For the full year 2013 U.S. EYLEA net sales were $1.4 billion and ARCALYST net sales were $17 million.

As Bob mentioned fourth quarter U.S. EYLEA sales benefited from an increase in distributor inventory.

Specifically at the end of the fourth quarter 2013 U.S distributors held a little over two weeks of inventory which is higher than the typical range of one to two weeks that has been held by distributors. This increase in inventory may have been in part due to the tightening of commercial terms that went into effect on January 1, 2014.

So far this year inventory levels appear to be returning to the more customary one to two week range and if this continues it would impact sales in the first quarter of 2014. For 2014 we expect full year U.S.

EYLEA net sales to be in the range of $1.7 billion to $1.8 billion. This guidance includes the expected approval of EYLEA for DME in the third quarter of 2014 but does not include any change in the compounding environment.

Ex-U.S. EYLEA sales were a $184 million in the fourth quarter and $472 million for the full year 2013.

Product revenue from ex-U.S. EYLEA sales is recorded by Bayer HealthCare.

We recognized $44 million in the fourth quarter as our share of net profits from ex-U.S. EYLEA sales which was after repayment of $15 million in development expenses to Bayer HealthCare and $102 million for the full year 2013 after repayment of $58 million.

Bayer HealthCare collaboration revenue was $86 million for the fourth quarter and $220 million for the full year 2013. During the fourth quarter of 2013 Bayer HealthCare collaboration revenue included $25 million in milestone payments comprised of a $10 million milestone related to EYLEA approval in Japan for the treatment of macular edema following CRVO and one sales million payment of $15 million.

For the full year 2013 Bayer HealthCare collaboration revenue included a total of $70 million in substantive regulatory and sales milestone payments as compared to $25 million in 2012. Total Sanofi collaboration revenue was a $111 million for the fourth quarter and $430 million for the full year 2013.

Included in the Sanofi collaboration line are three key components, our share of losses in connection with ZALTRAP which was $8 million in the fourth quarter and $31 million for the full year, reimbursement of Regeneron incurred R&D expenses which was a $112 million in the fourth quarter and $459 million for the full year and amortization of upfront and other payments previously received from Sanofi. Global ZALTRAP net sales as reported by Sanofi were $20 million for the fourth quarter and $70 million for the full year 2013.

Turning to expenses non-GAAP R&D expenses were $234 million in the fourth quarter and $743 million for the full year 2013. If we net out R&D reimbursements from our collaborators and our R&D stock-based compensation from our GAAP R&D expense line item our net non-GAAP unreimbursed R&D was a $115 million for the fourth quarter and $263 million for the full year 2013 which is slightly higher than the top range of our guidance for 2013 of $250 million.

Please note that in our press release issued this morning we have included all the information required to calculate our unreimbursed non-GAAP R&D numbers. For 2014 we would like to reiterate our previously provided guidance of non-GAAP unreimbursed R&D to be in the range of $425 million to $475 million.

Our non-GAAP unreimbursed R&D spend is driven by three factors: Our obligation to pay for 20% of the Phase III Alirocumab and sarilumab clinical development expenses following the first positive Phase III results as reported in the fourth quarter 2013 for each of these antibodies and advancing un-partnered pipeline which now includes six antibodies, a variety of new technologies such as antibody drug conjugates and bio-specific antibodies in our recent proprietary R&D initiative such as those in the area of human genomics. Non-GAAP SG&A expense was $61 million for the fourth quarter and $249 million for the full year 2013.

We expect non-GAAP SG&A expense in 2014 to be in the range of $330 million to $380 million. This increase in 2014 is due to an increase in our contribution to independent co-pay foundations that assist qualified patients in satisfying their co-pay requirement and an increase in the branded prescription drug fee that we are assessed as part of the patient protection of Affordable Care Act.

As a reminder non-GAAP R&D and SG&A expenses excludes non-cash share-based compensation expenses. Non-GAAP cost of goods sold was $34 million in the fourth quarter and a $116 million for the full year 2013.

This translates into gross margin of approximately 92% of sales for the full year. As a reminder COGS includes royalty expenses in connection with our agreement with Genentech related to U.S.

EYLEA sales which we're obligated to pay until the second quarter of 2016. Cost of collaboration manufacturing was $14 million in the fourth quarter and $37 million for the full year 2013.

Turning now to taxes, at the current time we do not expect to pay significant cash taxes for at least mid-2015. As such we expect that our 2014 non-GAAP earnings will continue to exclude any significant income tax provision.

It is too early for us to provide specific cash tax guidance for 2015 at this time. Over the long term with the expansion of our international operations we expect to achieve a tax efficient operating model.

The foundation of this operating model will be the establishment of a new manufacturing facility in Ireland and the migration of certain intellectual property related to our ex-U.S. EYLEA franchise in our late stage antibody pipeline to Ireland.

We currently project that the benefits of our investment in our global operating model will begin to be reflected in our effective tax rate commencing in 2014. You will notice that on a GAAP basis the effective tax rate in the fourth quarter for our GAAP earnings was 51.1% and 40.5% for the full year 2013.

We expect our GAAP effective tax rate in 2014 to be similar to that experienced in the fourth quarter 2013. The increase in GAAP effective tax rate is a result of near term expenses incurred outside the U.S.

in connection with our expansion of our international operations. Our capital expenditures for the full year 2013 were $156 million which is significantly greater than our capital expenditures of $49 million in 2012 which is primarily driven by our expansion of leased facilities in Tarrytown, New York and our owned facilities in Rensselaer, New York.

We expect capital expenditures for 2014 to be $350 million to $425 million as we continue to invest in our Tarrytown and Rensselaer facilities and purchase and commence renovations on a new manufacturing facility in Limerick, Ireland. We ended 2013 with cash and marketable securities totaling approximately $1.1 billion compared to approximately $600 million at the end of 2012.

We also have trade accounts receivable of $787 million at the end of 2013. With that I'd now like to turn the call back over to Len.

Thanks Bob and thank you everybody else. 2014 is a promising year for us.

We believe that we have the key elements that are required for long term growth, deepening our existing franchise advancing our broad and active pipeline investing in new technologies such as new initiatives in human genomics and expanding our presence globally. With that I would now turn the call over to Michael.

Thank you, Len. That concludes our prepared remarks.

We'd now like to open the call for Q&A. As we'd like to give many people a chance to ask questions as possible we again request you to limit yourself to one question.

Our team will be available in the office after the call for follow up questions. Thank you and operator and if you could please open the call for questions.

Hi good morning everyone. I will start with a tax question you touched a bit on this but can you give us a bit more on what IP is actually overseas at this time and what IP you intend to take, is it just EYLEA or could it be more than that?

And then secondly when does this start to impacting tax and maybe you can give some high level thoughts on what statutory tax rates are and then what they would be with the amounts of things that you are planning to take overseas? Thanks.

Sure. Hi, this is Len.

As far as what intellectual property has been migrated we are not going to go into details of that, but I should say that it's not limited to EYLEA and it can be any and all and we are doing that as we view it as appropriate. As far as what the impact on the tax rate I think Bob said is that in 2017 it might began to have an impact but we are not going to get into the details unless Bob do you have anything further you want to add?

Yeah I'll just give you a little bit more color on as you would expect we do have kind of net operating loss carry-forwards going forward of approximately $460 million and then we obviously have federal and state credit tax credits forwards going forward of roughly $120 million. That will allow us not to pay significant tax cash tax through at least mid-2015.

I had said obviously this is subject to change based on various factors that may come about, but that's our current position today. And again as Len said we are kind of taking the right steps as you'd expect a company like us to take going forward and we won't get into specificities of these with regards to the migration of the IP but as Len said you can rest assured it's not just EYLEA and that coupled with kind of our new manufacturing facility that we're getting kind of in the ground in Ireland will allow us to get favorable tax rates beginning in kind of that 2017 year.

Right next question?

Good morning, guys thanks for taking my question. First I would like to ask you to elaborate your thought on the VISTA data because we saw the arterial and trauma and related events and also the death rate there picking up.

I was wondering if you could comment on the regulatory indication for that arm and then what you might see as the positioning in the competition in the DME landscape. And then secondly it sounds like you guys are seeing somewhat like steady stage market share for EYLEA in wet AMD market.

So I was wondering if you have any long-term strategy in growing share in that market.

First of all, that's two questions. Compound question which would you prefer to have answered.

We'll start with the DME -- we're not going to get into the details of our regulatory discussions but other than to say that we've made our submission, the FDA has filed the package and we are on track we think for PDUFA date based on our submissions in August of this year. In terms of the data we were very pleased with the data George do you want to add anything on that?

Yeah, as this is also very highly scrutinized area because of concerns about anti-VEGF agents with regard to systemic adverse events and the so called AT/PT events as well as deaths. And of course we found it very comforting that are systemic, serious systemic adverse events were similar between all groups as was the -- our serious adverse events declined by the AT/PT criteria.

And in terms of death it's very important to point out that the 2 milligram every other month group, which produced data virtually identical to that of the monthly group was numerically very similar to that of the laser control group, the monthly group did have numerically a higher number but that was not even normally significantly different from the laser control group. So overall we are continuing to wait for the second study but I think that in the field we're pretty comforted by this data.

All right just to emphasize what George is saying about this, the 2-8 in similar, for the 2-4 in terms of the efficacy that should not be under appreciated that's just exactly how those curves overlap in terms of efficacy between the alternate month group and the monthly group. Bob do you want to have comment about market share?

Yeah, so first of all I would remind you as we pointed out that despite the fact we launched several years after Lucentis we added even market share in wet AMD with Lucentis and we made $1.4 billion last year. So we're very encouraged with the performance of EYLEA.

Future growth will come primarily from new patients and we have implemented a number of strategies to try to pick up more new patients to the marketplace. I think the biggest challenge to growth for both us and Lucentis is the fact that despite the change in the compounding landscape there has been very little change in the use of Avastin in the marketplace.

And that's probably the major obstacle for both products at the current time. So I'll just say and I anticipate a question on the compounding our projections don't assume any significant change in the compounding environment.

That is not to say there might not be some of laws rewritten but and the FDA has said that there are no compounding exceptions that are applicable to biologics, the new lower of compounding does not grant these waivers to biologics but how the FDA will enforce that and whether that will change things is yet to be determined. We wait to see what the FDA will do.

Of course our long standing opinion has been we're in favor of choice. We think it's good that patients can choose, they can choose right now between three alternatives, be it Avastin, be it Lucentis and EYLEA we are interested in having choice is good but we would like to have only a single quality standard in terms of the manufacture and preparation of the product.

Next question, Michael.

Yeah, thanks. I was just wondering if you could maybe comment on so you've discussed it with FDA here you have got your -- I am sorry your PDUFA date -set.

Any updates on likelihood of a panel in front of that for DME?

Yeah I mean I think the FDA reserves the right to call a panel if they need one, we've had no indication to-date that there will be one, but it's not too late if they choose to but right now they haven't. I don't know if that's helpful but that's the way it works.

Okay. Thanks.

Great. You answered my compounding question, so I'll ask another which is on the human genomics effort, this is obviously a very big project and I am just wondering if there will be sort of any interim kind of announceable events where you give progress updates on anything that might be coming out of that or is this something that is going to go somewhat radio silence for years until a drug pops out of this program versus something we can expect updates on?

Yeah, maybe George can give you some perspective on that.

I think we are viewing a situation where the program can impact every aspect of everything that we do and I can tell you we've already had results that have impacted how we think about, how we design our programs and so forth. So this is the continuous data.

We will certainly be taking advantage of it in a continuous fashion of course we hope that there will be some huge breakthroughs that will also lead to important new therapeutics opportunities. And we also anticipate that there will be a lot of publishing going on continuously also not only from our selves but importantly from our collaborators such as Geisinger.

Could you expand on what you mean by you've already seen impact to some of your thinking around your programs. What are you referring to?

Yeah, it's probably a bit premature to get into those details, Jason. So but stay tuned this is an exciting area.

Thank you.

Okay.

Hi, guys thanks for taking my question. So maybe you could frame for us how to think about the data for the IL-4 IL-13 compound given that you are going to have a couple of data sets in the next six months.

Just what would be, what is the data set that we should be focused on and what are your thoughts on IL-4 in asthma? Thanks.

George?

Well, certainly very soon as we announced in the first quarter we will be getting data from our Phase IIB study in atopic dermatitis. We certainly hope that, that data will confirm and extend the data to-date and as we indicated we think that, that is a very large opportunity on itself and it's an earlier program in terms of moving towards the market and towards approval in asthma.

In terms of asthma obviously we are going to be doing the Phase IIb and we are going to be anticipating that data in terms of also confirming what we've seen to-date better establishing our dose relationship and going forward into the real cause.

Yeah, and just to be clear the data coming up at the Quad AI at the end of this month would be the Phase IIa data. And then as George indicated we will be additionally getting Phase IIb data perhaps later this quarter or the second quarter.

So lots going on in the atopic dermatitis area and the asthma Phase IIb program is very large study that's well underway in terms of enrollment. So this is a pretty exciting area for us.

Okay. Thanks.

Hi, thanks for taking my question. Maybe another on the pipeline front.

Was just wondering the EYLEA PDGF co-formulation trial, if you could give us any more insights on the design there, that will include EYLEA control arm, when we might get some data? And then maybe your thoughts on that target and given what we are seeing from the competition out there?

Thanks.

Well in terms of the target we've said many times that it's potentially interesting to combine PDGF and EYLEA. We also think it's potentially interesting and maybe more interesting to combine [inaudible] and EYLEA.

And I think other people can speak to their own data but we don't view this as a done deal just yet and I don't George you want to get into it that or not give anything on trial design.

I don't think we're going to be talking about the details of our trial design at this point. But as Len said we're very excited about the fact that we have the opportunity to combine both of these agents in terms of either the PDGF agent or the anti-agents in the same as intro-vitrial formulation as EYLEA which I think if either of these agents can walk for a substantive advantage I think that would be very attractive and convenient to patients for getting a single injection with both the agents in it.

Okay. Next question.

Hi this is Carter on for Jeff. Congrats on a good quarter.

A question related to the differentiation strategy for sarilumab do you think you can differentiate versus [actamer] strictly in the basis of the reduction of progression in joint damage, in case of pretty comparable --

I don't think it's appropriate for us to be doing any cross trial comparisons at this point if at all let's wait until we get our data and then I think the rheumatology community will be able to assess, I think as George indicated in his talk the fact that we have both two different dosing regimens that we've been able to demonstrate I think reasonable data with both may afford a nice choice given subcutaneously et cetera. By the way give regard to Geoff because this is fourth time in all that somebody stood in for him and we hope he's okay.

So I just wanted to add to that we think the field is far from knowing the best way to use biologics as you already heard there is a substantial number of patients who don’t respond best to TNS and I think that it's both an issue of the right trials being done and trial designs and so forth. The best get the best biologic to the best patients and I think that’s going to be important way of expanding the opportunity of anti-VEGF agents in general in this space.

Hi everybody and thanks for taking my question. I don't know how you are going to let me sneak in two questions because I know you might not answer the first one.

The first on just for Bob the DME market can you give us a sense how much of it is branded now versus sort of Avastin I am trying to get a sense how much is the [inaudible] and then if you don't mind I have a second one. I just don’t understand the biology for you guys may be for George and for Len, -- EYLEA sort of synergies versus PDGF and EYLEA synergy.

I am just trying to get a sense help us understand evaluate it little bit and why may be take - testing them separately and is there even an opportunity to test them all together as a triple, so plenty of questions in there?

So Yaron those are good questions we'll deal with both of them. First Bob can you comment on the -- so in terms of DME obviously for a number of years it was not an improved product so Avastin was the dominant player in the marketplace since Lucentis has launched they have rapidly penetrated the market.

But they are not at the same 50-50 split as in the wet AMD market it's more like 60% of Avastin 40% Lucentis from the survey data that we have. That said with the launch of Lucentis the anti-VEGF market in DME is growing so we're very encouraged that over time the DME market, as I said only right now only a portion is getting into anti-VEGF therapy.

But we expect that to change and especially when you look at the data which indicates patients really should not be receiving laser. If they get laser early on from what we saw in our year two data they never really catch up when they get anti-VEGF therapy.

So we believe there is a major opportunity for anti-VEGF therapy to be used earlier in the treatment of clinically significant DME. Okay.

So George you want to comment on relatively pre-clinical or whatever data if you have anything want to say that PDGS and Avastin and whether or not a combination makes any sense at all?

Well right now we view the pre-clinical data is actually stronger for ANG potent II. They both are acting predominantly on the blood vessels as opposed to PDGF which is acting on the smooth muscles.

So I guess theoretically there is some rationale a possibility of the three way combination but I think actually first we are going to have to -- as a field to convincingly demonstrate that either agent on top of anti-VEGF have a substantial advantage. Okay, next question.

Hi, thanks for taking the question and congrats on the progress. I just wanted to ask you about the market share trends here.

Can you speak to whether or not the market share in AMD and CRVO you report is representative of what you see if you limited that sample to just patients starting therapy or switching therapy? And then related as you think about launching into DME, is there anything you can learn from your experience here in AMD and RVO together with the dosing advantages and things like that could result in sort of the super market share gain in DME with EYLEA than you had in the previous indication, thanks.

Yeah, I would say we were pretty pleased with how quickly we got market share and I am not sure we have much to add on that. Bob do you want to come on that?

I think I don’t want to split it out our survey data for new versus switched patients, what I would say is that the majority of our business that is not on -- from continuing patients is now on new patients which is very encouraging. We’ve really got that pool of switched patients earlier on and now it’s we’re fighting it out to get new patients, by new patients our share in new patients is greater than our share in switches.

With regard to the DME growth I think that the opportunity is similar to what we saw in with wet AMD, there is a dissatisfied group of patients who will be switched and our real opportunity is to grow the market because quite frankly laser therapy is not appropriate and most patients were set with DME with central vision and we have to get that message out.

Right, obviously that bothers you post the approvals hopefully which is due in August of this year, okay.

Okay, next question.

Thanks a lot. I was wondering if you could talk about how you've designed your antibody against PDGF and what science supports going after the receptor versus the lag end and PDGF data versus other sub units.

Yeah, I think that's a little bit proprietary so we will have to duck that one. But we will give you another question if you have one.

Thanks, how about are you detecting any potential changes in the way physicians are reimbursed for inter vitrial injections.

Bob, do you have any comment or question about that?

Over the short term there are no anticipated changes but right now the whole health care environment is uncertain so I can't talk about what might happen in the future.

Okay, alright, great thanks.

Just two quick ones, just to make sure I understand your guidance for sales in the first quarter and your inventory comments, are you actually guiding for 1Q sales that are lower than the fourth quarter reported sales? And then to follow up on the DME comments, it sounds like that there will be because Roche has already kind of said that the market, if I am interpreting their comments correctly, is around $250 million in sales for DME in U.S.

now and I understand it is going to grow. Just sounds like there's overall there is a much smaller pool of patients to switch and we ought to be thinking about DME in the context of your comments.

I just want to make sure I understand if it's as big as AMD that’s really several years from now as opposed to in the next two years. Is that so?

Yeah, good question. The second question, in terms of the size of the DME markets you are correct.

We are launching into a market that is much less mature than the AMD market that is assuming we get approval we will launching into a market there is much less mature and therefore you are correct the number of actual switches available might be less. On the other hand our statement that the market could be as large really was a demographic statement relating to the number of patients with DME and the fact that the disease is often bilateral, the number of eyes that could be needed to be treated.

And the fact that a significant fraction of the market is now still laser at least according to the several meeting that I have been the people feel that laser user usage will be decreasing dramatically. In terms of we did not give specific sequential quarterly guidance but you are correct that we were suggesting that there could be a negative effect of on the first quarter of this year based on inventory realignment and plus the growth that we're predicting.

As I said it's tilted more towards the second half of the year especially post the approval of DME if it comes in August.

So Len I think one thing people need to keep in mind when they're looking at about $250 million number is that Lucentis is dosed at a 0.3 milligram dose in DME. So it's three-fifth of the price in AMD.

So you really can't compare AMD and DME numbers.

Okay, good questions, thanks. So we have time for couple of more I think?

Yes two more questions operator?

Yeah thanks for taking my question, good morning. Thanks for taking my question.

Just a question on Alirocumab, just wondering if you could give us an update on the outcomes trial how's it proceeding and then a related question what is the rate limiting factor to filing Alirocumab in U.S. is it that the outcomes trial has to have a certain percentage of enrollment or are you going to wait for the data from the trial.

Yeah so I think what we've said is that we're not going to comment on the specifics of our outcome data progress enrolment et cetera because it is a very competitive field. We have indicated that in terms of what's required for filing with the FDA wanted to see some progress and I am not going to get some specifics there but they were looking at progress in terms of the number of events and a blinded setting in one group or the other overall number of events.

So they knew the progress was -- so the progress of the trial was moving along but we don't want to get into the specifics there either because each program they have its own nuances. So hope that helps.

Next question.

Len, a question on your competitors they are working at more and frequent delivery of anti-VEGF could you may be share your thoughts on EYLEA and your efforts on -- around this, thanks.

Yeah we continue to look at alternative delivery systems whether it would be through genetic approaches whether it would be through delivery devices or what have you as far we know one of our competitors had something in Phase I for quite some time now and we haven't seen that progress. We don't know much more than you do.

And we don't have anything in the clinic as yet but I can assure you we look at this area very carefully and we'll see whether or not going to be this combination will make a difference as well. Okay, Michael?

Well, thank you -- thanks everybody we appreciate you participating in our fourth quarter call. We look forward to a great 2014 and with that I would like to close the call.