What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-05 compared with 2020-05-05 · 317 added, 201 removed, 354 unchanged (59% of the section changed)

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Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate," variations of such words, and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words.

These statements concern, and these risks and uncertainties include, among others, the impact of SARS-CoV-2 (the virus that has caused the COVID-19 pandemic) on Regeneron's business and its employees, collaborators, suppliers, and other third parties on which Regeneron relies, Regeneron's and its collaborators’ ability to continue to conduct research and clinical programs, Regeneron's ability to manage its supply chain, net product sales of products marketed by Regeneron and/or its collaborators (collectively, "Regeneron’s Products"), and the global economy;

the nature, timing, and possible success and therapeutic applications of Regeneron's Products and our product candidates and research and clinical programs now underway or planned, including without limitation EYLEA ® (aflibercept) Injection, Dupixent ® (dupilumab) Injection, Libtayo ® (cemiplimab) Injection, Praluent ® (alirocumab) Injection, Kevzara ® (sarilumab) Injection, fasinumab, evinacumab, REGN-EB3, garetosmab, pozelimab, Regeneron's oncology programs (including its costimulatory bispecific portfolio), Regeneron's COVID-19 antibody

program and other earlier-stage programs, and the use of human genetics in Regeneron's research programs;

These statements concern, and these risks and uncertainties include, among others, the impact of SARS-CoV-2 (the virus that has caused the COVID-19 pandemic) on Regeneron's business and its employees, collaborators, and suppliers and other third parties on which Regeneron relies, Regeneron's and its collaborators’ ability to continue to conduct research and clinical programs, Regeneron's ability to manage its supply chain, net product sales of products marketed by Regeneron and/or its collaborators (collectively, "Regeneron’s Products"), and the global economy;

the nature, timing, and possible success and therapeutic applications of Regeneron's Products and our product candidates and research and clinical programs now underway or planned, including without limitation EYLEA ® (aflibercept) Injection, Dupixent ® (dupilumab) Injection, Libtayo ® (cemiplimab) Injection, Praluent ® (alirocumab) Injection, Kevzara ® (sarilumab) Injection, fasinumab, evinacumab, REGN-EB3, garetosmab, pozelimab, REGN-COV2, Regeneron's oncology programs (including its costimulatory bispecific portfolio), Regeneron's earlier-stage programs, and the use of human genetics in Regeneron's research programs;

the likelihood and timing of achieving any of our anticipated development milestones referenced in this report;

unforeseen safety issues resulting from the administration of Regeneron's Products and product candidates in patients, including serious complications or side effects in connection with the use of Regeneron's Products and product candidates in clinical trials;

the likelihood and timing of possible regulatory approval and commercial launch of our late-stage product candidates and new indications for Regeneron's Products, including without limitation EYLEA, Dupixent, Libtayo, Praluent, Kevzara, fasinumab, evinacumab, REGN-EB3, garetosmab, pozelimab, and REGN1979;

the extent to which the results from the research and development programs conducted by us or our collaborators may be replicated in other studies and lead to therapeutic applications;

safety issues resulting from the administration of Regeneron's Products and product candidates in patients, including serious complications or side effects in connection with the use of Regeneron's Products and product candidates in clinical trials;

the likelihood, timing, and scope of possible regulatory approval and commercial launch of our late-stage product candidates and new indications for Regeneron's Products, including without limitation EYLEA, Dupixent, Libtayo, Praluent, Kevzara, fasinumab, evinacumab, REGN-EB3, garetosmab, pozelimab, REGN-COV2, and REGN1979;

the extent to which the results from the research and development programs conducted by us and/or our collaborators may be replicated in other studies and/or lead to advancement of product candidates to clinical trials, therapeutic applications, or regulatory approval;

ongoing regulatory obligations and oversight impacting Regeneron's Products (such as EYLEA, Dupixent, Libtayo, Praluent, and Kevzara), research and clinical programs, and business, including those relating to patient privacy;

determinations by regulatory and administrative governmental authorities which may delay or restrict our ability to continue to develop or commercialize Regeneron's Products and product candidates;

competing drugs and product candidates that may be superior to Regeneron's Products and product candidates;

uncertainty of market acceptance and commercial success of Regeneron's Products and product candidates;

competing drugs and product candidates that may be superior to, or more cost effective than, Regeneron's Products and product candidates;

uncertainty of market acceptance and commercial success of Regeneron's Products and product candidates and the impact of studies (whether conducted by Regeneron or others and whether mandated or voluntary) on the commercial success of Regeneron's Products and product candidates;

our ability to manufacture and manage supply chains for multiple products and product candidates;

the ability of our collaborators, suppliers, or other third parties (as applicable) to perform manufacturing, filling, finishing, packaging, labeling, distribution, and other steps related to Regeneron's Products and product candidates;

coverage and reimbursement determinations by third-party payors, including Medicare and Medicaid;

the availability and extent of reimbursement of Regeneron’s Products from third-party payers, including private payer healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies, and government programs such as Medicare and Medicaid;

coverage and reimbursement determinations by such payers and new policies and procedures adopted by such payers;

unanticipated expenses;

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(or their respective affiliated companies, as applicable), to be cancelled or terminated without any further product success;

and risks associated with intellectual property of other parties and pending or future litigation relating thereto (including without limitation the patent litigation and other related proceedings relating to Dupixent and Praluent described further in Note 11 to our Condensed Consolidated Financial Statements included in this report), other litigation and other proceedings and governmental investigations relating to the Company and/or its operations (including without limitation those described in Note 11 to our Condensed Consolidated Financial Statements included in this report), the ultimate outcome of any such proceedings and investigations, and the impact any of the foregoing may have on our business, prospects, operating results, and financial condition.

and risks associated with intellectual property of other parties and pending or future litigation relating thereto (including without limitation the patent litigation and other related proceedings relating to EYLEA, Dupixent, and Praluent described further in Note 12 to our Condensed Consolidated Financial Statements included in this report), other litigation and other proceedings and government investigations relating to the Company and/or its operations (including without limitation those described in Note 12 to our Condensed Consolidated Financial Statements included in this report), the ultimate outcome of any such proceedings and investigations, and the impact any of the foregoing may have on our business, prospects, operating results, and financial condition.

These statements are made based on management's current beliefs and judgment, and the reader is cautioned not to rely on any such statements.

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Three Months Ended

June 30, Six Months Ended

(In millions, except per share data) 2020 2019 *

Revenues $ 1,952.0 $ 1,577.8 $ 3,780.2 $ 2,950.4

Net income $ 897.3 $ 193.1 $ 1,521.9 $ 654.2

Net income per share - diluted $ 7.61 $ 1.68 $ 13.03 $ 5.69

* Certain revisions have been made to the previously reported March 31, 2019 revenues.

* Certain revisions have been made to the previously reported June 30, 2019 revenues.

See Note 1 to our Condensed Consolidated Financial Statements for further details.

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We currently have seven products that have received marketing approval, which are currently marketed by us, Bayer, and/or Sanofi:

Disease Area (1)

Product Disease Area (1)

EU Japan ROW (6)

EYLEA (aflibercept) Injection (2)

Neovascular age-related macular degeneration ("wet AMD")

Diabetic macular edema ("DME")

Macular edema following retinal vein occlusion ("RVO"), which includes macular edema following central retinal vein occlusion ("CRVO") and macular edema following branch retinal vein occlusion ("BRVO")

Myopic choroidal neovascularization ("mCNV")

Diabetic retinopathy

Neovascular glaucoma ("NVG")

- Neovascular age-related macular degeneration ("wet AMD") a a a a

- Diabetic macular edema ("DME") a a a a

- Macular edema following retinal vein occlusion ("RVO"), which includes macular edema following central retinal vein occlusion ("CRVO") and macular edema following branch retinal vein occlusion ("BRVO") a a a a

- Myopic choroidal neovascularization ("mCNV") a a a

- Diabetic retinopathy a

- Neovascular glaucoma ("NVG") a

Dupixent (dupilumab) Injection (3)

- Atopic dermatitis (in adults and adolescents) (7)

Asthma (in adults and adolescents)

Chronic rhinosinusitis with nasal polyposis ("CRSwNP")

- Atopic dermatitis (in pediatrics 6–11 years of age) a

- Asthma (in adults and adolescents) a a a a

- Chronic rhinosinusitis with nasal polyposis ("CRSwNP") a a a a

Libtayo (cemiplimab) Injection (3)(4)

Metastatic or locally advanced cutaneous squamous cell carcinoma ("CSCC")

- Metastatic or locally advanced cutaneous squamous cell carcinoma ("CSCC") a a a

Praluent (alirocumab) Injection (5)

LDL-lowering in heterozygous familial hypercholesterolemia ("HeFH") or clinical atherosclerotic cardiovascular disease ("ASCVD") (in adults)

Cardiovascular risk reduction in patients with established cardiovascular disease

- LDL-lowering in heterozygous familial hypercholesterolemia ("HeFH") or clinical atherosclerotic cardiovascular disease ("ASCVD") (in adults) a a (9)

- Cardiovascular risk reduction in patients with established cardiovascular disease a a a

Kevzara (sarilumab) Solution for Subcutaneous Injection (3)

Rheumatoid arthritis ("RA") (in adults)

- Rheumatoid arthritis ("RA") (in adults) a a a a

ARCALYST ® (rilonacept) Injection for Subcutaneous Use

Cryopyrin-Associated Periodic Syndromes ("CAPS"), including Familial Cold Auto-inflammatory Syndrome ("FCAS") and Muckle-Wells Syndrome ("MWS")

- Cryopyrin-Associated Periodic Syndromes ("CAPS"), including Familial Cold Auto-inflammatory Syndrome ("FCAS") and Muckle-Wells Syndrome ("MWS") a

ZALTRAP ® (ziv-aflibercept) Injection for Intravenous Infusion (8)

Metastatic colorectal cancer ("mCRC")

- Metastatic colorectal cancer ("mCRC") a a a a

(1) Refer to label information in each territory for specific indication

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(4) Marketed as Libtayo (cemiplimab-rwlc) Injection in the United States

(5) Pursuant to a 2015 amended and restated ZALTRAP agreement, Sanofi is solely responsible for the development and commercialization of ZALTRAP, and Sanofi pays us a percentage of aggregate net product sales of ZALTRAP

(5) In collaboration with Sanofi prior to April 2020.

Effective April 2020, the Company is solely responsible for the development and commercialization of Praluent in the United States, and Sanofi is solely responsible for the development and commercialization of Praluent outside of the United States.

Pursuant to the April 2020 agreement, Sanofi pays us a royalty on net product sales of Praluent outside the United States.

Refer to "Collaboration and License Agreements" section below for further details.

(6) Rest of world.

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(7) Approval in Japan is for adults and adolescents 15 years of age and older

(8) In collaboration with Sanofi prior to April 2020.

Pursuant to the April 2020 agreement, Sanofi will pay us a percentage of aggregate net product sales of Praluent outside the United States.

Refer to "Collaboration Agreements" section below for further details.

(8) Pursuant to a 2015 amended and restated ZALTRAP agreement, Sanofi is solely responsible for the development and commercialization of ZALTRAP, and Sanofi pays us a percentage of aggregate net product sales of ZALTRAP

(9) No longer marketed by Sanofi in Japan due to injunction (see Note 12 to our Condensed Consolidated Financial Statements for further details)

Net Product Sales of Regeneron-Discovered Products

Three Months Ended

(In millions)

(Total Sales)

Net product sales recorded by Regeneron

Net product sales recorded by Sanofi (1) :

(1) Bayer records net product sales of EYLEA outside the United States, and Sanofi records net product sales of Libtayo outside the United States and global net product sales of Dupixent, Kevzara, and ZALTRAP.

Historically, Sanofi also recorded global net product sales of Praluent;

effective April 1, 2020, the Company is solely responsible for the development and commercialization of Praluent in the United States and will record net product sales of Praluent in the United States.

Refer to "Marketed Products" section above and "Collaboration Agreements" section below for further details.

Net Product Sales Recorded by Regeneron Three Months Ended

2020 2019 % Change

ROW Total U.S.

ROW Total (Total Sales)

$ 1,113.7 $ 641.0 $ 1,754.7 $ 1,160.3 $ 715.3 $ 1,875.6 (6 %)

$ 770.4 $ 174.6 $ 945.0 $ 454.7 $ 102.6 $ 557.3 70 %

$ 63.3 $ 16.7 $ 80.0 $ 40.8 — $ 40.8 96 %

$ 47.2 $ 39.4 $ 86.6 $ 26.5 $ 47.2 $ 73.7 18 %

Kevzara (b) $ 36.5 $ 31.8 $ 68.3 $ 34.2 $ 24.3 $ 58.5 17 %

ZALTRAP (b) $ 1.7 $ 25.0 $ 26.7 $ 1.3 $ 25.3 $ 26.6 — %

ARCALYST U.S.

$ 2.7 — $ 2.7 $ 4.2 — $ 4.2 (36 %)

Net Product Sales Recorded by Regeneron Six Months Ended

2020 2019 % Change

ROW Total U.S.

ROW Total (Total Sales)

$ 2,285.7 $ 1,322.7 $ 3,608.4 $ 2,234.4 $ 1,384.7 $ 3,619.1 — %

Dupixent (b) $ 1,449.4 $ 350.8 $ 1,800.2 $ 757.7 $ 173.3 $ 931.0 93 %

$ 125.0 $ 29.8 $ 154.8 $ 67.6 — $ 67.6 129 %

$ 82.3 $ 84.1 $ 166.4 $ 49.4 $ 88.2 $ 137.6 21 %

Kevzara (b) $ 71.8 $ 56.6 $ 128.4 $ 54.9 $ 37.3 $ 92.2 39 %

ZALTRAP (b) $ 3.2 $ 51.5 $ 54.7 $ 1.8 $ 49.3 $ 51.1 7 %

ARCALYST U.S.

$ 5.7 — $ 5.7 $ 7.7 — $ 7.7 (26 %)

(a) Regeneron records net product sales of EYLEA in the United States.

Bayer records net product sales of EYLEA outside the United States.

The Company records its share of profits/losses in connection with sales of EYLEA outside the United States.

(b) Regeneron records net product sales of Libtayo in the United States.

Sanofi records net product sales of Libtayo outside the United States and global net product sales of Dupixent, Kevzara, and ZALTRAP.

The Company records its share of profits/losses in connection with (i) sales of Libtayo outside the United States, and (ii) global sales of Dupixent and Kevzara.

Sanofi pays the Company a percentage of net sales of ZALTRAP.

Also effective April 1, 2020, Sanofi records net product sales of Praluent outside the United States and pays the Company a royalty on such sales.

Previously, Sanofi recorded global net product sales of Praluent and the Company recorded its share of profits/losses in connection with such sales.

Refer to "Marketed Products" section above and "Collaboration and License Agreements - Sanofi" section below for further details.

Programs in Clinical Development

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The planning, execution, and results of our clinical programs are significant factors that can affect our operating and financial results.

Additionally, the COVID-19 pandemic and the restrictions adopted around the globe to reduce the spread of the disease have impacted and will continue to impact our clinical development programs.

At this time, we do not expect a significant adverse effect on clinical trials that completed enrollment prior to the outbreak of COVID-19, and are working to ensure patient safety, provide sufficient supply of product candidates for the studies, and oversee trial management.

New clinical studies and recruitment of new patients into open studies are being impacted by both availability of healthcare resources and local or regional restrictions.

While we are currently expecting an approximately one quarter delay for these new or ongoing studies as a result of COVID-19 and have adjusted the timelines in the table below accordingly, our expectations may need to adjust as the facts evolve;

the ultimate delays will depend, among other factors, on the extent of the pandemic in the areas with study sites for our clinical programs.

We and our collaborators conduct clinical trials in multiple countries across the world.

The COVID-19 pandemic and the restrictions adopted around the globe to reduce the spread of the disease have impacted and will continue to impact our clinical development programs.

We continue to evaluate the impact of the COVID-19 pandemic on an individual trial basis and are

working to ensure patient safety, provide sufficient supply of product candidates for the studies, and oversee trial management.

At this time, we expect fully enrolled clinical studies to remain generally on track.

While the COVID-19 pandemic and the resulting constraints on healthcare resources and local or regional restrictions initially adversely impacted new clinical studies and recruitment of new patients into open studies, enrollment in both new and ongoing clinical studies started to resume as regions relaxed their restrictions and healthcare resources started to become more available for non-COVID-19 activities.

However, there has been a resurgence of COVID-19 cases in many regions across the world, and any resurgence of COVID-19 cases in the regions in which we or our collaborators conduct clinical trials may require our expectations relating to the impacted studies to adjust.

The ultimate impact (including possible delays) resulting from the COVID-19 pandemic will depend, among other factors, on the extent of the pandemic in the areas with study sites for our or our collaborators' clinical programs.

It is possible that the COVID-19 pandemic may cause clinical disruptions beyond those we have described.

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"Risk Factors" for a description of these and other risks and uncertainties that may affect our clinical programs, including those related to the COVID-19 pandemic.

Clinical Program

Regulatory Review (i)

2020 Events to Date

Select Upcoming Milestones (k)

Clinical Program Phase 1 Phase 2 Phase 3 Regulatory Review (i)

2020 Events to Date Select Upcoming Milestones (k)

Ophthalmology

High-dose formulation in wet AMD

Retinopathy of prematurity

- High-dose formulation in wet AMD - Retinopathy of prematurity

- Approved by Ministry of Health, Labour and Welfare ("MHLW") for NVG in Japan

Initiate Phase 3 studies of a high-dose formulation of aflibercept in wet AMD and DME (mid-2020)

- High-dose formulation in wet AMD - Pre-filled syringe approved by European Commission ("EC")

- High-dose formulation in DME

Immunology & Inflammatory Diseases

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Antibody to IL-4R alpha subunit

Grass allergy

Atopic dermatitis in pediatrics (6 months–5 years of age) (Phase 2/3) (d)

Atopic dermatitis in pediatrics (6–11 years of age) (U.S.

Approved by MHLW for CRSwNP in Japan

FDA decision (target action date of May 26, 2020) on supplemental Biologics License Application ("sBLA") and European Commission ("EC") decision (second half 2020) for expanded atopic dermatitis indication in pediatric patients (6–11 years of age)

Peanut allergy

Asthma in pediatrics (6–11 years of age)

Auto-injector for 300 mg dose (U.S.

- Peanut allergy - Atopic dermatitis in pediatrics (6 months–5 years of age) (Phase 2/3) (d)

- Atopic dermatitis in pediatrics (6–11 years of age) (EU) (d)

- Approved by FDA for expanded atopic dermatitis indication in pediatrics (6–11 years of age) - EC decision for expanded atopic dermatitis indication in pediatrics (6–11 years of age) (second half 2020)

- Asthma in pediatrics (6–11 years of age) - Auto-injector for 300 mg dose (Japan) - Approved by National Medical Products Administration ("NMPA") in China for adults with atopic dermatitis - Report results from Phase 3 study for atopic dermatitis in pediatric patients (6 months–5 years of age) (2022)

- Eosinophilic esophagitis

Chronic obstructive pulmonary disease ("COPD")

Report results from Phase 3 study for atopic dermatitis in pediatric patients (6 months–5 years of age) (2022)

("EoE") (c) in adults, adolescents, and pediatrics

- Approved by MHLW for CRSwNP in Japan - Report results from Phase 3 study for asthma in pediatric patients (6–11 years of age) (second half 2020)

- Chronic obstructive pulmonary disease ("COPD") - Approved by FDA for 300 mg auto-injector

- Bullous pemphigoid (Phase 2/3) (c)

- Reported that Part A of the Phase 3 trial in adult and adolescent patients with EoE met both co-primary endpoints - Resubmit supplemental Biologics License Application ("sBLA") for 200 mg auto-injector (second half 2020)

- Chronic spontaneous urticaria

Report results from Phase 3 study for asthma in pediatric patients (6–11 years of age) (second half 2020)

Prurigo nodularis

FDA decision on application for 300 mg auto-injector (target action date of June 20, 2020)

Resubmit sBLA for 200 mg auto-injector (second half 2020)

Present results from Phase 2a trial in grass allergy at medical meeting (mid-2020)

Report results from Phase 2 study in peanut allergy (first half 2021)

- Prurigo nodularis - Presented results from Phase 2a trial in grass allergy - Report results from Phase 2 study in peanut allergy (second half 2020)

- Initiated second confirmatory Phase 3 trial in COPD - Report results from Part B of the Phase 3 study in adults and adolescents with EoE (2022)

Clinical Program (continued)

Regulatory Review (i)

2020 Events to Date

Select Upcoming Milestones (k)

Initiate Phase 3 study in pediatric patients with EOE (second half 2020)

Report results from Phase 2 portion of Phase 2/3 study in EOE (mid-2020)

Initiate Phase 3 studies in hand and foot atopic dermatitis and allergic bronchopulmonary aspergillosis ("ABPA") (second half 2020)

Phase 1 Phase 2 Phase 3 Regulatory Review (i)

2020 Events to Date Select Upcoming Milestones (k)

- Allergic bronchopulmonary aspergillosis ("ABPA") - Initiate Phase 3 study in hand and foot atopic dermatitis (second half 2020)

Kevzara (sarilumab) (a)

Antibody to IL-6R

Polyarticular-course juvenile idiopathic arthritis ("pcJIA")

Polymyalgia rheumatica ("PMR")

Reported preliminary results from Phase 2 portion of Phase 2/3 U.S.

study in hospitalized COVID-19 patients and that Phase 3 portion of the study will continue to enroll "critical" patients only

Report results from Phase 3 U.S.

study in COVID-19 (June 2020)

- Polyarticular-course juvenile idiopathic arthritis ("pcJIA") - Hospitalized "critical" COVID-19 patients (outside the United States) - Stopped Phase 3 U.S.

trial in COVID-19 patients due to study not meeting its primary and key secondary endpoints - Report results from Phase 3 study outside the United States in COVID-19 (second half 2020)

- Systemic juvenile idiopathic arthritis ("sJIA")

Giant cell arteritis ("GCA")

Hospitalized "critical" COVID-19 patients

- Discontinued clinical development in polymyalgia rheumatica and giant cell arteritis

Antibody to IL-33.

Studied as monotherapy and in combination with Dupixent.

Discontinued further clinical development in atopic dermatitis due to lack of efficacy

- Asthma - Discontinued further clinical development in atopic dermatitis due to lack of efficacy

REGN1908-1909 (f)

Multi-antibody therapy to Feld1

Report results from Phase 2 study in cat allergic asthmatics (first half 2020)

- Cat allergy - Report results from Phase 2 study in cat allergic asthmatics (first half 2021)

REGN5713-5714-5715

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Antibody to PD-1

Solid tumors and advanced hematologic malignancies

Basal cell carcinoma ("BCC")

(potentially pivotal study)

First-line non-small cell lung cancer ("NSCLC"), monotherapy

Reported that Phase 3 monotherapy trial in first-line NSCLC met its primary endpoint.

The Independent Data Monitoring Committee recommended stopping the trial early due to highly significant improvement in overall survival.

Submit sBLA and Marketing Authorization Application ("MAA") for monotherapy NSCLC (second half 2020)

- Solid tumors and advanced hematologic malignancies - Basal cell carcinoma ("BCC")

(potentially pivotal study) - First-line non-small cell lung cancer ("NSCLC"), monotherapy - Reported that Phase 3 monotherapy trial in first-line NSCLC met its primary endpoint.

The Independent Data Monitoring Committee ("IDMC") recommended stopping the trial early due to highly significant improvement in overall survival.

- Submit sBLA and Marketing Authorization Application ("MAA") for first-line NSCLC, monotherapy (second half 2020)

Clinical Program (continued)

Regulatory Review (i)

2020 Events to Date

Select Upcoming Milestones (k)

Phase 1 Phase 2 Phase 3 Regulatory Review (i)

2020 Events to Date Select Upcoming Milestones (k)

- Metastatic or locally advanced CSCC (d)

First-line NSCLC, chemotherapy combination

Reported that Phase 2 study in BCC demonstrated clinically-meaningful and durable responses

Complete patient enrollment in Phase 3 first-line NSCLC chemotherapy combination study (second half 2020)

- First-line NSCLC, chemotherapy combination - Reported that Phase 2 study in BCC demonstrated clinically-meaningful and durable responses - Complete patient enrollment in Phase 3 first-line NSCLC chemotherapy combination study (second half 2020)

- Neoadjuvant CSCC

- Second-line cervical cancer (e)

- Submit sBLA and MAA for BCC (second half 2020)

- Adjuvant CSCC

Submit sBLA and MAA in BCC (second half 2020)

- Interim analysis from Phase 3 study in cervical cancer (2021)

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- Certain B-cell malignancies (c)

B-cell non-Hodgkin lymphoma ("B-NHL") (potentially pivotal study)

Expanded potentially pivotal Phase 2 program with different subtypes of NHL

Report updated results from initial study in certain B-cell malignancies (mid-2020)

- B-cell non-Hodgkin lymphoma ("B-NHL") (potentially pivotal study) - Expanded potentially pivotal Phase 2 program with different subtypes of NHL - Report updated results from initial study in certain B-cell malignancies (second half 2020)

Bispecific antibody targeting BCMA and CD3

Multiple myeloma

Report updated results from initial study in multiple myeloma (second half 2020)

- Multiple myeloma - Report updated results from initial study in multiple myeloma (second half 2020)

Bispecific antibody targeting BCMA and CD3

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Clinical Program (continued)

Regulatory Review (i)

2020 Events to Date

Select Upcoming Milestones (k)

Phase 1 Phase 2 Phase 3 Regulatory Review (i)

2020 Events to Date Select Upcoming Milestones (k)

Cardiovascular/Metabolic Diseases

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- Homozygous familial hypercholesterolemia ("HoFH") (c) in adults and pediatrics

Reported results from Phase 3 study in adult patients with HoFH

Submit sBLA for HoFH in adults (mid-2020)

- HoFH in adults (U.S.) (c)

- Reported results from Phase 3 study in adult patients with HoFH - FDA decision on sBLA for HoFH in adults (target action date of April 4, 2021)

- HeFH in pediatrics

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Antibody to ANGPTL3

Refractory hypercholesterolemia (both HeFH and non-FH)

HoFH (U.S.) (c)(d)

Complete rolling BLA submission for HoFH (mid-2020)

Submit MAA for HoFH (second half 2020)

- Refractory hypercholesterolemia (both HeFH and non-FH) - HoFH (U.S.) (c)(d)

- Submitted MAA for HoFH - FDA decision on BLA and EC decision on MAA for HoFH (first half 2021)

- Severe hypertriglyceridemia

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- Fibrodysplasia ossificans progressiva

("FOP") (c)(e) (potentially pivotal study)

Reported results from Phase 2 study in FOP

Submit first regulatory application (in the United States) (second half 2020)

Initiate Phase 3 study for FOP in pediatrics (2021)

("FOP") (c)(d)(e) (potentially pivotal study)

- Reported results from Phase 2 study in FOP - Submit BLA and MAA for FOP (first half 2021)

- Initiate Phase 3 study for FOP in pediatrics (first half 2021)

Agonist antibody to leptin receptor ("LEPR")

- Generalized lipodystrophy (e)

Fasinumab (b)(f) (REGN475)

Fasinumab (l)(f) (REGN475)

Antibody to NGF

- Osteoarthritis pain of the knee or hip (e)

Report results from Phase 3 studies in osteoarthritis pain of the knee or hip (mid-2020)

- Reported top-line results from Phase 3 trials in osteoarthritis pain of the knee or hip - Report additional longer-term safety results from Phase 3 studies in osteoarthritis pain of the knee or hip (first half 2021)

Antibody to GFRα3

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Clinical Program (continued)

Regulatory Review (i)

2020 Events to Date

Select Upcoming Milestones (k)

Phase 1 Phase 2 Phase 3 Regulatory Review (i)

2020 Events to Date Select Upcoming Milestones (k)

Infectious Diseases

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- FDA decision on BLA for Ebola (target action date of October 25, 2020)

REGN-COV2 (g) (REGN10933-10987)

Multi-antibody therapy to SARS-CoV-2 virus

- COVID-19 multi-dose safety study - COVID-19 treatment (Phase 2/3) - COVID-19 prevention (m)

- Two papers published in Science describing REGN-COV2

- Report initial virology and biomarker results from treatment trials (September 2020)

For purposes of the table above, a program is classified in Phase 1, 2, or 3 clinical development after recruiting for the corresponding study or studies has commenced

(a) In collaboration with Sanofi

(b) In collaboration with Teva and Mitsubishi Tanabe Pharma

(b) In collaboration with Bayer outside of the United States

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(g) We and the Biomedical Advanced Research Development Authority ("BARDA") of the U.S.

Department of Health and Human Services ("HHS") are parties to agreements whereby HHS provides certain funding to support research, development, and manufacturing of these antibodies.

Department of Health and Human Services ("HHS") are parties to agreements whereby HHS provides certain funding to support research and development of these antibodies.

(h) Studied as monotherapy and in combination with other antibodies and treatments

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Refer to "Collaboration Agreements" section below for further details.

Refer to "Collaboration and License Agreements" section below for further details.

(k) As described in the section preceding the table above and Part II, Item 1A.

"Risk Factors," development timelines may be further subject to change as a result of the impact of the COVID-19 pandemic

(l) In collaboration with Teva and Mitsubishi Tanabe Pharma

(m) Conducted jointly with the National Institute of Allergy and Infectious Diseases ("NIAID"), part of the National Institutes of Health ("NIH")

Our ability to generate profits and to generate positive cash flow from operations over the next several years depends significantly on the continued success in commercializing EYLEA and Dupixent.

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We cannot predict whether or when new products or new indications for marketed products will receive regulatory approval or, if any such approval is received, whether we will be able to successfully commercialize such product(s) and whether or when they may become profitable.

Other Research Programs

Additional Information - Clinical Development Programs

We are using our end-to-end antibody technologies to discover and develop brand new therapeutic antibodies for COVID-19.

The Company is advancing REGN-COV2, a novel investigational antibody "cocktail" treatment designed to prevent and treat infection from the SARS-CoV-2 virus.

In April, the Company moved its leading neutralizing antibodies into pre-clinical and clinical-scale cell production lines and plans to have supply available for clinical studies, which are expected to begin in June 2020.

The Company is also working to rapidly scale-up manufacturing.

The Company also announced an expansion of its Other Transaction Agreement ("OTA") with BARDA, pursuant to which HHS is obligated to fund 80% of our costs incurred for certain research and development activities related to COVID-19 treatments.

The use of our two-antibody "cocktail" is intended to diminish the risk of viral escape by effectively binding to the virus's critical spike protein in two separate, non-overlapping locations.

In April 2020, the Company moved its leading neutralizing antibodies into pre-clinical and clinical-scale cell production lines, and in June 2020, initiated its first clinical trial of REGN-COV2.

Following a positive review from the IDMC of REGN-COV2 Phase 1 safety results in an initial cohort, the program advanced to late-stage clinical trials (see table above for further details).

The REGN-COV2 clinical program consists of the following separate study populations:

hospitalized COVID-19 patients, non-hospitalized symptomatic COVID-19 patients, and uninfected people with close exposure to a COVID-19 patient (such as the patient's housemate).

In August 2020, we announced that two Phase 3 trials, FACT OA1 and FACT OA2, achieved the co-primary endpoints for fasinumab 1 mg monthly, demonstrating significant improvements in pain and physical function over placebo at week 16 and week 24, respectively.

Fasinumab 1 mg monthly also showed nominally significant benefits in physical function in both trials and pain in one trial, when compared to the maximum FDA-approved prescription doses of non-steroidal anti-inflammatory drugs for osteoarthritis.

The FACT OA1 trial included an additional treatment arm, fasinumab 1 mg every two months, which showed numerical benefit over placebo, but did not reach statistical significance.

In initial safety analyses from the Phase 3 trials, there was an increase in arthropathies reported with fasinumab.

In a sub-group of patients from one Phase 3 long-term safety trial, there was an increase in joint replacement with fasinumab 1 mg monthly treatment during the off-drug follow-up period, although this increase was not seen in the other trials to date.

Additional longer-term safety data from the ongoing trials are being collected and are expected to be reported early next year.

Agreements with BARDA

In the first quarter of 2020, the Company announced an expansion of its Other Transaction Agreement ("OTA") with BARDA, pursuant to which HHS is obligated to fund 80% of our costs incurred for certain research and development activities related to COVID-19 treatments.

In July 2020, the Company also announced an agreement with entities acting at the direction of BARDA and the U.S.

Department of Defense to manufacture and deliver filled and finished REGN-COV2 to the U.S.

This agreement could result in payments to the Company of up to $450.2 million in the aggregate for bulk manufacturing of the drug substance, beginning in the summer of 2020, as well as fill/finish and storage activities starting in the third quarter of 2020.

In 2015, we and BARDA entered into an agreement pursuant to which HHS provides certain funding to develop, test, and manufacture a treatment for Ebola virus infection.

In July 2020, HHS exercised its option under the existing agreement to provide up to $344.6 million of additional funding for the manufacture and supply of REGN-EB3.

Contingent upon FDA approval of REGN-EB3, we expect to deliver an established number of treatment doses over the course of approximately six years.

Collaboration and License Agreements

As of March 31, 2020, we were collaborating with Sanofi on the global development and commercialization of Dupixent, Praluent, Kevzara, and REGN3500 (the "Antibody Collaboration").

In May 2020, a secondary offering of 13,014,646 shares of our Common Stock held by Sanofi was completed.

We also purchased 9,806,805 shares directly from Sanofi for an aggregate purchase amount of $5 billion.

Pursuant to the offering and purchase, Sanofi disposed of all of its shares of common stock in Regeneron, other than 400,000 shares that it retained as of the closing of these transactions (which Sanofi has used, and may continue to use, for the funding of certain development costs as described below).

As of June 30, 2020, we were collaborating with Sanofi on the global development and commercialization of Dupixent, Kevzara, and REGN3500 (the "Antibody Collaboration").

See discussion below for updates related to the development and commercialization of Praluent effective April 1, 2020.

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In 2018, we and Sanofi entered into a letter agreement (the "Letter Agreement") amending the LCA in connection with, among other matters, the allocation of additional funds to certain proposed activities relating to dupilumab and REGN3500 (collectively, the "Dupilumab/REGN3500 Eligible Investments").

Pursuant to the Letter Agreement, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to the Dupilumab/REGN3500 Eligible Investments for the quarterly periods commencing on January 1, 2018 and ending on September 30, 2020 by selling up to an aggregate of 600,000 shares (of which 410,661 currently remains available) of our Common Stock directly or indirectly owned by Sanofi.

Refer to the " Immuno-Oncology " section below for further details regarding the Letter Agreement.

Pursuant to the Letter Agreement, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to the Dupilumab/REGN3500 Eligible Investments for the quarterly periods commencing on January 1, 2018 and ending on September 30, 2020 by selling certain shares of our Common Stock directly or indirectly owned by Sanofi.

Refer to the " Immuno-Oncology " section below for further details regarding the Letter Agreement and this funding arrangement.

Under our collaboration agreement, Sanofi records product sales for commercialized products, and Regeneron has the right to co-commercialize such products on a country-by-country basis.

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The Company will be entitled to receive the first sales milestone payment from Sanofi, in the amount of $50.0 million, when such sales outside the United States exceed $1.0 billion.

In April 2020, the Company and Sanofi entered into an amendment to the LCA in connection with, among other things, the removal of Praluent from the LCA such that (i) effective April 1, 2020, the LCA no longer governs the development, manufacture, or commercialization of Praluent and (ii) the quarterly period ended March 31, 2020 is the last quarter for which Sanofi and the Company will share profits and losses for Praluent under the LCA.

The parties also entered into a Praluent Cross License & Commercialization Agreement (the "Praluent Agreement") pursuant to which, effective April 1, 2020, the Company, at its sole cost, is solely responsible for the development and commercialization of Praluent in the United States, and Sanofi, at its sole cost, is solely responsible for the development and commercialization of Praluent outside of the United States.

In April 2020, the Company and Sanofi entered into an amendment to the LCA in connection with, among other things, the removal of Praluent from the LCA such that (i) effective April 1, 2020, the LCA no longer governs the development, manufacture, or commercialization of Praluent and (ii) the quarterly period ended March 31, 2020 was the last quarter for which Sanofi and the Company will share profits and losses for Praluent under the LCA.

The parties also entered into a Praluent

Cross License & Commercialization Agreement (the "Praluent Agreement") pursuant to which, effective April 1, 2020, the Company, at its sole cost, is solely responsible for the development and commercialization of Praluent in the United States, and Sanofi, at its sole cost, is solely responsible for the development and commercialization of Praluent outside of the United States.

Under the Praluent Agreement, Sanofi will pay the Company a 5% royalty on Sanofi’s net product sales of Praluent outside the United States until March 31, 2032.

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In December 2019, the Company and Sanofi also announced their intent to restructure their antibody collaboration for Kevzara.

The companies continue to assess potential terms of this restructuring in light of the recently launched clinical programs evaluating Kevzara in patients hospitalized with COVID-19 infection.

The companies continue to assess potential terms of this restructuring in light of the clinical program evaluating Kevzara in patients hospitalized with COVID-19 infection.

Immuno-Oncology

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Pursuant to the Amended IO Discovery Agreement, the parties agreed that (i) if Sanofi exercises its option with respect to a BCMAxCD3 Program antibody, Sanofi will lead the development and global commercialization of such BCMAxCD3 Program antibody;

and (ii) if Sanofi exercises its option with

respect to a MUC16xCD3 Program antibody, (x) we will lead the development of such MUC16xCD3 Program antibody and commercialization of such MUC16xCD3 Program antibody within the United States and (y) Sanofi will lead the commercialization of such MUC16xCD3 Program antibody outside of the United States.

and (ii) if Sanofi exercises its option with respect to a MUC16xCD3 Program antibody, (x) we will lead the development of such MUC16xCD3 Program antibody and commercialization of such MUC16xCD3 Program antibody within the United States and (y) Sanofi will lead the commercialization of such MUC16xCD3 Program antibody outside of the United States.

In connection with the IO License and Collaboration Agreement, Sanofi made a $375.0 million non-refundable up-front payment to us.

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We have principal control over the development of Libtayo, and the parties share equally, on an ongoing basis, development and commercialization expenses for Libtayo.

Under the Letter Agreement, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligation with respect to Libtayo development costs for the quarterly periods commencing on October 1, 2017 and ending on September 30, 2020 by selling up to an aggregate of 800,000 shares (of which 330,253 currently remains available) of our Common Stock directly or indirectly owned by Sanofi.

Under the Letter Agreement, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligation with respect to Libtayo development costs for the quarterly periods commencing on October 1, 2017 and ending on September 30, 2020 by selling certain shares of our Common Stock directly or indirectly owned by Sanofi.

As of June 30, 2020, 279,766 shares of our Common Stock remained eligible for sale by Sanofi in order to satisfy its funding obligations with respect to Libtayo development costs and/or, as noted above, Dupilumab/REGN3500 Eligible Investments.

If Sanofi desires to sell shares of our Common Stock during the term of the Letter Agreement to satisfy a portion or all of its funding obligations for the Libtayo development and/or, as noted above, Dupilumab/REGN3500 Eligible Investments, we may elect to purchase, in whole or in part, such shares from Sanofi.

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In connection with the agreement, Teva made a $250.0 million non-refundable up-front payment.

We lead global development activities, and the parties will share equally, on an ongoing basis, development costs under a global development plan.

As of March 31, 2020 , we had earned an aggregate of $120.0 million of development milestones from Teva and we are entitled to receive up to an aggregate of $340.0 million in additional development milestones and up to an aggregate of $1.890 billion in contingent payments upon achievement of specified annual net sales amounts.

We lead global development activities, and the parties share equally, on an ongoing basis, development costs under a global development plan.

As of June 30, 2020, we had earned an aggregate of $120.0 million of development milestones from Teva and we are entitled to receive up to an aggregate of $340.0 million in additional development milestones and up to an aggregate of $1.890 billion in contingent payments upon achievement of specified annual net sales amounts.

We are responsible for the manufacture and supply of fasinumab globally.

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In April 2020, we entered into an agreement with Zai Lab Limited to develop and commercialize REGN1979 in mainland China, Hong Kong, Taiwan, and Macau (the "Zai Territories").

In connection with the agreement, Zai is obligated to make a $30.0 million non-refundable up-front payment.

In connection with the agreement, Zai made a $30.0 million non-refundable up-front payment to the Company.

We will continue to lead global development activities for REGN1979, and Zai will be responsible for funding a portion of the global development costs for certain clinical trials.

We are responsible for the manufacture and supply of clinical and commercial supplies of REGN1979 to Zai.

We are responsible for the manufacture and supply of clinical and commercial product of REGN1979 to Zai.

If REGN1979 is commercialized in the Zai Territories, we will supply the product to Zai at a tiered purchase price, which is calculated as a percentage of net sales of the product (subject to adjustment in certain circumstances), and are eligible to receive up to $160.0 million in additional regulatory and sales milestone payments.

In 2016, we entered into a license and collaboration agreement with Intellia Therapeutics, Inc.

to advance CRISPR/Cas9 gene-editing technology for in vivo therapeutic development.

In May 2020, we expanded our existing collaboration with Intellia Therapeutics, Inc.

to provide us with rights to develop products for additional in vivo CRISPR/Cas9-based therapeutic targets and for the companies to jointly develop potential products for the treatment of hemophilia A and B.

In addition, we also received non-exclusive rights to independently develop and commercialize ex vivo gene edited products.

In connection with the agreement, we made a $70.0 million up-front payment and purchased 925,218 shares of Intellia common stock for an aggregate purchase price of $30.0 million.

The amount paid in excess of the fair market value of the shares purchased , or $15.0 million, was recorded to Research and development expense.

Corporate Information

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Results of Operations

Three Months Ended March 31, 2020 and 2019

Certain revisions have been made to the previously reported March 31, 2019 amounts below in connection with changing the presentation of certain amounts earned from collaborators;

Three and Six Months Ended June 30, 2020 and 2019

Certain revisions have been made to the previously reported June 30, 2019 amounts below in connection with changing the presentation of certain amounts earned from collaborators;

see Note 1 to our Condensed Consolidated Financial Statements for further details.

Three Months Ended

June 30, Six Months Ended

(In millions, except per share data) 2020 2019 2020 2019

Revenues $ 1,952.0 $ 1,577.8 $ 3,780.2 $ 2,950.4

Operating expenses 1,295.6 1,262.2 2,423.7 2,154.8

Income from operations 656.4 315.6 1,356.5 795.6

Other (expense) income, net

Other income (expense), net 262.5 (90.9) 231.0 (24.8)

Income before income taxes 918.9 224.7 1,587.5 770.8

Income tax expense 21.6 31.6 65.6 116.6

Net income $ 897.3 $ 193.1 $ 1,521.9 $ 654.2

Net income per share - diluted $ 7.61 $ 1.68 $ 13.03 $ 5.69

Three Months Ended

(In millions)

June 30, Six Months Ended

(In millions) 2020 2019 $ Change *

2020 2019 $ Change *

Net product sales in the United States:

EYLEA $ 1,113.7 $ 1,160.3 $ (46.6) $ 2,285.7 $ 2,234.4 $ 51.3

Libtayo 63.3 40.8 22.5 125.0 67.6 57.4

Praluent 47.2 *

ARCALYST 2.7 4.2 (1.5) 5.7 7.7 (2.0)

Sanofi and Bayer collaboration revenue:

Sanofi 269.1 75.8 193.3 516.0 57.8 458.2

Bayer 244.2 277.2 (33.0) 525.6 541.2 (15.6)

Other revenue 211.8 19.5 192.3 275.0 41.7 233.3

Total revenues $ 1,952.0 $ 1,577.8 $ 374.2 $ 3,780.2 $ 2,950.4 $ 829.8

* Net product sales of Praluent in the United States were recorded by Sanofi prior to April 1, 2020

Net Product Sales

Net product sales of EYLEA in the United States increased for the three months ended March 31, 2020 , compared to the same period in 2019 , due to higher sales volume, partly offset by an increase in sales-related deductions primarily due to higher rebates and discounts.

The Company continues to monitor the potential impact of the COVID-19 pandemic on product sales.

For the three months ended March 31, 2020, the impact of shelter-in-place and social distancing orders, physicians' office closures, and delays in the treatment of patients following the COVID-19 pandemic on our net product sales of EYLEA was limited.

In the month of April 2020, overall U.S.

EYLEA demand was lower compared to the same period of 2019.

In addition to other potential impacts of the COVID-19 pandemic on net product sales, the Company expects to see continued adverse impact on new patient starts for all products while social distancing guidelines remain in place.

Effective April 1, 2020, the Company is solely responsible for the development and commercialization of Praluent in the United States and will record net product sales of Praluent in the United States.

Refer to "Collaboration Agreements - Collaborations with Sanofi - Antibody " section above for further details.

Net product sales of EYLEA in the United States decreased for the three months ended June 30, 2020, compared to the same period in 2019, due to lower sales volume primarily attributable to the COVID-19 pandemic and an increase in sales-related deductions primarily due to higher discounts.

Net product sales of EYLEA in the United States increased for the six months ended June 30, 2020, compared to the same period in 2019, due to higher sales volume partly offset by an increase in sales-related deductions, primarily due to higher rebates and discounts, as well as the impact of the COVID-19 pandemic.

EYLEA demand was lower in April 2020 compared to the same period of 2019.

While we observed an increase in U.S.

EYLEA demand during the remainder of the second quarter of 2020 relative to April 2020, we are unable to predict whether there will be additional adverse impact on net product sales if shelter-in-place and social distancing orders are reintroduced or imposed in additional geographies.

Effective April 1, 2020, the Company is solely responsible for the development and commercialization of Praluent in the United States and records net product sales of Praluent in the United States.

Refer to "Collaboration and License Agreements - Sanofi - Antibody " section above for further details.

Sanofi Collaboration Revenue

Three Months Ended

June 30, Six Months Ended

(In millions) 2020 2019 2020 2019

Regeneron's share of profits (losses) in connection with commercialization of antibodies

Regeneron's share of profits in connection with commercialization of antibodies

$ 171.9 $ 38.8 $ 342.8 $ 11.0

Reimbursement for manufacturing of commercial supplies (1)

100.6 43.9 180.7 58.4

Total Antibody 272.5 82.7 523.5 69.4

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Regeneron's share of losses in connection with commercialization of Libtayo outside the United States

(6.4) (6.9) (12.6) (11.6)

Reimbursement for manufacturing of commercial supplies (1)

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(1) The corresponding costs incurred by us in connection with such production is recorded within Cost of collaboration and contract manufacturing.

During the three months ended March 31, 2020 , the change in our share of profits (losses) in connection with commercialization of antibodies, compared to the same period in 2019, was primarily driven by higher Dupixent profits.

Sanofi provides us with an estimate of our share of the profits or losses from commercialization of antibodies for the most recent fiscal quarter;

these estimates are reconciled to actual results in the subsequent fiscal quarter, and our portion of the profits or losses is adjusted accordingly, as necessary.

During the three and six months ended June 30, 2020, the change in our share of profits in connection with commercialization of antibodies, compared to the same period in 2019, was primarily driven by higher Dupixent profits as well as our new agreement with Sanofi under which, effective April 1, 2020, we are no longer sharing in losses with Sanofi in connection with the commercialization of Praluent (see further information below).

The increase in reimbursements for manufacturing of commercial supplies is primarily driven by higher Dupixent sales, as revenue recognition for such cost reimbursements is deferred until the product is sold by Sanofi to third-party customers.

Regeneron's share of profits (losses) in connection with the commercialization of Dupixent, Praluent, and Kevzara is summarized below:

Regeneron's share of profits in connection with the commercialization of Dupixent, Praluent (through March 31, 2020), and Kevzara is summarized below:

Three Months Ended

June 30, Six Months Ended

(In millions) 2020 2019 2020 2019

Dupixent, Praluent, and Kevzara net product sales (1)

Regeneron's share of collaboration profits (losses)

$ 1,013.3 $ 689.5 $ 2,008.4 $ 1,160.8

Regeneron's share of collaboration profits

$ 191.4 $ 43.0 $ 384.4 $ 15.2

Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation

Regeneron's share of profits (losses) in connection with commercialization of antibodies

19.5 4.2 41.6 4.2

Regeneron's share of profits in connection with commercialization of antibodies

$ 171.9 $ 38.8 $ 342.8 $ 11.0

Regeneron's share of collaboration profits as a percentage of Dupixent, Praluent, and Kevzara net product sales (1)

* Global net product sales of Dupixent, Praluent, and Kevzara are recorded by Sanofi

** Percentage not meaningful

The quarterly period ended March 31, 2020 is the last quarter for which Sanofi and the Company will share profits and losses for Praluent.

As described above under "Collaboration Agreements - Collaborations with Sanofi - Antibody ", effective April 1, 2020, the Company is solely responsible for the development and commercialization of Praluent in the United States.

17 % 6 % 17 % 1 %

(1) Global net product sales of Dupixent and Kevzara are recorded by Sanofi.

The quarter ended March 31, 2020 was the last quarter for which Sanofi and the Company shared profits and losses in connection with Sanofi's global net sales and the related commercialization of Praluent (see further details below);

therefore, the quarter ended March 31, 2020 was the last quarter for which net product sales of Praluent were included in the table above.

As described above under "Collaboration and License Agreements - Sanofi - Antibody ", effective April 1, 2020, the Company is solely responsible for the development and commercialization of Praluent in the United States.

Under the new agreement, Sanofi is solely responsible for the development and commercialization of Praluent outside of the United States, and will pay the Company a 5% royalty on Sanofi’s net product sales of Praluent outside the United States.

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Three Months Ended

June 30, Six Months Ended

(In millions) 2020 2019 2020 2019

Regeneron's net profit in connection with commercialization of EYLEA outside the United States

$ 230.9 $ 269.0 $ 484.7 $ 518.3

Reimbursement for manufacturing of commercial supplies (1)

13.3 8.2 40.9 22.9

Total Bayer collaboration revenue $ 244.2 $ 277.2 $ 525.6 $ 541.2

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Three Months Ended

June 30, Six Months Ended

(In millions) 2020 2019 2020 2019

EYLEA net product sales outside the United States

$ 641.0 $ 715.3 $ 1,322.7 $ 1,384.7

Regeneron's share of collaboration profit from sales outside the United States

$ 245.3 $ 282.9 $ 513.5 $ 546.3

Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation

(14.4) (13.9) (28.8) (28.0)

Regeneron's net profit in connection with commercialization of EYLEA outside the United States

$ 230.9 $ 269.0 $ 484.7 $ 518.3

Regeneron's net profit as a percentage of EYLEA net product sales outside the United States

36 % 38 % 37 % 37 %

Bayer records net product sales of EYLEA outside the United States.

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Other Revenue

Other revenue includes, but is not limited to:

recognition of revenue in connection with our agreements with BARDA related to REGN-EB3 for the treatment of Ebola and antibodies for the treatment of COVID-19;

Sanofi's reimbursement for manufacturing commercial supplies of ZALTRAP and a percentage of aggregate net product sales of ZALTRAP under the terms of the Amended ZALTRAP Agreement;

royalties on worldwide sales of Ilaris ® (canakinumab) under the terms of a 2009 agreement with Novartis.

The royalty rates in the agreement start at 4% and reach 15% when annual sales exceed $1.5 billion, and we are entitled to royalties until Novartis ceases sale of products subject to royalty;

recognition of revenue in connection with sequencing of samples by the Regeneron Genetics Center ® ("RGC") for its customers.

Other revenue increased during the three and six months ended June 30, 2020, compared to the same periods of 2019, primarily due to:

• recognition of revenue in connection with our agreements with BARDA related to funding of certain development activities for REGN-EB3 for the treatment of Ebola and antibodies for the treatment of COVID-19;

• $30.0 million up-front payment received from Zai Lab in connection with our collaboration agreement;

• effective April 1, 2020, Sanofi's reimbursement for manufacturing commercial supplies of Praluent and royalties of 5% on Sanofi’s net product sales of Praluent outside the United States.

Three Months Ended

(In millions, except headcount data)

June 30, Six Months Ended

(In millions, except headcount data) 2020 2019 $ Change 2020 2019 $ Change

Research and development (1)

$ 722.0 $ 885.5 $ (163.5) $ 1,305.9 $ 1,371.6 $ (65.7)

Selling, general, and administrative (1)

348.3 294.6 53.7 715.6 585.7 129.9

Cost of goods sold (2)

102.5 67.0 35.5 181.3 137.9 43.4

Cost of collaboration and contract manufacturing (3)

173.0 78.8 94.2 311.5 180.0 131.5

Other operating (income) expense, net (50.2) (63.7) 13.5 (90.6) (120.4) 29.8

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Average headcount

(1) Includes cost reimbursements from collaborators who are not deemed to be our customers

8,254 7,649 605 8,142 7,549 593

(1) Includes costs incurred as well as cost reimbursements from collaborators who are not deemed to be our customers

(2) Cost of goods sold includes costs in connection with producing commercial supplies for products that are sold by Regeneron in the United States ( i.e., for which we record net product sales) and any royalties we are obligated to pay on such sales, period costs for our Limerick manufacturing facility, and amounts we are obligated to pay to Sanofi for its share of Libtayo U.S.

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(3) Cost of collaboration and contract manufacturing includes costs we incur in connection with producing commercial drug supplies for collaborators and others

Operating expenses in the first quarter of 2020 and 2019 included a total of $105.8 million and $107.9 million , respectively, of non-cash compensation expense related to awards granted under our long-term incentive plans.

Operating expenses included a total of $103.5 million and $105.8 million for the three months ended June 30, 2020 and 2019, respectively, and $209.3 million and $213.7 million for the six months ended June 30, 2020 and 2019, respectively, of non-cash compensation expense related to equity awards granted under our long-term incentive plans.

Research and Development Expenses

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Three Months Ended

June 30, Six Months Ended

(In millions) 2020 2019 *

$ Change 2020 2019 *

Direct research and development expenses:

Fasinumab $ 43.2 $ 59.6 $ (16.4) $ 83.7 $ 109.7 $ (26.0)

Libtayo (cemiplimab) 35.4 34.4 1.0 71.4 78.4 (7.0)

Dupixent (dupilumab) 31.7 19.6 12.1 66.2 45.3 20.9

Praluent (alirocumab)

REGN-COV2 14.1 — 14.1 14.1 — 14.1

EYLEA 11.2 12.2 (1.0) 28.8 25.3 3.5

Evinacumab 8.8 8.4 0.4 18.8 15.0 3.8

Up-front payments related to license and collaboration agreements

85.0 400.0 (315.0) 85.0 400.0 (315.0)

Other product candidates in clinical development and other research programs

148.4 81.4 67.0 253.6 167.5 86.1

Total direct research and development expenses

377.8 615.6 (237.8) 621.6 841.2 (219.6)

Indirect research and development expenses:

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Lab supplies and other research and development costs

30.6 33.8 (3.2) 65.5 61.4 4.1

Occupancy and other operating costs 80.8 75.2 5.6 162.7 147.2 15.5

Total indirect research and development expenses

304.8 280.8 24.0 619.6 547.3 72.3

Clinical manufacturing costs

181.2 151.9 29.3 361.5 301.6 59.9

Reimbursement of research and development expenses by collaborators

(141.8) (162.8) 21.0 (296.8) (318.5) 21.7

Total research and development expenses

$ 722.0 $ 885.5 $ (163.5) $ 1,305.9 $ 1,371.6 $ (65.7)

* Certain prior year amounts have been reclassified to conform to the current year's presentation.

Research and development expenses included non-cash compensation expense of $56.7 million and $58.7 million in the first quarter of 2020 and 2019 , respectively.

Research and development expenses for the three and six months ended June 30, 2020 included $85.0 million in aggregate up-front payments made in connection with our collaboration agreement with Intellia (see "Collaboration and License Agreements - Intellia" above).

Direct research and development expenses in 2020 also include costs incurred in connection with Kevzara for the treatment of COVID-19 patients (included within "Other product candidates in clinical development and other research programs" in the table above).

Research and development expenses for the three and six months ended June 30, 2019 included a $400.0 million up-front payment to Alnylam.

Research and development expenses included non-cash compensation expense of $56.9 million and $59.3 million for the three months ended June 30, 2020 and 2019, respectively, and $113.6 million and $118.0 million for the six months ended June 30, 2020 and 2019, respectively.

There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development, uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes in the competitive landscape affecting a product candidate, and other risks and uncertainties described in Part II, Item 1A.

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Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased in the first quarter of 2020 , compared to the same period in 2019 , primarily due to higher headcount and headcount-related costs, an increase in commercialization-related expenses for EYLEA, additional accruals for loss contingencies associated with ongoing litigation, and higher contributions to independent not-for-profit patient assistance organizations.

Selling, general, and administrative expenses also included non-cash compensation expense of $40.3 million and $43.8 million in the first quarter of 2020 and 2019 , respectively.

Selling, general, and administrative expenses increased for the three and six months ended June 30, 2020, compared to the same periods in 2019, primarily due to higher headcount-related costs, additional accruals for loss contingencies associated with ongoing litigation, higher contributions to independent not-for-profit patient assistance organizations, and, effective April 1, 2020, no longer receiving Praluent-related cost reimbursements from Sanofi for Regeneron-incurred expenses.

Selling, general, and administrative expenses also increased for the six months ended June 30, 2020, compared to the same period in 2019, due to an increase in commercialization-related expenses for EYLEA.

Selling, general, and administrative expenses also included non-cash compensation expense of $38.2 million and $37.7 million for the three months ended June 30, 2020 and 2019, respectively, and $78.5 million and $81.5 million for the six months ended June 30, 2020 and 2019, respectively.

Cost of Collaboration and Contract Manufacturing

Cost of collaboration and contract manufacturing increased in the first quarter of 2020, compared to the same period in 2019 , primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent and manufacturing costs in connection with our BARDA Ebola agreement.

Cost of collaboration and contract manufacturing increased for the three and six months ended June 30, 2020, compared to the same periods in 2019, primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent, process validation costs in connection with manufacturing REGN-EB3 under our BARDA agreement, and recognition of costs in connection with manufacturing ex-U.S.

commercial supplies of Praluent for Sanofi under our new agreement (see "Collaboration and License Agreements - Sanofi - Antibody " above for further details).

Other Operating (Income) Expense

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Other Income (Expense)

Other income (expense), net, in the first quarter of 2020, compared to the same period in 2019 , was negatively impacted by the recognition of unrealized losses on equity securities.

Other income (expense), net, for the three and six months ended June 30, 2020, compared to the same periods in 2019, was positively impacted by the recognition of unrealized gains on equity securities.

Three Months Ended

June 30, Six Months Ended

(In millions, except effective tax rate) 2020 2019 2020 2019

Income tax expense

$ 21.6 $ 31.6 $ 65.6 $ 116.6

Effective tax rate

Our effective tax rate for the three months ended March 31, 2020 was positively impacted, compared to the U.S.

2.4 % 14.1 % 4.1 % 15.1 %

Our effective tax rate for the three and six months ended June 30, 2020 was positively impacted, compared to the U.S.

federal statutory rate, primarily by stock-based compensation, and, to a lesser extent, income earned in foreign jurisdictions with tax rates lower than the U.S.

federal statutory rate and federal tax credits for research activities.

Our effective tax rate for the three months ended March 31, 2019 was positively impacted, compared to the U.S.

federal statutory rate, primarily by the federal tax credits for research activities, stock-based compensation, the foreign-derived intangible income deduction, and income earned in foreign jurisdictions with tax rates lower than the U.S.

federal statutory rate.

Our effective tax rate for the three and six months ended June 30, 2019 was positively impacted, compared to the U.S.

federal statutory rate, primarily by income earned in foreign jurisdictions with tax rates lower than the U.S.

federal statutory rate, stock-based compensation, federal tax credits for research activities, and, to a lesser extent, the foreign-derived intangible income deduction, partly offset by the taxation of certain global intangible low-taxed income and the non-deductible Branded Prescription Drug Fee.

Liquidity and Capital Resources

Our financial condition is summarized as follows:

(In millions)

June 30, December 31,

(In millions) 2020 2019 $ Change

Financial assets:

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Marketable securities - noncurrent 2,587.6 3,256.8 (669.2)

$ 5,731.8 $ 6,471.1 $ (739.3)

Working capital:

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Current liabilities 3,702.4 2,096.6 1,605.8

As of March 31, 2020 , we also had borrowing availability of $750.0 million under a revolving credit facility.

Sources and Uses of Cash for the Three Months Ended March 31, 2020 and 2019

(In millions)

$ 4,157.8 $ 5,592.5 $ (1,434.7)

As of June 30, 2020, we also had borrowing availability of $750.0 million under a revolving credit facility.

Sources and Uses of Cash for the Six Months Ended June 30, 2020 and 2019

June 30, June 30,

(In millions) 2020 2019 $ Change

Cash flows provided by operating activities $ 1,641.4 $ 1,085.3 $ 556.1

Cash flows used in investing activities

Cash flows provided by financing activities

Cash flows provided by (used in) investing activities $ 1,010.2 $ (1,612.1) $ 2,622.3

Cash flows (used in) provided by financing activities $ (2,277.2) $ 104.6 $ (2,381.8)

Cash Flows from Operating Activities

Our net income for the six months ended June 30, 2020 included up-front payments of $85.0 million made to Intellia and a $30.0 million up-front payment received from Zai Lab pursuant to our collaboration agreements.

Our net income for the six months ended June 30, 2020 also included $171.3 million related to unrealized gains (net) on equity securities (included in other non-cash items).

Deferred taxes as of June 30, 2020 decreased by $118.0 million, compared to December 31, 2019, primarily due to non-cash compensation expense and unrealized gains (net) on equity securities as described above.

Cash Flows from Investing Activities

Capital expenditures in the first quarter of 2020 included costs associated with (i) the expansion of our manufacturing facilities in Rensselaer, New York and Limerick, Ireland, including construction of a fill/finish facility and related equipment, and (ii) laboratory expansion and renovations at our Tarrytown, New York facilities.

Sales of marketable securities during the six months ended June 30, 2020 included proceeds in connection with funding our stock repurchase from Sanofi (as described below).

Capital expenditures during the six months ended June 30, 2020 included costs associated with (i) the expansion of our manufacturing facilities in Rensselaer, New York and Limerick, Ireland, including construction of a fill/finish facility and related equipment, and (ii) laboratory expansion and renovations at our Tarrytown, New York facilities.

We expect to incur capital expenditures of $540 million to $590 million for the full year of 2020 primarily in connection with these projects.

Cash Flows from Financing Activities

Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $811.4 million in the first quarter of 2020 compared to $140.6 million in the first quarter of 2019.

During the first quarter of 2020, we paid an aggregate of $320.7 million to purchase shares of our Common Stock.

See further descriptions under " Share Repurchase Program " and " Sanofi Funding of Certain Development Costs " below.

During the six months ended June 30, 2020, we paid an aggregate of $5.4 billion to purchase shares of our Common Stock, a portion of which was funded with the proceeds from a $1.5 billion senior unsecured 364-day bridge loan facility.

See further descriptions under " Share Repurchase Program, " " Sanofi Funding of Certain Development Costs, " and " Dispositions of Regeneron Common Stock Held by Sanofi " below.

Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $2.2 billion during the six months ended June 30, 2020 compared to $155.1 million during the six months ended June 30, 2019.

Share Repurchase Program

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We plan to finance the share repurchase program with available cash.

During the first quarter of 2020 , we repurchased 719,167 shares of our Common Stock under the program and recorded the cost of the shares received, or $272.8 million , as Treasury Stock.

As of March 31, 2020 , the Company had $473.1 million which remained available for share repurchases under the program.

During the six months ended June 30, 2020, we repurchased 719,167 shares of our Common Stock under the program and recorded the cost of the shares received, or $272.8 million, as Treasury Stock.

As of June 30, 2020, the Company had $473.1 million which remained available for share repurchases under the program.

Sanofi Funding of Certain Development Costs

As described above in "Collaboration Agreements - Collaborations with Sanofi," effective January 7, 2018, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to Libtayo development and/or Dupilumab/REGN3500 Eligible Investments by selling up to an aggregate of 1,400,000 shares (of which 740,914 shares remain available to be sold as of March 31, 2020 ) of our Common Stock directly or indirectly owned by Sanofi.

During the first quarter of 2020 , Sanofi elected to sell, and we elected to purchase (by issuing a credit towards the amount owed by Sanofi), 43,627 shares of the Company's Common Stock to satisfy Sanofi's funding obligation related to Libtayo development costs.

Consequently, we recorded $21.4 million related to the shares received as Treasury Stock during the first quarter of 2020 .

In addition, during the first quarter of 2020 , Sanofi elected to sell, and we elected to purchase (in cash), 85,287 shares of the Company's Common Stock in connection with Sanofi's funding obligation for Dupilumab/REGN3500 Eligible Investments.

Consequently, we recorded the cost of the shares received, or $41.8 million , as Treasury Stock during the first quarter of 2020 .

As described above in "Collaboration and License Agreements - Sanofi," effective January 7, 2018, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to Libtayo development and/or Dupilumab/REGN3500 Eligible Investments by selling shares (of which 279,766 shares remain available to be sold as of June 30, 2020) of our Common Stock directly or indirectly owned by Sanofi.

During the six months ended June 30, 2020, Sanofi elected to sell, and we elected to purchase (by issuing a credit towards the amount owed by Sanofi), 77,677 shares of the Company's Common Stock to satisfy Sanofi's funding obligation related to Libtayo development costs.

Consequently, we recorded $41.7 million related to the shares received as Treasury Stock during the six months ended June 30, 2020.

In addition, during the six months ended June 30, 2020, Sanofi elected to sell, and we elected to purchase (in cash), 171,471 shares of the Company's Common Stock in connection with Sanofi's funding obligation for Dupilumab/REGN3500 Eligible Investments.

Consequently, we recorded the cost of the shares received, or $93.3 million, as Treasury Stock during the six months ended June 30, 2020.

Secondary Offering and Purchase of Regeneron Common Stock Held by Sanofi

As described above in "Collaboration and License Agreements - Sanofi," in May 2020, a secondary offering of 13,014,646 shares of our Common Stock (the "Secondary Offering") held by Sanofi was completed.

In connection with the Secondary Offering, we also purchased 9,806,805 shares of our Common Stock directly from Sanofi for an aggregate purchase amount of $5 billion (the "Stock Purchase").

As a result of the Secondary Offering and the Stock Purchase, Sanofi disposed of all of its shares of our Common Stock, other than 400,000 shares that it retained as of the closing of the Secondary Offering and the Stock Purchase (which Sanofi has used, and may continue to use, for the funding of certain Libtayo development costs and/or Dupilumab/REGN3500 Eligible Investments as described above).

We funded the Stock Purchase with a combination of cash on hand, proceeds from the sale of marketable securities, and proceeds from loans under a $1.5 billion senior unsecured 364-day bridge loan facility (the "Bridge Facility") which was entered into in May 2020.

The loans under the Bridge Facility bear interest at a variable interest rate based on either the London Interbank Offered Rate or the alternate base rate, plus an applicable margin that varies with our debt rating and total leverage ratio.

The Bridge Facility will mature, and all amounts outstanding thereunder will become due and payable, in May 2021.

We intend to refinance the Bridge Facility prior to its maturity by entering into new debt financing arrangements.

Amounts borrowed under the Bridge Facility may be prepaid at any time without premium or penalty.

As of June 30, 2020, $1.5 billion remained outstanding under the Bridge Facility.

The credit agreement governing the Bridge Facility (the “Bridge Credit Agreement”) contains financial and operating covenants, which are substantially similar to the covenants set forth in our existing $750.0 million senior unsecured five-year revolving credit facility.

Financial covenants include a maximum total leverage ratio and a minimum interest expense coverage ratio.

We were in compliance with all covenants of the Bridge Credit Agreement as of June 30, 2020.

Critical Accounting Policies and Use of Estimates

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"Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (filed February 7, 2020).

Except as described in Note 1 to our Condensed Consolidated Financial Statements included in this report, there were no material changes to our critical accounting policies and use of estimates during the three months ended March 31, 2020.

Future Impact of Recently Issued Accounting Standards

As of March 31, 2020, the future adoption of recently issued accounting standards is not expected to have a material impact on the Company's financial position or results of operations.

As of June 30, 2020, the future adoption of recently issued accounting standards is not expected to have a material impact on the Company's financial position or results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis