Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) Q4 2022 Earnings Call Transcript (Corrected)
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) Q4 2022 Earnings Call Transcript February 3, 2023
Operator: Welcome to the Regeneron Pharmaceuticals' Fourth Quarter 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 listen-only 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, Investor 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 Yancopoulos, 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 forecast and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement issues, intellectual property, pending litigation and other proceedings and competition. Each forward-looking statement is subject to risks and uncertainties that could cause actual results 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 10-K 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 Executive Officer, Len Schleifer. Len?
Leonard Schleifer: Good morning to everybody and for those of you experiencing the optic freeze, I hope you are staying warm. Our strong fourth quarter performance kept remarkable year of Regeneron, highlighted by significant achievements that better position 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 REGEN-COV and Ronapreve 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 aflibercept 8 milligrams in neovascular age-related macular degeneration or wet AMD 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 Libtayo in combination with chemotherapy as a first line treatment for advanced non-small cell lung cancer, making Libtayo only the second PD-1 or PD-L1 antibody approved in this setting, regardless of the patient's histology or PD-L1 expressions level. We also presented data from our rapidly advancing oncology pipeline, including fianlimab, our LAG-3 antibody in combination with Libtayo in advanced non-small cell lung cancer, odronextamab, our CD20xCD3 bispecific in B-cell lymphomas and linvoseltamab, our BCMA x CD3 bispecific in multiple myeloma. Finally, Dupixent was approved for prurigo nodularis in Europe. Briefly reflecting on 2022, we ended the year with three strategic imperatives 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 aflibercept 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 DUPIXENT leadership across a variety of Type 2 allergic diseases. 2022 turned out to be a phenomenal year with Dupixent global net product sales approaching $8.7 billion and growing 44% at constant currency. Despite new competition, Dupixent 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 Dupixent commercial opportunity, allowing the addressable population to increase by approximately 225,000 patients, bringing the total addressable population to over 7 million patients globally. And third, we wanted to make significant progress towards becoming a leader in immunooncology and 2022 turned out to be a crucial year. Key to this long-term goal was requiring Sanofi's share of global rights to Libtayo, 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 LAG-3 antibody, our costimulatory 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 U.S. launch for aflibercept 8 milligrams in late August given prescribers decade plus experience with EYLEA. And now with the 48-week data for aflibercept 8 milligrams, which demonstrated comparable efficacy and safety to EYLEA, but with longer treatment intervals, we believe that over time there is an opportunity for aflibercept 8 milligrams to become the new standard of care for wet AMD and DME. We expect Dupixent 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 biologic eligible population. Additionally, we look forward to the upcoming readout of our first Phase 3 study of Dupixent in COPD in the first half of this year. In oncology, we expect to continue rapidly advancing our pipeline. For our LAG-3 combination with Libtayo, we are moving forward with expansion beyond melanoma to include lung cancer and potentially other solid tumors. For our costimulatory bispecifics, in combination with Libtayo, we are continuing dose expansion in our Phase 1/2 PSMAxCD28 program in advanced prostate cancer.
We also expect to report additional Phase 1 data from our EGFRxCD28 program in solid tumors and to present initial clinical data for our MUC16xCD28 program in recurrent ovarian cancer. And within Heme-Onc, we anticipate second half regulatory submissions for odronextamab in follicular lymphoma and diffuse large B-cell lymphoma as well as limvolseltumab in 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 were unable to map 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 at 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.
George Yancopoulos: Thanks, 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 pivotal positive pivotal results for aflibercept 8 milligram in wet AMD and DME. These trials showed that aflibercept 8 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 EYLEA. These are truly unprecedented and potentially game-changing results who have not which have not been achieved using any other anti-VEGF agents. Moving to Dupixent, in 2022, Dupixent became the only biologic approved in atopic dermatitis, for infants as young as 6 months of age, the first treatment for prurigo nodularis 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 urticaria and shared positive Phase 3 data in children with the eosinophilic esophagitis. Dupixent is now approved in 5 related Type 2 allergic conditions. And our data shows 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, Dupixent has the potential to holistically address these patients multiple Type 2 conditions for which Dupixent is approved. While many other immunomodulators are associated with worrisome immunosuppression and carry boxed warnings, Dupixent's safety profile supports its approval in infants.
In 2023, we are looking forward to the initial results of BOREAS, the first Dupixent Phase 3 study in patients with chronic obstructive pulmonary disease, or COPD. Our Dupixent COPD Phase 3 studies have enrolled patients with elevated blood eosinophils aiming to select for patients with COPD driven by Type 2 inflammation. The BOREAS study passed an interim futility analysis in 2020, an encouraging event, which triggered the start of the replicate Phase 3 NOTUS study. We are looking forward to the readout of BOREAS with the primary endpoint of annualized rate of acute, moderate and severe COPD exacerbations expected in the first half of 23. Moving on to oncology, 2022 was an important year for our oncology programs. Libtayo was approved by the FDA in combination with chemotherapy in 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.
Libtayo is also emerging as an essential backbone of our oncology pipeline as several programs in combination with Libtayo are starting to yield encouraging data. First, I will discuss our LAG-3 antibody, fianlimab in combination with Libtayo, 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 dataset in non-small-cell lung cancer patients. These initial results suggest that the fianlimab Libtayo combination has a potentially best-in-class profile in melanoma. And we are advancing broad pivotal programs in both melanoma and lung cancer. Phase 3 studies in metastatic melanoma and adjuvant melanoma are already enrolling and we have plans to soon initiate another Phase 3 study in perioperative melanoma as well as Phase 2/3 studies in first-line advanced as well as perioperative non-small cell lung cancer.
Other notable Libtayo combination used from this year was the early but very encouraging data with our PSMA by CD28 costimulatory bispecific in advanced metastatic castrate-resistant prostate cancer, a tumor type considered immunologically cold with multiple recent Phase 3 failures demonstrating that prostate cancer is largely unresponsive to anti-PD-1 therapy in other end as well as in other types of chemo combination. In our proof-of-concept study of our PSMA by CD28 costimulatory bispecific, we observed first evidence that combining this new class of bispecifics with anti-PD-1 can confer profound responsiveness to tumors previously thought to be cold and unresponsive to anti-PD-1 therapy with 3 out of the 4 patients treated at the highest dose levels showing greater than 90% reductions within 6 weeks of initiating combination therapy in the prostate cancer biomarker PSA.
Following up on these early but exciting results, we are 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 bispecific in a solid tumor for ubamatamab, our MUC16xCD3 bispecific in development for advanced ovarian cancer. As a single agent in a Phase 1 dose escalation study in heavily pretreated recurrent ovarian cancer patients, we observed a 14% overall response rate [George Yancopoulos misread his script, the company sent a correction request to change "4%" to "14%"] with a 31% response rates in a small subset of patients with high MUC16 expressing tumors. We expect initial dose escalation data later this year for ubamatamab with Libtayo as well as for our MUC16xCD28 costimulatory bispecific with Libtayo in advanced ovarian cancer.
We also expect updated clinical data for our EGFRxCD28 costimulatory bispecific in combination with Libtayo in various solid tumors later this year. Moving on to our hematology oncology pipeline, at the American Society of Hematology, or ASH Annual Meeting, we presented new data from odronextamab, our CD20xCD3 bispecific as well as linvoseltamab our BCMAxCD3 bispecific. For odronextamab, we presented pivotal Phase 2 ELM-2 data. Odronextamab 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 odronextamab's safety profile while retaining efficacy similar to the prior dosing regimen.
In third or later in relapse or recurrent diffuse large B-cell lymphoma, odronextamab demonstrated efficacy regardless of prior CAR-T experience and a safety profile generally similar to that seen in follicular lymphoma. We are planning regulatory submissions in the second half of 2023 for both indications, which we hope will support potential accelerated approvals. In 2023, we anticipate initiating several Phase 3 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 CD22xCD28 costimulatory bispecific in combination with odronextamab in diffuse large B-cell lymphoma, which we hope could further add to the anticancer benefit for these patients.
For linvoseltamab, our BCMAxCD3 bispecific antibody we presented efficacy and safety data from our pivotal Phase 2 study in third or later line multiple myeloma at ASH. 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 3 study of linvoseltamab in second line multiple myeloma and are on track for a BLA submission in the second half of the year. As with odronextamab, we plan to initiate combination studies for linvoseltamab with costimulatory bispecifics in the near future. I'd also like to update some additional clinical programs. Our antibody blocking Factor XI 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 Alnylam and siRNA Therapeutics, we are planning a broad and multi-pronged approach to develop treatments for NASH, nonalcoholic steatohepatitis. We are initiating a Phase 2 study of ALN-HSD and 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 Genetics Center, including side B, which will potentially be the next NASH therapeutic candidate to enter the clinic. With regard to our collaboration with Alnylam for central nervous system targets, our initial dose escalation study is ongoing.
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Our collaboration with Intellia and CRISPR-based therapeutics, this is expected to progress further in 2023, building on continuing data readouts from the Phase 1 study of NTLA-2001 in transthyretin 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 the 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 U.S. FDA and the UK MHRA for DB-OTO, a virally delivered gene therapy designed to restore hearing to individuals with otoferlin-related hearing loss. A Phase 1/2 study in patients 2 years of age and younger is expected to initiate in the first half of 2023 with initial data from the first cohort 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 find 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 atop that has remained highly conserved, greater than 99.9% 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 driving the emergence of these resistant variants. We hope that by targeting this unique and conservative to outside of the RBD this antibody will also retain its activity in the face of future variance.
We plan to initiate clinical trials to test this antibody this year, and we are looking to develop it in both treatment and prophylactic setting. 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 Marion.
Marion McCourt: 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 EYLEA, 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% year-over-year growth and outpacing total growth of the anti-VEGF category for the year. At the end of the fourth quarter, EYLEA category share was approaching previous levels of approximately 50% of injections.
This followed the short-term shift earlier in the quarter where EYLEA 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 not-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 aflibercept 8-milligram launch. In summary, our retinal franchise leads the anti-VEGF category with EYLEA as the current standard of care and aflibercept 8-milligram, if approved, offering a differentiated clinical profile that can potentially shift the treatment paradigm.
Turning to Libtayo. Total fourth quarter global net sales were $169 million, growing 44% on a constant currency basis. In the U.S., 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, Libtayo continues to see steady growth in utilization in prescribers. Customer ordering has accelerated following the chemotherapy combination approval last November. We are working to maximize launch uptake by increasing depth and breath of prescribers. Early launch indicators are positive community and academic centers have welcomed Libtayo'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 U.S. alone for which Libtayo is an important treatment option. Outside the U.S., Libtayo 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 Libtayo and potential future medicines. Finally, turning to DUPIXENT, where in the fourth quarter, global net sales grew 42% on a constant currency basis to $2.45 billion. In the U.S., 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 eosinophilic esophagitis and prurigo nodularis.
DUPIXENT is well positioned to expand market penetration and drive revenue growth across established new and potential future indications in 2023 and beyond. Atopic dermatitis DUPIXENT's largest indication continues to rapidly grow across all age groups, firmly establishing DUPIXENT as the preferred systemic therapy for patients with moderate to severe disease. There continues to be rapid uptake in younger populations, further confirming DUPIXENT's differentiated efficacy and safety profile. We've also seen meaningful early adoption in prurigo nodularis where DUPIXENT is the only FDA-approved medicine for this debilitating disease. We expect ongoing uptake of DUPIXENT as the launch progresses and physicians identify patients need. DUPIXENT 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, DUPIXENT's differentiated clinical profile continues to drive uptake as the leading first-line treatment option in patients requiring systemic therapy. In the eosinophilic esophagitis, the launch is going exceptionally well finally offering physicians and their patients a treatment to effectively manage the underlying mechanism of the disease. Patients treated with DUPIXEN 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 U.S., DUPIXENT 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, DUPIXENT was approved for prurigo nodularis in December. And earlier this week, DUPIXENT was also approved for eosinophilic esophagitis. We expect these new indications to contribute to DUPIXENT'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 our in-line 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 Landry: Thank you, Marion. My comments 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 REGEN-COV and Ronapreve, fourth quarter total revenues increased 14% year-over-year to $3 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 ex-U.S. EYLEA 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 EYLEA net profits outside the U.S. Total Sanofi collaboration revenue was $836 million in the fourth quarter and grew 61%, driven by DUPIXENT.
Our share of profits from the commercialization of DUPIXENT and KEVZARA 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 ex-U.S. 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 ex-U.S. sales of Ronapreve 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 Libtayo transaction with Regeneron now recording all R&D expense for Libtayo and our full 50% share of antibody collaboration R&D spend for DUPIXENT and odronextamab, as well as additional costs incurred in connection with the company's late-stage pipeline and increasing clinical manufacturing activities and higher headcount-related costs.
SG&A expense increased 17% year-over-year to $579 million due to higher headcount and related costs, incremental costs to fully support the global commercialization of Libtayo and higher contributions to an independent not-for-profit patient systems 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 and no longer having to pay Sanofi for their share of U.S. Libtayo gross profits. Finally, fourth quarter 2022 effective tax rate was 11.3% compared to 12.6% in the prior year. Shifting now to cash flow and the balance sheet. For full year 2022, Regeneron generated $4.4 billion in free cash flow, favorably impacted by our first quarter 2022 payment from the U.S. government for sales REGEN-COV 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 Checkmate Pharmaceuticals in the exclusive worldwide rights to Libtayo. 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 and 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 billion to $2.2 billion. This primarily reflects the full year impact of global Life tile 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 billion to $3.925 billion. As George mentioned, we have numerous strategically important development programs advancing in 2023, including late-stage studies for our fianlimab, Libtayo combination in melanoma and lung cancer in confirmatory Phase 3 studies for odronextamab, both in FL and DLBCL and linvoseltamab in myeloma.
In addition, we continue to advance programs in our early pipeline across multiple therapeutic areas including with collaborators such as Alnylam and Intellia positioning us for long-term growth. This range also includes the full year impact of the Libtayo transaction, we are now recording all development expenses for Libtayo recognizing our full 50% share of development expenses for DUPIXENT in itepekimab. COCM is expected to be in the range of $720 million to $800 million, similar to 2022 reflecting the gradual phase-in of a new Regeneron developed manufacturing process for DUPIXENT that is designed to improve drug substance yields. We expect our capital expenditures in 2023 to be in the range of $825 million 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 are beyond absent a new transaction. In conclusion, Regeneron continued 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. Shannon, please go ahead and poll for questions.
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