What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 233 added, 519 removed, 459 unchanged (62% of the section changed)

3 unchanged sentences

(In millions, except share data)

September 30, December 31,

March 31, December 31,

Current assets:

1 unchanged sentence

Marketable securities 2,065.9 1,393.3

Accounts receivable - trade, net 3,092.5 2,100.0

Accounts receivable - Sanofi 460.8 260.6

Accounts receivable - other 486.2 425.0

Accounts receivable, net 4,173.0 4,114.7

Inventories 2,164.7 1,916.6

10 unchanged sentences

Accrued expenses and other current liabilities 1,492.2 1,644.2

Deferred revenue - Sanofi 409.3 310.5

Deferred revenue - other 85.5 71.6

Other liabilities - Sanofi 96.9 85.0

Finance lease liabilities 717.8 —

Deferred revenue 464.9 577.7

Total current liabilities 3,217.8 2,697.4

1 unchanged sentence

Finance lease liabilities — 717.2

Deferred revenue - Sanofi 37.9 27.7

Deferred revenue - other 67.0 77.6

Other liabilities - Sanofi 367.0 482.0

Deferred revenue 27.0 57.8

Other noncurrent liabilities 571.5 687.1

6 unchanged sentences

40,000,000 shares authorized;

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

shares issued and outstanding - 1,848,970 i n 2021 and 2020

Common Stock, $ .001 par value;

11 unchanged sentences

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

(In millions, except per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Statements of Operations

Net product sales $ 1,724.3 $ 1,236.7

Sanofi collaboration revenue 353.3 175.0 869.3 232.8

Bayer collaboration revenue 299.9 293.6 825.5 834.8

Collaboration revenue 754.4 528.3

Other revenue 50.0 63.2

8 unchanged sentences

Other income (expense):

Other (expense) income, net ( 28.5 ) 37.8 218.3 28.7

Other income (expense), net 154.9 ( 25.4 )

Interest expense ( 14.6 ) ( 6.1 )

10 unchanged sentences

Other comprehensive income (loss), net of tax:

Unrealized (loss) gain on debt securities ( 4.9 ) 1.0 10.9 31.5

Unrealized loss on debt securities ( 13.3 ) ( 28.8 )

Unrealized gain (loss) on cash flow hedges 0.2 ( 1.4 )

16 unchanged sentences

Stock-based compensation charges — — — — 135.6 — — — — 135.6

— — — — 108.0 — — — — 108.0

— — — — — 624.6 — — — 624.6

Net income — — — — — 1,115.2 — — — 1,115.2

Other comprehensive loss, net of tax — — — — — — ( 13.1 ) — — ( 13.1 )

— — — — — — ( 30.2 ) — — ( 30.2 )

Balance, March 31, 2021 1.8 — 121.9 $ 0.1 $ 6,887.8 $ 12,008.2 $ 16.2 ( 17.1 ) $ ( 6,935.3 ) $ 11,977.0

Issuance of Common Stock for equity awards granted under long-term incentive plans

— — 4.4 — 1,355.5 — — — — 1,355.5

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations

— — ( 0.6 ) — ( 416.5 ) — — — — ( 416.5 )

Issuance/distribution of Common Stock for 401(k) Savings Plan

— — — — 7.4 — — — 2.7 10.1

Repurchases of Common Stock

— — — — — — — ( 9.9 ) ( 5,071.8 ) ( 5,071.8 )

Stock-based compensation charges

— — — — 105.2 — — — — 105.2

— — — — — 897.3 — — — 897.3

Other comprehensive income, net of tax

— — — — — — 44.6 — — 44.6

Balance, June 30, 2020 1.8 — 119.8 0.1 6,263.0 8,901.7 35.5 ( 15.6 ) ( 6,142.9 ) 9,057.4

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

Issuance of Common Stock for equity awards granted under long-term incentive plans — — 3.1 — 817.4 — — — — 817.4

— — 0.9 — 297.5 — — — — 297.5

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations — — ( 0.4 ) — ( 155.1 ) — — — — ( 155.1 )

— — ( 0.2 ) — ( 80.9 ) — — — — ( 80.9 )

Issuance/distribution of Common Stock for 401(k) Savings Plan — — — — 12.5 — — — 2.1 14.6

— — — — 8.6 — — — 1.3 9.9

Repurchases of Common Stock — — — — — — — ( 0.8 ) ( 336.0 ) ( 336.0 )

— — — — — — — ( 0.1 ) ( 100.4 ) ( 100.4 )

Stock-based compensation charges — — — — 108.0 — — — — 108.0

— — — — 104.6 — — — — 104.6

— — — — — 842.1 — — — 842.1

Net income — — — — — 624.6 — — — 624.6

Other comprehensive loss, net of tax — — — — — — ( 30.2 ) — — ( 30.2 )

Balance, September 30, 2020 1.8 — 120.5 $ 0.1 $ 6,592.8 $ 9,743.8 $ 30.8 ( 15.7 ) $ ( 6,242.0 ) $ 10,125.5

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (continued)

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

Issuance of Common Stock for equity awards granted under long-term incentive plans

— — 0.6 — 140.9 — — — — 140.9

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations

— — — — ( 10.7 ) — — — — ( 10.7 )

Issuance of Common Stock for 401(k) Savings Plan

— — — — 4.3 — — 0.1 6.2 10.5

Repurchases of Common Stock

— — — — — — — ( 0.1 ) ( 54.0 ) ( 54.0 )

Stock-based compensation charges

— — — — 114.8 — — — — 114.8

Adjustment upon adoption of new accounting standard

— — — — — 9.7 — — — 9.7

— — — — — 461.1 — — — 461.1

Other comprehensive income, net of tax

— — — — — — 15.1 — — 15.1

Balance, March 31, 2020 1.8 — 116.0 $ 0.1 $ 5,211.4 $ 8,004.4 $ ( 9.1 ) ( 5.7 ) $ ( 1,073.8 ) $ 12,133.0

Issuance of Common Stock for equity awards granted under long-term incentive plans

— — 0.3 — 13.9 — — — — 13.9

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations

— — ( 0.1 ) — ( 29.7 ) — — — — ( 29.7 )

Issuance/distribution of Common Stock for 401(k) Savings Plan

— — — — 9.3 — — — 2.4 11.7

Stock-based compensation charges

— — — — 109.2 — — — — 109.2

— — — — — 193.1 — — — 193.1

Other comprehensive income, net of tax

— — — — — — 13.0 — — 13.0

Balance, June 30, 2019 1.9 — 111.9 0.1 4,263.6 5,918.2 15.8 ( 4.0 ) ( 441.8 ) 9,755.9

Issuance of Common Stock for equity awards granted under long-term incentive plans

— — 0.1 — 8.3 — — — — 8.3

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations

— — — — ( 0.1 ) — — — — ( 0.1 )

Issuance/distribution of Common Stock for 401(k) Savings Plan

— — — — 3.9 — — — 2.1 6.0

Repurchases of Common Stock

— — — — — — — ( 0.2 ) ( 48.7 ) ( 48.7 )

Conversion of Class A Stock to Common Stock

( 0.1 ) — 0.1 — — — — — — —

Stock-based compensation charges

— — — — 112.7 — — — — 112.7

— — — — — 669.6 — — — 669.6

Other comprehensive income, net of tax

— — — — — — 0.7 — — 0.7

Balance, September 30, 2019 1.8 — 112.1 $ 0.1 $ 4,388.4 $ 6,587.8 $ 16.5 ( 4.2 ) $ ( 488.4 ) $ 10,504.4

The accompanying notes are an integral part of the financial statements.

2 unchanged sentences

(In millions)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

6 unchanged sentences

Changes in assets and liabilities:

Increase in Sanofi, trade, and other accounts receivable ( 1,275.3 ) ( 464.5 )

Increase in accounts receivable, net ( 58.3 ) ( 169.0 )

Increase in inventories ( 252.8 ) ( 70.8 )

Decrease in prepaid expenses and other assets 16.4 24.8

Increase in deferred revenue 112.3 166.8

Increase in accounts payable, accrued expenses, and other liabilities 80.8 328.9

(Increase) decrease in prepaid expenses and other assets ( 50.0 ) 70.1

(Decrease) increase in deferred revenue ( 143.6 ) 73.9

Decrease in accounts payable, accrued expenses, and other liabilities ( 34.7 ) ( 85.2 )

Total adjustments ( 446.7 ) 73.4

4 unchanged sentences

Capital expenditures ( 115.3 ) ( 170.1 )

Net cash provided by (used in) investing activities 234.4 ( 1,819.1 )

Net cash used in investing activities ( 1,059.0 ) ( 443.2 )

Cash flows from financing activities:

Proceeds from issuance of long-term debt 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 95.0 811.4

2 unchanged sentences

Net cash (used in) provided by financing activities ( 366.4 ) 335.6

Net decrease in cash, cash equivalents, and restricted cash ( 43.7 ) ( 82.9 )

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 756.9 ) 590.4

Cash, cash equivalents, and restricted cash at beginning of period 2,207.3 1,630.3

3 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Interim Financial Statements

8 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 Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019, and the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2019.

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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Three Months Ended

September 30, 2019 Nine Months Ended

September 30, 2019

Statement of Operations Data:

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

Sanofi collaboration revenue

$ 404.2 $ ( 229.2 ) $ 175.0 $ 999.7 $ ( 766.9 ) $ 232.8

Bayer collaboration revenue $ 302.8 $ ( 9.2 ) $ 293.6 $ 868.0 $ ( 33.2 ) $ 834.8

Other revenue

$ 103.1 $ ( 66.3 ) $ 36.8 $ 278.2 $ ( 199.7 ) $ 78.5

Total revenues $ 2,048.4 $ ( 304.7 ) $ 1,743.7 $ 5,693.9 $ ( 999.8 ) $ 4,694.1

Research and development

$ 663.4 $ ( 137.4 ) $ 526.0 $ 2,353.5 $ ( 455.9 ) $ 1,897.6

Selling, general, and administrative

$ 419.9 $ ( 115.5 ) $ 304.4 $ 1,248.0 $ ( 357.9 ) $ 890.1

Cost of collaboration and contract manufacturing (1)

$ 110.7 $ ( 1.1 ) $ 109.6 $ 304.5 $ ( 14.9 ) $ 289.6

Other operating (income) expense, net

— $ ( 50.7 ) $ ( 50.7 ) — $ ( 171.1 ) $ ( 171.1 )

Total operating expenses $ 1,309.9 $ ( 304.7 ) $ 1,005.2 $ 4,159.8 $ ( 999.8 ) $ 3,160.0

(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.

Nine Months Ended

September 30, 2019

Cash Flows Data:

As Previously Reported Adjustments As Revised

Cash flows from operating activities:

Increase in deferred revenue $ 375.8 $ ( 209.0 ) $ 166.8

Increase in accounts payable, accrued expenses, and other liabilities

$ 119.9 $ 209.0 $ 328.9

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

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 condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020;

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

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 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.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Product Sales

Net product sales consist of the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) Three Months Ended

Net Product Sales in the United States

$ 1,347.0 $ 1,172.0

71.6 47.6 196.6 115.2

48.5 * 95.7 * *

REGN-COV2 40.2 — 40.2 —

3.6 3.0 9.3 10.7

REGEN-COV™ (casirivimab with imdevimab)

$ 1,724.3 $ 1,236.7

* 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.

* Effective April 1, 2020, the Company became 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 the three and nine months ended September 30, 2020 and 2019.

The Company had product sales to certain customers that accounted for more than 10% of total gross product revenue for the three months ended March 31, 2021 and 2020.

Sales to each of these customers as a percentage of the Company's total gross product revenue are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Besse Medical, a subsidiary of AmerisourceBergen Corporation

50 % 57 % 52 % 57 %

McKesson Corporation 29 % 36 %

Government (see Note 3) 13 % —

As of March 31, 2021 and December 31, 2020, the Company had $ 3.173 billion and $ 3.112 billion, respectively, of trade accounts receivable that were recorded within Accounts receivable, net.

Collaboration, License, and Other Agreements

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.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Nature/Type of Payment Statement of Operations Presentation

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

Collaboration revenue

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.

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 in the period in which such costs are incurred.

In connection with the commercialization phase of our collaborative arrangements, we may be obligated to perform commercialization-related activities on behalf of the collaboration.

If we are reimbursed for all or a portion of costs incurred for the commercialization-related activities, we record those reimbursable amounts in the period in which such costs are incurred.

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.

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 deferred until 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.

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.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

Statement of Operations Classification Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

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

Sanofi collaboration revenue

$ 212.8 $ 94.2 $ 555.6 $ 105.2

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

Reimbursement for manufacturing of commercial supplies

Sanofi collaboration revenue

$ 94.3 $ 85.4 $ 275.0 $ 143.8

Reimbursement of research and development expenses

Reduction of Research and development expense

$ 45.5 $ 60.2 $ 174.4 $ 216.5

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

Research and development expense

$ ( 17.5 ) $ ( 10.2 ) $ ( 59.1 ) $ ( 29.8 )

Reimbursement of commercialization-related expenses

Reduction of Selling, general, and administrative expense

$ 83.2 $ 111.6 $ 260.4 $ 349.3

(In millions) 2021 2020

Regeneron's share of profits in connection with commercialization of antibodies Collaboration revenue $ 260.6 $ 170.9

Reimbursement for manufacturing of commercial supplies Collaboration revenue $ 105.6 $ 80.1

Reimbursement of research and development expenses Reduction of Research and development expense $ 30.1 $ 77.6

Regeneron's obligation for its share of Sanofi research and development expenses Research and development expense $ ( 11.9 ) $ ( 16.7 )

Reimbursement of commercialization-related expenses Reduction of Selling, general, and administrative expense $ 60.4 $ 91.2

Immuno-oncology:

Regeneron's share of losses in connection with commercialization of Libtayo outside the United States Sanofi collaboration revenue $ ( 4.7 ) $ ( 4.6 ) $ ( 17.3 ) $ ( 16.2 )

Reimbursement for manufacturing of commercial supplies

Sanofi collaboration revenue

$ 0.9 — $ 6.0 —

Reimbursement of research and development expenses

Reduction of Research and development expense

$ 49.8 $ 38.0 $ 136.7 $ 120.9

Reimbursement of commercialization-related expenses

Reduction of Selling, general, and administrative expense

$ 14.5 $ 3.0 $ 39.2 $ 7.0

Regeneron's share of losses in connection with commercialization of Libtayo outside the United States Collaboration revenue $ ( 6.1 ) $ ( 6.2 )

Reimbursement for manufacturing of commercial supplies Collaboration revenue $ 4.7 $ 2.1

Reimbursement of research and development expenses Reduction of Research and development expense $ 21.9 $ 39.9

Reimbursement of commercialization-related expenses Reduction of Selling, general, and administrative expense $ 18.5 $ 10.4

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

gross profits Cost of goods sold $ ( 30.4 ) $ ( 26.8 )

Amounts recognized in connection with up-front payments received

Other operating income

$ 20.0 $ 18.5 $ 57.0 $ 73.8

See Note 8 and Note 10 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") .

Under the companies' Antibody License and Collaboration Agreement (the "LCA"), 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 generally shared 80 % by Sanofi and 20 % by Regeneron.

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

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, the "Dupilumab/Itepekimab Eligible Investments").

Refer to the " Immuno-Oncology " section below for further details regarding the Letter Agreement and Note 10 for additional information regarding shares purchased by us from Sanofi during the three and nine months ended September 30, 2020 and 2019.

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

See discussion below related to the development and commercialization of Praluent

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

effective April 1, 2020.

Amounts recognized in connection with up-front payments received Other operating income $ 22.9 $ 16.5

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 ® (dupilumab), Kevzara ® (sarilumab), 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.

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

In addition to profit and loss sharing, the Company is 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 antibodies outside the United States (including Praluent) 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 sales milestone payments from Sanofi.

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

September 30, December 31,

Accounts receivable

$ 453.2 $ 272.7

March 31, December 31,

(In millions) 2021 2020

Accounts receivable, net $ 362.5 $ 407.7

Deferred revenue

$ 383.4 $ 347.7

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

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

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, became solely responsible for the development and commercialization of Praluent in the United States, and Sanofi, at its sole cost, became 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.

7 unchanged sentences

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").

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.

If Sanofi exercises its option to license rights to a BCMAxCD3 Program antibody or MUC16xCD3 Program antibody thereunder, it will co-develop these drug candidates with the Company through product approval.

Sanofi will fund development costs up front for a BCMAxCD3 Program antibody and we will reimburse half of the total development costs for such antibody from our share of future IO Collaboration profits to the extent they are sufficient for this purpose.

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

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 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.

During the first quarter of 2021, Sanofi did not exercise its options to license rights to these product candidates;

as a result, we retain the exclusive right to develop and commercialize such product candidates and Sanofi will receive a royalty on sales (if any).

In addition, the Company has no further obligations to to develop drug product candidates under the Amended IO Discovery Agreement.

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/Itepekimab Eligible Investments incurred in

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

periods through September 30, 2020 by selling certain shares of our Common Stock directly or indirectly owned by Sanofi;

if Sanofi desires to sell such shares, we may elect to purchase, in whole or in part, such shares from Sanofi.

See Note 10 for additional information regarding shares purchased by us from Sanofi during the three and nine months ended September 30, 2020 and 2019.

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.

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

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

September 30, December 31,

March 31, December 31,

(In millions) 2021 2020

Accounts receivable, net

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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 September 30, 2020 was $ 951.0 million.

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 March 31, 2021 was $ 515.4 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.

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.

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 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 sales of EYLEA.

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

Statement of Operations Classification Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions) 2021 2020

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

Bayer collaboration revenue

$ 287.9 $ 275.0 $ 772.6 $ 793.3

Collaboration revenue $ 308.9 $ 253.8

Reimbursement for manufacturing of commercial supplies

Bayer collaboration revenue

$ 12.0 $ 18.6 $ 52.9 $ 41.5

Reimbursement of development expenses

Collaboration revenue $ 13.9 $ 27.6

Reimbursement of research and development expenses

Reduction of Research and development expense

$ 5.0 $ 34.3 $ 15.6

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

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$ ( 12.5 ) $ ( 8.1 )

Reimbursement of other expenses Cost of collaboration and contract manufacturing

$ 2.0 $ 3.7 $ 5.3 $ 16.6

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

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 addition, the Company and Bayer share the funding of agreed-upon EYLEA development costs.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

September 30, December 31,

Accounts receivable - other

$ 299.2 $ 311.6

March 31, December 31,

(In millions) 2021 2020

Accounts receivable, net $ 320.3 $ 336.2

Deferred revenue

$ 97.0 $ 99.7

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 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.

The Company leads global development activities, and the parties share development costs equally, on an ongoing basis, under a global development plan.

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

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

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

Statement of Operations Classification Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions) 2021 2020

Reimbursement of research and development expenses

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

September 30, December 31,

Accounts receivable - other

$ 26.6 $ 21.2

March 31, December 31,

(In millions) 2021 2020

Accounts receivable, net $ 20.0 $ 27.7

Other liabilities

1 unchanged sentence

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

The aggregate amount of estimated consideration under the Teva Collaboration Agreement related to the Company's obligation that was unsatisfied (or partially unsatisfied) as of September 30, 2020 was $ 130.3 million.

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 March 31, 2021 was $ 123.9 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 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

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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 the second quarter of 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 the second quarter of 2020.

Biomedical Advanced Research Development Authority ("BARDA")

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

Department of Health and Human Services ("HHS") is obligated to fund 80 % of certain of our costs incurred for certain research and development activities related to COVID-19 treatments.

In the first quarter of 2020, we announced an expansion of our Other Transaction Agreement 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 REGN-COV2 to the U.S.

The agreement could result in payments to the Company of up to $ 450.2 million in the aggregate for bulk manufacturing of the drug substance, as well as fill/finish and storage activities.

See Note 2 for REGN-COV2 net product sales recognized in connection with this agreement during the three months ended September 30, 2020.

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

During the first quarter of 2021, the Company completed its final deliveries of drug product under this agreement.

See Note 2 for REGEN-COV net product sales recognized in connection with this agreement during the three months ended March 31, 2021.

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.

During the three months ended March 31, 2021, we did not recognize any net product sales in connection with this agreement.

In August 2020, we entered into a collaboration agreement (the "Roche Collaboration Agreement") with Roche to develop, manufacture, and distribute the casirivimab with imdevimab antibody cocktail (known as REGEN-COV in the United States).

We continue to lead global development activities for casirivimab with imdevimab, and the parties jointly fund certain ongoing studies, as well as any mutually agreed additional new global studies to evaluate further the potential of casirivimab with imdevimab 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 casirivimab with imdevimab each year.

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

The parties 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.

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

Statement of Operations Classification Three Months Ended

(In millions) 2021 2020

Regeneron's share of gross profits in connection with sales of casirivimab with imdevimab Collaboration revenue $ 66.8 —

Reimbursement of research and development expenses Reduction of Research and development expense $ 86.8 —

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

March 31, December 31,

(In millions) 2021 2020

Accounts receivable, net $ 219.9 $ 77.1

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.

Basic net income per share is 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.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

(In millions, except per share data) 2021 2020

Net income - basic and diluted $ 1,115.2 $ 624.6

(Shares in millions)

Weighted average shares - basic 105.4 109.8

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Three Months Ended

September 30, Nine Months Ended

September 30,

(Shares in millions) 2021 2020

Stock options 5.0 10.2

Restricted stock — 0.4 — 0.4

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Marketable Securities

Marketable securities as of September 30, 2020 and December 31, 2019 consist of both available-for-sale debt securities of investment grade issuers (see below and Note 6) as well as equity securities of publicly traded companies (see Note 6).

Marketable securities as of March 31, 2021 and December 31, 2020 consist of both available-for-sale debt securities of investment grade issuers (see below and Note 6) as well as equity securities of publicly traded companies (see Note 6).

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

Amortized Unrealized Fair

As of September 30, 2020 Cost Basis Gains Losses Value

(In millions) Amortized Unrealized Fair

As of March 31, 2021 Cost Basis Gains Losses Value

Corporate bonds $ 3,610.4 $ 27.7 $ ( 5.9 ) $ 3,632.2

12 unchanged sentences

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 September 30, 2020 mature at various dates through September 2025.

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

September 30, December 31,

The available-for-sale debt securities listed as of March 31, 2021 mature at various dates through March 2026.

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

March 31, December 31,

(In millions) 2021 2020

Maturities within one year $ 2,065.9 $ 1,393.3

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Less than 12 Months 12 Months or Greater Total

As of September 30, 2020 Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

(In millions)

As of March 31, 2021

Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

Corporate bonds $ 1,304.1 $ ( 5.9 ) — — $ 1,304.1 $ ( 5.9 )

government and government agency obligations 123.1 ( 0.2 ) — — 123.1 ( 0.2 )

Sovereign bonds 28.0 ( 0.1 ) — — 28.0 ( 0.1 )

$ 1,455.2 $ ( 6.2 ) — — $ 1,455.2 $ ( 6.2 )

1 unchanged sentence

Corporate bonds $ 364.5 $ ( 0.2 ) — — $ 364.5 $ ( 0.2 )

government and government agency obligations

17.3 ( 0.1 ) — — 17.3 ( 0.1 )

$ 274.5 $ ( 0.3 ) — — $ 274.5 $ ( 0.3 )

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

For the three months ended September 30, 2020, realized gains on sales of marketable securities were not material.

For the nine months ended September 30, 2020, realized gains were $ 28.5 million.

Realized losses were not material for the three and nine months ended September 30, 2020.

There were no realized losses on sales of marketable securities, and realized gains were not material, for the three and nine months ended September 30, 2019.

With respect to marketable securities, for the three and nine months ended September 30, 2020 and 2019, amounts reclassified from Accumulated other comprehensive income into Other (expense) income, net were related to realized gains and losses on sales of available-for-sale debt securities (as described above).

There were no realized losses on sales of marketable securities, and realized gains were no t material, for the three months ended March 31, 2021 and 2020.

With respect to marketable securities, for the three months ended March 31, 2021 and 2020, amounts reclassified from Accumulated other comprehensive income into Other income (expense), net were related to realized gains on sales of available-for-sale debt securities.

Fair Value Measurements

4 unchanged sentences

• Level 3 - Significant other unobservable inputs

Fair Value Measurements at Reporting Date

As of September 30, 2020 Fair Value Level 1 Level 2

(In millions) Fair Value Measurements at Reporting Date

As of March 31, 2021 Fair Value Level 1 Level 2

Available-for-sale debt securities:

17 unchanged sentences

$ 4,528.9 $ 839.8 $ 3,689.1

The Company held certain restricted equity securities as of September 30, 2020 which are subject to transfer restrictions that expire at various dates through 2024.

During the three and nine months ended September 30, 2020, we recorded $ 37.5 million of net unrealized losses and $ 133.8 million of net unrealized gains, respectively, on equity securities in Other (expense) income, net.

During the three and nine months ended September 30, 2019, we recorded $ 15.7 million of net unrealized gains and $ 58.4 million of net unrealized losses, respectively, on equity securities in Other (expense) income, net.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

In addition to the investments summarized in the table above, as of September 30, 2020 and December 31, 2019, the Company had $ 60.6 million and $ 55.6 million, respectively, in equity investments that do not have a readily determinable fair value.

The Company held certain restricted equity securities as of March 31, 2021 which are subject to transfer restrictions that expire at various dates through 2024.

During the three months ended March 31, 2021 and 2020, we recorded $ 143.9 million of net unrealized gains and $ 56.8 million of net unrealized losses, respectively, on equity securities in Other income (expense), net.

In addition to the investments summarized in the table above, as of March 31, 2021 and December 31, 2020, the Company had $ 40.0 million and $ 59.2 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 8 " Senior Notes " for additional details) was estimated to be $ 1.929 billion as of September 30, 2020, and was determined based on Level 2 inputs.

The fair value of our long-term debt (see Note 8), which was determined based on Level 2 inputs, was estimated to be $ 1.803 billion and $ 1.958 billion as of March 31, 2021 and December 31, 2020, respectively.

Inventories consist of the following:

September 30, December 31,

March 31, December 31,

(In millions) 2021 2020

Raw materials $ 576.2 $ 459.4

3 unchanged sentences

$ 2,164.7 $ 1,916.6

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 3).

Bridge Loan Facility

As described in Note 10, 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") which was entered into in May 2020.

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 the third quarter of 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.

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 three months ended September 30, 2020 was $ 6.4 million.

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.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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

In August 2020, we issued and sold $ 1.250 billion aggregate principal amount of senior unsecured notes due 2030 and $ 750 million aggregate principal amount of senior unsecured notes due 2050.

Long-term debt in connection with our senior unsecured notes (collectively, the "Notes"), net of underwriting discounts and offering expenses, consists of the following:

March 31, December 31,

(In millions) 2021 2020

1.750 % Senior Notes due September 2030

$ 1,239.0 $ 1,238.7

2.800 % Senior Notes due September 2050

$ 1,978.9 $ 1,978.5

Interest expense related to the Notes for the three months ended March 31, 2021 was $ 11.1 million.

The Company is subject to U.S.

federal, state, and foreign income taxes.

The Company's effective tax rate was 15.6 % and 12.9 % for the three months ended September 30, 2020 and 2019, respectively, and 8.6 % and 14.0 % for the nine months ended September 30, 2020 and 2019, respectively.

The Company's effective tax rate for the three and nine months ended September 30, 2020 was positively impacted, compared to the U.S.

The Company's effective tax rate was 11.0 % and 6.6 % for the three months ended March 31, 2021 and 2020, respectively.

The Company's effective tax rate for the three months ended March 31, 2021 was positively impacted, compared to the U.S.

federal statutory rate, primarily by the reversal of liabilities related to uncertain tax positions, stock-based compensation, income earned in foreign jurisdictions with tax rates lower than the U.S.

federal statutory rate, and federal tax credits for research activities.

The Company's federal income tax returns for 2015 through 2018 are currently under audit by the Internal Revenue Service ("IRS").

During the first quarter of 2021, we reduced the amount of liabilities for uncertain tax positions related to the Company’s federal income tax returns for 2015 and 2016, and the audits of such tax years are expected to conclude in the next 12 months.

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

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

federal statutory rate and federal tax credits for research activities.

The Company's effective tax rate for the three and nine months ended September 30, 2019 was positively impacted, compared to the U.S.

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

federal statutory rate, partly offset by the taxation of certain global intangible low-taxed income and the non-deductible Branded Prescription Drug Fee.

The Company believes it is reasonably possible that its unrecognized tax benefits as of September 30, 2020 may decrease within 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.

Stockholders' Equity

Share Repurchase Program

Share Repurchase Programs

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 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.

During the three months ended March 31, 2020, we repurchased 719,167 shares of our Common Stock under the program and recorded the cost of the shares received, or $ 272.8 million, as Treasury Stock.

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

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.

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.

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

The table below summarizes the shares of our Common Stock we repurchased during 2020 under the program and the cost of the shares received, which were recorded as Treasury Stock.

Three Months Ended

September 30, 2020 Nine Months Ended

September 30, 2020

Number of shares repurchased 179,824 898,991

Total cost of shares received $ 100.4 $ 373.3

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

As of September 30, 2020, the Company had $ 372.7 million which remained available for share repurchases under the program.

During the three months ended March 31, 2021, we repurchased 690,265 shares of our Common Stock under the program and recorded the cost of the shares received, or $ 323.5 million, as Treasury Stock.

As of March 31, 2021, $ 1.177 billion remained available for share repurchases under the program.

Sanofi Funding of Certain Development Costs

As described in Note 3, effective January 2018, we have agreed 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 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.

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

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

— 103,761 77,677 210,733

Total cost of shares received — $ 29.2 $ 41.7 $ 73.3

Dupilumab/Itepekimab:

Number of shares purchased (in cash) — 69,143 171,471 93,286

Total cost of shares received — $ 19.4 $ 93.3 $ 29.4

As of September 30, 2020, 279,766 shares of our Common Stock remained available for sale by Sanofi to satisfy its funding obligations with respect to Libtayo development costs and/or Dupilumab/Itepekimab Eligible Investments incurred in periods through September 30, 2020.

Additional Stock Purchased from Sanofi

In May 2020, a secondary offering of 13,014,646 shares of our Common Stock (the "Secondary Offering") held by Sanofi was completed.

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

See Note 8 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 (which Sanofi has used, and may continue to use, for the funding of certain development costs described above).

In 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, the "Dupilumab/Itepekimab Eligible Investments").

Pursuant to the Letter Agreement, we agreed to allow Sanofi to satisfy its funding obligations with respect to Dupilumab/Itepekimab Eligible Investments, as well as Libtayo development costs, for quarterly periods ending on September 30, 2020 by selling our Common Stock owned by Sanofi.

During the three months ended March 31, 2020, Sanofi elected to sell, and we elected to purchase (by issuing a credit towards the amount owed by Sanofi), 43,627 shares of our Common Stock to satisfy Sanofi's funding obligation related to Libtayo development costs, and we recorded the cost of the shares received, or $ 21.4 million, as Treasury Stock.

In addition, during the three months ended March 31, 2020, Sanofi elected to sell, and we elected to purchase (in cash), 85,287 shares of our Common Stock in connection with Sanofi's funding obligation for Dupilumab/Itepekimab Eligible Investments, and recorded the cost of the shares received, or $ 41.8 million, as Treasury Stock.

Statement of Cash Flows

The following provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheet to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows:

September 30, September 30,

(In millions) 2021 2020

Cash and cash equivalents $ 1,437.9 $ 2,208.2

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Restricted cash consists of amounts held by financial institutions pursuant to contractual arrangements.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Supplemental disclosure of non-cash investing and financing activities

The following amounts were included in accounts payable, accrued expenses, and other liabilities:

September 30, December 31, September 30, December 31,

2020 2019 2019 2018

March 31, December 31, March 31, December 31,

(In millions) 2021 2020 2020 2019

Accrued capital expenditures $ 75.6 $ 83.6 $ 72.6 $ 133.7

As described in Note 10, during the three months ended March 31, 2020, 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.

Legal Matters

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The Company recognizes accruals for loss contingencies associated with such proceedings when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated.

As of September 30, 2020 and December 31, 2019, the Company had accruals for loss contingencies of $ 132.2 million and $ 100.0 million, respectively.

As of March 31, 2021 and December 31, 2020, the Company's accruals for loss contingencies were not material.

If the Company were unable to prevail in any such proceedings, its consolidated financial position, results of operations, and future cash flows may be materially impacted.

Proceedings Relating to '287 Patent and '163 Patent

The Company is a party to patent infringement litigation initiated by the Company involving its European Patent No.

1,360,287 (the "'287 Patent") and its European Patent No.

2,264,163 (the "'163 Patent").

Each of these patents concerns genetically engineered mice capable of producing chimeric antibodies that are part human and part mouse.

Chimeric antibody sequences can be used to produce high-affinity fully human monoclonal antibodies.

In these proceedings, the Company claims infringement of several claims of the '287 Patent and the '163 Patent (as applicable), and seeks, among other types of relief, an injunction and an account of profits in connection with the defendants' infringing acts, which may include, among other things, the making, use, keeping, sale, or offer for sale of genetically engineered mice (or certain cells from which they are derived) that infringe one or more claims of the '287 Patent and the '163 Patent (as applicable).

On September 25, 2013, the Company commenced patent infringement litigation against Kymab Ltd in the English High Court of Justice, Chancery Division, Patents Court, in London, asserting the '287 Patent and '163 Patent.

Following a trial to adjudicate the claims of infringement and counterclaims of invalidity of the '287 Patent and the '163 Patent, the court issued a final judgment on February 1, 2016, finding that the asserted claims of the '287 and '163 Patents are novel, not obvious, and infringed by Kymab's genetically engineered mice.

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 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.

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.

Proceedings Relating to Praluent (alirocumab) Injection

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.

(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.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

United States

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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, on February 11, 2021, the Federal Circuit (as defined below) affirmed the lower court's decision that certain of Amgen's asserted patent claims are invalid based on lack of enablement.

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 has been scheduled for December 9, 2020.

An oral hearing before the Federal Circuit was held on December 9, 2020.

On February 11, 2021, the Federal Circuit affirmed the District Court's decision that certain of Amgen's asserted patent claims are invalid based on lack of enablement.

On April 14, 2021, Amgen filed a petition for a rehearing en banc.

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 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 relevant to Praluent 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 Amgen's European Patent No.

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.

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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.

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

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

"July 11 Decision").

Amgen subsequently enforced the injunction and, as a result, commercialization of Praluent in Germany has been discontinued.

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.

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 (originally scheduled for April 2, 2020) has been rescheduled for November 5, 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 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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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 February 12, 2021.

On February 8, 2021, the lawsuit was dismissed.

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.

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On August 12, 2020, the court denied Amgen's preliminary injunction motion.

On February 9, 2021, the lawsuit was dismissed.

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.

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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.

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.

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On November 2, 2020, Amgen filed a motion withdrawing this lawsuit;

EPO Proceedings.

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 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.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(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.

5,906,333 (the "'333 Patent") and 5,705,288 (the "'288 Patent") in the Tokyo District Court Civil Division (the "Tokyo District Court") against Sanofi K.K.

Amgen's complaint alleges that manufacturing, selling or otherwise transferring, and offering to sell or otherwise transfer Praluent (alirocumab) in Japan (as well as importing Praluent (alirocumab) into Japan) infringe the '333 and '288 Patents.

The complaint further seeks a permanent injunction, disposal of product, and court costs.

The Company has not been named as a defendant in this litigation.

On January 17, 2019, the Tokyo District Court upheld the validity of the '333 Patent and '288 Patent and ordered a permanent injunction against Sanofi K.K.

to stop manufacturing, selling or otherwise transferring, and offering to sell or otherwise transfer Praluent (alirocumab) in Japan (as well as importing Praluent (alirocumab) into Japan) and to dispose of all product.

However, the Tokyo District Court stayed the enforcement of such injunction pending appeal to the Intellectual Property High Court of Japan (the "IPHC").

On January 30, 2019, Sanofi K.K.

appealed the Tokyo District Court's decision in the infringement proceedings to the IPHC.

Following an oral hearing on October 30, 2019, the IPHC affirmed the Tokyo District Court's decision in the infringement proceedings.

appealed the IPHC's decision in the infringement proceedings to the Supreme Court of Japan on November 12, 2019.

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.

and, on February 1, 2021, the lawsuit was dismissed.

Proceedings Relating to Dupixent (dupilumab) Injection

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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 March 11, 2021, Immunex filed a petition for writ of certiorari with the United States Supreme Court.

The '487 Patent expired in May 2020 following Immunex's filing of a terminal disclaimer with the USPTO.

On April 5, 2017, Immunex Corporation filed a lawsuit against the Company, Sanofi, Sanofi-Aventis U.S.

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On June 28, 2017, the Company and the Sanofi parties filed an answer to Immunex's complaint and counterclaims against Immunex and Amgen (which was amended on October 31, 2017 to, among other things, add an inequitable conduct allegation), and Immunex and Amgen filed an answer to the counterclaims on July 28, 2017.

A combined hearing on the construction of certain disputed claim terms of the '487 Patent and the Company and the Sanofi parties' motion

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

for summary judgment on the issue of indefiniteness of the '487 Patent claims was held on July 12, 2018.

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.

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On September 20, 2017 and September 21, 2017, respectively, the Company and Sanofi initiated opposition proceedings in the EPO against Immunex's European Patent No.

2,990,420 (the "'420 Patent"), a divisional patent of the '665 Patent ( i.e.

2,990,420 (the "'420

Patent"), a divisional patent of the '665 Patent ( i.e.

, a patent that shares the same priority date, disclosure, and patent term of the parent '665 Patent but contains claims to a different invention).

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The original patent term of the Immunex patents is set to expire in 2021.

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

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, 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.

The ITC instituted the investigation on July 22, 2020 and a trial was scheduled for April 19–23, 2021.

On March 26, 2021, the staff attorney appointed by the ITC's Office of Unfair Import Investigations ("OUII")—an independent government party to the case representing the public interest—determined that the '631 Patent is invalid on several grounds.

On April 8, 2021, Novartis moved to terminate the ITC investigation in its entirety based on its withdrawal of the complaint;

and, on May 3, 2021, the ITC terminated the investigation.

On June 19, 2020, Novartis also filed a patent infringement lawsuit in the U.S.

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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 April 8, 2021, Novartis requested that the stay of this lawsuit be lifted.

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 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.

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.

Following Novartis's motion to terminate the ITC investigation discussed above, on April 16, 2021 the Company filed a new IPR petition seeking a declaration of invalidity of the '631 Patent based on the same grounds that were the basis for the OUII staff attorney's determination discussed above.

The Company is also seeking injunctive relief and treble damages.

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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 that 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.

On February 22, 2021, Novartis filed, and Vetter moved to join, a motion to dismiss the amended complaint.

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.

On February 10, 2021, the court entered a 90-day stay of the litigation.

Proceedings Relating to fasinumab

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2,270,048 (the "'048 Patent"), European Patent No.

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

1,871,416 (the "'416 Patent"), and European Patent No.

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The counterclaim also seeks a permanent injunction, damages, an accounting of profits, and costs and interest.

A trial has been scheduled to commence in late November or early December 2021.

On December 15, 2020, Rinat filed an amended defense and counterclaim seeking a declaration of infringement of the '711 Patent by fasinumab.

On May 5, 2021, the court stayed this litigation on terms mutually agreed by the parties.

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.

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On October 21, 2020, Teva filed a notice of intervention with the TBA to take part in the appeal proceedings as an intervener.

An oral hearing before the TBA has been scheduled for April 5–6, 2022.

The '711 Patent is also subject to opposition proceedings in the EPO, which were initiated by the Company on May 1, 2018.

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An oral hearing before the TBA has been scheduled for July 29, 2021.

Proceedings Relating to REGN-COV2

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 with imdevimab)

On October 5, 2020, Allele Biotechnology and Pharmaceuticals, Inc.

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On August 24, 2020, the Company filed a motion to dismiss the complaint in its entirety.

An oral hearing on the motion to dismiss was held on October 7, 2020.

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.

On March 1, 2021, the Company filed a motion to dismiss the complaint in its entirety.

On March 25, 2021, UHC filed an amended complaint;

and, on April 22, 2021, the Company filed a motion to dismiss this amended complaint in its entirety.

Shareholder Demand

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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, is evaluating this demand letter.

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.

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

What changed 10-Q

Item 1. Financial Statements