What changed in this filing

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Item 9A. Controls and Procedures

2021-02-08 compared with 2020-02-07 · 840 added, 554 removed, 1070 unchanged (57% of the section changed)

20 unchanged sentences

We have adopted a code of business conduct and ethics that applies to our officers, directors, and employees.

The full text of our code of business conduct and ethics can be found on our website (http://www.regeneron.com) under the "Investors & Media" heading on the "Corporate Governance" page.

The full text of our code of business conduct and ethics can be found on our website (http://www.regeneron.com) under the "Corporate Governance" heading on the "Investors & Media" page.

We may satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or controller, or persons performing similar functions, by posting such information on our website where it is accessible through the same link noted above.

4 unchanged sentences

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item will be included in our definitive proxy statement with respect to our 2020 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.

The information called for by this item will be included in our definitive proxy statement with respect to our 2021 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

5 unchanged sentences

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.

Exhibit Number

Exhibit Number Description

3.1 Restated Certificate of Incorporation, as amended.

4 unchanged sentences

4.1 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

(Incorporated by reference from the Form 10-K for the Registrant, for the year ended December 31, 2019, filed February 7, 2020.)

4.2 Indenture, dated August 12, 2020, between the Registrant and U.S.

Bank National Association.

(Incorporated by reference from the Form 8-K for the Registrant, filed August 12, 2020.)

4.3 First Supplemental Indenture, dated August 12, 2020, between the Registrant and U.S.

Bank National Association.

(Incorporated by reference from the Form 8-K for the Registrant, filed August 12, 2020.)

4.4 Form of 1.750% Senior Note due 2030 (included in Exhibit 4.3).

4.5 Form of 2.800% Senior Note due 2050 (included in Exhibit 4.3).

10.1 + Regeneron Pharmaceuticals, Inc.

1 unchanged sentence

(Incorporated by reference from the Registration Statement on Form S-8 for the Registrant, filed June 13, 2011.)

Form of option agreement and related notice of grant for use in connection with the grant of options to the Registrant's non-employee directors and named executive officers under the Regeneron Pharmaceuticals, Inc.

Second Amended and Restated 2000 Long-Term Incentive Plan.

(Incorporated by reference from the Form 8-K for the Registrant, filed December 16, 2005.)

Form of option agreement and related notice of grant for use in connection with the grant of options to the Registrant's executive officers other than the named executive officers under the Regeneron Pharmaceuticals, Inc.

Second Amended and Restated 2000 Long-Term Incentive Plan.

(Incorporated by reference from the Form 8-K for the Registrant, filed December 16, 2005.)

Form of restricted stock award agreement and related notice of grant for use in connection with the grant of restricted stock awards to the Registrant's executive officers under the Regeneron Pharmaceuticals, Inc.

Second Amended and Restated 2000 Long-Term Incentive Plan.

(Incorporated by reference from the Form 8-K for the Registrant, filed December 13, 2004.)

10.1.1 + Form of option agreement and related notice of grant for use in connection with the grant of time based vesting stock options to the Registrant's non-employee directors and executive officers under the Regeneron Pharmaceuticals, Inc.

76 unchanged sentences

2014 Long-Term Incentive Plan (revised 2019).

(Incorporated by reference from the F orm 10-K for the Registrant, for the year ended December 31, 201 9 , filed February 7, 20 20 .)

10.2.18 + Form of stock option agreement and related notice of grant for use in connection with the grant of non-qualified stock options to P.

2 unchanged sentences

2014 Long-Term Incentive Plan (revised 2019).

(Incorporated by reference from the Form 10-K for the Registrant, for the year ended December 31, 201 9 , filed February 7, 2020.)

10.2.19 + Form of restricted stock award agreement and related notice of grant for use in connection with the grant of restricted stock awards to the Registrant's executive officers under the Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (revised 2019).

(Incorporated by reference from the Form 10-K for the Registrant, for the year ended December 31, 2019, filed February 7, 2020.)

10.2.20 + Form of stock option agreement and related notice of grant for use in connection with the grant of non-qualified stock options to the Registrant's non-employee directors under the Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (revised 2019).

(Incorporated by reference from the Form 10-K for the Registrant, for the year ended December 31, 2019, filed February 7, 2020.)

10.2.21 + Form of restricted stock unit award agreement and related notice of grant for use in connection with the grant of restricted stock units to the Registrant's non-employee directors under the Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (revised 2019).

(Incorporated by reference from the Form 10-K for the Registrant, for the year ended December 31, 2019, filed February 7, 2020.)

10.2.22 + Form of performance restricted stock unit award agreement and related notice of grant for use in connection with the grant of performance restricted stock units to Leonard S.

4 unchanged sentences

2014 Long-Term Incentive Plan.

(Incorporated by reference from the Form 10-K for the Registrant, for the year ended December 31, 2019, filed February 7, 2020.)

10.3 + Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

(Incorporated by reference from the Registration Statement on Form S-8 for the Registrant, filed June 16 , 20 20 .)

10.3.1 + Form of stock option agreement and related notice of grant for use in connection with the grant of non-qualified stock options to the Registrant's executive officers under the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

10.3.2 + Form of stock option agreement and related notice of grant for use in connection with the grant of non-qualified stock options to P.

Roy Vagelos, M.D.

under the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

10.3.3 + Form of restricted stock award agreement and related notice of grant for use in connection with the grant of restricted stock awards to the Registrant's executive officers under the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

10.3.4 + Form of restricted stock unit award agreement and related notice of grant for use in connection with the grant of restricted stock units to P.

Roy Vagelos, M.D.

under the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

10.3.5 + Form of stock option agreement and related notice of grant for use in connection with the grant of non-qualified stock options to the Registrant's non-employee directors under the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

10.3.6 + Form of restricted stock unit award agreement and related notice of grant for use in connection with the grant of restricted stock units to the Registrant's non-employee directors under the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

10.3.7 + Form of performance restricted stock unit award agreement and related notice of grant for use in connection with the grant of performance restricted stock units to Leonard S.

Schleifer, M.D., Ph.D.

and George D.

Yancopoulos, M.D., Ph.D.

under the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan.

10.4 + Amended and Restated Employment Agreement, dated as of November 14, 2008, between the Registrant and Leonard S.

22 unchanged sentences

10.11.2** Second Amendment Agreement, dated December 19, 2019, by and between Bayer HealthCare LLC and the Registrant.

(Incorporated by reference from the Form 10-K for the Registrant, for the year ended December 31, 2019, filed February 7, 2020.)

10.12 License and Collaboration Agreement, dated as of January 10, 2014, by and between Bayer HealthCare LLC and the Registrant.

13 unchanged sentences

(Incorporated by reference from the Form 10-Q for the Registrant, for the quarter ended September 30, 2015, filed November 4, 2015.)

10.14.3** Third Amendment to Amended and Restated License and Collaboration Agreement, dated as of April 5, 2020, and effective as of April 1, 2020, by and between the Registrant, Sanofi Biotechnology SAS, and Sanofi.

(Incorporated by reference from the Form 10-Q for the Registrant, for the quarter ended June 30, 2020, filed August 5, 2020.)

10.15** Praluent Cross License & Commercialization Agreement, dated as of April 5, 2020, and effective as of April 1, 2020, by and between the Registrant and Sanofi Biotechnology SAS.

(Incorporated by reference from the Form 10-Q for the Registrant, for the quarter ended June 30, 2020, filed August 5, 2020.)

10.16 Amended and Restated Investor Agreement, dated as of January 11, 2014, by and among Sanofi, sanofi-aventis US LLC, Aventis Pharmaceuticals Inc., sanofi-aventis Amerique du Nord, and the Registrant.

(Incorporated by reference from the Form 8-K for the Registrant, filed January 13, 2014.)

10.16.1 Amendment to the Amended and Restated Investor Agreement, dated as of May 25, 2020, by and among the Registrant, Sanofi, Sanofi-Aventis US LLC, and Aventisub LLC.

(Incorporated by reference from the Form 8-K for the Registrant, filed May 29, 2020.)

10.17* Letter Agreement by and between the Registrant and Aventis Pharmaceuticals Inc., dated May 2, 2013.

42 unchanged sentences

(Incorporated by reference from the Form 10-Q for the Registrant, for the quarter ended June 30, 2019, filed August 6, 2019.)

10.32 Stock Repurchase Agreement, dated as of May 25, 2020, by and between the Registrant and Sanofi.

(Incorporated by reference from the Form 8-K for the Registrant, filed May 29, 2020.)

10.33** Base Agreement, dated as of July 6, 2020, by and between the Registrant and Advanced Technology International.

(Incorporated by reference from the Form 10-Q for the Registrant, for the quarter ended September 30, 2020, filed November 5, 2020.)

10.34** Project Agreement, dated as of July 6, 2020, by and between the Registrant and Advanced Technology International.

10.34.1 Modification No.

01 to Project Agreement, dated as of October 13, 2020, by and between the Registrant and Advanced Technology International.

10.34.2** Modification No.

02 to Project Agreement, dated as of November 17, 2020, by and between the Registrant and Advanced Technology International.

10.35** License Agreement, dated as of August 18, 2020, by and among the Registrant, F.

Hoffman-La Roche Ltd, and Genentech, Inc.

(Incorporated by reference from the Form 10-Q for the Registrant, for the quarter ended September 30, 2020, filed November 5, 2020.)

21.1 Subsidiaries of the Registrant.

18 unchanged sentences

REGENERON PHARMACEUTICALS, INC.

February 7, 2020

February 8, 2021 By:

/s/ LEONARD S.

6 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature Title Date

/s/ LEONARD S.

President, Chief Executive Officer, and Director (Principal Executive Officer)

February 7, 2020

SCHLEIFER President, Chief Executive Officer, and Director (Principal Executive Officer) February 8, 2021

Schleifer, M.D., Ph.D.

/s/ ROBERT E.

Executive Vice President, Finance and Chief Financial Officer (Principal Financial Officer)

February 7, 2020

LANDRY Executive Vice President, Finance and Chief Financial Officer (Principal Financial Officer) February 8, 2021

/s/ CHRISTOPHER R.

Vice President, Controller (Principal Accounting Officer)

February 7, 2020

FENIMORE Senior Vice President, Controller (Principal Accounting Officer) February 8, 2021

Christopher R.

/s/ GEORGE D.

President, Chief Scientific Officer, and Director

February 7, 2020

YANCOPOULOS President, Chief Scientific Officer, and Director February 8, 2021

Yancopoulos, M.D., Ph.D.

Chairman of the Board

February 7, 2020

ROY VAGELOS Chairman of the Board February 8, 2021

Roy Vagelos, M.D.

/s/ BONNIE L.

February 7, 2020

BASSLER Director February 8, 2021

Bassler, Ph.D.

/s/ MICHAEL S.

February 7, 2020

ANTHONY COLES

February 7, 2020

BROWN Director February 8, 2021

ANTHONY COLES Director February 8, 2021

Anthony Coles, M.D.

/s/ JOSEPH L.

February 7, 2020

GOLDSTEIN Director February 8, 2021

Goldstein, M.D.

/s/ CHRISTINE A.

February 7, 2020

POON Director February 8, 2021

/s/ ARTHUR F.

February 7, 2020

RYAN Director February 8, 2021

/s/ GEORGE L.

February 7, 2020

/s/ MARC TESSIER-LAVIGNE

February 7, 2020

SING Director February 8, 2021

/s/ MARC TESSIER-LAVIGNE Director February 8, 2021

Marc Tessier-Lavigne, Ph.D.

February 7, 2020

ZOGHBI Director February 8, 2021

REGENERON PHARMACEUTICALS, INC.

15 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contracts with customers in 2018.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for amounts received from collaborative partners who are not deemed to be the Company's customers in 2020 and the manner in which it accounts for revenues from contracts with customers in 2018.

Basis for Opinions

14 unchanged sentences

A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance

regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of

financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

3 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Recognition of Collaboration Revenue related to Research and Development Performance Obligations

As described in Note 1 to the consolidated financial statements, revenues related to collaboration arrangements where the Company satisfies performance obligations during the development phase over time are typically recognized using an input method on the basis of research and development costs incurred relative to the total expected costs which determines the extent of progress in each period towards completion of the performance obligation.

Collaboration revenue for non-refundable up-front payments, development milestones, and payments for development activities, for which management used an input method, was $497.6 million for the year ended December 31, 2019.

Recognition of Other Operating Income related to Research and Development Up-front and Milestone Payments

As described in Note 1 to the consolidated financial statements, other operating income related to collaboration arrangements where the Company satisfies obligations during the development phase over time is typically recognized using an input method on the basis of research and development costs incurred relative to the total expected costs which determines the extent of progress towards completion of the obligation.

Other operating income for non-refundable up-front payments and development milestones for which management used an input method, was $276.7 million for the year ended December 31, 2020.

Management has disclosed that there is variability in the scope of activities and length of time necessary to develop a drug product, potential delays in development programs, changes to development plans and budgets as programs progress, and uncertainty in the ultimate requirements to obtain governmental approval for commercialization related to these estimates.

The principal considerations for our determination that performing procedures relating to recognition of collaboration revenue related to research and development performance obligations is a critical audit matter are there was significant judgment by management when developing the total expected research and development costs to complete the performance obligation.

This in turn led to significant audit effort in performing procedures and evaluating evidence to assess the reasonableness of the estimates of the costs to complete.

The principal considerations for our determination that performing procedures relating to recognition of other operating income related to research and development up-front and milestone payments is a critical audit matter are the significant judgment by management when determining the estimate of total expected research and development costs to complete the obligation, which in turn led to significant audit effort in performing procedures and evaluating evidence to assess the reasonableness of the estimates of the costs to complete.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the determination of total expected research and development costs to complete the performance obligation.

These procedures also included, among others, evaluating and testing management’s process for determining the total expected research and development costs at completion for a sample of contracts, which included evaluating the reasonableness of actual costs incurred and estimated costs to complete.

Evaluating the reasonableness of estimated costs to complete involved assessing management’s ability to reasonably estimate costs to complete the performance obligation by (i) obtaining supporting evidence for expected development activities;

These procedures included testing the effectiveness of controls relating to the other operating income recognition process, including controls over the determination of the estimate of total expected research and development costs to complete the obligation.

These procedures also included, among others, evaluating and testing management’s process for determining the estimate of total expected research and development costs at completion for a sample of contracts, which included evaluating the reasonableness of actual costs incurred and estimated costs to complete.

Evaluating the reasonableness of estimated costs to complete involved assessing management’s ability to reasonably estimate costs to complete the obligation by (i) obtaining supporting evidence for expected development activities;

(ii) evaluating the identification of circumstances that may warrant a modification to estimated costs to complete;

11 unchanged sentences

Accounts receivable - trade, net 3,111.5 2,100.0

Accounts receivable from Sanofi

Accounts receivable from Bayer

Accounts receivable - Sanofi, net 404.7 260.6

Accounts receivable - other, net 598.5 425.0

Inventories 1,916.6 1,415.5

Prepaid expenses and other current assets 160.8 273.7

4 unchanged sentences

Other noncurrent assets 168.1 144.7

Total assets $ 17,163.3 $ 14,805.2

LIABILITIES AND STOCKHOLDERS' EQUITY

2 unchanged sentences

Accrued expenses and other current liabilities 1,521.8 1,211.4

Deferred revenue from Sanofi

Deferred revenue - Sanofi 341.7 310.5

Deferred revenue - other 236.0 71.6

Other liabilities - Sanofi 122.4 85.0

Total current liabilities 2,697.4 2,096.6

Long-term debt 1,978.5 —

Finance lease liabilities 717.2 713.9

Deferred revenue from Sanofi

Deferred revenue - Sanofi 16.7 27.7

Deferred revenue - other 41.1 77.6

Other liabilities - Sanofi 189.3 482.0

Other noncurrent liabilities 497.8 317.7

7 unchanged sentences

40,000,000 shares authorized;

shares issued and outstanding - 1,848,970 in 2019 and 1,911,354 in 2018

shares issued and outstanding - 1,848,970 in 2020 and 2019

Common Stock, $ .001 par value;

3 unchanged sentences

Retained earnings 10,893.0 7,379.8

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income 29.3 21.1

Treasury Stock, at cost;

16,431,520 shares in 2020 and 4,860,123 shares in 2019

( 6,613.3 ) ( 739.9 )

Total stockholders' equity 11,025.3 11,089.7

5 unchanged sentences

Year Ended December 31,

2020 2019 2018

Statements of Operations

3 unchanged sentences

Other revenue 557.0 174.0 129.0

8,497.1 6,557.6 5,145.6

Research and development 2,735.0 2,450.0 1,468.8

2 unchanged sentences

Cost of collaboration and contract manufacturing 628.0 402.8 237.5

Other operating (income) expense, net ( 280.4 ) ( 209.2 ) ( 402.3 )

4,920.5 4,347.8 2,611.2

Income from operations 3,576.6 2,209.8 2,534.4

2 unchanged sentences

Interest expense ( 56.9 ) ( 30.2 ) ( 28.2 )

233.8 219.3 19.1

Income before income taxes 3,810.4 2,429.1 2,553.5

Income tax expense 297.2 313.3 109.1

Net income $ 3,513.2 $ 2,115.8 $ 2,444.4

Net income per share - basic $ 32.65 $ 19.38 $ 22.65

3 unchanged sentences

Statements of Comprehensive Income

Net income $ 3,513.2 $ 2,115.8 $ 2,444.4

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on marketable securities

Unrealized gain (loss) on debt securities 9.1 35.9 ( 7.0 )

Unrealized (loss) gain on cash flow hedges ( 0.9 ) ( 2.5 ) 0.7

5 unchanged sentences

(In millions)

Class A Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Treasury Stock

Total Stockholders' Equity

Class A Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity

Shares Amount Shares Amount Shares Amount

Balance, December 31, 2017 1.9 — 109.5 $ 0.1 $ 3,512.9 $ 2,946.7 $ 0.6 ( 3.8 ) $ ( 316.2 ) $ 6,144.1

2 unchanged sentences

Issuance of Common Stock for 401(k) Savings Plan — — 0.1 — 26.9 — — — — 26.9

Repurchases of Common Stock — — — — — — — ( 0.2 ) ( 80.2 ) ( 80.2 )

Stock-based compensation charges — — — — 444.8 — — — — 444.8

Other comprehensive income, net of tax

Cumulative-effect adjustment upon adoption of new accounting standards — — — — — ( 136.8 ) ( 6.6 ) — — ( 143.4 )

Net income — — — — — 2,444.4 — — — 2,444.4

Other comprehensive loss, net of tax — — — — — — ( 6.3 ) — — ( 6.3 )

Balance, December 31, 2018 1.9 — 111.1 0.1 3,911.6 5,254.3 ( 12.3 ) ( 4.0 ) ( 396.4 ) 8,757.3

1 unchanged sentence

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations — — ( 0.5 ) — ( 188.0 ) — — — — ( 188.0 )

Issuance of Common Stock for 401(k) Savings Plan

Issuance/distribution of Common Stock for 401(k) Savings Plan — — — — 24.9 — — 0.1 13.2 38.1

Repurchases of Common Stock — — — — — — — ( 1.0 ) ( 356.7 ) ( 356.7 )

Conversion of Class A Stock to Common Stock ( 0.1 ) — 0.1 — — — — — — —

Stock-based compensation charges — — — — 466.9 — — — — 466.9

Cumulative-effect adjustment upon adoption of new accounting standards

Other comprehensive loss, net of tax

Adjustment upon adoption of new accounting standard — — — — — 9.7 — — — 9.7

Net income — — — — — 2,115.8 — — — 2,115.8

Other comprehensive income, net of tax — — — — — — 33.4 — — 33.4

Balance, December 31, 2019 1.8 — 113.3 0.1 4,428.6 7,379.8 21.1 ( 4.9 ) ( 739.9 ) 11,089.7

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (continued)

Class A Stock

Additional Paid-in Capital

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

Treasury Stock

Total Stockholders' Equity

Class A Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity

Shares Amount Shares Amount Shares Amount

Issuance of Common Stock for equity awards granted under long-term incentive plans — — 9.6 — 2,576.4 — — — — 2,576.4

2 unchanged sentences

Repurchases of Common Stock — — — — — — — ( 11.6 ) ( 5,880.9 ) ( 5,880.9 )

Conversion of Class A Stock to Common Stock

Stock-based compensation charges — — — — 442.9 — — — — 442.9

Adjustment upon adoption of new accounting standard

Net income — — — — — 3,513.2 — — — 3,513.2

Other comprehensive income, net of tax — — — — — — 8.2 — — 8.2

5 unchanged sentences

Year Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net income $ 3,513.2 $ 2,115.8 $ 2,444.4

Adjustments to reconcile net income to net cash provided by operating activities:

4 unchanged sentences

Changes in assets and liabilities:

Increase in Sanofi, Bayer, and trade accounts receivable

Increase in trade, Sanofi, and other accounts receivable ( 1,356.1 ) ( 523.7 ) ( 236.4 )

Increase in inventories ( 529.4 ) ( 335.5 ) ( 387.9 )

Increase in prepaid expenses and other assets

Decrease (increase) in prepaid expenses and other assets 114.9 ( 79.8 ) ( 88.1 )

Increase (decrease) in deferred revenue 148.1 139.5 ( 43.4 )

Increase (decrease) in accounts payable, accrued expenses, and other liabilities

Increase in accounts payable, accrued expenses, and other liabilities 118.9 599.0 58.8

Total adjustments ( 895.1 ) 314.2 ( 249.3 )

2 unchanged sentences

Purchases of marketable and other securities ( 3,241.0 ) ( 3,202.4 ) ( 1,845.5 )

Sales or maturities of marketable securities

Sales or maturities of marketable and other securities 3,785.0 1,604.2 775.6

Capital expenditures ( 614.6 ) ( 429.6 ) ( 383.1 )

Other — — ( 10.0 )

Net cash used in investing activities ( 70.6 ) ( 2,027.8 ) ( 1,463.0 )

Cash flows from financing activities:

Proceeds in connection with finance lease liabilities

Payments in connection with finance lease liabilities

Proceeds from issuance of long-term debt, net of issuance costs 1,981.9 — —

Proceeds from bridge loan facility 1,500.0 — —

Repayment of bridge loan facility ( 1,500.0 ) — —

Proceeds from issuance of Common Stock 2,575.2 211.8 114.5

Payments in connection with Common Stock tendered for employee tax obligations

( 680.8 ) ( 188.0 ) ( 187.2 )

Repurchases of Common Stock ( 5,846.8 ) ( 275.9 ) ( 4.4 )

15 unchanged sentences

Our commercialized medicines and product candidates in development are designed to help patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, infectious diseases, and rare diseases.

The Company's products that have received marketing approval, which are currently marketed by us and/or our collaborators, consist of EYLEA ® (aflibercept), Dupixent ® (dupilumab), Libtayo ® (cemiplimab), Praluent ® (alirocumab), Kevzara ® (sarilumab), ARCALYST ® (rilonacept), and ZALTRAP ® (ziv-aflibercept) .

The Company's products that have received marketing approval consist of EYLEA ® (aflibercept), Dupixent ® (dupilumab), Libtayo ® (cemiplimab), Praluent ® (alirocumab), Kevzara ® (sarilumab), Inmazeb ™ (atoltivimab, maftivimab, and odesivimab-ebgn), ARCALYST ® (rilonacept), and ZALTRAP ® (ziv-aflibercept) .

In addition, REGEN-COV ™ (casirivimab and imdevimab) received Emergency Use Authorization from the U.S.

Food and Drug Administration ("FDA") for the treatment of mild to moderate COVID-19 in certain patients at high risk for progressing to severe COVID-19 and/or hospitalization.

The Company is a party to collaboration agreements to develop and commercialize, as applicable, certain products and product candidates (see Note 3).

The Company operates in one business segment, which includes all activities related to the discovery, development, and commercialization of medicines for the treatment of serious diseases.

The Company's business is subject to certain risks including, but not limited to, uncertainties relating to conducting pharmaceutical research, product development, obtaining regulatory approvals, market acceptance, competition, and obtaining and enforcing patents.

The Company's business is subject to certain risks including, but not limited to, uncertainties relating to conducting research activities, product development, obtaining regulatory approvals, competition, and obtaining and enforcing patents.

Basis of Presentation

2 unchanged sentences

Certain reclassifications have been made to prior period amounts to conform with the current period's presentation.

Effective January 1, 2020, we changed the presentation of cost reimbursements from collaborators who are not deemed to be our customers from collaboration revenue to a reduction of the corresponding operating expense ( i.e.

, either Research and development or Selling, general, and administrative) incurred by us.

We also changed the presentation of amounts recognized in connection with up-front and development milestone payments received from collaboration revenue to other operating income.

We made these changes in presentation because we believe the new presentation is preferable, as it better reflects the nature of the Company’s costs incurred and revenues earned pursuant to arrangements with collaborators and enhances the comparability of our financial statements with industry peers.

The change in presentation has been applied retrospectively.

The tables below present the impact of the change on the Company’s previously-filed Consolidated Balance Sheet as of December 31, 2019, the Consolidated Statement of Operations for the years ended December 31, 2019, and 2018, and the Consolidated Statement of Cash Flows for the years ended December 31, 2019, and 2018.

The Company’s previously-filed balance sheet has been updated to reflect the addition of the caption Other liabilities for the presentation of up-front and development milestones paid by collaborators that are deferred.

There was no impact on the Company’s previously-filed Consolidated Statements of Stockholders’ Equity.

December 31, 2019

Balance Sheet Data:

As Previously Reported Adjustments As Revised

Accrued expenses and other current liabilities $ 1,086.8 $ 124.6 $ 1,211.4

Deferred revenue - Sanofi (current) $ 395.5 $ ( 85.0 ) $ 310.5

Deferred revenue - other (current) $ 196.2 $ ( 124.6 ) $ 71.6

Other liabilities - Sanofi (current) — $ 85.0 $ 85.0

Deferred revenue - Sanofi (noncurrent) $ 509.7 $ ( 482.0 ) $ 27.7

Deferred revenue - other (noncurrent) $ 109.3 $ ( 31.7 ) $ 77.6

Other liabilities - Sanofi (noncurrent) — $ 482.0 $ 482.0

Other noncurrent liabilities $ 286.0 $ 31.7 $ 317.7

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Year Ended December 31, 2019 Year Ended December 31, 2018

Statement of Operations Data:

As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised

Sanofi collaboration revenue

$ 1,426.8 $ ( 1,023.2 ) $ 403.6 $ 1,111.1 $ ( 1,236.8 ) $ ( 125.7 )

Bayer collaboration revenue $ 1,188.8 $ ( 43.2 ) $ 1,145.6 $ 1,076.7 $ ( 40.6 ) $ 1,036.1

Other revenue

$ 413.4 $ ( 239.4 ) $ 174.0 $ 416.8 $ ( 287.8 ) $ 129.0

Total revenues $ 7,863.4 $ ( 1,305.8 ) $ 6,557.6 $ 6,710.8 $ ( 1,565.2 ) $ 5,145.6

Research and development

$ 3,036.6 $ ( 586.6 ) $ 2,450.0 $ 2,186.1 $ ( 717.3 ) $ 1,468.8

Selling, general, and administrative

$ 1,834.8 $ ( 492.9 ) $ 1,341.9 $ 1,556.2 $ ( 429.0 ) $ 1,127.2

Cost of collaboration and contract manufacturing (1)

$ 419.9 $ ( 17.1 ) $ 402.8 $ 254.1 $ ( 16.6 ) $ 237.5

Other operating (income) expense, net

— $ ( 209.2 ) $ ( 209.2 ) — $ ( 402.3 ) $ ( 402.3 )

Total operating expenses $ 5,653.6 $ ( 1,305.8 ) $ 4,347.8 $ 4,176.4 $ ( 1,565.2 ) $ 2,611.2

(1) In addition to the reclassification of certain amounts in connection with the change in accounting presentation described above, the Company also reclassified certain immaterial reimbursements that were previously classified as collaboration revenue to Cost of collaboration and contract manufacturing.

Year Ended December 31, 2019 Year Ended December 31, 2018

Cash Flows Data:

As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised

Cash flows from operating activities:

Increase (decrease) in deferred revenue $ 294.0 $ ( 154.5 ) $ 139.5 $ ( 194.5 ) $ 151.1 $ ( 43.4 )

Increase in accounts payable, accrued expenses, and other liabilities

$ 444.5 $ 154.5 $ 599.0 $ 209.9 $ ( 151.1 ) $ 58.8

We adopted Accounting Standards Codification ("ASC") 842, Leases , on January 1, 2019 (the "effective date") and used the effective date as our date of initial application.

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The impact of adopting the standard for the facilities that we had historically applied build-to-suit and capital lease accounting was not material to our Consolidated Financial Statements.

Prior period amounts have not been adjusted in connection with the adoption of this standard.

Prior period amounts were not adjusted in connection with the adoption of this standard.

We adopted ASC 606, Revenue from Contracts with Customers , as of January 1, 2018.

The Company adopted the standard using the modified retrospective method, and thus recognized a cumulative-effect adjustment to reduce Retained earnings and increase Deferred revenue on January 1, 2018 by $ 143.4 million, net of tax.

Prior period amounts were not adjusted in connection with the adoption of this standard.

We also adopted Accounting Standards Update ("ASU") 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , as of January 1, 2018.

The Company recognized a cumulative-effect adjustment, related to unrealized gains on equity securities, to reduce Accumulated other comprehensive income and increase Retained earnings on January 1, 2018 by $ 6.6 million .

Use of Estimates

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Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments which potentially expose the Company to concentrations of credit risk consist of cash, cash equivalents, certain investments, and accounts receivable.

In accordance with the Company's policies, the Company mandates asset diversification and monitors exposure with its counterparties.

The extent to which the COVID-19 pandemic may directly or indirectly impact our business, financial condition, and results of operations is highly uncertain and subject to change.

We considered the potential impact of the COVID-19 pandemic on our estimates and assumptions and there was not a material impact to our consolidated

REGENERON PHARMACEUTICALS, INC.

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(Unless otherwise noted, dollars in millions, except per share data)

financial statements as of and for the year ended December 31, 2020;

however, actual results could differ from those estimates and there may be changes to our estimates in future periods.

Concentration of Credit Risk

Financial instruments which potentially expose the Company to concentrations of credit risk consist of cash, cash equivalents, certain investments, and accounts receivable.

In accordance with the Company's policies, the Company mandates asset diversification and monitors exposure with its counterparties.

Concentrations of credit risk with respect to accounts receivable are significant.

The Company has a concentration of credit risk associated with the receivables due from its collaborators Bayer, Sanofi, and Teva.

The Company is also subject to credit risk with accounts receivable from its product sales, which are due from several distributors and specialty pharmacies (the Company's customers).

The Company is also subject to credit risk with accounts receivable from its product sales to its customers.

As of December 31, 2020 and 2019, three individual customers accounted for 93 % and 97 %, respectively, of the Company's net trade accounts receivable balances.

The Company has contractual payment terms with each of its customers, and the Company monitors its customers' financial performance and credit worthiness so that it can properly assess and respond to any changes in their credit profile.

As of December 31, 2019 and 2018 , there were no reserves against trade accounts receivable.

In addition, during the years ended December 31, 2019 , 2018 , and 2017 , the Company did no t recognize any charges for write-offs of trade accounts receivable.

The Company has contractual payment terms with each of its collaborators and customers, and the Company monitors their financial performance and credit worthiness so that it can properly assess and respond to any changes in their credit profile.

As of December 31, 2020 and 2019, there were no write-offs and allowances of accounts receivable related to credit risk for our collaborators or customers.

Significant Accounting Policies

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Realized gains and losses on available-for-sale debt securities are included in Other income (expense), net.

The Company reviews its portfolio of available-for-sale debt securities, using both quantitative and qualitative factors, to determine if declines in fair value below cost have resulted from a credit-related loss or other factors.

If the decline in fair value is due to credit-related factors, a loss is recognized in net income, whereas if the decline in fair value is not due to credit-related factors, the loss is recorded in Other comprehensive income (loss).

We also have investments in equity securities that are carried at fair value with changes in fair value recognized within Other income (expense), net.

We have elected to measure certain equity investments we hold that do not have readily determinable fair values at cost less impairment, if any, and adjust for observable price changes in orderly transactions for identical or similar investments of the same issuer within Other income (expense), net.

The Company reviews its portfolio of available-for-sale debt securities, using both quantitative and qualitative factors, to determine if declines in fair value below cost are other-than-temporary.

If a decline in the fair value of an available-for-sale debt security in the Company's investment portfolio is deemed to be other-than-temporary, the Company writes down the cost basis of the security to its current fair value and recognizes a loss as a charge against income.

Accounts Receivable

The Company's trade accounts receivable arise from product sales and represent amounts due from its distributors and specialty pharmacies (collectively, the Company's trade "customers"), which are all located in the United States.

The Company's trade accounts receivable arise from product sales and represent amounts due from its customers, which are all located in the United States.

In addition, the Company records accounts receivable arising from its collaboration and licensing agreements.

The Company monitors the financial performance and credit worthiness of its counterparties so that it can properly assess and respond to changes in their credit profile.

The Company provides reserves against receivables for estimated losses, if any, that may result from a counterparty's inability to pay.

Amounts determined to be uncollectible are written-off against the reserve.

The Company provides allowances against receivables for estimated losses, if any, that may result from a counterparty's inability to pay.

Amounts determined to be uncollectible are written-off against the allowance.

Inventories are stated at the lower of cost or net realizable value.

The Company determines the cost of inventory using the first-in, first-out, or FIFO, method.

The Company capitalizes inventory costs associated with the Company's products prior to regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized;

otherwise, such costs are expensed.

The determination to capitalize inventory costs is based on various factors, including status and expectations of the regulatory approval process, any known safety or efficacy concerns, potential labeling restrictions, and any other impediments to obtaining regulatory approval.

REGENERON PHARMACEUTICALS, INC.

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(Unless otherwise noted, dollars in millions, except per share data)

otherwise, such costs are expensed.

The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate.

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The estimated useful lives of property, plant, and equipment are as follows:

Building and improvements

Laboratory and other equipment

Furniture and fixtures

Building and improvements 10 – 50 years

Laboratory and other equipment 3 – 10 years

Furniture and fixtures 5 years

The Company periodically assesses the recoverability of long-lived assets, such as property, plant, and equipment, and evaluates such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Revenue Recognition

Product Revenue

Product revenue consists of U.S.

net product sales of EYLEA, Libtayo, and ARCALYST.

Revenue from product sales is recognized at a point in time when our customer is deemed to have obtained control of the product, which generally occurs upon receipt by our distributors and specialty pharmacies.

The Company's written contracts with its customers stipulate product is shipped freight on board destination (FOB destination).

The Company sells its marketed products in the United States to several distributors and specialty pharmacies.

Under these distribution models, the distributors and specialty pharmacies take physical delivery of product.

For EYLEA and Libtayo, the distributors and specialty pharmacies sell the product directly to healthcare providers.

The amount of revenue we recognize from product sales varies due to rebates, chargebacks, and discounts provided under governmental and other programs, distribution-related fees, and other sales-related deductions.

The Company determines if an arrangement is a lease considering whether there is an identified asset and the contract conveys the right to control its use.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company's lease terms may include options to extend or terminate a lease when it is reasonably certain that it will exercise that option.

The Company accounts for lease components ( e.g.

, rental payments) separately from non-lease components ( e.g.

, common area maintenance costs).

Right-of-use assets and lease liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term, unless there is a transfer of title or purchase option we are reasonably certain to exercise.

For leases where an implicit rate is not readily determinable, we use our incremental borrowing rate based on information available at the lease commencement date to determine the present value of future lease payments.

Lease expense for operating leases is recognized on a straight-line basis over the expected lease term.

Revenue Recognition - Product Revenue

Revenue from product sales is recognized at a point in time when our customer is deemed to have obtained control of the product, which generally occurs upon receipt by our customer.

The amount of revenue we recognize from product sales may vary due to rebates, chargebacks, and discounts provided under governmental and other programs, distribution-related fees, and other sales-related deductions.

In order to determine the transaction price, we estimate, utilizing the expected value method, the amount of variable consideration that we will be entitled to.

This estimate is based upon contracts with customers and government agencies, statutorily-defined discounts applicable to government-funded programs, historical experience, estimated payor mix, and other relevant factors.

This estimate is based upon contracts with customers, healthcare providers, payors, and government agencies, statutorily-defined discounts applicable to government-funded programs, historical experience, estimated payor mix, and other relevant factors.

The Company reviews its estimates of rebates, chargebacks, and other applicable provisions each period and records any necessary adjustments in the current period's net product sales.

Rebates, Chargebacks, and Discounts:

The Company estimates reductions to product sales for Medicaid and Veterans' Administration ("VA") programs as well as certain other qualifying federal and state government programs, and for other programs, including group purchasing organizations.

Based upon the Company's contracts with government agencies and other organizations, statutorily-defined discounts applicable to government-funded programs, historical experience, and estimated payor mix, the Company estimates and records an allowance for rebates and chargebacks.

The Company's liability for Medicaid rebates consists of estimates for claims that a state will make for a current quarter, claims for prior quarters that have been estimated for which an invoice has not been received, and invoices received for claims from prior quarters that have not been paid.

The Company's reserves related to discounted pricing to VA, Public Health Services, and others (collectively "qualified healthcare providers") represent the Company's estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices the Company charges to its customers ( i.e.

, distributors and specialty pharmacies).

The Company's customers charge the Company for the difference between what they pay for the products and the ultimate selling price to the

REGENERON PHARMACEUTICALS, INC.

1 unchanged sentence

(Unless otherwise noted, dollars in millions, except per share data)

qualified healthcare providers.

• Rebates, Chargebacks, and Discounts:

The Company estimates reductions to product sales for Medicaid and Veterans' Administration ("VA") programs as well as certain other qualifying federal and state government programs, and other programs, including group purchasing organizations, and records an allowance for rebates and chargebacks.

The Company's reserves related to discounted pricing to VA, Public Health Services, eligible physicians, and others (collectively "qualified healthcare providers") represent the Company's estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices the Company charges to its customers ( i.e.

, distributors and specialty pharmacies).

The Company's customers charge the Company for the difference between what they pay for the products and the ultimate selling price to the qualified healthcare providers.

The Company's reserve for this discounted pricing is based on expected sales to qualified healthcare providers and the chargebacks that customers have already claimed.

3 unchanged sentences

• Other Sales-Related Deductions :

The Company estimates other sales-related deductions offered to customers based on written contracts.

The Company estimates and records other sales-related deductions generally based on gross sales.

The Company's other sales-related deductions include co-pay assistance programs and product returns.

The Company estimates and records other sales-related deductions generally based on gross sales, written contracts, and other relevant factors.

Consistent with industry practice, the Company offers its customers a limited right to return product purchased directly from the Company, which is principally based upon the product's expiration date.

The Company will accept returns for three months prior to and up to six months after the product expiration date.

Product returned is generally not resalable given the nature of the Company's products and method of administration.

The Company develops estimates for product returns based upon historical experience, shelf life of the product, and other relevant factors.

The Company monitors product supply levels in the distribution channel, as well as sales by its customers of EYLEA and Libtayo to healthcare providers and ARCALYST to patients using product-specific data provided by its customers.

The Company monitors product supply levels in the distribution channel, as well as sales by its customers, using product-specific data provided by its customers.

If necessary, the Company's estimates of product returns may be adjusted in the future based on actual returns experience, known or expected changes in the marketplace, or other factors.

Collaborative Arrangements

We have entered into various collaborative arrangements to research, develop, manufacture, and commercialize product candidates and utilize our technology platforms.

Although each of these arrangements is unique in nature, such arrangements involve a joint operating activity where both parties are active participants in the activities of the collaboration and exposed to significant risks and rewards dependent on the commercial success of the activities.

In arrangements where we do not deem our collaborator to be our customer, payments to and from our collaborator are presented in our statement of operations based on the nature of our business operations, the nature of the arrangement, including the contractual terms, and the nature of the payments, as summarized in the table and further described below.

Nature/Type of Payment Statement of Operations Presentation

Regeneron's share of profits or losses in connection with commercialization of products

Collaboration revenue

We have entered into various agreements related to our activities to research, develop, manufacture, and commercialize product candidates and utilize our technology platforms.

The Company earns collaboration revenue in connection with collaboration agreements to utilize our technology platforms and develop and/or commercialize product candidates where we deem the collaborator to be our customer.

During the first quarter of 2018, we adopted ASC 606, Revenue from Contracts with Customers .

Under ASC 606, revenue is measured as the amount of consideration we expect to be entitled to in exchange for transferring promised goods or providing services to a customer, and is recognized when (or as) we satisfy performance obligations under the terms of a contract.

Depending on the terms of the arrangement, we may defer the recognition of all or a portion of the consideration received because the performance obligations are satisfied over time.

Our collaboration agreements may require us to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate.

In agreements involving multiple goods or services promised to be transferred to a customer, we must assess, at the inception of the contract, whether each promise represents a separate performance obligation ( i.e.

, is "distinct"), or whether such promises should be combined as a single performance obligation.

The terms of these agreements typically include consideration to be provided to the Company in the form of non-refundable up-front payments, development milestones, reimbursements for development activities, as well as reimbursements for commercialization activities, sales milestones, and sharing of profits or losses arising from the commercialization of products.

At the inception of the contract, the transaction price reflects the amount of consideration we expect to be entitled to in exchange for transferring promised goods or services to our customer.

In arrangements where we satisfy performance obligation(s) during the development phase over time, we recognize collaboration revenue over time typically using an input method on the basis of our research and development costs incurred relative to the total expected cost which determines the extent of our progress toward completion.

We review our estimate of the transaction price and the total expected cost each period, and make revisions to such estimates as necessary.

When we are entitled to reimbursement of all or a portion of the research and development expenses that we incur under a collaboration, we record those reimbursable amounts proportionately as we recognize our expenses.

We recognized collaboration revenue for non-refundable up-front payments, development milestones, and payments for development activities, for which we used an input method, of $ 497.6 million and $ 837.7 million for the years ended December 31, 2019 and 2018 , respectively.

If the collaboration is a cost-sharing arrangement in which both we and our collaborator perform development work and share costs, we also recognize, as research and development expense in the period when our collaborator incurs development expenses, the portion of the collaborator's development expenses that we are obligated to reimburse.

Our collaborators provide us with estimated development expenses for the most recent fiscal quarter.

Reimbursement for manufacturing of commercial supplies

Collaboration revenue

Royalties and/or sales-based milestones earned Collaboration revenue

Reimbursement of Regeneron's research and development expenses

Reduction to Research and development expenses

Regeneron's obligation for its share of collaborator's research and development expenses

Research and development expense

Up-front and development milestone payments to collaborators Research and development expense

Reimbursement of Regeneron's commercialization-related expenses

Reduction to Selling, general, and administrative expense

Regeneron's obligation for its share of collaborator's commercialization-related expenses

Selling, general, and administrative expense

Regeneron's obligation to pay collaborator for its share of gross profits when Regeneron is deemed to be the principal

Cost of goods sold

Up-front and development milestones earned (when we have a combined unit of account which includes a license and providing research and development services)

Other operating income

In agreements involving multiple goods or services promised to be transferred to our collaborator, we must assess, at the inception of the contract, whether each promise represents a separate obligation ( i.e.

, is "distinct"), or whether such promises should be combined as a single unit of account.

When we have a combined unit of account which includes a license and providing research and development services to our collaborator, recognition of up-front payments and development milestones earned from our collaborator is deferred (as a liability) and recognized over the development period ( i.e.

, over time).

In arrangements where we satisfy our obligation(s) during the development phase over time, we recognize amounts initially deferred over time typically using an input method on the basis of our research and development costs incurred relative to the total expected cost which determines the extent of our progress toward completion.

We review our estimates each period and make revisions to such estimates as necessary.

We recognized other operating income in connection with up-front and development milestones earned, for which we used an input method, of $ 276.7 million and $ 207.2 million for the years ended December 31, 2020 and 2019, respectively.

When we are entitled to reimbursement of all or a portion of the expenses ( e.g.

, research and development expenses) that we incur under a collaboration, we record those reimbursable amounts in the period in which such costs are incurred.

If we and our collaborator perform development work or commercialization-related activities and share costs, we also recognize, as expense ( i.e.

, research and development expense or selling, general, and administrative expense, as applicable) in the period when our collaborator incurs such expenses, the portion of the collaborator's expenses that we are obligated to reimburse.

Our collaborators provide us with estimated expenses for the most recent fiscal quarter.

Our collaborators' estimates are reconciled to their actual expenses for such quarter in the subsequent fiscal quarter, and our portion of our collaborators' expenses that we are obligated to reimburse is adjusted on a prospective basis accordingly, as necessary.

Under certain of the Company's collaboration agreements, product sales and cost of sales may be recorded by the Company's collaborators as they are deemed to be the principal in the transaction.

The Company shares in any profits or losses arising from the commercialization of such products, and records its share of the variable consideration, representing net product sales less cost of goods sold and shared commercialization and other expenses, as collaboration revenue in the period in which such underlying

In arrangements where we:

• are obligated to use commercially reasonable efforts to supply commercial product to our collaborator, we may be reimbursed for our manufacturing costs as commercial product is shipped to the collaborator;

however, recognition of such cost reimbursements is recognized when the product is sold by our collaborator to third-party customers;

• share in any profits or losses arising from the commercialization of such products, we record our share of the variable consideration, representing net product sales less cost of goods sold and shared commercialization and other expenses, in the period in which such underlying sales occur and costs are incurred by the collaborator;

• receive royalties and/or sales-based milestone payments from our collaborator, we recognize such amounts in the period earned.

REGENERON PHARMACEUTICALS, INC.

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(Unless otherwise noted, dollars in millions, except per share data)

sales occur and costs are incurred by the collaborator.

Our collaborators provide us with estimates of our share of the profits or losses for such quarter;

these estimates are reconciled to actual results in the subsequent fiscal quarter, and our share of the profit or loss is adjusted accordingly, as necessary

In arrangements where the collaborator records product sales, the Company may be obligated to use commercially reasonable efforts to supply commercial product to its collaborators, and may be reimbursed for its manufacturing costs as commercial product is shipped to its collaborators;

however, recognition of such cost reimbursements as revenue is deferred until the product is sold by the Company's collaborators to third-party customers.

In addition, we may also be reimbursed for a portion of costs incurred for other commercial-related activities, which are recorded as collaboration revenue in the period in which such costs are incurred.

Our collaborators provide us with estimates of product sales and our share of profits or losses, as applicable, for such quarter.

These estimates are reconciled to actual results in the subsequent fiscal quarter, and collaboration revenue is adjusted accordingly, as necessary.

Research and Development Expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, materials, supplies, depreciation on and maintenance of research equipment, costs related to research collaboration and licensing agreements, the cost of services provided by outside contractors, including services related to the Company's clinical trials, clinical trial expenses, the full cost of manufacturing drug for use in research, preclinical development, and clinical trials, amounts that the Company is obligated to reimburse to collaborators for research and development expenses that they incur, and the allocable portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation, and general support services.

Research and development expenses include costs attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, materials, supplies, depreciation on and maintenance of research equipment, costs related to research collaboration and licensing agreements, the cost of services provided by outside contractors, including services related to the Company's clinical trials, clinical trial expenses, the full cost of manufacturing drug for use in research, preclinical development, and clinical trials, amounts that the Company is obligated to reimburse to collaborators for research and development expenses that they incur, and the allocable portions of facility costs, such as rent, utilities, insurance, repairs and maintenance, depreciation, and general support services.

Costs associated with research and development are expensed.

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The grant-date fair value of an award is generally recognized as compensation expense over the award's requisite service period.

The fair value of stock option awards are estimated using the Black-Scholes model.

The fair value of stock option awards is estimated using the Black-Scholes model.

Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited.

This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of performance-based restricted stock units which are subject to vesting based on the Company’s attainment of pre-established performance goals is estimated using a Monte Carlo simulation.

The fair value of performance-based restricted stock units which are subject to vesting based on the Company’s attainment of pre-established market performance goals is estimated using a Monte Carlo simulation.

The probability of the number of actual shares expected to be earned is considered in the grant-date valuation, and therefore, stock-based compensation expense is not adjusted at the vesting date to reflect the actual number of shares earned.

4 unchanged sentences

A valuation allowance is established for deferred tax assets for which it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Uncertain tax positions, for which management's assessment is that there is more than a 50% probability of sustaining the position upon challenge by a taxing authority based upon its technical merits, are subjected to certain recognition and measurement criteria.

Uncertain tax positions, for which management's assessment is that there is more than a 50% probability that the position will be sustained upon examination by a taxing authority based upon its technical merits, are subjected to certain recognition and measurement criteria.

The Company re-evaluates uncertain tax positions and considers various factors, including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, and changes in facts or circumstances related to a tax position.

The Company adjusts the level of the liability to reflect any subsequent changes in the relevant facts and circumstances

The Company adjusts the level of the liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the uncertain positions.

The Company recognizes interest and penalties related to income tax matters in income tax expense.

REGENERON PHARMACEUTICALS, INC.

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(Unless otherwise noted, dollars in millions, except per share data)

surrounding the uncertain positions.

The Company recognizes interest and penalties related to income tax matters in income tax expense.

Per Share Data

4 unchanged sentences

Common stock equivalents include:

(i) outstanding stock options and restricted stock under the Company's long-term incentive plans, which are included under the "treasury stock method" when dilutive and (ii) Common Stock to be issued upon the achievement of certain market conditions, which are included under the "treasury stock method" when dilutive.

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13").

(i) outstanding stock options and unvested restricted stock under the Company's long-term incentive plans, which are included under the treasury stock method when dilutive, and (ii) Common Stock that would be issued upon the achievement of certain market conditions, which are included under the treasury stock method when dilutive.

Recently Adopted Accounting Standards

We adopted Accounting Standards Update 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), as of January 1, 2020.

ASU 2016-13 requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred.

For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded through net income instead of directly reducing the amortized cost of the investment under the current other-than-temporary impairment model.

The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

We do not expect the adoption of this standard to have a significant impact on our financial statements or internal controls.

For available-for-sale debt securities with unrealized credit losses, the standard requires allowances to be recorded through net income instead of directly reducing the amortized cost of the investment under the previous other-than-temporary impairment model.

The adoption of this standard did not have a material impact on our financial statements or a significant impact on our internal controls.

Product Sales

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Net Product Sales in the United States 2020 2019 2018

EYLEA $ 4,947.2 $ 4,644.2 $ 4,076.7

Libtayo 270.7 175.7 14.8

Praluent 150.9 * *

REGEN-COV 185.7 — —

ARCALYST 13.1 14.5 14.7

$ 5,567.6 $ 4,834.4 $ 4,106.2

* 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.

See Note 3 for further details.

The Company had product sales to certain customers that accounted for more than 10% of total gross product revenue for each of the years ended December 31, 2020, 2019, and 2018.

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

Besse Medical, a subsidiary of AmerisourceBergen Corporation

51 % 57 % 56 %

McKesson Corporation 32 % 33 % 36 %

Curascript SD Specialty Distribution, a subsidiary of Express Scripts

** Sales to Curascript SD Specialty Distribution represented less than 10% of total gross product revenue during the period.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Revenue from product sales is recorded net of applicable provisions for rebates, chargebacks, and discounts, distribution-related fees, and other sales-related deductions.

2 unchanged sentences

The following table summarizes the provisions, and credits/payments, for sales-related deductions for the years ended December 31, 2020, 2019, and 2018.

Rebates, Chargebacks, and Discounts

Distribution-

Related Deductions

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Rebates, Chargebacks, and Discounts Distribution-

Related Fees Other Sales-

Related Deductions Total

Balance as of December 31, 2017 $ 29.9 $ 34.1 $ 21.3 $ 85.3

223.4 211.0 44.5 478.9

Credits/payments ( 212.2 ) ( 203.1 ) ( 57.5 ) ( 472.8 )

Balance as of December 31, 2018 41.1 42.0 8.3 91.4

423.2 242.9 61.8 727.9

Credits/payments ( 384.0 ) ( 238.5 ) ( 40.7 ) ( 663.2 )

Balance as of December 31, 2019 80.3 46.4 29.4 156.1

762.9 279.9 94.1 1,136.9

Credits/payments ( 641.0 ) ( 249.1 ) ( 78.7 ) ( 968.8 )

Balance as of December 31, 2020 $ 202.2 $ 77.2 $ 44.8 $ 324.2

Collaboration and License Agreements

We have entered into various agreements related to our activities to research, develop, manufacture, and commercialize product candidates and utilize our technology platforms.

Significant agreements of this kind are described below.

Sanofi owned a total of 23,350,365 shares of our Common Stock as of December 31, 2019 , a portion of which was purchased in connection with the companies' antibody collaboration described below.

See Note 12 for a description of the investor agreement between us and Sanofi.

REGENERON PHARMACEUTICALS, INC.

1 unchanged sentence

(Unless otherwise noted, dollars in millions, except per share data)

The collaboration revenue we earned from Sanofi is detailed below:

Year Ended December 31,

Collaboration, License, and Other Agreements

Amounts recognized in our Statements of Operations in connection with our collaborations with Sanofi are detailed below:

Statement of Operations Classification Year Ended December 31,

2020 2019 2018

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

$ 785.2 $ 209.3 $ ( 227.0 )

Sales-based milestone earned Sanofi collaboration revenue $ 50.0 — —

Reimbursement for manufacturing of commercial supplies

Sanofi collaboration revenue

$ 368.0 $ 216.0 $ 113.7

Reimbursement of research and development expenses

Reduction of Research and development expense

$ 226.7 $ 277.7 $ 265.3

Regeneron's obligation for its share of Sanofi research and development expenses

Research and development expense

$ ( 77.6 ) $ ( 46.0 ) $ ( 47.7 )

Reimbursement of commercialization-related expenses

Reimbursement for manufacturing of commercial supplies

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

Total Antibody

Reduction of Selling, general, and administrative expense

$ 359.4 $ 479.9 $ 417.2

Regeneron's obligation for its share of Sanofi other expenses Cost of collaboration and contract manufacturing $ ( 21.5 ) $ ( 12.8 ) $ ( 16.1 )

Immuno-oncology:

Regeneron's share of losses in connection with commercialization of Libtayo outside the United States Sanofi collaboration revenue $ ( 25.7 ) $ ( 21.7 ) $ ( 12.4 )

Reimbursement for manufacturing of commercial supplies

Sanofi collaboration revenue

Reimbursement of research and development expenses

Reduction of Research and development expense

$ 166.2 $ 163.0 $ 311.8

Reimbursement of commercialization-related expenses

Reduction of Selling, general, and administrative expense

$ 64.7 $ 10.3 $ 8.9

Regeneron's obligation for Sanofi's share of Libtayo U.S.

gross profits Cost of goods sold $ ( 119.1 ) $ ( 78.2 ) $ ( 6.8 )

Amounts recognized in connection with up-front payments received

Total Immuno-oncology

In 2007, the Company entered into a global, strategic collaboration with Sanofi to discover, develop, and commercialize fully human monoclonal antibodies (the "Antibody Collaboration") .

The Antibody Collaboration was governed by the companies' Discovery and Preclinical Development Agreement ("Antibody Discovery Agreement") and a License and Collaboration Agreement (each as amended).

In connection with the execution of the Antibody Discovery Agreement in 2007, the Company received a non-refundable up-front payment of $ 85.0 million from Sanofi.

In addition, under the Antibody Discovery Agreement, Sanofi funded the Company's research to identify and validate potential drug discovery targets and develop fully human monoclonal antibodies against these targets.

Pursuant to the Antibody Discovery Agreement, as amended, Sanofi funded $ 130.0 million of the Company's research activities in 2017.

The Company's Antibody Discovery Agreement with Sanofi ended on December 31, 2017 without any extension and, therefore, funding from Sanofi under the Antibody Discovery Agreement ceased after 2017.

The Company accelerated the recognition of deferred revenue from the $ 85.0 million up-front payment and other payments in connection with Sanofi's decision to end the Antibody Discovery Agreement between the Company and Sanofi on December 31, 2017.

The Company has the right to develop or continue to develop product candidates discovered under the Antibody Discovery Agreement, with the exception of those that are being developed (and commercialized, as applicable) under the Antibody License and Collaboration Agreement ( i.e.

, Dupixent, Praluent, Kevzara, and REGN3500), independently, or with other collaborators.

Under the License and Collaboration Agreement, following receipt of the first positive Phase 3 trial results for a co-developed drug candidate, subsequent Phase 3 trial-related costs for that drug candidate ("Shared Phase 3 Trial Costs") are shared 80 % by Sanofi and 20 % by Regeneron.

The Company recognized as research and development expense $ 46.0 million , $ 47.7 million , and $ 91.8 million in 2019 , 2018 , and 2017 , respectively, its share of antibody development expenses that Sanofi incurred related to Dupixent, Praluent, and Kevzara.

All other agreed-upon worldwide development expenses incurred by both companies are funded by Sanofi.

We are obligated to reimburse Sanofi for 50 % of worldwide development expenses that were fully funded by Sanofi and 30 % of Shared Phase 3 Trial Costs, in accordance with a defined formula based on the amounts of these expenses and the Company's share of collaboration profits from commercialization of collaboration products.

However, we are only required to apply 10 % of our share of the profits from the Antibody Collaboration in any calendar quarter to reimburse Sanofi for these

Other operating income

$ 210.6 $ 92.7 $ 243.8

See Note 9 and Note 11 for information regarding Sanofi's sale of our Common Stock during the second quarter of 2020.

The Company is party to a global, strategic collaboration with Sanofi to research, develop, and commercialize fully human monoclonal antibodies (the "Antibody Collaboration"), which currently consists of Dupixent, Kevzara, and itepekimab .

Under the terms of the Antibody License and Collaboration Agreement ("LCA"), Sanofi is generally responsible for funding 80 %– 100 % of agreed-upon development costs.

We are obligated to reimburse Sanofi for 30 %– 50 % of worldwide development expenses that were funded by Sanofi (collectively, the "development balance") based on our share of collaboration profits from commercialization of collaboration products.

However, we are only required to apply 10 % of our share of the profits from the Antibody Collaboration in any calendar quarter to reimburse Sanofi for these development costs.

The Company's contingent reimbursement obligation to Sanofi under the Antibody Collaboration was approximately $ 3.103 billion as of December 31, 2020.

Effective January 2018, the Company and Sanofi entered into a letter agreement (the "Letter Agreement") in connection with, among other matters, the allocation of additional funds to certain activities relating to dupilumab and itepekimab (collectively,

REGENERON PHARMACEUTICALS, INC.

1 unchanged sentence

(Unless otherwise noted, dollars in millions, except per share data)

development costs.

The Company's contingent reimbursement obligation to Sanofi under the Antibody Collaboration was approximately $ 2.990 billion as of December 31, 2019 .

Effective January 7, 2018, the Company and Sanofi entered into a letter agreement (the "Letter Agreement") in connection with, among other matters, the allocation of additional funds to certain activities relating to dupilumab and REGN3500 (collectively, the "Dupilumab/REGN3500 Eligible Investments").

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

During 2019 , Sanofi elected to sell, and we elected to purchase (in cash), 93,286 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 $ 29.4 million , as Treasury Stock during 2019 .

During 2018 , the cost of shares of the Company's Common Stock that we elected to purchase from Sanofi (in cash) in connection with Sanofi's funding obligation for Dupilumab/REGN3500 Eligible Investments was not material.

the "Dupilumab/Itepekimab Eligible Investments").

Refer to the " Immuno-Oncology " section below for further details regarding the Letter Agreement and Note 11 for additional information regarding shares purchased by us from Sanofi.

Regeneron is obligated to use commercially reasonable efforts to supply clinical requirements of each drug candidate under the Antibody Collaboration until commercial supplies of that drug candidate are being manufactured.

Sanofi leads commercialization activities for products developed under the License and Collaboration Agreement, subject to the Company's right to co-commercialize such products.

The Company has exercised its option to co-commercialize Dupixent, Praluent, and Kevzara in the United States.

While we are not currently co-commercializing these antibodies outside the United States, we have recently exercised our option to co-commercialize Dupixent in certain countries outside the United States.

We currently anticipate commencing co-commercialization of Dupixent outside the United States at the end of 2020.

Sanofi leads commercialization activities for products under the Antibody Collaboration, subject to the Company's right to co-commercialize such products.

The Company co-commercializes Dupixent in the United States and exercised its option to co-commercialize Dupixent in certain countries outside the United States.

We currently anticipate commencing co-commercialization of Dupixent in such countries outside the United States in 2021.

The parties equally share profits and losses from sales within the United States.

The parties share profits outside the United States on a sliding scale based on sales starting at 65 % (Sanofi)/ 35 % (Regeneron) and ending at 55 % (Sanofi)/ 45 % (Regeneron), and losses outside the United States at 55 % (Sanofi)/ 45 % (Regeneron).

In addition to profit and loss sharing, the Company is entitled to receive up to $ 250.0 million in sales milestone payments, with milestone payments commencing after aggregate annual sales of antibodies (subject to this agreement) outside the United States exceed $ 1.0 billion on a rolling twelve -month basis.

"Reimbursement of commercialization-related expenses" in the table above represents reimbursement of internal and external costs in connection with commercializing Dupixent, Praluent, and Kevzara.

During the same periods that the Company recorded reimbursements from Sanofi related to the Company's commercialization expenses, the Company also recorded its share of profits or losses in connection with the companies commercializing Dupixent, Praluent, and Kevzara, within Sanofi collaboration revenue.

With respect to each antibody product in development under the License and Collaboration Agreement, Sanofi or the Company may, by giving twelve months ' notice, opt-out of further development and/or commercialization of the product, in which event the other party retains exclusive rights to continue the development and/or commercialization of the product.

Upon termination of the collaboration in its entirety, the Company's obligation to reimburse Sanofi for development costs out of any future profits from collaboration products will terminate.

In December 2019, we and Sanofi announced our intent to restructure the Antibody Collaboration for Kevzara and Praluent and enter into a royalty-based arrangement.

Under the proposed terms of the agreement, Sanofi is expected to gain sole global rights to Kevzara and sole rights to Praluent outside of the United States.

Regeneron is expected to gain sole U.S.

rights to Praluent.

Under the proposed terms, each party will be solely responsible for funding development and commercialization expenses in their respective territories.

In the fourth quarter of 2019, we recorded a $ 35.2 million charge related to employee separation costs, as the Company has eliminated certain commercialization activities and related headcount in connection with the proposed restructuring of the antibody agreement with Sanofi.

The proposed agreement with Sanofi to restructure the antibody agreement, which is expected to be finalized in the first quarter of 2020, will not impact Dupixent and REGN3500 as the companies will continue to collaborate on these antibodies under the terms of the License and Collaboration Agreement.

The Company's significant promised goods and services consist of providing research and development services, including the manufacturing of clinical supplies, and providing commercial-related services, including the manufacturing of commercial supplies.

We recognize Sanofi antibody collaboration revenue in an amount equal to the amount we have the right to invoice and such amount corresponds directly with the value to Sanofi of our performance to date;

therefore, we do not disclose the value of the transaction price allocated to our remaining unsatisfied performance obligations.

The amount of variable consideration related to our share of profits and losses, as well as sales milestones, is deemed to be constrained as of December 31, 2019 , and therefore has not been included in the transaction price.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

In addition to profit and loss sharing, we are entitled to receive sales milestone payments from Sanofi.

In the third quarter of 2020, the Company earned, and recognized as revenue, the first $ 50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of Dupixent, Kevzara, and Praluent outside the United States exceeding $ 1.0 billion on a rolling twelve-month basis.

We are entitled to receive up to an aggregate of $ 200.0 million in additional milestone payments from Sanofi, including the second sales milestone in the amount of $ 50.0 million, when such sales outside the United States exceed $ 1.5 billion on a rolling twelve-month basis.

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 shared 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.

The Company will not owe Sanofi royalties on the Company’s net product sales of Praluent in the United States.

Although each party will be responsible for manufacturing Praluent for its respective territory, the parties have entered into definitive supply agreements under which, for a certain transitional period, the Company will continue to supply drug substance to Sanofi and Sanofi will continue to supply finished product to Regeneron.

With respect to any intellectual property or product liability litigation relating to Praluent, the parties have agreed that, effective April 1, 2020, Regeneron and Sanofi each will be solely responsible for any such litigation (including damages and other costs and expenses thereof) in the United States and outside the United States, respectively, arising out of Praluent sales or other activities on or after April 1, 2020 (subject to Sanofi's right to set off a portion of any third-party royalty payments resulting from certain patent litigation proceedings against up to 50 % of any Praluent royalty payment owed to Regeneron).

The parties will each bear 50 % of any damages arising out of Praluent sales or other activities prior to April 1, 2020.

See Note 15 for discussion of legal proceedings related to Praluent.

The Company's significant promised goods and services in connection with the Antibody Collaboration consist of providing research and development services, including the manufacturing of clinical supplies, and providing commercial-related services, including the manufacturing of commercial supplies.

We recognize amounts in connection with the Antibody Collaboration based on the amount we have the right to invoice and such amount corresponds directly with our performance to date;

therefore, we do not disclose the value of the transaction price ( i.e.

, the amount of consideration we expect to be entitled to) allocated to our remaining unsatisfied obligations.

The following table summarizes contract balances in connection with the Company's Antibody Collaboration with Sanofi:

1 unchanged sentence

Accounts receivable

$ 407.7 $ 272.7

Deferred revenue

Significant changes in deferred revenue balances are as follows:

December 31, 2019

Increase due to shipments of commercial supplies to Sanofi

Revenue recognized that was included in deferred revenue at the beginning of the period

$ 347.7 $ 328.8

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Immuno-Oncology

In 2015, the Company and Sanofi entered into a collaboration to discover, develop, and commercialize antibody-based cancer treatments in the field of immuno-oncology (the "IO Collaboration").

The Company is party to a collaboration with Sanofi to research, develop, and commercialize antibody-based cancer treatments in the field of immuno-oncology (the "IO Collaboration").

The IO Collaboration is governed by an Amended and Restated Immuno-oncology Discovery and Development Agreement ("Amended IO Discovery Agreement"), and an Immuno-oncology License and Collaboration Agreement ("IO License and Collaboration Agreement").

In connection with the execution of the original Immuno-oncology Discovery and Development Agreement in 2015 ("2015 IO Discovery Agreement"), which has been replaced by the Amended IO Discovery Agreement (as discussed below), Sanofi made a $ 265.0 million non-refundable up-front payment to the Company.

Pursuant to the 2015 IO Discovery Agreement, the Company was to spend up to $ 1.090 billion ("IO Discovery Budget") to identify and validate potential immuno-oncology targets and develop therapeutic antibodies against such targets through clinical proof-of-concept, and Sanofi was to reimburse the Company for up to $ 825.0 million of these costs, subject to certain annual limits.

The original term of the 2015 IO Discovery Agreement was to continue through the later of five years from the effective date of the IO Collaboration or the date the IO Discovery Budget was exhausted, subject to Sanofi’s option to extend it for up to an additional three years for the continued development (and funding) of selected ongoing programs.

Effective December 31, 2018, the Company and Sanofi entered into the Amended IO Discovery Agreement, which narrowed the scope of the existing discovery and development activities conducted by the Company ("IO Development Activities") under the 2015 IO Discovery Agreement to developing therapeutic bispecific antibodies targeting (i) BCMA and CD3 (the "BCMAxCD3 Program") and (ii) MUC16 and CD3 (the "MUC16xCD3 Program") through clinical proof-of-concept.

The Amended IO Discovery Agreement provided for Sanofi’s payment of $ 461.9 million to the Company as consideration for (x) the termination of the 2015 IO Discovery Agreement, (y) the prepayment for certain IO Development Activities regarding the BCMAxCD3 Program and the MUC16xCD3 Program, and (z) the reimbursement of costs incurred by the Company under the 2015 IO Discovery Agreement during the fourth quarter of 2018.

Under the terms of the Amended IO Discovery Agreement, the Company is required to conduct development activities with respect to (i) the BCMAxCD3 Program through the earlier of clinical proof-of-concept or the expenditure of $ 70.0 million and (ii) the MUC16xCD3 Program through the earlier of clinical proof-of-concept or the expenditure of $ 50.0 million (the "MUC16xCD3 Program Costs Cap");

provided that under certain circumstances, Sanofi will have the option to increase the MUC16xCD3 Program Costs Cap to $ 70.0 million by making a payment to the Company in the amount of $ 20.0 million .

Pursuant to the Amended IO Discovery Agreement, we are primarily responsible for antibody development, preclinical activities, toxicology studies, manufacture of clinical supplies, filing of Investigational New Drug Applications ("INDs"), and clinical development through proof-of-concept with respect to the BCMAxCD3 Program and MUC16xCD3 Program.

Pursuant to the 2015 IO Discovery Agreement, the Company was to spend up to $ 1.090 billion to identify and validate potential immuno-oncology targets and develop therapeutic antibodies against such targets through clinical proof-of-concept, and Sanofi was to reimburse the Company for up to $ 825.0 million of these costs, subject to certain annual limits.

We are obligated to reimburse Sanofi for half of the development costs they funded that are attributable to clinical development of antibody product candidates from our share of future profits from commercialized IO Collaboration products.

1 unchanged sentence

The Company's contingent reimbursement obligation to Sanofi under the IO Collaboration was approximately $ 107 million as of December 31, 2020.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Under the terms of the Amended IO Discovery Agreement, the Company is required to conduct development activities with respect to (i) the BCMAxCD3 Program through the earlier of clinical proof-of-concept or the expenditure of $ 70.0 million (the "BCMAxCD3 Program Costs Cap") and (ii) the MUC16xCD3 Program through the earlier of clinical proof-of-concept or the expenditure of $ 50.0 million (the "MUC16xCD3 Program Costs Cap").

With regard to the BCMAxCD3 Program and the MUC16xCD3 Program, when (i) clinical proof-of-concept is established, (ii) the applicable Program Costs Cap is reached, or (iii) in certain other limited circumstances, Sanofi will have the option to license rights to the product candidate and other antibodies targeting the same targets for, with regard to BCMAxCD3, immuno-oncology indications, and with regard to MUC16xCD3, all indications, pursuant to the IO License and Collaboration Agreement, as amended.

Given the applicable Program Costs Cap for the BCMAxCD3 Program and MUC16xCD3 Program has been reached, we expect Sanofi to provide its decision on whether it will exercise its option to license rights to these product candidates in early 2021.

If Sanofi does not exercise its option to license rights to a product candidate, we will retain the exclusive right to develop and commercialize such product candidate and Sanofi will receive a royalty on sales.

4 unchanged sentences

In addition, we and Sanofi will share equally, on an ongoing basis, the development costs for a MUC16xCD3 Program antibody.

The Amended IO Discovery Agreement will terminate as of the earlier of (a) Sanofi having elected to exercise or not exercise its options with respect to the BCMAxCD3 Program and the MUC16xCD3 Program in accordance with the terms of the Amended IO Discovery Agreement and (b) December 31, 2022.

In connection with the execution of the IO License and Collaboration Agreement in 2015, Sanofi made a $ 375.0 million non-refundable up-front payment to the Company.

Under the terms of the IO License and Collaboration Agreement, the parties are co-developing and co-commercializing Libtayo (cemiplimab), an antibody targeting the receptor known as programmed cell death protein 1 (PD-1).

The parties share equally, on an ongoing basis, agreed-upon development and commercialization expenses for Libtayo.

Pursuant to the Letter Agreement, the Libtayo development budget was increased and the Company has agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to the Libtayo development and Dupilumab/REGN3500 Eligible Investments by selling up to an aggregate of 1,400,000 shares (of which 869,828 currently remains available) of our Common Stock directly or indirectly owned by Sanofi through September 30, 2020.

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 Dupilumab/REGN3500 Eligible Investments, we may elect to purchase, in whole or in part, such shares from Sanofi.

If we do not elect to purchase such shares, Sanofi may sell the applicable number of shares (subject to certain daily and quarterly limits) in one or more open-market transactions.

Refer to Note 18 for details regarding shares Sanofi elected to sell, and we elected to purchase (by issuing a credit towards the amount owed by Sanofi) to satisfy Sanofi's funding obligation related to Libtayo development costs and refer to the " Antibody " section above for a description of share transactions related to Dupilumab/REGN3500 Eligible Investments.

The Company has principal control over the development of Libtayo and leads commercialization activities in the United States (see Note 2 for related product sales information), while Sanofi leads commercialization activities outside of the United States and the parties equally share profits and losses from worldwide sales.

Consequently, in 2019 , we recorded $ 78.2 million , within Cost of goods sold, related to our obligation to pay Sanofi its share of Libtayo U.S.

gross profits;

such amounts were not material in 2018 .

As it relates to the commercialization of Libtayo outside of the United States, we recognize our share of profits and losses within Sanofi collaboration revenue.

In September 2018, the FDA approved Libtayo for the treatment of patients with metastatic or locally advanced cutaneous squamous cell carcinoma ("CSCC"), and Sanofi exercised its option to co-commercialize Libtayo in the United States.

The parties share equally, on an ongoing basis, agreed-upon development and commercialization

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

expenses for Libtayo.

Pursuant to the Letter Agreement, the Libtayo development budget was increased and the Company allowed Sanofi to satisfy in whole or in part its funding obligations with respect to the Libtayo development and Dupilumab/Itepekimab Eligible Investments incurred in periods through September 30, 2020 by selling certain shares of our Common Stock directly or indirectly owned by Sanofi;

if Sanofi desired to sell such shares, we were able to elect to purchase, in whole or in part, such shares from Sanofi.

See Note 11 for additional information regarding shares purchased by us from Sanofi.

Sanofi has exercised its option to co-commercialize Libtayo in the United States.

The Company will be entitled to a milestone payment of $ 375.0 million in the event that global sales of certain licensed products targeting PD-1 (including Libtayo), together with sales of any other products licensed under the IO License and Collaboration Agreement and sold for use in combination with any of such licensed products targeting PD-1, equal or exceed $ 2.0 billion in any consecutive twelve-month period.

The amount of variable consideration related to such milestone is deemed to be constrained as of December 31, 2019 , and therefore has not been included in the transaction price.

In August 2018, we and Sanofi entered into a license agreement with Bristol-Myers Squibb Company, E.

1 unchanged sentence

to obtain a license under certain patents owned and/or exclusively licensed by one or more of those parties that includes the right to develop and sell Libtayo.

Under the agreement, we and Sanofi made an up-front payment of $ 20.0 million and are obligated to pay royalties of 8.0 % on worldwide sales of Libtayo through December 31, 2023, and royalties

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

of 2.5 % from January 1, 2024 through December 31, 2026.

Under the agreement, we and Sanofi made an up-front payment of $ 20.0 million and are obligated to pay royalties of 8.0 % on worldwide sales of Libtayo through December 31, 2023, and royalties of 2.5 % from January 1, 2024 through December 31, 2026.

The up-front payment was shared, and the royalties are shared, equally by us and Sanofi.

Each party will have the right to co-commercialize licensed products in countries where it is not the lead commercialization party.

The parties will share equally in profits and losses in connection with the commercialization of collaboration products.

The parties share equally in profits and losses in connection with the commercialization of collaboration products.

The Company is obligated to use commercially reasonable efforts to supply clinical requirements of each drug candidate under the IO License and Collaboration Agreement until commercial supplies of that IO drug candidate are being manufactured.

With respect to each product candidate that enters development under the IO License and Collaboration Agreement, Sanofi or the Company may, by giving twelve months ' notice, opt-out of further development and/or commercialization of the product, in which event the other party will retain exclusive rights to continue the development and/or commercialization of such product.

At the inception of the IO Collaboration, the Company's significant promised goods and services consisted of a license to certain rights and intellectual property and providing research and development services, including the manufacturing of clinical supplies.

The Company concluded that the license was not distinct, primarily as a result of (i) Sanofi being unable to benefit on its own or together with other resources that are readily available as the license provides access to Regeneron's complex and specialized know-how and (ii) the research and development services, including manufacturing in support of such services, were expected to significantly modify the initial license.

Therefore, the promised goods and services were considered a single performance obligation.

Consequently, the $ 640.0 million in aggregate up-front payments made by Sanofi during 2015 in connection with the execution of the IO Collaboration has been recorded as deferred revenue and has been included in the transaction price at the inception of the contract.

"Amounts recognized in connection with up-front payments received" in the Sanofi Collaboration Revenue table above includes recognition of deferred revenue from (i) the aggregate up-front payments received during 2015 and (ii) amounts received in connection with the termination of the 2015 IO Discovery Agreement (as described above).

During 2018, we reduced our estimate of the total research and development costs expected to complete the contract, including in connection with the termination of the 2015 IO Discovery Agreement, and, as result, a cumulative catch-up adjustment of $ 135.0 million was recognized for the year ended December 31, 2018.

Therefore, the promised goods and services were considered a combined unit of account.

Consequently, the $ 640.0 million in aggregate up-front payments made by Sanofi during 2015 in connection with the execution of the IO Collaboration was recorded within other liabilities and has been included in the transaction price.

During 2020, we updated our estimate of the total research and development costs expected to be incurred (which resulted in a change to the estimate of the stage of completion) in connection with the Sanofi IO Collaboration, and, as a result, recorded a cumulative catch-up adjustment of $ 135.4 million to other operating income.

During 2018, we updated our estimate of the total research and development costs expected to be incurred for this arrangement, including in connection with the termination of the 2015 IO Discovery Agreement, and, as result, a cumulative catch-up adjustment of $ 135.0 million was recorded to other operating income.

The following table summarizes contract balances in connection with the Company's IO Collaboration with Sanofi:

1 unchanged sentence

Accounts receivable, net

$ ( 6.5 ) $ ( 16.7 )

Deferred revenue

Significant changes in deferred revenue balances are as follows:

December 31, 2019

Increase as a result of payment received from Sanofi in connection with the termination of the 2015 IO Discovery Agreement

Revenue recognized that was included in deferred revenue at the beginning of the period

Revenue recognized that was added to deferred revenue during the period

The aggregate amount of the transaction price under the IO Collaboration allocated to the Company's performance obligation that was unsatisfied (or partially unsatisfied) as of December 31, 2019 was $ 1.138 billion .

This amount is expected to be recognized as revenue over the remaining period in which the Company is obligated to satisfy its performance obligation in connection with performing development activities.

Other liabilities

$ 280.9 $ 558.6

REGENERON PHARMACEUTICALS, INC.

1 unchanged sentence

(Unless otherwise noted, dollars in millions, except per share data)

EYLEA outside the United States

Revenue earned in connection with our Bayer EYLEA collaboration is as follows (note that the table excludes amounts in connection with our Bayer Ang2 antibody and PDGFR-beta antibody collaboration agreements, which were previously terminated):

Year Ended December 31,

Bayer EYLEA Collaboration Revenue

Other liabilities include up-front payments received from Sanofi for which recognition has been deferred.

The aggregate amount of the estimated consideration under the IO Collaboration related to the Company's obligation that was unsatisfied (or partially unsatisfied) as of December 31, 2020 was $ 557.5 million.

This amount is expected to be recognized over the remaining period in which the Company is obligated to satisfy its obligation in connection with performing development activities.

Amounts recognized in our Statements of Operations in connection with our Bayer EYLEA collaboration are as follows:

Statement of Operations Classification Year Ended December 31,

2020 2019 2018

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

Reimbursement of EYLEA development expenses

In 2006, the Company entered into a license and collaboration agreement with Bayer for the global development and commercialization outside the United States of EYLEA.

All agreed-upon EYLEA development expenses incurred by the Company and Bayer, under a global development plan, are shared equally.

Bayer collaboration revenue

$ 1,107.9 $ 1,091.4 $ 992.3

Reimbursement for manufacturing of commercial supplies

Bayer collaboration revenue

$ 78.2 $ 54.2 $ 43.8

Reimbursement of development expenses

Reduction of Research and development expense

$ 46.7 $ 23.0 $ 11.2

Regeneron's obligation for its share of Bayer research and development expenses

Research and development expense

$ ( 35.8 ) $ ( 20.1 ) $ ( 0.5 )

Reimbursement of other expenses Cost of collaboration and contract manufacturing

$ 7.4 $ 19.0 $ 28.9

The Company is party to a license and collaboration agreement with Bayer for the global development and commercialization of EYLEA outside the United States.

All agreed-upon EYLEA development expenses incurred by the Company and Bayer are shared equally.

The Company is also obligated to use commercially reasonable efforts to supply clinical and commercial bulk product of EYLEA.

Bayer has the right to terminate the license and collaboration agreement without cause with at least six months ' or twelve months ' advance notice depending on defined circumstances at the time of termination.

In the event of termination of the agreement for any reason, the Company retains all rights to EYLEA.

Bayer markets EYLEA outside the United States, where, for countries other than Japan, the companies share equally in profits and losses from sales of EYLEA.

In Japan, the Company is entitled to receive a tiered percentage of between 33.5 % and 40.0 % of EYLEA net sales through 2021, and thereafter, the companies will share equally in profits and losses from the sales of EYLEA.

In Japan, the Company is currently entitled to receive a tiered percentage of between 33.5 % and 40.0 % of EYLEA net product sales through 2021, and thereafter, the companies will share equally in profits and losses from the sales of EYLEA.

Within the United States, the Company is responsible for commercialization of EYLEA and retains exclusive rights to all profits from such commercialization in the United States.

1 unchanged sentence

The Company's contingent reimbursement obligation to Bayer was approximately $ 276 million as of December 31, 2020.

In 2016, the Company and Teva entered into a collaboration agreement (the "Teva Collaboration Agreement") to develop and commercialize fasinumab globally, excluding certain Asian countries that are subject to our collaboration agreement with Mitsubishi Tanabe Pharma Corporation.

The following table summarizes contract balances in connection with our Bayer EYLEA collaboration:

As of December 31,

Accounts receivable - other

$ 336.2 $ 311.6

Deferred revenue

$ 99.7 $ 123.0

The Company and Teva are parties to a collaboration agreement (the "Teva Collaboration Agreement") to develop and commercialize fasinumab globally, excluding certain Asian countries that are subject to our collaboration agreement with Mitsubishi Tanabe Pharma Corporation.

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

1 unchanged sentence

The Company is also responsible for the manufacture and supply of fasinumab globally.

Within the United States, the Company will lead commercialization activities, and the parties will share equally in any profits and losses in connection with commercialization of fasinumab.

In the territory outside the United States, Teva will lead commercialization activities and the Company will supply product to Teva at a tiered purchase price, which is calculated as a percentage of net sales of the product (subject to adjustment in certain circumstances).

Unless terminated earlier in accordance with its provisions, the Teva Collaboration Agreement will continue to be in effect until such time as neither party is developing or commercializing fasinumab.

REGENERON PHARMACEUTICALS, INC.

1 unchanged sentence

(Unless otherwise noted, dollars in millions, except per share data)

In 2017, the Company earned, and recognized as substantive milestones, development milestones of $ 25.0 million and $ 35.0 million , respectively, from Teva upon initiation of two Phase 3 trials.

Within the United States, the Company will lead commercialization activities, and the parties will share equally in any profits and losses in connection with commercialization of fasinumab.

During 2018, the Company achieved a development milestone of $ 60.0 million.

The Company is entitled to receive up to an aggregate of $ 340.0 million in additional development milestones and up to an aggregate of $ 1,890.0 million in contingent payments upon achievement of specified annual net sales amounts;

the amount of variable consideration related to such milestones is deemed to be constrained as of December 31, 2019 , and therefore has not been included in the transaction price.

The Company is 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.

At the inception of the Teva Collaboration Agreement, the Company's significant promised goods and services consisted of a license to certain rights and intellectual property and providing research and development services, including the manufacturing of clinical supplies.

The Company concluded that the license was not distinct, primarily as a result of (i) Teva being unable to benefit from the license on its own or together with other resources that are readily available as the license provides access to Regeneron's complex and specialized know-how and (ii) the research and development services, including manufacturing in support of such services, were expected to significantly modify the initial license.

Therefore, the promised goods and services were considered a single performance obligation.

Consequently, the $ 250.0 million up-front payment and development milestones received or receivable from Teva, as described above, have been recorded as deferred revenue and have been included in the transaction price.

The Company recognized $ 206.5 million , $ 244.6 million , and $ 221.5 million of revenue in 2019 , 2018 , and 2017 , respectively, in connection with the Teva Collaboration Agreement.

Therefore, the promised goods and services were considered a combined unit of account.

Consequently, the $ 250.0 million up-front payment and development milestones received from Teva, as described above, have been recorded within other liabilities and included in the transaction price.

Amounts recognized in our Statements of Operations in connection with the Teva Collaboration Agreement are as follows:

Statement of Operations Classification Year Ended December 31,

2020 2019 2018

Reimbursement of research and development expenses

Reduction of Research and development expense

$ 109.4 $ 122.9 $ 129.5

Amounts recognized in connection with up-front and development milestone payments received

Other operating income

$ 47.2 $ 82.2 $ 113.2

During 2020, we updated our estimate of the total research and development costs expected to be incurred (which resulted in a change to the estimate of the stage of completion) in connection with the Teva Collaboration Agreement, and, as a result, recognized a cumulative catch-up adjustment of $ 25.6 million as a reduction to other operating income.

The following table summarizes contract balances in connection with the Teva Collaboration Agreement:

As of December 31,

Accounts receivable (recorded within Prepaid expenses and other current assets)

Deferred revenue

Significant changes in deferred revenue balances are as follows:

December 31, 2019

Revenue recognized that was included in deferred revenue at the beginning of the period

The aggregate amount of the transaction price under the Teva Collaboration Agreement allocated to the Company's performance obligation that was unsatisfied (or partially unsatisfied) as of December 31, 2019 was $ 267.1 million .

Accounts receivable - other $ 27.7 $ 21.2

Other liabilities $ 66.8 $ 114.4

Other liabilities include up-front and development milestone payments received from Teva for which recognition has been deferred.

The aggregate amount of the estimated consideration under the Teva Collaboration Agreement related to the Company's obligation that was unsatisfied (or partially unsatisfied) as of December 31, 2020 was $ 155.9 million.

This amount is expected to be recognized over the remaining period in which the Company is obligated to satisfy its obligation in connection with performing development activities.

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.

The parties collaborate to conduct research for the discovery, development, and commercialization of new therapies, in addition to the research and technology development of the CRISPR/Cas9 platform.

Under the terms of the 2016 agreement, the parties agreed to a target selection process, whereby the Company may obtain exclusive rights in up to 10 targets to be chosen by the Company during the collaboration term, subject to various adjustments

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

and limitations set forth in the agreement.

Certain targets that either we or Intellia select pursuant to the target selection process may be subject to a co-development and co-commercialization arrangement at our option or Intellia’s option, as applicable.

In May 2020, we expanded our existing collaboration with Intellia to provide us with rights to develop products for additional in vivo CRISPR/Cas9-based therapeutic targets and for the parties 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, which was recorded to Research and development expense in 2020, 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 also recorded to Research and development expense in 2020.

In the first quarter of 2020, we announced an expansion of our Other Transaction Agreement ("OTA") with the Biomedical Advanced Research Development Authority ("BARDA"), pursuant to which the U.S.

Department of Health and Human Services ("HHS") was obligated to fund certain of our costs incurred for research and development activities related to COVID-19 treatments.

In July 2020, we entered into an agreement with entities acting at the direction of BARDA and the U.S.

Department of Defense to manufacture and deliver filled and finished drug product of REGEN-COV to the U.S.

The agreement, as subsequently amended, could result in payments to the Company of up to $ 465.9 million in the aggregate for bulk manufacturing of the drug substance, as well as fill/finish, storage, and other activities.

See Note 2 for REGEN-COV net product sales recognized in connection with this agreement during 2020.

In January 2021, the Company announced an agreement with an entity acting on behalf of the U.S.

Department of Defense and HHS to manufacture and deliver additional filled and finished drug product of REGEN-COV to the U.S.

Pursuant to the agreement, the U.S.

government is obligated to purchase all filled and finished doses of drug product delivered by June 30, 2021, and may accept doses during the period from July 1, 2021 through September 30, 2021 at its discretion.

government will acquire doses at the lowest treatment dose authorized or approved by the FDA for the indication authorized under the EUA, resulting in payments to the Company of up to $ 2.625 billion in the aggregate.

A number of factors may impact available filled and finished supply by June 30, 2021, including manufacturing considerations and authorized dose level.

In August 2020, we entered into a collaboration agreement with Roche to develop, manufacture, and distribute REGEN-COV.

We will continue to lead global development activities for REGEN-COV, and the parties will jointly fund certain ongoing studies, as well as any mutually agreed additional new global studies to evaluate further the potential of REGEN-COV in treating or preventing COVID-19.

Roche will be responsible for securing regulatory approvals outside the United States, following the initial European Medicines Agency ("EMA") approval (if any), and conducting any additional studies specifically required for approval by regulators outside the United States.

Under the terms of the agreement, each party is obligated to dedicate a certain amount of manufacturing capacity to REGEN-COV each year.

We will distribute the product in the United States and Roche will distribute the product outside of the United States.

The parties will share gross profits from worldwide sales based on a pre-specified formula, depending on the amount of manufactured product supplied by each party to the market.

Any profit sharing will commence after product manufactured by Roche receives regulatory authorization.

During 2020, we recorded $ 78.5 million of reimbursements received from Roche as a reduction of Research and development expense.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

In April 2019, the Company and Alnylam Pharmaceuticals, Inc.

1 unchanged sentence

The collaboration is governed by a Master Collaboration Agreement (the "Master Agreement") (including the form of a License Agreement and a Co-Commercialization Collaboration Agreement).

Under the terms of the Master Agreement, we made an up-front payment of $ 400.0 million to Alnylam, which was recorded in Research and development expense during the second quarter of 2019.

For each program, we will provide Alnylam with a specified amount of funding at program initiation and at lead candidate designation, and Alnylam is eligible to receive up to $ 200.0 million in clinical proof-of-principle milestones for eye or CNS programs.

Under the terms of the Master Agreement, we made an up-front payment of $ 400.0 million to Alnylam, which was recorded in Research and development expense during 2019.

For each program, we will provide Alnylam with a specified amount of funding at program initiation and at lead candidate designation, and Alnylam is eligible to receive up to an aggregate of $ 200.0 million in clinical proof-of-principle milestones for eye or CNS programs.

Under the collaboration, the parties plan to perform discovery research until designation of lead candidates.

Following designation of a lead candidate, the parties may further advance such lead candidate under either a License Agreement or a Co-Commercialization Collaboration Agreement structure.

The initial target nomination and discovery period is five years (which may under certain

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

situations automatically be extended for up to seven years in the aggregate) (the "Research Term").

The initial target nomination and discovery period is five years (which may under certain situations automatically be extended for up to seven years in the aggregate) (the "Research Term").

In addition, we have an option to extend the Research Term for an additional five-year period for a research extension fee ranging from $ 200.0 million to $ 400.0 million;

2 unchanged sentences

Pursuant to the terms of the Stock Purchase Agreement, we purchased shares of Alnylam common stock for aggregate cash consideration of $ 400.0 million.

In August 2019, the parties entered into a Co-Commercialization Collaboration Agreement for a silencing RNA ("siRNA") therapeutic targeting the C5 component of the human complement pathway being developed by Alnylam, with Alnylam as the lead party, and a License Agreement for a combination product consisting of such siRNA therapeutic and a fully human monoclonal antibody targeting C5 being developed by us, with us as the licensee.

In August 2019, the parties entered into a Co-Commercialization Collaboration Agreement for a silencing RNA ("siRNA") therapeutic targeting the C5 component of the human complement pathway being developed by Alnylam, with Alnylam as the lead party, and a License Agreement for a combination product consisting of such siRNA therapeutic (cemdisiran) and a fully human monoclonal antibody targeting C5 being developed by us (pozelimab), with us as the licensee.

The C5 siRNA Co-Commercialization Collaboration Agreement is consistent with the financial terms contained in the form of the existing Co-Commercialization Collaboration Agreement with Alnylam and the parties will share in development expenses equally.

The C5 siRNA License Agreement contains a flat low double-digit royalty payable to Alnylam on our potential future net sales of the combination product only subject to customary reductions, as well as up to $ 325.0 million in commercial milestones.

In addition to the collaboration agreements discussed above, the Company has various other collaboration agreements that are not individually, or in the aggregate, significant to its operating results or financial condition at this time.

In addition to the collaboration agreements discussed above, the Company has various other collaboration agreements that are not individually significant to its operating results or financial condition at this time.

Pursuant to the terms of those agreements, the Company may be required to pay, or it may receive, additional amounts upon the achievement of various development and commercial milestones which in the aggregate could be significant.

2 unchanged sentences

The payment or receipt of these amounts, however, is contingent upon the occurrence of various future events.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Marketable Securities

1 unchanged sentence

The following tables summarize the Company's investments in available-for-sale debt securities:

As of December 31, 2019

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Amortized Unrealized Fair

As of December 31, 2020 Cost Basis Gains Losses Value

Corporate bonds $ 3,053.0 $ 37.5 $ ( 0.2 ) $ 3,090.3

3 unchanged sentences

Certificates of deposit 127.4 0.1 — 127.5

$ 3,649.2 $ 40.1 $ ( 0.2 ) $ 3,689.1

As of December 31, 2019

4 unchanged sentences

Certificates of deposit 72.3 0.1 — 72.4

$ 4,206.3 $ 28.5 $ ( 0.3 ) $ 4,234.5

The Company classifies its investments in available-for-sale debt securities based on their contractual maturity dates.

The available-for-sale debt securities listed as of December 31, 2019 mature at various dates through December 2024.

The available-for-sale debt securities listed as of December 31, 2020 mature at various dates through October 2025.

The fair values of available-for-sale debt security investments by contractual maturity consist of the following:

2 unchanged sentences

Maturities after one year through five years 2,295.8 2,638.0

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

The following table shows the fair value of the Company's available-for-sale debt securities that have unrealized losses and that are deemed to be only temporarily impaired, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

Less than 12 Months

12 Months or Greater

As of December 31, 2019

Unrealized Loss

Corporate bonds

government and government agency obligations

As of December 31, 2018

Corporate bonds

government and government agency obligations

There were no realized losses on sales of marketable securities, and realized gains were not material, for the year ended December 31, 2019 .

Realized gains and losses on sales of marketable securities were not material for the years ended December 31, 2018 and 2017 .

With respect to marketable securities, for the years ended December 31, 2019 , 2018 , and 2017 , amounts reclassified from Accumulated other comprehensive income (loss) into Other income (expense), net were related to realized gains and losses on sales of securities (as described above).

$ 3,689.1 $ 4,234.5

Unrealized losses of our available-for-sale debt securities that had been in a continuous loss position, for both less than and greater than 12 months, were not material for the years ended December 31, 2020 and 2019.

Realized gains on sales of marketable securities for the year ended December 31, 2020 were $ 29.0 million and realized gains were no t material for the years ended December 31, 2019 and 2018.

Realized losses on sales of marketable securities were no t material for the years ended December 31, 2020 and 2018 and there were no realized losses for the year ended December 31, 2019.

With respect to marketable securities, for the years ended December 31, 2020, 2019, and 2018, amounts reclassified from Accumulated other comprehensive income (loss) into Other income (expense), net were related to realized gains and losses on sales of available-for-sale debt securities (as described above).

REGENERON PHARMACEUTICALS, INC.

8 unchanged sentences

Fair Value Measurements at Reporting Date

As of December 31, 2019

As of December 31, 2020 Fair Value Level 1 Level 2

Available-for-sale debt securities:

6 unchanged sentences

Equity securities (restricted) 791.5 791.5 —

$ 4,528.9 $ 839.8 $ 3,689.1

As of December 31, 2019

7 unchanged sentences

Equity securities (restricted) 557.2 557.2 —

The Company held certain restricted equity securities as of December 31, 2019 , including its investment in Alnylam (see Note 3), which are subject to transfer restrictions that expire at various dates through 2023.

The Company adopted ASU 2016-01 during the first quarter of 2018 (see Note 1);

as a result, we recorded $ 118.3 million of net unrealized gains and $ 41.9 million of net unrealized losses on equity securities in Other income (expense), net for the years ended December 31, 2019 and 2018 , respectively.

During the year ended December 31, 2017 , we recorded net unrealized gains of $ 14.7 million on equity securities in Other comprehensive income (loss).

$ 4,853.3 $ 618.8 $ 4,234.5

The Company held certain restricted equity securities as of December 31, 2020 which are subject to transfer restrictions that expire at various dates throug h 2024.

During the years ended December 31, 2020 and 2019, we recorded $ 196.0 million and $ 118.3 million of net unrealized gains, respectively, on equity securities in Other income (expense).

During the year ended December 31, 2018, we recorded net unrealized losses on equity securities of $ 41.9 million in Other income (expense).

In addition to the investments summarized in the table above, as of December 31, 2020 and 2019, the Company had $ 59.2 million and $ 55.6 million, respectively, in equity investments that do not have a readily determinable fair value.

These investments are recorded within Other noncurrent assets.

The fair value of our long-term debt (see Note 9) was estimated to be $ 1.958 billion as of December 31, 2020, and was determined based on Level 2 inputs.

REGENERON PHARMACEUTICALS, INC.

7 unchanged sentences

Deferred costs 430.9 400.9

Deferred costs represent the costs of product manufactured and shipped to the Company's collaborators for which recognition of revenue has been deferred (see Note 1 for a further description of the related accounting policy).

$ 1,916.6 $ 1,415.5

Deferred costs represent the costs of product manufactured and shipped to the Company's collaborators for which recognition of revenue has been deferred.

For the years ended December 31, 2020, 2019, and 2018, Cost of goods sold included inventory write-downs and reserves of $ 39.2 million, $ 73.8 million, and $ 12.5 million, respectively.

2 unchanged sentences

As of December 31,

Land $ 241.2 $ 230.8

Building and improvements 1,891.1 1,683.4

4 unchanged sentences

Furniture, office equipment, and other

4,352.7 3,812.8

Less, accumulated depreciation and amortization

( 1,131.1 ) ( 922.4 )

$ 3,221.6 $ 2,890.4

Property, plant, and equipment in the table above includes leased property under the Company's finance lease at its Tarrytown, New York facility.

Depreciation and amortization expense (including as it relates to the Company's finance lease) on property, plant, and equipment amounted to $ 230.8 million, $ 205.2 million, and $ 144.1 million for the years ended December 31, 2020, 2019, and 2018, respectively.

As of December 31, 2019 and 2018 , $ 2,117.6 million and $ 1,813.8 million , respectively, of the Company's net property, plant, and equipment was located in the United States and $ 772.8 million and $ 762.0 million , respectively, was located in Europe (primarily in Ireland).

As of December 31, 2020 and 2019, $ 2.398 billion and $ 2.118 billion, respectively, of the Company's net property, plant, and equipment was located in the United States and $ 823.8 million and $ 772.8 million, respectively, was located in Europe (primarily in Ireland).

REGENERON PHARMACEUTICALS, INC.

9 unchanged sentences

Other accrued expenses and liabilities

Deferred Revenue

Deferred revenue consists of the following:

As of December 31,

Current portion:

Received or receivable from Sanofi (see Note 3a)

Received or receivable from Bayer (see Note 3b)

Received or receivable from Teva (see Note 3c)

Noncurrent portion:

Received or receivable from Sanofi (see Note 3a)

Received or receivable from Bayer (see Note 3b)

Received or receivable from Teva (see Note 3c)

$ 1,521.8 $ 1,211.4

Credit Facility

In December 2018, we entered into an agreement with a syndicate of lenders (the "Credit Agreement") which provides for a $ 750.0 million senior unsecured five -year revolving credit facility (the "Credit Facility"), and contemporaneously terminated our then-existing credit agreement (the "Prior Credit Agreement").

The Credit Agreement was entered into on terms substantially similar to those of the Prior Credit Agreement.

No borrowings were outstanding under the Prior Credit Agreement at the time of its termination.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

The Credit Agreement includes an option for us to elect to increase the commitments under the Credit Facility and/or to enter into one or more tranches of term loans in the aggregate principal amount of up to $ 250.0 million, subject to the consent of the lenders providing the additional commitments or term loans, as applicable, and certain other conditions.

6 unchanged sentences

The Company was in compliance with all covenants of the Credit Facility as of December 31, 2020.

Bridge Loan Facility

As described in Note 11, in May 2020, we purchased shares of our Common Stock from Sanofi, in connection with Sanofi's secondary offering of our Common Stock held by Sanofi, 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").

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

The Bridge Facility was repaid in full during 2020 following the closing of the issuance and sale of the Company's senior notes (as described below).

In August 2020, we issued and sold $ 1.250 billion aggregate principal amount of senior unsecured notes due 2030 (the "2030 Notes") and $ 750 million aggregate principal amount of senior unsecured notes due 2050 (the "2050 Notes" and, together with the 2030 Notes, the "Notes").

Net proceeds from the issuance and sale of the Notes (after deducting underwriting discounts and offering expenses) were used in part to repay in full the Bridge Facility described above, including accrued interest and related fees and expenses in connection therewith.

The underwriting discounts and offering expenses are being amortized as additional interest expense over the period from issuance through maturity.

The 2030 Notes accrue interest at the rate of 1.750 % per year and will mature on September 15, 2030.

The 2050 Notes accrue interest at the rate of 2.800 % per year and will mature on September 15, 2050.

Interest on each series of Notes is payable semi-annually in arrears on March 15 and September 15 of each year until their respective maturity dates.

Interest expense related to the Notes for the year ended December 31, 2020 was $ 17.6 million.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

The Notes may be redeemed at the Company’s option at any time at 100 % of the principal amount plus accrued and unpaid interest, and, until a specified period before maturity, a specified make-whole amount.

The Notes contain a change-of-control provision that, under certain circumstances, may require the Company to offer to repurchase the Notes at a price equal to 101 % of the principal amount plus accrued and unpaid interest.

The Notes also contain certain limitations on the Company’s ability to incur liens and enter into sale and leaseback transactions, as well as customary events of default.

Commitments and Contingencies

3 unchanged sentences

As described in Note 1, during the first quarter of 2019, we adopted ASC 842, Leases .

We determine if an arrangement is a lease considering whether there is an identified asset and the contract conveys the right to control its use.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Our lease terms may include options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

We account for lease components ( e.g.

, rental payments) separately from non-lease components ( e.g.

, common area maintenance costs).

Lease expense for operating leases is recognized on a straight-line basis over the expected lease term.

Operating leases

3 unchanged sentences

In March 2017, we entered into a Participation Agreement with BA Leasing BSC, LLC, an affiliate of Banc of America Leasing & Capital LLC ("BAL"), as lessor, and a syndicate of lenders (collectively, the "Lease Participants").

In March 2017, we also entered into a Lease and Remedies Agreement with BAL, pursuant to which we have leased laboratory and office facilities in Tarrytown, New York (the "Facility") for a five -year term.

The Participation Agreement, the Lease and Remedies Agreement, and certain other related agreements were amended and restated in May 2019, among other things, to revise certain covenants, representations and warranties, and events of default to be substantially similar to those set forth in the agreement governing the Company's revolving credit facility (as so amended and restated, the "Participation Agreement" and the "Lease," respectively).

4 unchanged sentences

The advances under the Participation Agreement mature, and all amounts outstanding thereunder will become due and payable in full, at the end of the term of the Lease.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Prior to January 1, 2019, for certain of the premises under the Lease we were deemed, in substance, to be the owner of the buildings (collectively, the "Build-to-Suit Buildings").

3 unchanged sentences

The Company was in compliance with all such covenants as of December 31, 2020.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Amounts recognized in the Consolidated Balance Sheet related to the Lease are included in the table below.

Other than the Lease described above, we had no leases accounted for as finance leases as of December 31, 2019 .

Other than the Lease described above, we had no leases accounted for as finance leases as of December 31, 2020 and 2019.

As of December 31,

Classification 2020 2019

Finance lease right-of-use assets

Property, plant, and equipment, net (1)

Finance lease liabilities

Finance lease liabilities (noncurrent)

(1) Finance lease right-of-use assets are recorded net of accumulated amortization of $76.1 million as of December 31, 2019.

As of December 31, 2018, property, plant, and equipment, at cost, included $ 723.9 million of leased property under the Lease.

Accumulated amortization related to these assets amounted to $ 61.7 million as of December 31, 2018.

Finance lease right-of-use assets Property, plant, and equipment, net (1)

$ 645.7 $ 660.1

Finance lease liabilities Finance lease liabilities (noncurrent)

$ 717.2 $ 713.9

(1) Finance lease right-of-use assets are recorded net of accumulated amortization of $ 90.5 million and $ 76.1 million as of December 31, 2020 and 2019, respectively.

Finance lease costs consist of the following:

December 31, 2019

Year Ended December 31,

Amortization of right-of-use assets $ 14.4 $ 14.4

Interest on lease liabilities 15.7 27.6

$ 30.1 $ 42.0

Other information related to our finance lease includes the following:

As of December 31,

Remaining lease term (in years) 1.17 2.17

Discount rate 1.66 % 3.05 %

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Supplemental information

The following is a maturity analysis of our lease liabilities as of December 31, 2019 :

Operating Leases

Finance Leases

The following is a maturity analysis of our finance lease liabilities:

As of December 31, 2020

Total undiscounted lease payments 735.2

2 unchanged sentences

Total lease liabilities $ 717.2

As of December 31, 2018, the estimated future minimum noncancelable lease commitments, excluding the purchase price we would be obligated to pay if we were to exercise our option to purchase the Facility, were as follows:

Operating Leases

Capital and Facility Lease Obligations

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Research Collaboration and Licensing Agreements

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Some of these agreements may require the Company to pay additional amounts upon the achievement of various development and commercial milestones, contingent upon the occurrence of various future events.

Additionally, we have in-license patent and/or technology agreements which contain provisions which require the Company to pay royalties, as defined, at rates that range from 0.5 % to 11.5 % , in the event the Company sells or licenses any proprietary products developed under the respective agreements.

Additionally, we have in-licensed patent and/or technology pursuant to agreements which contain provisions that require the Company to pay royalties, as defined, at rates that range from 0.5 % to 11.5 %, in the event the Company sells or licenses any proprietary products developed under the respective agreements.

The Company also has contingent reimbursement obligations to its collaborators Sanofi and Bayer out of the respective collaboration's profits, if they are sufficient for that purpose.

See Note 3 for a more detailed description of collaboration agreements.

For the years ended December 31, 2019 , 2018 , and 2017 , the Company recorded royalty expense in Cost of goods sold and Cost of collaboration and contract manufacturing of $ 54.2 million , $ 36.7 million , and $ 30.8 million , respectively, based on product sales of commercial products under various licensing agreements.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

See Note 3 for a more detailed description of collaboration, license, and other agreements.

For the years ended December 31, 2020, 2019, and 2018, the Company recorded royalty expense (net of reimbursements from collaborators, as applicable) in Cost of goods sold and Cost of collaboration and contract manufacturing of $ 56.5 million, $ 47.0 million, and $ 30.1 million, respectively, based on product sales of commercial products under various licensing agreements.

Stockholders' Equity

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In November 2019, our board of directors authorized a share repurchase program to repurchase up to $ 1.0 billion of our Common Stock.

The share repurchase program permits the Company to effect repurchases through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, block trades, and other transactions in compliance with Rule 10b-18 of the Exchange Act.

Repurchases may be made from time to time at management’s discretion, and the timing and amount of any such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors.

The program has no time limit and can be discontinued at any time.

During 2019, we repurchased 722,596 shares of Common Stock under the program and recorded the cost of the shares received, or $ 254.0 million , as Treasury Stock.

There can be no assurance as to the timing or number of shares of any repurchases in the future.

Arrangements with Collaborators

The share repurchase program permitted the Company to effect repurchases through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, block trades, and other transactions in compliance with Rule 10b-18 of the Exchange Act.

As of December 31, 2020, the Company had repurchased the entire $ 1.0 billion it was authorized to repurchase under the program.

The table below summarizes the shares of our Common Stock we repurchased under the program and the cost of the shares received, which were recorded as Treasury Stock.

Year Ended December 31,

Number of shares repurchased 1,605,582 722,596

Total cost of shares received $ 746.0 $ 254.0

In January 2021, our board of directors authorized a new share repurchase program to repurchase up to $ 1.5 billion of our Common Stock.

The share repurchase program was approved under terms substantially similar to the November 2019 share repurchase program described above.

Arrangements with Sanofi

In 2007, Sanofi purchased 12 million newly issued, unregistered shares of the Company's Common Stock.

As a condition to the closing of this transaction, Sanofi entered into an investor agreement, as amended and restated, with the Company.

Under the terms of the amended and restated investor agreement, Sanofi has three demand rights to require the Company to use all reasonable efforts to conduct a registered underwritten public offering with respect to shares of the Company's Common Stock held by Sanofi from time to time.

Under the amended and restated investor agreement, Sanofi has also agreed not to dispose of any shares of the Company's Common Stock beneficially owned by Sanofi from time to time until December 20, 2020 (subject to the limited waiver described below).

These restrictions on dispositions are subject to earlier termination upon the occurrence of certain events, such as the consummation of a change-of-control transaction involving the Company or the Company's dissolution or liquidation, and certain restrictions have been imposed on the manner of sales thereafter.

As described in Note 3, effective January 7, 2018, the Company and Sanofi entered into a Letter Agreement, which, among other things, amended certain provisions of the amended and restated investor agreement.

Pursuant to the Letter Agreement, the Company has granted Sanofi a limited waiver of the lock-up obligations under the investor agreement to allow Sanofi to sell up to an aggregate of 1,400,000 shares (of which 869,828 shares remain available to be sold as of December 31, 2019 ) of the Company's Common Stock held by Sanofi through September 30, 2020.

Further, pursuant to the amended and restated investor agreement, Sanofi is bound by certain "standstill" provisions, which contractually prohibit Sanofi from seeking to directly or indirectly exert control of the Company or acquiring more than 30 % of the outstanding shares of the Company's Class A Stock and Common Stock (taken together).

Under the amended and restated investor agreement, Sanofi agreed not to dispose of any shares of the Company's Common Stock beneficially owned by Sanofi from time to time until December 20, 2020 (subject to the limited waiver described below).

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

the outstanding shares of the Company's Class A Stock and Common Stock (taken together).

This prohibition will remain in place until the earliest of (i) the later of the fifth anniversaries of the expiration or earlier termination of the Company's License and Collaboration Agreement with Sanofi and the Company's ZALTRAP Agreement with Sanofi, each as amended, and (ii) other specified events.

Sanofi has also agreed to vote as recommended by the Company's board of directors, except that it may elect to vote proportionally with the votes cast by all of the Company's other shareholders with respect to certain change-of-control transactions, and to vote in its sole discretion with respect to liquidation or dissolution, stock issuances equal to or exceeding 20 % of the outstanding shares or voting rights of the Company's Class A Stock and Common Stock (taken together), and new equity compensation plans or amendments if not materially consistent with the Company's historical equity compensation practices.

The rights and restrictions under the investor agreement are subject to termination upon the occurrence of certain events.

In addition, upon Sanofi reaching 20 % ownership of the Company's outstanding shares of Class A Stock and Common Stock (taken together) during 2014, the Company was required to appoint an individual agreed upon by the Company and Sanofi to the Company's board of directors.

This individual is required to be independent of the Company, and not to be a current or former officer, director, employee, or paid consultant of Sanofi.

Subject to certain exceptions, the Company is required to use its reasonable efforts (including

The rights and restrictions under the investor agreement are subject to termination upon the occurrence of certain events and have been amended in connection with the Secondary Offering and the Stock Purchase (each as defined below).

As described in Note 3, effective January 2018, we and Sanofi entered into a Letter Agreement, which, among other things, amended certain provisions of the amended and restated investor agreement.

Pursuant to the Letter Agreement, we granted Sanofi a limited waiver of the lock-up obligations under the investor agreement in order to allow Sanofi to satisfy in whole or in part its funding obligations with respect to Libtayo development costs and/or Dupilumab/Itepekimab Eligible Investments for quarterly periods ending on September 30, 2020 by selling our Common Stock directly or indirectly owned by Sanofi.

The table below summarizes the shares of our Common Stock Sanofi elected to sell, and we elected to purchase, to satisfy Sanofi's funding obligations and the cost of the shares received, which were recorded as Treasury Stock.

As of December 31,

2020 2019 2018

Number of shares purchased (by issuing a credit towards the amount owed by Sanofi)

77,677 210,733 215,387

Total cost of shares received $ 41.7 $ 73.3 $ 75.8

Dupilumab/Itepekimab:

Number of shares purchased (in cash) 171,471 93,286 10,766

Total cost of shares received $ 93.3 $ 29.4 $ 4.4

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 directly from Sanofi for an aggregate purchase amount of $ 5 billion (the "Stock Purchase").

See Note 9 for additional information.

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 (a portion of which Sanofi has used for the funding of certain development costs described above).

In May 2020, the Company entered into an amendment to the amended and restated investor agreement, which provides, among other things, that following the Secondary Offering and Share Purchase, (1) the “standstill” provisions, which contractually prohibit Sanofi from seeking to directly or indirectly exert control of the Company, continue to apply pursuant to their terms;

(2) the voting commitments contained in the investor agreement continue to apply to the shares of Common Stock held by Sanofi and its affiliates following the secondary offering and stock repurchase, for so long as such shares are held by them;

and (3) the lock-up restrictions in the investor agreement continued to apply to the shares of Common Stock held by Sanofi following the Secondary Offering and Stock Purchase until December 20, 2020 (except those shares which could be used to satisfy certain funding obligations of Sanofi).

Arrangements with Other Collaborators

In connection with the Company's license and collaboration agreements with Bayer for the joint development and commercialization outside the United States of antibody product candidates to PDGFR-beta and Ang2, Bayer is bound by certain "standstill" provisions, which contractually prohibit Bayer from seeking to influence the control of the Company or acquiring more than 20 % of the Company's outstanding shares of Class A Stock and Common Stock (taken together).

With respect to each of these agreements, this prohibition will remain in place until the earliest of (i) the fifth anniversary of the

REGENERON PHARMACEUTICALS, INC.

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(Unless otherwise noted, dollars in millions, except per share data)

recommending that its shareholders vote in favor) to cause the election of this designee at the Company's annual shareholder meetings for so long as (other than during the term of the Letter Agreement) Sanofi maintains a specified equity interest in the Company.

With respect to each of these agreements, this prohibition will remain in place until the earliest of (i) the fifth anniversary of the expiration or earlier termination of the agreement (which, in the case of the PDGFR-beta license and collaboration agreement, occurred on July 31, 2017, and, in the case of the Ang2 agreement, occurred on November 1, 2018) or (ii) other specified events.

termination of the agreement (which, in the case of the PDGFR-beta license and collaboration agreement, occurred on July 31, 2017, and, in the case of the Ang2 agreement, occurred on November 1, 2018) or (ii) other specified events.

Further, pursuant to the 2016 Teva Collaboration Agreement, Teva and its affiliates are bound by certain "standstill" provisions, which contractually prohibit them from seeking to directly or indirectly exert control of the Company or acquiring more than 5 % of the Company's Class A Stock and Common Stock (taken together).

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Long-Term Incentive Plans

The Company has used long-term incentive plans for the purpose of granting equity awards to employees of the Company, including officers, and nonemployees, including consultants and nonemployee members of the Company's board of directors (collectively, "Participants").

The Company has used long-term incentive plans for the purpose of granting equity awards to employees of the Company, including officers, and nonemployees, including nonemployee members of the Company's board of directors (collectively, "Participants").

The Participants may receive awards as determined by a committee of independent members of the Company's board of directors or, to the extent authorized by such committee with respect to certain Participants, a duly authorized employee (collectively, the "Committee").

The incentive plan currently used by the Company is the Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (the "Amended and Restated 2014 Incentive Plan").

It was adopted and approved by the Company's shareholders in 2017, at which time the Company registered an additional 12,000,000 shares of Common Stock for issuance thereunder.

As of the shareholder approval date, the Amended and Restated 2014 Incentive Plan provided for the issuance of up to 18,559,431 shares of Common Stock in respect of awards.

In addition, upon expiration, forfeiture, surrender, exchange, cancellation, or termination of any award previously granted under the Amended and Restated 2014 Incentive Plan, the Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (the "Original 2014 Incentive Plan"), or the Second Amended and Restated 2000 Long-Term Incentive Plan (the predecessor to the Original 2014 Incentive Plan), any shares subject to such award are added to the pool of shares available for grant under the Amended and Restated 2014 Incentive Plan.

The awards that may be made under the Amended and Restated 2014 Incentive Plan include:

The incentive plan currently used by the Company is the Second Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (the "Second Amended and Restated 2014 Incentive Plan").

It was most recently adopted and approved by the Company's shareholders in 2020, at which time the Company registered an additional 12,000,000 shares of Common Stock for issuance thereunder.

As of the most recent shareholder approval date, the Second Amended and Restated 2014 Incentive Plan provided for the issuance of up to 22,269,970 shares of Common Stock in respect of awards.

In addition, upon expiration, forfeiture, surrender, exchange, cancellation, or termination of any award previously granted under the Amended and Restated Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (the "Amended and Restated 2014 Incentive Plan"), the Regeneron Pharmaceuticals, Inc.

2014 Long-Term Incentive Plan (the "Original 2014 Incentive Plan"), or the Second Amended and Restated 2000 Long-Term Incentive Plan (the "2000 Incentive Plan"), any shares subject to such award are added to the pool of shares available for grant under the Second Amended and Restated 2014 Incentive Plan.

The awards that may be made under the Second Amended and Restated 2014 Incentive Plan include:

(a) incentive stock options and nonqualified stock options, (b) shares of restricted stock, (c) shares of phantom stock (also referred to as restricted stock units, which may be time- or performance-based), and (d) other awards.

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The Committee also determines the expiration date of each option.

The maximum term of options that have been awarded under the 2000 Incentive Plan, the Original 2014 Incentive Plan, and the Amended and Restated 2014 Incentive Plan (collectively, the "Incentive Plans") is ten years .

The maximum term of options that have been awarded under the 2000 Incentive Plan, the Original 2014 Incentive Plan, the Amended and Restated 2014 Incentive Plan, and the Second Amended and Restated 2014 Incentive Plan (collectively, the "Incentive Plans") is ten years .

Restricted stock awards grant Participants shares of restricted Common Stock or allow Participants to purchase such shares at a price determined by the Committee.

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Should employment terminate, as specified in the Incentive Plans, except as determined by the Committee in its discretion and subject to the applicable Incentive Plan documents, the ownership of any unvested restricted stock will be transferred to the Company.

Phantom stock awards provide the Participant the right to receive, within 30 days of the date on which the share vests, an amount, in cash and/or shares of Common Stock as determined by the Committee, equal to the sum of the fair market value of a share of Common Stock on the date such share of phantom stock vests and the aggregate amount of cash dividends paid with respect to a share of Common Stock during the period from the grant date of the share of phantom stock to the date on which the share vests.

Phantom stock awards provide the Participant the right to receive Common Stock or an amount of cash based on the value of the Common Stock at a future date.

The award is subject to such restrictions, if any, as the Committee may impose at the date of grant or thereafter, including a specified period of employment or the achievement of performance goals.

Time-based restricted stock units and performance-based restricted stock units are each a type of phantom stock award permitted under the Second Amended and Restated 2014 Incentive Plan.

The Incentive Plans contain provisions that allow for the Committee to provide for the immediate vesting of awards upon a change in control of the Company, as defined in the Incentive Plans.

As of December 31, 2020, there were 18,916,095 shares available for future grants under the Second Amended and Restated 2014 Incentive Plan.

No additional awards may be made under the 2000 Incentive Plan, the Original 2014 Incentive Plan, or the Amended and Restated 2014 Incentive Plan.

REGENERON PHARMACEUTICALS, INC.

1 unchanged sentence

(Unless otherwise noted, dollars in millions, except per share data)

As of December 31, 2019 , there were 9,546,628 shares available for future grants under the Amended and Restated 2014 Incentive Plan.

No additional awards may be made under the 2000 Incentive Plan or the Original 2014 Incentive Plan.

Stock Options

Transactions involving stock option awards during 2020 under the Company's Incentive Plans are summarized in the table below.

Number of Shares

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Term (in years)

Intrinsic Value

Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Intrinsic Value

Outstanding as of December 31, 2019 28,609,277 $ 337.24

Granted 2,850,590 $ 492.60

Forfeited ( 562,629 ) $ 379.02

Expired ( 56,282 ) $ 473.77

Exercised ( 9,139,287 ) $ 281.90

Outstanding as of December 31, 2020 21,701,669 $ 379.51 6.34 $ 2,347.4

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The Company satisfies stock option exercises with newly issued shares of the Company's Common Stock.

The total intrinsic value of stock options exercised during 2019 , 2018 , and 2017 was $ 558.9 million , $ 510.6 million , and $ 735.6 million , respectively.

The total intrinsic value of stock options exercised during 2020, 2019, and 2018 was $ 2.251 billion, $ 558.9 million, and $ 510.6 million, respectively.

The intrinsic value represents the amount by which the market price of the underlying stock exceeds the exercise price of an option.

The table below summarizes the weighted-average exercise prices and weighted-average grant-date fair values of options issued during the years ended December 31, 2020, 2019, and 2018.

The fair value of each option granted under the Company's Incentive Plans during these periods was estimated on the date of grant using the Black-Scholes option-pricing model.

Number of Options Granted

Weighted-Average Exercise Price

Weighted-Average Fair Value

Number of Options Granted Weighted-Average Exercise Price Weighted-Average Fair Value

Exercise price equal to Market Price 2,850,590 $ 492.60 $ 126.50

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The following table summarizes the weighted average values of the assumptions used in computing the fair value of option grants during 2020, 2019, and 2018.

2020 2019 2018

Expected volatility 28 % 28 % 29 %

Expected lives from grant date

Expected lives from grant date 5.0 years 5.0 years 4.9 years

Expected dividend yield 0 % 0 % 0 %

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Treasury rates for securities with maturities approximating the options' expected lives.

Restricted Stock Awards and Restricted Stock Units

A summary of the Company's activity related to restricted stock awards and restricted stock units (including performance-based restricted stock units) (collectively, "restricted stock") during 2019 is summarized below.

As described in Note 1, the fair value of performance-based restricted stock units is estimated using a Monte Carlo simulation.

Number of Shares/Units

Weighted-Average Grant

Restricted Stock Awards and Time-Based Restricted Stock Units

A summary of the Company's activity related to restricted stock awards and time-based restricted stock units (excluding performance-based restricted stock units, which are detailed further below) (collectively, "restricted stock") during 2020 is summarized below.

Number of Shares/Units Weighted-Average Grant

Date Fair Value

Balance as of December 31, 2019 1,102,390 $ 377.32

Granted 646,844 $ 496.44

Vested ( 15,630 ) $ 526.62

Forfeited/Cancelled ( 46,061 ) $ 377.85

Balance as of December 31, 2020 1,687,543 $ 421.58

The Company recognized non-cash stock-based compensation expense from restricted stock of $ 41.5 million , $ 5.6 million , and $ 14.5 million in 2019 , 2018 , and 2017 , respectively (net of amounts capitalized as inventory, which were not material for each of the three years).

The Company recognized non-cash stock-based compensation expense related to restricted stock of $ 102.5 million, $ 29.7 million, and $ 5.6 million in 2020, 2019, and 2018, respectively (net of amounts capitalized as inventory, which were not material for each of the three years).

As of December 31, 2020, there was $ 425.5 million of stock-based compensation cost related to unvested restricted stock which had not yet been recognized.

The Company expects to recognize this compensation cost over a weighted-average period of 2.7 years.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Performance-based Restricted Stock Units

Performance-based restricted stock units ("PSUs") have been granted to certain executive officers of the Company.

The PSUs will be earned based upon the achievement of predetermined, cumulative total shareholder return goals with respect to the Company's Common Stock price over a specified (generally five-year ) period beginning on the grant date.

The number of PSUs granted shown in the table below represents the maximum number of units that are eligible to be earned.

Depending on the terms of the PSUs and the outcome of the performance goals, a recipient may ultimately earn 0 % to 250 % (as specified for each PSU grant) of the target number of PSUs granted.

A summary of the Company's activity related to PSUs during 2020 is summarized below.

Number of Shares/Units Weighted-Average Grant

Date Fair Value

Balance as of December 31, 2019 59,396 $ 198.10

Granted 1,240,540 $ 209.59

Forfeited/Cancelled — —

Balance as of December 31, 2020 1,299,936 $ 209.06

The Company did no t recognize non-cash stock-based compensation expense related to PSUs in 2020 (as PSUs granted in 2020 were granted on December 31, 2020 and will be expensed over the vesting period).

The Company recognized non-cash stock-based compensation expense related to PSUs of $ 11.7 million in 2019 (net of amounts capitalized as inventory, which were not material).

PSUs were not granted during 2018.

As of December 31, 2020, there was $ 260.0 million of stock-based compensation cost related to unvested PSUs which had not yet been recognized.

The Company expects to recognize this compensation cost on a straight-line basis over a period of 5.0 years.

Fair Value Assumptions:

The following table summarizes the weighted average values of the assumptions used in computing the fair value of PSUs during 2020 and 2019.

Expected volatility 35 % 33 %

Expected dividend yield 0 % 0 %

Risk-free interest rate 0.36 % 1.63 %

Employee Savings Plans

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Year Ended December 31,

2020 2019 2018

United States $ 2,442.3 $ 2,011.2 $ 2,151.7

Foreign 1,368.1 417.9 401.8

$ 3,810.4 $ 2,429.1 $ 2,553.5

Components of income tax expense consist of the following:

Year Ended December 31,

2020 2019 2018

Federal $ 199.0 $ 444.6 $ 223.7

State 1.2 1.9 4.8

Foreign 21.4 ( 2.6 ) 20.6

Total current tax expense 221.6 443.9 249.1

Federal 109.0 ( 132.0 ) 687.6

State ( 2.0 ) ( 1.7 ) ( 1.9 )

Foreign ( 31.4 ) 3.1 ( 825.7 )

Total deferred tax (benefit) expense 75.6 ( 130.6 ) ( 140.0 )

$ 297.2 $ 313.3 $ 109.1

A reconciliation of the U.S.

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Year Ended December 31,

2020 2019 2018

federal statutory tax rate 21.0 % 21.0 % 21.0 %

Income tax credits

Stock-based compensation ( 7.6 ) ( 2.5 ) ( 2.5 )

Foreign-derived intangible income deduction

Income tax credits ( 2.8 ) ( 4.6 ) ( 2.6 )

Taxation of non-U.S.

Non-deductible Branded Prescription Drug Fee

operations ( 1.8 ) ( 1.0 ) ( 1.9 )

Sale of non-inventory related assets between foreign subsidiaries ( 0.8 ) — ( 6.3 )

Foreign-derived intangible income deduction — ( 1.6 ) ( 1.0 )

Non-deductible Branded Prescription Drug Fee 0.5 0.7 0.6

Impact of change in U.S.

corporate tax rate (the Act) — — ( 2.7 )

Domestic production activities deduction

Other permanent differences ( 0.7 ) 0.9 ( 0.3 )

Effective income tax rate 7.8 % 12.9 % 4.3 %

The difference between the U.S.

federal statutory rate and the Company's effective tax rate for each of the three years ended December 31, 2019, 2018, and 2017 is summarized in the table above.

In 2018 , the difference between the U.S.

federal statutory rate of 21% and the Company's effective tax rate of 4.3 % was partly attributable to the impact of the Company's sale of non-inventory related assets between foreign subsidiaries (including the associated impact of global intangible low-taxed income).

REGENERON PHARMACEUTICALS, INC.

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(Unless otherwise noted, dollars in millions, except per share data)

2017 , the difference between the U.S.

federal statutory rate of 35% and the Company's effective tax rate of 42.3 % was partly impacted by the charge related to the re-measurement of the Company's U.S.

net deferred tax assets upon the enactment of the Act (see below).

In December 2017, the bill known as the "Tax Cuts and Jobs Act" (the "Act") was signed into law.

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corporate income tax laws by, among other things, reducing the U.S.

federal corporate income tax rate from 35% to 21%, changing the taxation of foreign earnings (including taxation of certain global intangible low-taxed income ("GILTI")), allowing for a foreign-derived intangible income deduction and immediate expensing for qualified assets, repealing the deduction for domestic manufacturing, and imposing further limitations on the deductibility of executive compensation.

As a result of the Act being signed into law, the Company recognized a provisional charge of $ 326.2 million in the fourth quarter of 2017 related to the re-measurement of its U.S.

net deferred tax assets at the lower enacted corporate tax rate.

The provisional charge recorded in the fourth quarter of 2017 was an estimate, and the measurement of deferred tax assets was subject to further analysis, such as developing interpretations and clarifications of the provisions of the Act.

During 2018, we recorded an income tax benefit of $ 68.0 million as a final adjustment to the provisional amount recorded as of December 31, 2017, which was partly attributable to our election to record deferred tax assets and liabilities for expected amounts of GILTI inclusions.

federal corporate income tax rate from 35% to 21%.

As a result of the Act being signed into law, the Company recognized a provisional charge in the fourth quarter of 2017 related to the re-measurement of its U.S.

net deferred tax assets at the lower enacted corporate tax rate, and, during 2018, we recorded an income tax benefit of $ 68.0 million as a final adjustment to the provisional amount recorded as of December 31, 2017, which was partly attributable to our election to record deferred tax assets and liabilities for expected amounts of GILTI inclusions.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Deferred tax liabilities:

Other ( 42.8 ) ( 11.2 )

Net deferred tax assets $ 718.7 $ 791.4

The Company's 2015 through 2018 federal income tax returns remain open to examination by the IRS.

The Company's federal income tax returns for 2015 through 2019 remain open to examination by the IRS.

The Company's 2015 and 2016 federal income tax returns are currently under audit by the IRS.

In general, the Company's state income tax returns from 2016 to 2019 remain open to examination.

The Company’s Commonwealth of Pennsylvania returns for 2015 through 2019 are currently under audit by the Commonwealth.

The United States and many states generally have statutes of limitation ranging from 3 to 5 years;

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In general, tax authorities have the ability to review income tax returns in which the statute of limitation has previously expired to adjust the tax credits generated in those years.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

The following table reconciles the beginning and ending amounts of unrecognized tax benefits.

The amount of unrecognized tax benefits that, if settled, would impact the effective tax rate is $ 267.0 million, $ 210.8 million, and $ 189.5 million as of December 31, 2020, 2019, and 2018, respectively.

2020 2019 2018

Balance as of January 1 $ 210.8 $ 189.5 $ 146.2

Gross increases related to current year tax positions 76.6 37.9 51.4

Gross (decreases) increases related to prior year tax positions

Gross increases (decreases) related to prior year tax positions 7.2 ( 7.2 ) 5.6

Gross decreases due to settlements and lapse of statutes of limitations

( 27.6 ) ( 9.4 ) ( 13.7 )

Balance as of December 31 $ 267.0 $ 210.8 $ 189.5

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During 2020, 2019, and 2018, interest expense related to unrecognized tax benefits recorded by the Company was not material.

The Company does not believe that it is reasonably possible that the resolution of tax exposures within the next twelve months would have a material impact on its unrecognized tax benefits as of December 31, 2019.

The Company believes it is reasonably possible that its unrecognized tax benefits as of December 31, 2020 may decrease within

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

the next twelve months, and, as a result, positively impact our effective tax rate, as a result of expected settlement of audits and statute of limitation lapses.

Legal Matters

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However, the court invalidated the '287 and '163 Patents on the ground of insufficiency.

On appeal, the Court of Appeal (Civil Division of England and Wales) reversed the English High Court's decision and held that the '287 Patent and '163 Patent are both valid and infringed by Kymab and subsequently issued a final order, which enjoins Kymab from infringing the '287 Patent and '163 Patent (subject to certain exceptions) and requires Kymab to destroy or deliver to a third party all products and antibodies and cells engineered to produce antibodies which infringe the '287 Patent and '163 Patent (subject to certain exceptions).

Thereafter, the Supreme Court of the United Kingdom granted Kymab's application for permission to appeal the order made by the Court of Appeal with respect to an issue of validity of the '287 Patent and the '163 Patent and scheduled an oral hearing for February 11–12, 2020.

The provisions of the final order of the Court of Appeal are stayed pending final determination of Kymab's appeal to the Supreme Court of the United Kingdom.

The Company has also been awarded a portion of the legal fees incurred by it in connection with the proceedings in the English High Court and the Court of Appeal described above.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

2019, the Company filed an action in the English High Court for a calculation of damages relating to Kymab's infringement of the '287 Patent and the '163 Patent.

On July 8 and July 13, 2016, notices of opposition against the '163 Patent were filed in the European Patent Office (the "EPO") by Merus N.V.

and Kymab and Novo Nordisk A/S, respectively.

The notices assert, as applicable, lack of novelty, lack of inventive step, and insufficiency.

Following an oral hearing before the Opposition Division of the EPO on February 5–7, 2018, the Opposition Division upheld the '163 Patent without amendments.

Kymab, Merus, and Novo Nordisk each filed a notice of appeal of the Opposition Division's decision on February 9, 2018, May 25, 2018, and June 26, 2018, respectively.

On January 7, 2019, Merus withdrew its appeal of the '163 Patent in the EPO in connection with the previously reported global settlement.

On appeal, the Court of Appeal (Civil Division of England and Wales) reversed the English High Court's decision and held that the '287 Patent and '163 Patent are both valid and infringed by Kymab and subsequently issued a final order, which enjoined Kymab from infringing the '287 Patent and '163 Patent (subject to certain exceptions) and required Kymab to destroy or deliver to a third party all products and antibodies and cells engineered to produce antibodies which infringe the '287 Patent and '163 Patent (subject to certain exceptions).

On June 24, 2020, the Supreme Court of the United Kingdom overturned the decision of the Court of Appeal on validity and held that the '287 and '163 Patents are each invalid on the ground of insufficiency.

Proceedings Relating to Praluent (alirocumab) Injection

United States

As described in greater detail below, the Company is currently a party to patent infringement actions initiated by Amgen Inc.

(and/or its affiliated entities) against the Company and/or Sanofi (and/or the Company's and Sanofi's respective affiliated entities) in a number of jurisdictions relating to Praluent, which the Company is jointly developing and commercializing with Sanofi.

(and/or its affiliated entities) against the Company and/or Sanofi (and/or the Company's and Sanofi's respective affiliated entities) in a number of jurisdictions relating to Praluent.

See Note 3 for a description of the Company's and Sanofi's arrangement regarding the costs resulting from or associated with such actions.

United States

In the United States, Amgen has asserted claims of U.S.

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Amgen also seeks a judgment of patent infringement of the asserted patents, monetary damages (together with interest), costs and expenses of the lawsuits, and attorneys' fees.

As described in greater detail under "Second Jury Trial and Appeal" below, the parties to this litigation are currently awaiting a decision by the Federal Circuit (as defined below) on Amgen's appeal.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

First Jury Trial and Appeal.

The first jury trial in this litigation (the "First Trial") was held in the United States District Court for the District of Delaware (the "District Court") from March 8 to March 16, 2016.

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In addition, it affirmed the District Court's ruling that Amgen's patents were not obvious.

Second Jury Trial and Appeal.

On January 3, 2019, the District Court held oral argument in the remanded proceedings on the Company and the Sanofi defendants' motion for judgment on the pleadings regarding Amgen's willful infringement claim.

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On October 23, 2019, Amgen filed a notice of appeal of the District Court's decision with the Federal Circuit.

An oral hearing before the Federal Circuit was held on December 9, 2020.

Injunctive Relief Proceedings.

On March 18, 2019, Amgen filed a renewed motion for a permanent injunction to prohibit the Company and the Sanofi defendants from Commercializing Praluent in the United States (a "Permanent Injunction"), and an oral hearing on this motion was held in June 2019.

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On August 28, 2019, the District Court dismissed as moot Amgen's renewed motion for a Permanent Injunction.

Amgen has asserted European Patent No.

2,215,124 (the "'124 Patent"), which pertains to PCSK9 monoclonal antibodies, in the countries in Europe discussed below.

As described in greater detail under "EPO Proceedings" below, in October 2020 the '124 Patent claims directed to compositions of matter and medical use were ruled invalid by the Technical Board of Appeal (the "TBA") of the European Patent Office (the "EPO").

This decision, subject to any review by the EPO Enlarged Board of Appeal, has impacted or will impact each of the infringement proceedings based on the '124 Patent discussed below.

EPO Proceedings.

The '124 Patent was subject to opposition proceedings in the EPO seeking to invalidate certain of its claims, which were initiated by Sanofi on February 24, 2016 and, separately, by the Company, Sanofi, and several other opponents on November 24, 2016.

On December 13, 2017, the Opposition Division of the EPO issued a preliminary, non-binding opinion (the "Preliminary Opinion") regarding the validity of the '124 Patent, indicating that it currently considers the claims of a new request filed by Amgen in response to the opposition to satisfy the requirements for patentability.

An oral hearing on the oppositions against the '124 Patent was held on November 28–30, 2018, at which the Opposition Division upheld the validity of the '124 Patent's claims in amended form.

The Company and Sanofi filed notices of appeal to the TBA on November 30, 2018.

An oral hearing before the TBA was held on October 28–29, 2020, at which the TBA ruled that the '124 Patent claims directed to compositions of matter and medical use were invalid based on a lack of inventive step.

United Kingdom.

On July 25, 2016, Amgen filed a lawsuit against Regeneron, Sanofi-Aventis Groupe S.A., Sanofi-Synthelabo Limited, Aventis Pharma Limited, Sanofi Winthrop Industrie S.A., and Sanofi-Aventis Deutschland GmbH in the English High Court of Justice, Chancery Division, Patents Court, in London, seeking a declaration of infringement of the '124 Patent by Praluent.

The lawsuit also seeks a permanent injunction, damages, an accounting of profits, and costs and interest.

On February 8, 2017, the court temporarily stayed this litigation on terms mutually agreed by the parties.

On October 22, 2020, the court lifted the stay upon application by the Company and the Sanofi defendants, and the case will proceed in due course.

On July 25, 2016, Amgen filed a lawsuit for infringement of the '124 Patent against Regeneron, Sanofi-Aventis Groupe S.A., Sanofi Winthrop Industrie S.A., and Sanofi-Aventis Deutschland GmbH in the Regional Court of Düsseldorf,

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(Unless otherwise noted, dollars in millions, except per share data)

2,215,124 (the "'124 Patent"), which pertains to PCSK9 monoclonal antibodies, by Praluent.

The lawsuit also seeks a permanent injunction, damages, an accounting of profits, and costs and interest.

On February 8, 2017, the court temporarily stayed this litigation on terms mutually agreed by the parties.

Also on July 25, 2016, Amgen filed a lawsuit for infringement of the '124 Patent against Regeneron, Sanofi-Aventis Groupe S.A., Sanofi Winthrop Industrie S.A., and Sanofi-Aventis Deutschland GmbH in the Regional Court of Düsseldorf, Germany (the "Düsseldorf Regional Court"), seeking a permanent injunction, an accounting of marketing activities, a recall of Praluent and its removal from distribution channels, and damages.

On November 14, 2017, the Düsseldorf Regional Court issued a decision staying the infringement proceedings until a decision of the Opposition Division of the EPO concerning the pending opposition filed by the Company, Sanofi, and several other opponents against the '124 Patent (as discussed below).

Following Amgen's request to reopen the proceedings in light of the issuance of the Preliminary Opinion (as defined below), the Düsseldorf Regional Court held an oral hearing on September 11, 2018 and ruled on December 10, 2018 that the infringement proceedings would be reopened.

Germany (the "Düsseldorf Regional Court"), seeking a permanent injunction, an accounting of marketing activities, a recall of Praluent and its removal from distribution channels, and damages.

Following Amgen's request to reopen the proceedings in light of the issuance of the Preliminary Opinion, the Düsseldorf Regional Court held an oral hearing on September 11, 2018 and ruled on December 10, 2018 that the infringement proceedings would be reopened.

On July 11, 2019, the Düsseldorf Regional Court found that Praluent infringes the '124 Patent and granted an injunction prohibiting the Company and Sanofi's manufacture, sale, and marketing of Praluent in Germany (the "July 11 Decision").

Amgen subsequently enforced the injunction and, as a result, commercialization of Praluent in Germany has been discontinued.

Amgen subsequently enforced the injunction and, as a result, commercialization of Praluent in Germany was discontinued.

On July 12, 2019, the Company and Sanofi appealed the July 11 Decision to the Higher Regional Court of Düsseldorf (the "Higher Regional Court").

An oral hearing on the merits of the appeal to the Higher Regional Court has been scheduled for April 2, 2020.

On August 5, 2019 and October 31, 2019, the Higher Regional Court denied the Company and Sanofi's requests for a stay of preliminary enforcement of the July 11 Decision pending the appeal on the merits.

On July 12, 2018, Sanofi-Aventis Deutschland GmbH, Sanofi-Aventis Groupe S.A., and Sanofi Winthrop Industrie S.A.

filed an action in the Federal Patents Court (the "FPC") in Munich, Germany, seeking a compulsory license from Amgen based on the '124 Patent for the continued commercializing of Praluent in Germany.

This compulsory license action included a request for a provisional compulsory license.

The FPC held an oral hearing on September 6, 2018 and denied the Sanofi parties' request for the provisional compulsory license.

On January 16, 2019, the Sanofi parties appealed the FPC's denial of the provisional compulsory license to the Federal Court of Justice (the "FCJ") of Germany.

The FCJ held an oral hearing on June 4, 2019 on the appeal of the provisional compulsory license ruling and dismissed the Sanofi parties' appeal.

On September 16, 2019, the Sanofi parties filed a brief to withdraw the compulsory license action with the FPC.

On November 3, 2020, Amgen filed a motion withdrawing this lawsuit without prejudice.

An oral hearing on the merits of the appeal to the Higher Regional Court was held on November 5, 2020, at which the Higher Regional Court overturned the July 11 Decision.

On September 26, 2016, Amgen filed a lawsuit for infringement of the '124 Patent in the Tribunal de grande instance in Paris, France against Regeneron, Sanofi-Aventis Groupe S.A., Sanofi Winthrop Industrie S.A., and Sanofi Chimie (subsequently added as a defendant).

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Oral hearing on this infringement lawsuit (originally scheduled for February 12, 2019) has yet to be rescheduled.

The Netherlands.

On December 17, 2019, Amgen initiated a lawsuit alleging infringement of the Dutch designation of the '124 Patent in the District Court of The Hague in the Netherlands, against Sanofi-Aventis Netherlands B.V.

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Amgen's requests are made on an accelerated basis and include, among other things, a request for a permanent injunction, damages, an order for customer information, a recall order, a destruction order, and an order for costs.

A trial has been scheduled for October 30, 2020.

A hearing has been scheduled for February 12, 2021.

On December 20, 2019, Amgen filed a lawsuit for infringement of the Italian designation of the '124 Patent in the Tribunale di Milano - Enterprise Chamber in Milan, Italy, against Sanofi-Aventis Groupe S.A., Sanofi Chimie, and Sanofi SpA.

The Company has not been named as a defendant in this action.

Amgen alleges that the production, importation, and commercialization of Praluent

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

(alirocumab) in Italy infringes the '124 Patent.

Amgen alleges that the production, importation, and commercialization of Praluent (alirocumab) in Italy infringes the '124 Patent.

The writ of summons filed by Amgen seeks, among other things, a declaration of infringement, a permanent injunction, withdrawal of product from the market, and damages.

On June 24, 2020, Amgen also filed a preliminary injunction motion against the Sanofi parties.

On August 12, 2020, the court denied Amgen's preliminary injunction motion.

On December 20, 2019, Amgen also filed a lawsuit alleging infringement of the Spanish designation of the '124 Patent in the Juzgado de lo Mercantil No.

5 (Commercial Court) in Barcelona, Spain, against Sanofi-Aventis, S.A.

The Company has not been named as a defendant in this action.

Amgen alleges, among other things, patent infringement based on the manufacture, offering for sale, introduction into the market, use, and importation or possession of Praluent (alirocumab) in Spain.

Amgen seeks, among other things, a permanent injunction, withdrawal of Praluent from the market, seizure and destruction of Praluent from the market and in storage, and damages in the form of lost profits and costs and expenses.

The '124 Patent is also subject to opposition proceedings in the EPO seeking to invalidate certain of its claims, which were initiated by Sanofi on February 24, 2016 and, separately, by the Company, Sanofi, and several other opponents on November 24, 2016.

An oral hearing on the oppositions against the '124 Patent was held on November 28–30, 2018, at which the Opposition Division upheld the validity of the '124 Patent's claims in amended form.

The Company and Sanofi filed notices of appeal to the Technical Board of Appeal (the "TBA") of the EPO on November 30, 2018.

An oral hearing before the TBA has been scheduled for March 24–25, 2020.

The Company was not named as a defendant in this action.

Amgen alleged, among other things, patent infringement based on the manufacture, offering for sale, introduction into the market, use, and importation or possession of Praluent (alirocumab) in Spain.

Amgen sought, among other things, a permanent injunction, withdrawal of Praluent from the market, seizure and destruction of Praluent from the market and in storage, and damages in the form of lost profits and costs and expenses.

On May 12, 2020, the court stayed this lawsuit until October 30, 2020 on terms mutually agreed by the parties.

On October 30, 2020, the stay was automatically lifted.

On November 2, 2020, Amgen filed a motion withdrawing this lawsuit;

and, on February 1, 2021, the lawsuit was dismissed.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

On May 19, 2017, Amgen filed a lawsuit for infringement of Amgen's Japanese Patent Nos.

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appealed the IPHC's decision in the infringement proceedings to the Supreme Court of Japan on November 12, 2019.

The injunction will remain stayed pending appeal of the IPHC's decision to the Supreme Court of Japan.

On April 24, 2020, the Supreme Court of Japan declined to hear the appeal filed by Sanofi K.K.

in the infringement proceedings and the injunction issued by the Tokyo District Court became effective.

subsequently complied with the injunction and, as a result, the commercialization of Praluent in Japan has been discontinued.

On March 31, 2020, Amgen filed a related lawsuit in the Tokyo District Court against Sanofi K.K.

seeking damages incurred by Amgen as a result of the finding of infringement of the '333 Patent and the '288 Patent.

The Company has not been named as a defendant in this damages action.

Proceedings Relating to Dupixent (dupilumab) Injection

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Oral hearings on the Additional IPR Petitions before the PTAB were held on November 14, 2018.

On February 14, 2019, the PTAB issued final written decisions on the Additional IPR Petitions, invalidating all 17 claims of the '487 Patent as obvious based on one of the Additional IPR Petitions while declining to hold the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

challenged claims of the '487 Patent invalid based on the other.

In April 2019, the parties filed notices of appeal with the Federal Circuit appealing the PTAB's respective adverse final written decisions on the Additional IPR Petitions.

In April 2019, the parties filed notices of appeal with the Federal Circuit appealing the PTAB's respective adverse final written decisions on the Additional IPR Petitions, and oral argument was held on August 5, 2020.

On October 13, 2020, the Federal Circuit affirmed the PTAB's decision on the Additional IPR Petition that invalidated all 17 claims of the '487 Patent as obvious.

On April 5, 2017, Immunex Corporation filed a lawsuit against the Company, Sanofi, Sanofi-Aventis U.S.

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A combined hearing on the construction of certain disputed claim terms of the '487 Patent and the Company and the Sanofi parties' motion for summary judgment on the issue of indefiniteness of the '487 Patent claims was held on July 12, 2018.

On August 24, 2018, the court issued an order denying this motion and construed the disputed claim terms as proposed by Amgen.

On August 24, 2018,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

the court issued an order denying this motion and construed the disputed claim terms as proposed by Amgen.

On February 28, 2019, the court granted a joint stipulation by the parties to stay the litigation pending resolution of the appeals of the PTAB's final written decisions on the Additional IPR Petitions discussed above.

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The original patent term of the Immunex patents is set to expire in 2021.

Proceedings Relating to EYLEA (aflibercept) Injection and ZALTRAP (ziv-aflibercept) Injection for Intravenous Infusion

On March 19, 2018, Novartis Vaccines and Diagnostics, Inc., Novartis Pharma AG, and Grifols Worldwide Operations Limited (collectively, the "Novartis Parties") filed a lawsuit against the Company in the United States District Court for the Southern District of New York, seeking a judgment of patent infringement of U.S.

5,688,688 (the "'688 Patent") by the Company's manufacture of aflibercept (the active ingredient used in both EYLEA and ZALTRAP);

monetary damages (together with interest) for a limited period prior to the '688 Patent expiration;

an order of willful infringement of the '688 Patent (dismissed on October 24, 2018);

costs and expenses of the lawsuit;

and attorneys' fees.

The '688 Patent expired on November 18, 2014.

The Novartis Parties are not seeking an injunction in these proceedings.

On March 20, 2019, the court issued its Opinion and Order on Claim Construction (the "Claim Construction Order") in the '688 Patent infringement litigation.

Pursuant to the Claim Construction Order, on April 1, 2019, the court approved a joint stipulation and entered a partial judgment of noninfringement of the '688 Patent of nine asserted claims.

On August 14, 2019, the court issued a second Opinion and Order on Claim Construction concerning the one remaining asserted claim in this litigation.

On September 5, 2019, the court entered a stipulated judgment of noninfringement and dismissed with prejudice all of the Novartis Parties' claims of the '688 Patent, finding that the manufacture, use, offer for sale, sale, or importation into the United States of aflibercept does not infringe the claims of the '688 Patent.

On May 14, 2019, the Company filed an IPR in the USPTO seeking a declaration of invalidity of the '688 Patent.

On September 26, 2019, in connection with the dismissal of the '688 Patent infringement litigation discussed above, the Company and the Novartis Parties filed a joint motion to terminate the IPR petition, and the PTAB dismissed the IPR petition on October 1, 2019.

Proceedings Relating to EYLEA (aflibercept) Injection

On January 7, 2021, Chengdu Kanghong Pharmaceutical Group Co., Ltd.

filed an IPR petition in the USPTO against the Company' s U.S.

10,464,992 (the "'992 Patent") and a post-grant review petition against the Company's U.S.

10,828,345 (the "'345 Patent") seeking declarations of invalidity of the '992 Patent and '345 Patent.

Proceedings Relating to EYLEA (aflibercept) Injection Pre-filled Syringe

On June 19, 2020, Novartis Pharma AG, Novartis Pharmaceuticals Corporation, and Novartis Technology LLC (collectively, "Novartis") filed a complaint with the U.S.

International Trade Commission (the "ITC") pursuant to Section 337 of the Tariff Act of 1930 requesting that the ITC institute an investigation relating to the importation into the United States and/or sale within the United States after importation of EYLEA pre-filled syringes ("PFS") and/or components thereof which allegedly infringe Novartis’s U.S.

9,220,631 (the "'631 Patent").

Novartis also requested a permanent limited exclusion order forbidding entry into the United States of EYLEA PFS or components thereof;

a permanent cease-and-desist order from the importation, sale, offer for sale, advertising, packaging, or solicitation of any sale by the Company of EYLEA PFS or components thereof;

and a bond should the Company continue to import EYLEA PFS (if found to infringe) during, if applicable, any 60-day Presidential review period ( i.e.

, the period when the President of the United States (or his designee) can disapprove any ITC decision to issue an exclusion order or cease-and-desist order).

The ITC instituted the investigation on July 22, 2020 and a trial has been scheduled for April 19-23, 2021.

On June 19, 2020, Novartis also filed a patent infringement lawsuit in the U.S.

District Court for the Northern District of New York asserting claims of the '631 Patent and seeking preliminary and permanent injunctions to prevent the Company from continuing to infringe the '631 Patent.

Novartis also seeks a judgment of patent infringement of the '631 Patent, monetary damages (together with interest), treble damages, costs and expenses of the lawsuits, and attorneys' fees.

On July 30, 2020, the court granted the Company's motion to stay these proceedings until a determination in the ITC proceedings discussed above, including any appeals therefrom, becomes final.

On July 16, 2020, the Company initiated two IPR petitions in the USPTO seeking a declaration of invalidity of the '631 Patent on two separate grounds.

On January 15, 2021, the USPTO declined to institute an IPR proceeding on procedural grounds in light of the pending ITC investigation discussed above;

the other IPR petition has been withdrawn.

On July 17, 2020, the Company filed an antitrust lawsuit against Novartis and Vetter Pharma International Gmbh ("Vetter") in the United States District Court for the Southern District of New York seeking a declaration that the '631 Patent is unenforceable and a judgment that the defendants' conduct violates Sections 1 and 2 of the Sherman Antitrust Act of 1890, as amended (the "Sherman Antitrust Act").

The Company is also seeking injunctive relief and treble damages.

On September 4, 2020, Novartis filed, and Vetter moved to join, a motion to dismiss the complaint, to transfer the lawsuit to the Northern District of New York, or to stay the suit;

and on October 19, 2020, Novartis filed, and Vetter moved to join, a second motion to dismiss the complaint on different grounds.

On January 25, 2021, the Company filed an amended complaint seeking a judgment

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(Unless otherwise noted, dollars in millions, except per share data)

Department of Justice Investigations

that the Novartis's conduct violates Section 2 of the Sherman Antitrust Act based on additional grounds, as well as a judgment of tortious interference with contract.

Proceedings Related to "Most Favored Nation" Interim Final Rule

On December 11, 2020, the Company filed a lawsuit in the United States District Court for the Southern District of New York against the U.S.

Department of Health and Human Services, the Secretary of HHS, the Centers for Medicare & Medicaid Services ("CMS"), and the Administrator of CMS seeking declaratory and injunctive relief related to the interim final rule with comment period entitled "Most Favored Nation (MFN) Model" issued on November 20, 2020 by HHS, acting through CMS.

On the same day, the Company filed a motion for a preliminary injunction and temporary restraining order, seeking to prevent implementation of the MFN Rule.

On December 22, 2020, the court heard oral argument on the Company's motion for a preliminary injunction and temporary restraining order.

On December 31, 2020, the court granted the Company's motion and issued a preliminary injunction.

On February 2, 2021, the government stated to the court that the Solicitor General had determined not to appeal the preliminary injunction.

Proceedings Relating to fasinumab

On May 21, 2020, the Company and Teva Pharmaceutical Industries Limited ("Teva") filed a lawsuit against Rinat Neurosciences Corp.

("Rinat"), a wholly owned subsidiary of Pfizer Inc., in the English High Court of Justice in London, seeking invalidation and revocation of Rinat's European Patent No.

2,270,048 (the "'048 Patent"), European Patent No.

1,871,416 (the "'416 Patent"), and European Patent No.

2,305,711 (the "'711 Patent"), each of which pertains to the use of NGF monoclonal antibodies to treat certain symptoms in patients suffering from osteoarthritis.

On July 21, 2020, Rinat filed its defense and counterclaim seeking a declaration of infringement of the '048 Patent by fasinumab.

The counterclaim also seeks a permanent injunction, damages, an accounting of profits, and costs and interest.

On December 15, 2020, Rinat filed an amended defense and counterclaim seeking a declaration of infringement of the '711 Patent by fasinumab.

A trial has been scheduled to commence in late November or early December 2021.

The '048 Patent is subject to opposition proceedings in the EPO, which were initiated by the Company on August 10, 2016 and two other opponents on August 11, 2016.

On January 3, 2018, the Opposition Division of the EPO issued a preliminary, non-binding opinion regarding the validity of the '048 Patent, indicating that it considered the granted patent to be invalid.

An oral hearing on the oppositions against the '048 Patent was held on November 29–30, 2018, at which the Opposition Division upheld the validity of the '048 Patent's claims in amended form.

The Company filed a notice of appeal to the TBA of the EPO on March 7, 2019.

On October 21, 2020, Teva filed a notice of intervention with the TBA to take part in the appeal proceedings as an intervener.

The '711 Patent is also subject to opposition proceedings in the EPO, which were initiated by the Company on May 1, 2018.

On January 31, 2019, the Opposition Division of the EPO issued a preliminary, non-binding opinion regarding the validity of the '711 Patent, indicating that it considered the granted patent to be invalid.

An oral hearing on the opposition against the '711 Patent was held on December 3, 2019, at which the Opposition Division upheld the validity of the '711 Patent's claims in amended form.

The Company filed a notice of appeal to the TBA on December 20, 2019.

An oral hearing before the TBA has been scheduled for July 29, 2021.

On January 29, 2021, Teva filed a notice of intervention with the TBA to take part in the appeal proceedings as an intervener.

Proceedings Relating to REGEN-COV (casirivimab and imdevimab)

On October 5, 2020, Allele Biotechnology and Pharmaceuticals, Inc.

("Allele") filed a lawsuit against the Company in the United States District Court for the Southern District of New York, asserting infringement of U.S.

10,221,221 (the "'221 Patent").

Allele seeks a judgment of patent infringement of the '221 Patent, a judgment that such infringement was willful, and an award of monetary damages (together with interest), treble damages, costs and expenses of the lawsuit, and attorneys' fees.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Department of Justice Matters

In January 2017, the Company received a subpoena from the U.S.

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and certain other related documents and communications.

The Company is cooperating with this investigation.

On June 24, 2020, the U.S.

Attorney's Office for the District of Massachusetts filed a civil complaint in the U.S.

District Court for the District of Massachusetts alleging violations of the federal Anti-Kickback Statute, and asserting causes of action under the federal False Claims Act and state law.

On August 24, 2020, the Company filed a motion to dismiss the complaint in its entirety.

On December 4, 2020, the court denied the motion to dismiss.

In September 2019, the Company and Regeneron Healthcare Solutions, Inc., a wholly-owned subsidiary of the Company, each received a civil investigative demand ("CID") from the U.S.

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The Company is cooperating with this investigation.

Proceedings Initiated by UnitedHealthcare

On December 17, 2020, UnitedHealthcare Insurance Company and United Healthcare Services, Inc.

(collectively, "UHC") filed a lawsuit against the Company in the United States District Court for the Southern District of New York alleging UHC has been damaged by the conduct alleged in the civil complaint filed by the U.S.

Attorney's Office for the District of Massachusetts discussed under "Department of Justice Matters" above.

UHC alleges causes of action under state law and the federal Racketeer Influenced and Corrupt Organizations Act and seeks monetary damages and equitable relief.

Shareholder Demand

On or about September 30, 2020, the Company's board of directors received a demand letter from a purported shareholder of the Company.

The demand alleges that Regeneron and its shareholders have been damaged by the conduct alleged in the civil complaint filed by the U.S.

Attorney's Office for the District of Massachusetts discussed under "Department of Justice Matters" above.

The demand letter requests that the Company's board of directors investigate alleged breaches of fiduciary duty by its officers and directors and other alleged violations of law and corporate governance practices and procedures;

bring legal action against the persons responsible for causing the alleged damages;

and implement and maintain an effective system of internal controls, compliance mechanisms, and corporate governance practices and procedures.

The Company's board of directors, working with outside counsel, investigated and evaluated the allegations in the demand letter and has concluded that pursuing the claims alleged in the demand would not be in the Company's best interests at this time.

Net Income Per Share

The Company's basic net income per share amounts have been computed by dividing net income by the weighted average number of shares of Common Stock and Class A Stock outstanding.

Net income per share is presented on a combined basis, inclusive of Common Stock and Class A Stock outstanding, as each class of stock has equivalent economic rights.

Diluted net income per share includes the potential dilutive effect of other securities as if such securities were converted or exercised during the period, when the effect is dilutive.

The calculations of basic and diluted net income per share are as follows:

Year Ended December 31,

2020 2019 2018

Net income - basic and diluted $ 3,513.2 $ 2,115.8 $ 2,444.4

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Net income per share - diluted $ 30.52 $ 18.46 $ 21.29

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Shares which have been excluded from diluted per share amounts because their effect would have been antidilutive, include the following:

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Statement of Cash Flows

The following provides a reconciliation of cash, cash equivalents, and restricted cash to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

The following provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheet to the total of the same such amounts shown in the Consolidated Statement of Cash Flows:

2020 2019 2018

Cash and cash equivalents $ 2,193.7 $ 1,617.8 $ 1,467.7

Restricted cash included in Other noncurrent assets

13.6 12.5 12.5

Total cash, cash equivalents, and restricted cash shown in the Consolidated Statement of Cash Flows

$ 2,207.3 $ 1,630.3 $ 1,480.2

Restricted cash consists of amounts held by financial institutions pursuant to contractual arrangements.

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Included in accounts payable, accrued expenses, and other liabilities as of December 31, 2020, 2019, and 2018 were $ 83.6 million, $ 133.7 million, and $ 54.5 million, respectively, of accrued capital expenditures.

As described in Note 3, during 2019 , we purchased (by issuing a credit towards the amount owed by Sanofi) 210,733 shares of our Common Stock from Sanofi to satisfy Sanofi's funding obligation related to Libtayo development costs, and recorded the cost of the shares received, or $ 73.3 million , as Treasury Stock.

During 2018 , we purchased (by issuing a credit towards the amount owed by Sanofi) 215,387 shares of our Common Stock from Sanofi, and recorded the cost of the shares received, or $ 75.8 million , as Treasury Stock.

During 2017 , the Company recognized additional lease obligations of $ 201.2 million in connection with the Company's Tarrytown Lease.

No additional amounts were recognized during 2018 or 2019 .

As described in Note 11, during 2020, 2019, and 2018, we purchased (by issuing a credit towards the amount owed by Sanofi) shares of our Common Stock from Sanofi to satisfy Sanofi's funding obligation related to Libtayo development costs.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unless otherwise noted, dollars in millions, except per share data)

Unaudited Quarterly Results

Summarized quarterly financial data (unaudited) for the years ended December 31, 2020 and 2019 are set forth in the following tables.

Certain revisions have been made to the previously reported 2019 quarterly amounts below in connection with changing the presentation of certain amounts earned from collaborators (see Note 1 for further details).

First Quarter Ended

March 31, 2019

Second Quarter Ended

March 31, 2020 Second Quarter Ended

June 30, 2020 (1)

Third Quarter Ended

September 30, 2019

Fourth Quarter Ended

September 30, 2020 Fourth Quarter Ended

December 31, 2020 (2)

Revenues $ 1,828.2 $ 1,952.0 $ 2,294.0 $ 2,422.9

Operating expenses $ 1,128.1 $ 1,295.6 $ 1,240.9 $ 1,255.9

Net income $ 624.6 $ 897.3 $ 842.1 $ 1,149.2

Net income per share - basic $ 5.69 $ 8.19 $ 7.98 $ 10.90

1 unchanged sentence

First Quarter Ended

March 31, 2018

Second Quarter Ended

March 31, 2019 Second Quarter Ended

June 30, 2019 (3)

Third Quarter Ended

September 30, 2018

Fourth Quarter Ended

September 30, 2019 Fourth Quarter Ended

December 31, 2019

Revenues $ 1,372.6 $ 1,577.8 $ 1,743.7 $ 1,863.5

Operating expenses $ 892.6 $ 1,262.2 $ 1,005.2 $ 1,187.8

Net income $ 461.1 $ 193.1 $ 669.6 $ 792.0

Net income per share - basic $ 4.23 $ 1.77 $ 6.12 $ 7.25

Net income per share - diluted $ 3.99 $ 1.68 $ 5.86 $ 6.93

(1) Included in research and development expenses was a $400.0 million up-front payment in connection with the Alnylam collaboration agreement.

(2) Includes impact of a cumulative catch-up adjustment recorded to revenue upon termination of the 2015 IO Discovery Agreement.

(3) Includes tax impact of the sale of non-inventory related assets between foreign subsidiaries completed during the fourth quarter of 2018.

(1) Included in operating expenses (specifically, research and development expenses) were $ 85.0 million in up-front payments in connection with our collaboration agreement with Intellia.

(2) Included in operating expenses was (i) the recognition of cumulative catch-up adjustments of $ 99.8 million, net, in other operating income related to updates to estimates of the total research and development costs expected to be incurred for certain collaboration agreements (see Note 3), as well as (ii) a reversal of $ 95.0 million within selling, general, and administrative expenses for litigation-related loss contingency accruals in connection with proceedings for Praluent outside the United States (see Note 15).

(3) Included in operating expenses (specifically, research and development expenses) was a $ 400.0 million up-front payment in connection with our collaboration agreement with Alnylam.

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-K

Item 9A. Controls and Procedures