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Item 1A. Risk Factors

2021-11-04 compared with 2021-08-05 · 110 added, 110 removed, 864 unchanged (20% of the section changed)

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Furthermore, additional risks and uncertainties are described under other captions in this report and should also be considered by our investors.

For purposes of this section (as well as this report in general), references to our products encompass products marketed or otherwise commercialized by us and/or our collaborators and references to our product candidates encompass product candidates in development by us and/or our collaborators (in the case of collaborated products or product candidates under the terms of the applicable collaboration agreements), unless otherwise stated or required by the context.

For purposes of this section (as well as this report in general), references to our products encompass products marketed or otherwise commercialized by us and/or our collaborators or licensees and references to our product candidates encompass product candidates in development by us and/or our collaborators or licensees (in the case of collaborated or licensed products or product candidates under the terms of the applicable collaboration or license agreements), unless otherwise stated or required by the context.

In this section, we first provide a summary of the more significant risks and uncertainties we face and then provide a full set of risk factors and discuss them in greater detail.

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and the demand for our marketed products.

The COVID-19 pandemic has resulted in travel and other restrictions to reduce the spread of the disease, including governmental orders across the globe, which, among other things, direct individuals to shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings, maintain social distancing, and order cessation of non-essential travel.

Though some of these restrictions have eased, the continuation or recurrence of these restrictions remains uncertain and will depend on many factors, including any future spikes in COVID-19 cases and the continued availability and efficacy of vaccines and treatments.

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and our ability to obtain services from third-party specialty vendors and other providers or to access their expertise as fully and timely as needed.

The COVID-19 pandemic may also result in the loss of some of our key personnel, either temporarily or permanently.

The COVID-19 pandemic may also result in the loss of

some of our key personnel, either temporarily or permanently.

We and our employees may also be subject to government vaccine mandates, such as President Biden's recent Executive Order entitled "Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors" applicable to certain federal contractors (which we expect to become effective for us on December 8, 2021).

Any such requirement may have a negative impact on our ability to retain employees or hire new employees and could adversely impact our business.

In addition, our sales and marketing efforts were previously negatively impacted and may be further negatively impacted by postponement or cancellation of face-to-face meetings and restrictions on access by non-essential personnel to hospitals or clinics to the extent such measures slow down adoption or further commercialization of our marketed products.

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"Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations" for a discussion of our net product sales.

Demand for some or all of our marketed products may be further reduced if shelter-in-place or social distancing orders remain in effect or are re-implemented and, as a result, some of our inventory may become obsolete and may need to be written off, impacting our operating results.

Demand for some or all of our marketed products may be further reduced if shelter-in-place, social distancing, or similar orders remain in effect or are re-implemented and, as a result, some of our inventory may become obsolete and may need to be written off, impacting our operating results.

These and similar, and perhaps more severe, disruptions in our operations may materially adversely impact our business, operating results, and financial condition.

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We face risks related to the development, manufacturing, and commercialization of REGEN-COV.

In response to the recent global outbreak of COVID-19, we developed and are manufacturing and commercializing, in collaboration with Roche, REGEN-COV (known as Ronapreve in other countries outside the United States), a novel investigational antibody cocktail treatment designed to prevent and treat infection from the SARS-CoV-2 virus that received an EUA from the FDA in November 2020.

There can be no assurance with respect to how long the EUA will remain in effect, whether the EUA will be revised (such as to include the treatment of hospitalized COVID-19 patients) based on new clinical trial results or otherwise, and whether the EUA is revoked by the FDA based on its determination that the underlying health emergency no longer exists or warrants such authorization or other reasons (including if REGEN-COV is found to be less effective or not effective against new variants of the SARS-CoV-2 virus).

In addition, while the EUA was granted following our announcement of positive results from the ongoing Phase 2/3 seamless trial in non-hospitalized patients with COVID-19 and we have further announced positive Phase 3 results in 2021 (as discussed in Part I, Item 2.

"Management's Discussion and Analysis of Financial Condition and Results of Operations – Additional Information – Clinical Development Programs"), there are multiple ongoing clinical trials to evaluate the safety and efficacy of the antibody cocktail and there is no assurance of favorable results from any ongoing or future clinical trials, the timing of their completion, or the FDA's or other regulatory authorities' favorable determinations based on data from any such clinical trial.

EUA from the FDA in November 2020.

There can be no assurance with respect to how long the EUA will remain in effect, whether the EUA will be further expanded (such as to include the treatment of hospitalized COVID-19 patients) based on new clinical trial results or otherwise, and whether the EUA will be revoked by the FDA based on its determination that the underlying health emergency no longer exists or warrants such authorization or other reasons (including if REGEN-COV is found to be less effective or not effective against new variants of the SARS-CoV-2 virus).

In addition, there are multiple ongoing clinical trials (as discussed in Part I, Item 2.

"Management's Discussion and Analysis of Financial Condition and Results of Operations – Programs in Clinical Development") evaluating the safety and efficacy of the antibody cocktail and there is no assurance of favorable results from any ongoing or future clinical trials, the timing of their completion, or the FDA's or other regulatory authorities' favorable determinations based on data from any such clinical trial.

It is also possible that the FDA and certain other regulatory authorities may not grant the antibody cocktail full marketing approval for the treatment of COVID-19, or that any such marketing approvals, if granted, may have significant limitations on its use.

Further, other parties may be successful in developing a more effective treatment for COVID-19;

and utilization of REGEN-COV has been and may in the future be adversely impacted by other factors, such as the rollout of vaccines providing acquired immunity against COVID-19.

As a result, we may never be successful in fully commercializing REGEN-COV.

The intense public interest, including speculation by the media, in the development and commercialization of REGEN-COV has caused or contributed to significant volatility in

our stock price, which may continue as data and other information from the ongoing and any future clinical trials evaluating REGEN-COV and third-party product candidates for the treatment or prevention of COVID-19 as well as any other regulatory actions become public.

Further, other parties may be successful in developing a more efficacious, more easily administered, more cost-effective, or otherwise superior treatment for COVID-19;

and utilization of REGEN-COV has been and may in the future be adversely impacted by other factors, such as the rollout of vaccines providing acquired immunity against COVID-19 and the distribution model for REGEN-COV or other treatments for COVID-19.

Any of these factors may negatively impact the uptake or commercialization of REGEN-COV, and such impact may be material.

The intense public interest, including speculation by the media, in the development and commercialization of REGEN-COV has caused or contributed to significant volatility in our stock price, which may continue as data and other information from the ongoing and any future clinical trials evaluating REGEN-COV and third-party product candidates for the treatment or prevention of COVID-19 as well as any other regulatory actions become public.

We also face risks related to our significant investment in the development, supply, allocation, distribution, pricing, and commercialization of REGEN-COV.

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If we are unable to maintain the EUA or obtain regulatory approvals, or if we make a strategic decision to discontinue development of REGEN-COV or are otherwise not successful in the commercialization of REGEN-COV, we may be unable to recoup our significant expenses incurred to date and/or in the future related to the development and production of REGEN-COV.

While we recognized significant net product sales and collaboration revenue in connection with sales of REGEN-COV during the three and six months ended June 30, 2021, the degree to which future sales of REGEN-COV will continue to impact our results of operations is highly uncertain.

In addition, our internal manufacturing capacity may not be sufficient to cover the demand for REGEN-COV.

While we have entered into a collaboration agreement with Roche to develop, manufacture, and distribute REGEN-COV, we cannot be certain that our current manufacturing and distribution capacity for REGEN-COV or any increased manufacturing and distribution capacity through our collaboration with Roche will be sufficient.

While we previously recognized significant net product sales and collaboration revenue in connection with sales of REGEN-COV and expect to recognize additional significant net product sales under the September 2021 amended supply agreement with the U.S.

government, the degree to which future sales of REGEN-COV will continue to impact our results of operations is highly uncertain.

In addition, our internal and contracted manufacturing capacity may not be sufficient to cover the demand for REGEN-COV.

While we have entered into a collaboration agreement with Roche to develop, manufacture, and distribute REGEN-COV, we cannot be certain that our current manufacturing and distribution capacity for REGEN-COV and the increased manufacturing and distribution capacity through our collaboration with Roche will be sufficient.

In addition, we rely entirely on third parties for filling and finishing services for REGEN-COV.

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As supplies of REGEN-COV are expected to remain constrained, it is possible that the U.S.

government may limit or restrict our ability to distribute and commercialize REGEN-COV outside of the United States.

government may limit or restrict our and/or Roche's ability to distribute and commercialize REGEN-COV outside of the United States.

In addition, as a result of the emergency situations in many countries, there is a heightened risk that REGEN-COV may be subject to adverse governmental actions in certain countries.

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Further, we have observed and are likely to continue to face significant public attention and scrutiny over the complex decisions made regarding the REGEN-COV development program, including any allocation, distribution, or pricing decisions with respect to REGEN-COV.

If we are unable to successfully manage these risks, we could face significant reputational harm, which could negatively affect our stock price.

If we are unable to successfully manage these risks, we could face significant reputational harm, which could, among other adverse consequences, negatively affect our stock price.

Risks Related to Commercialization of Our Marketed Products, Product Candidates, and New Indications for Our Marketed Products

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EYLEA net sales represent a substantial portion of our revenues and this concentration of our net sales in a single product makes us substantially dependent on that product.

For the six months ended June 30, 2021 and 2020, EYLEA net sales in the United States represented 36% and 60% of our total revenues, respectively, with EYLEA net sales as a percentage of our total revenues for the six months ended June 30, 2021 being significantly lower due to the net product sales of REGEN-COV we recorded in that period in connection with deliveries of drug product under our agreements with the U.S.

For the nine months ended September 30, 2021 and 2020, EYLEA net sales in the United States represented 38% and 59% of our total revenues, respectively, with EYLEA net sales as a percentage of our total revenues for the nine months ended September 30, 2021 being significantly lower due to the net product sales of REGEN-COV we recorded in that period in connection with deliveries of drug product under our agreements with the U.S.

If we were to experience difficulty with the commercialization of EYLEA in the United States or if Bayer were to experience any difficulty with the commercialization of EYLEA outside the United States (including as a result of the COVID-19 pandemic discussed above), or if we and Bayer are unable to maintain current marketing approvals of EYLEA, we may experience a reduction in revenue and may not be able to sustain profitability, and our business, prospects, operating results, and financial condition would be materially harmed.

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• the effect of existing and new health care laws and regulations currently being considered or implemented in the United States, including price reporting and other disclosure requirements of such laws and regulations and the potential impact of such requirements on physician prescribing practices and payor coverage;

• serious complications or side effects in connection with the use of our marketed products, as discussed under "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Serious complications or side effects in connection with the use of our products and in clinical trials for our product candidates and new indications for our marketed products could cause our regulatory approvals to be revoked or limited or lead to delay or discontinuation of development of our product candidates or new indications for our marketed products, which could severely harm our business, prospects, operating results, and financial condition " below;

of development of our product candidates or new indications for our marketed products, which could severely harm our business, prospects, operating results, and financial condition " below;

• maintaining and successfully monitoring commercial manufacturing arrangements for our marketed products with third parties who perform fill/finish or other steps in the manufacture of such products to ensure that they meet our standards and those of regulatory authorities, including the FDA, which extensively regulate and monitor pharmaceutical manufacturing facilities;

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We and our collaborators are subject to significant ongoing regulatory obligations and oversight with respect to the products we or they commercialize for the products' currently approved indications in the United States, EU, and other countries where such products are approved.

If we or our collaborators fail to maintain regulatory compliance for such products' currently approved indications (including because the product does not meet the relevant endpoints of any required post-approval studies, or for any of the reasons discussed below under "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain "), the applicable marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition.

If we or our collaborators fail to maintain regulatory compliance or satisfy other obligations for such products' currently approved indications (including because the product does not meet the relevant endpoints of any required post-approval studies (such as those required under an accelerated approval by the FDA or other similar type of approval), or for any of the reasons discussed below under "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain "), the applicable marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition.

Failure to comply may also subject us to sanctions, product recalls, or withdrawals of previously approved marketing applications.

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Third-party payors may also require prior authorization for reimbursement, or require failure on another type of treatment before covering a particular drug, particularly with respect to higher-priced drugs.

As our currently marketed products and product candidates are biologics, bringing them to market may cost more than bringing traditional, small-molecule drugs to market due to the complexity associated with the research, development, production, supply, and regulatory review of such products.

As our currently marketed products and most of our product candidates are biologics, bringing them to market may cost more than bringing traditional,

small-molecule drugs to market due to the complexity associated with the research, development, production, supply, and regulatory review of such products.

Given cost sensitivities in many health care systems (which will likely be exacerbated as a result of the COVID-19 pandemic), our currently marketed products and product candidates are likely to be subject to continued pricing pressures, which may have an adverse impact on our business, prospects, operating results, and financial condition.

In addition, in order for private insurance and governmental payors (such as Medicare and Medicaid in the United States) to reimburse the cost of our marketed products, we must maintain, among other things, our FDA registration and our National Drug Code, formulary approval by PBMs, and recognition by insurance companies and the Centers for Medicare & Medicaid

Services (the "CMS").

There is no certainty that we will be able to obtain or maintain the applicable requirements for reimbursement (including relevant formulary coverage, as discussed further below) of our current and future marketed products, which may have a material adverse effect on our business.

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Further, there have been several recent U.S.

Congressional inquiries and proposed federal and state legislation and policies designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the out-of-pocket cost of prescription drugs, and reform government program reimbursement methodologies for drugs.

Congressional inquiries and proposed federal and state legislation and policies (in addition to those already in effect) designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the out-of-pocket cost of prescription drugs, and reform government program reimbursement methodologies for drugs.

President Biden and various members of his administration and the current U.S.

Congress have indicated that lowering drug prices continues to be a legislative and political priority, as evidenced, for example, by the "Executive Order on Promoting Competition in the American Economy" issued by President Biden in July 2021.

Proposals aimed at drug pricing previously introduced at the federal level include measures that would index the price of certain drugs to international pricing, allow the government to negotiate prescription drug prices for Medicare, and permit the importation of drugs from other countries into the United States at lower prices.

Another recent example is the September 2020 "MFN Executive Order" issued by former President Trump and the related interim final rule (the "MFN Interim Final Rule") issued by HHS, acting through CMS, to implement rulemaking to test a payment model (the "MFN Model") pursuant to which Medicare would pay no more than the "most-favored-nation price" within the member countries of the Organization for Economic Co-operation and Development for certain drugs covered by Medicare Part B (such as EYLEA) and Part D.

As previously reported, while preliminary injunctive relief preventing the MFN Interim Final Rule from becoming effective on January 1, 2021 has been granted and such relief has not been appealed, if the MFN Interim Final Rule is not permanently enjoined or repealed or the MFN Model is otherwise implemented, this would have a material adverse impact on the extent of Medicare reimbursements for EYLEA and our results of operations .

See Note 12 to our Condensed Consolidated Financial Statements for further details regarding the lawsuit relating to the MFN Interim Final Rule filed by Regeneron.

Proposals aimed at drug pricing introduced at the federal level include measures that would index the price of certain drugs (including those covered by Medicare Part B, such as EYLEA) using international or domestic reference pricing mechanisms, allow the government to negotiate prescription drug prices for Medicare and potentially other third-party payors, and permit the importation of drugs from other countries into the United States at lower prices.

At the state level, legislatures are becoming increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and price and marketing cost disclosure and transparency measures.

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For example, the EU provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

Our results of operations may suffer if we or our collaborators are

unable to market our products in foreign countries or if coverage and reimbursement for our marketed products in foreign countries is limited or delayed.

A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the

company placing the medicinal product on the market.

Our results of operations may suffer if we or our collaborators are unable to market our products in foreign countries or if coverage and reimbursement for our marketed products in foreign countries is limited or delayed.

The commercial success of our products and product candidates is subject to significant competition.

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EYLEA faces significant competition in the marketplace.

For example, EYLEA competes in one or more of its approved indications with other VEGF inhibitors, including Novartis and Genentech/Roche's Lucentis ® (ranibizumab) and Novartis' Beovu ® (brolucizumab).

For example, EYLEA competes in one or more of its approved indications with other VEGF inhibitors, including Novartis and Genentech/Roche's Lucentis ® (ranibizumab), Novartis' Beovu ® (brolucizumab), and Genentech/Roche's Susvimo ® (ranibizumab ocular implant), as well as Samsung Bioepis Co., Ltd.

and Biogen Inc.'s biosimilar referencing Lucentis.

Ophthalmologists are also using off-label, third-party repackaged versions of Genentech/Roche's approved VEGF antagonist, bevacizumab, for the treatment of certain of EYLEA's indications, and we are aware of another company developing an ophthalmic formulation of such product.

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We are also aware of a number of companies working on the development of product candidates and extended delivery devices for the potential treatment of one or more of EYLEA's indications, including those that act by blocking VEGF and VEGF receptors (including therapies designed to extend the treatment interval) and/or other targets (such as Ang2).

In addition, we are aware of several companies developing biosimilar versions of EYLEA and other approved anti-VEGF treatments, including biosimilar versions of Lucentis under regulatory review or in late-stage clinical development.

In addition, we are aware of several companies developing biosimilar versions of EYLEA and other approved anti-VEGF treatments, including other biosimilar versions of Lucentis under regulatory review or in late-stage clinical development.

Other potentially competitive products in development include products for use in combination with EYLEA and/or other anti-VEGF treatments, small-molecule tyrosine kinase inhibitors, gene therapies, and other eye-drop formulations, devices, and oral therapies.

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In atopic dermatitis, there are several topical ointments or agents either approved or in development.

There is also a systemic JAK inhibitor approved for atopic dermatitis and others are in development.

In addition, a number of companies are developing antibodies against IL-13, IL-13Ra1, OX40, IL-31R, and/or IL-1alpha.

There are also systemic JAK inhibitors and an antibody against IL-13 approved for atopic dermatitis and others are in development.

In addition, a number of companies are developing antibodies against IL-13Ra1, OX40, IL-31R, and/or IL-1alpha.

In asthma, competitors to Dupixent include antibodies against the IL-5 ligand or the IL-5 receptor or immunoglobulin E;

and some of these antibodies are either approved or in development for indications that also compete or may compete in the future with Dupixent in CRSwNP.

There are several other potentially competitive products in development that may compete with Dupixent in asthma, as well as potential future indications, including antibodies against thymic stromal lymphopoietin ("TSLP") or the IL-33 ligand.

Dupixent also faces competition from inhaled products in asthma and potential future indications.

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For example, we are aware of other pharmaceutical and biotechnology companies actively engaged in the research and development of antibody-based products against targets that are also the targets of our early- and late-stage product candidates.

We are also aware of other companies developing or marketing small molecules that may compete with our antibody-based product candidates in various indications, if such product candidates obtain regulatory approval in those indications.

these or other competitors announces a successful clinical study involving a product that may be competitive with one of our product candidates or the grant of marketing approval by a regulatory agency for a competitive product, such developments may have an adverse effect on our business or future prospects.

We are also aware of other companies developing or marketing small molecules or other treatments that may compete with our antibody-based product candidates in various indications, if such product candidates obtain regulatory approval in those indications.

If any of these or other competitors announces a successful clinical study involving a product that may be competitive with one of our product candidates or the grant of marketing approval by a regulatory agency for a competitive product, such developments may have an adverse effect on our business or future prospects.

In addition, the first product to reach the market in a therapeutic area is often at a significant competitive advantage relative to later entrants to the market.

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We also rely on Sanofi for sales, marketing, and distribution of Dupixent and Libtayo in countries outside the United States.

While we recently exercised our option under the Antibody Collaboration to co-commercialize Dupixent in certain jurisdictions outside the United States and expect to commence this co-commercialization later this year, we will continue to rely in part on Sanofi's sales and marketing organization in such jurisdictions and there can be no assurance that we will be able to commence or successfully conduct such co-commercialization in the expected time frame or at all.

While we exercised our options under the Antibody Collaboration and the IO Collaboration to co-commercialize Dupixent and Libtayo in certain jurisdictions outside the United States and have commenced this co-commercialization with respect to Dupixent, we will continue to rely in part on Sanofi's sales and marketing organization in such jurisdictions and there can be no assurance that we will be able to successfully conduct such co-commercialization in the expected time frame or at all.

If we and our collaborators are unsuccessful in continuing to commercialize the marketed products subject to such collaborations, or if Bayer or Sanofi terminate their respective collaborations with us, our business, prospects, operating results, and financial condition would be materially impaired.

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Sales of our marketed products recorded by us and our collaborators could be reduced by imports from countries where such products may be available at lower prices.

Our sales of products we commercialize in the United States and our collaborators' sales of products they commercialize under our collaboration agreements with them in the United States and other countries (which impact our share of any profits or losses from the commercialization of these products under the relevant collaboration agreements and, therefore, our results of operations) may be reduced if the applicable product is imported into those countries from lower priced markets, whether legally or illegally (a practice known as parallel trading or reimportation).

Our sales of products we commercialize in the United States and our collaborators' sales of products they commercialize or co-commercialize with us under our collaboration agreements with them in the United States and other countries (which impact our share of any profits or losses from the commercialization of these products under the relevant collaboration agreements and, therefore, our results of operations) may be reduced if the applicable product is imported into those countries from lower priced markets, whether legally or illegally (a practice known as parallel trading or reimportation).

Parallel traders (who may repackage or otherwise alter the original product or sell it through alternative channels such as mail order or the Internet) take advantage of the price differentials between markets arising from factors including sales costs, market conditions (such as intermediate trading stages), tax rates, or national regulation of prices.

Under our arrangement with Bayer, pricing and reimbursement for EYLEA outside the United States is the responsibility of Bayer.

Similarly, under our Antibody Collaboration and IO Collaboration with Sanofi, pricing and reimbursement for the products commercialized thereunder outside the United States are the responsibility of Sanofi.

Prices for our marketed products in jurisdictions outside the United States are based on local market economics and competition and are likely to differ from country to country.

In the United States, prices for pharmaceuticals are generally higher than in the bordering nations of Canada and Mexico and sales of our marketed products in the United States may be

reduced if the applicable product marketed in those bordering nations is imported into the United States.

Similarly, under our Antibody Collaboration and IO Collaboration with Sanofi, pricing and reimbursement for the products commercialized or co-commercialized thereunder outside the United States are the responsibility of Sanofi.

Prices for our marketed products in jurisdictions outside

the United States are based on local market economics and competition and are likely to differ from country to country.

In the United States, prices for pharmaceuticals are generally higher than in the bordering nations of Canada and Mexico and sales of our marketed products in the United States may be reduced if the applicable product marketed in those bordering nations is imported into the United States.

In addition, there are proposals to legalize the import of pharmaceuticals from outside the United States into the United States.

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We sell our marketed products for which we record net product sales in the United States to several distributors and specialty pharmacies, as applicable, which generally sell the product directly to healthcare providers or other pharmacies (as applicable).

For the six months ended June 30, 2021 and 2020, our gross product sales of such products to two customers accounted on a combined basis for 49% and 87% of our total gross product revenue, respectively, and gross product sales of REGEN-COV to the U.S.

For the nine months ended September 30, 2021 and 2020, our gross product sales of such products to two customers accounted on a combined basis for 53% and 86% of our total gross product revenue, respectively, and gross product sales of REGEN-COV to the U.S.

government accounted for an additional 38% of our gross product revenue in this period in 2021.

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If we are unable to establish commercial capabilities outside the United States for products we intend to commercialize or co-commercialize outside the United States, our business, prospects, operating results, and financial condition may be adversely affected.

We have limited commercial capabilities outside the United States and do not currently have an established organization for the sales, marketing, and distribution of marketed products outside the United States.

We will need to establish commercial capabilities outside the United States if we decide to co-commercialize a product outside the United States.

For example, we recently exercised our option under the Antibody Collaboration to co-commercialize Dupixent in certain jurisdictions outside the United States, and we have taken initial steps to establish commercial capabilities in such jurisdictions.

In addition, there may be other circumstances in which we need to establish commercial capabilities outside the United States, including because we decide to commercialize a particular product independently;

we are unable to find an appropriate collaborator;

We have limited commercial capabilities outside the United States and do not currently have a fully established organization for the sales, marketing, and distribution of marketed products outside the United States.

We will need to establish commercial capabilities outside the United States for any new product we decide to commercialize or co-commercialize outside the United States.

For example, following the exercise of our option under the Antibody Collaboration to co-commercialize Dupixent in certain jurisdictions outside the United States, we have begun establishing commercial capabilities for Dupixent in such jurisdictions.

There may be other circumstances in which we need to establish commercial capabilities outside the United States, including because we decide to commercialize a particular product independently;

we are unable to find an appropriate

collaborator;

or our existing collaborator decides not to opt in, decides to opt out, or breaches its obligations to us with respect to a particular product.

In order to commercialize or co-commercialize any products outside the United States, we must build our sales, marketing, distribution, managerial, and other non-technical capabilities in the relevant markets or make arrangements with third parties to perform these services, any of which will likely be expensive and time consuming and could delay product launch or the co-commercialization of a product in one or more markets outside the United States.

We cannot be certain that we will be able to successfully develop commercial capabilities outside the United States (including as it relates to Dupixent) within an acceptable time frame, without incurring substantial expenses, or at all.

We cannot be certain that we will be able to successfully develop commercial capabilities outside the United States (including as it relates to Dupixent and Libtayo) within an acceptable time frame, without incurring substantial expenses, or at all.

These and other difficulties relating to commercializing our products outside the United States may severely harm our business, prospects, operating results, and financial condition.

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According to the FDA policies under the Prescription Drug User Fee Act, the FDA system of review times for new drugs includes standard review and priority review.

The FDA's goal for a standard review is to review the application within a 10-month time frame from the time the application is filed by the FDA (filing date), which typically occurs approximately 60 days

following submission of the application by the applicant.

The FDA has stated the goal to act on 90% of standard new molecular entity ("NME") New Drug Application ("NDA") and original BLA submissions within 10 months of the filing date.

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If we or any of the third parties conducting our clinical studies are determined to have failed to fully comply with GCPs, the study protocol or applicable regulations, the clinical data generated in those studies may be deemed unreliable.

For example, as discussed in Part I, Item 2.

"Management's Discussion and Analysis of Financial Condition and Results of Operations – Additional Information - Clinical Development Programs – REGEN-COV (casirivimab and imdevimab) – Treatment Study - Hospitalized Patients," we were recently notified by the sponsor of a trial evaluating REGEN-COV in hospitalized patients with severe COVID-19 of a GCP inspection of the trial that found certain deviations from GCP compliance.

For example, as previously disclosed, we were recently notified by the sponsor of a trial evaluating REGEN-COV in hospitalized patients with severe COVID-19 of a GCP inspection of the trial that found certain deviations from GCP compliance.

There can be no assurance that the data from this trial will be found acceptable by the FDA or other regulatory authorities or will be sufficient for purposes of our request to expand the EUA for REGEN-COV to include COVID-19 treatment for appropriate hospitalized patients.

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grant similar powers to the competent authorities and impose similar obligations on companies.

on the totality of scientific evidence, there is evidence of effectiveness of the medical product, and there are no adequate, approved, and available alternatives.

In addition to the standard drug approval process, the FDA has the authority to grant an EUA to allow unapproved medical products to be used in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or conditions when, based on the totality of scientific evidence, there is evidence of effectiveness of the medical product, and there are no adequate, approved, and available alternatives.

For example, REGEN-COV has been authorized for use in certain individuals in the United States based on an EUA from the FDA.

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Furthermore, some of our products and product candidates (such as Libtayo and Dupixent) are studied in combination with agents and treatments developed by us or our collaborators.

There may be additional risks and unforeseen safety issues resulting from such combined administration, any of which may materially adversely impact clinical development of these product candidates and our ability to obtain regulatory approval.

There may be additional risks and unforeseen safety issues resulting

from such combined administration, any of which may materially adversely impact clinical development of these product candidates and our ability to obtain regulatory approval.

In some jurisdictions such as the EU, initiating phase 3 clinical trials and clinical trials in the pediatric population is subject to a requirement to obtain approval or a waiver from the competent authorities of the EU Member States and/or the EMA.

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Other VEGF blockers have reported side effects that became evident only after large-scale trials or after marketing approval when large numbers of patients were treated.

There are risks inherent in the intravitreal administration of drugs like aflibercept (such as intraocular inflammation ("IOI"), sterile and culture positive endophthalmitis, corneal decomposition, retinal detachment, and retinal tear), which can cause injury to the eye and other complications.

The side effects previously reported for EYLEA include conjunctival hemorrhage, macular degeneration, eye pain, retinal

hemorrhage, and vitreous floaters.

There are risks inherent in the intravitreal

administration of drugs like aflibercept (such as intraocular inflammation ("IOI"), sterile and culture positive endophthalmitis, corneal decomposition, retinal detachment, and retinal tear), which can cause injury to the eye and other complications.

The side effects previously reported for EYLEA include conjunctival hemorrhage, macular degeneration, eye pain, retinal hemorrhage, and vitreous floaters.

In addition, commercialization of EYLEA or our other products may be impacted by actions of third parties on which we rely, such as manufacturers of syringes or other devices used in the administration of our products.

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For example, we are currently party to patent infringement and other proceedings relating to the EYLEA pre-filled syringe, as described in Note 12 to our Condensed Consolidated Financial Statements.

Failure to successfully develop or supply the

devices, delays in or failure of the studies conducted by us, our collaborators, or third-party providers, or failure of our Company, our collaborators, or the third-party providers to obtain or maintain regulatory approval or clearance of the devices could result in increased development costs, delays in or failure to obtain regulatory approval, and associated delays in a product or product candidate reaching the market.

Failure to successfully develop or supply the devices, delays in or failure of the studies conducted by us, our collaborators, or third-party providers, or failure of our Company, our collaborators, or the third-party providers to obtain or maintain regulatory approval or clearance of the devices could result in increased development costs, delays in or failure to obtain regulatory approval, and associated delays in a product or product candidate reaching the market.

Loss of regulatory approval or clearance of a device that is used with our product may also result in the removal of our product from the market.

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2,264,163 (which concerns genetically engineered mice capable of producing chimeric antibodies that are part human and part mouse) is the subject of opposition proceedings in the European Patent Office (the "EPO") (currently pending before its Boards of Appeal).

In addition, on October 26 and October 27, 2021, anonymous parties initiated opposition proceedings in the EPO against our European Patent No.

2,944,306 (which concerns pre-filled syringes comprising ophthalmic formulations containing VEGF antagonists such as aflibercept for intravitreal administration), as described in Note 12 to our Condensed Consolidated Financial Statements included in this report.

We have pending patent applications in the United States Patent and Trademark Office (the "USPTO"), the EPO, and the patent offices of other foreign jurisdictions, and it is likely that we will need to defend patents from challenges by others from time to time in the future.

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9,254,338 (the "'338 Patent") and 9,669,069 (the "'069 Patent");

The '226 Patent concerns methods for manufacturing VEGF antagonist fusion proteins, including aflibercept, the '992 Patent concerns formulations and vials containing VEGF antagonist fusion proteins, including aflibercept;

and on September 7, 2021, Celltrion, Inc.

filed a petition for post-grant review of U.S.

10,857,231 (the "'231 Patent").

The '226 Patent concerns methods for manufacturing VEGF antagonist fusion proteins, including aflibercept;

the '992 Patent and the '231 Patent concern formulations and vials containing VEGF antagonist fusion proteins, including aflibercept;

and the '338 Patent and the '069 Patent concern methods for treating angiogenic eye disorders by administering VEGF antagonist fusion proteins, including aflibercept.

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We have been in the past, are currently, and may in the future be involved in patent litigation and other proceedings involving patents and other intellectual property.

For example, we and/or Sanofi are currently party to patent infringement proceedings initiated by Amgen against us and/or Sanofi relating to Praluent and patent infringement proceedings relating to Dupixent, as described in Note 12 to our Condensed Consolidated Financial Statements.

For example, we and/or Sanofi are currently party to patent infringement proceedings initiated by Amgen against us and/or Sanofi relating to Praluent and other intellectual property proceedings relating to Dupixent, as described in Note 12 to our Condensed Consolidated Financial Statements.

In addition, we are currently party to patent infringement and other proceedings relating to EYLEA and REGEN-COV, as described in Note 12 to our Condensed Consolidated Financial Statements.

We are aware of patents and pending patent applications owned by others that respectively claim antibodies to IL-4R and methods of treating conditions including atopic dermatitis and asthma with such antibodies;

antibodies to IL-6R and methods of treating conditions including rheumatoid arthritis with such antibodies;

antibodies to PCSK9 and methods of treating hypercholesterolemia with such antibodies;

and antibodies to PD-1 and methods of treating cancer with such antibodies.

In addition to Dupixent (dupilumab), Libtayo (cemiplimab), Praluent (alirocumab), and Kevzara (sarilumab), our late-stage antibody-based pipeline includes REGEN-COV, a novel investigational antibody cocktail treatment designed to prevent and treat infection from the SARS-CoV-2 virus;

fasinumab, an antibody to NGF;

garetosmab, an antibody to Activin A;

pozelimab, an antibody to C5;

odronextamab, a bispecific antibody targeting CD20 and CD3;

itepekimab, an antibody to IL-33;

REGN5458, a bispecific antibody targeting BCMA and CD3;

REGN5713-5714-5715, a multi-antibody therapy to Bet v 1;

and REGN1908-1909, a multi-antibody therapy to Fel d 1.

We are aware of patents and pending patent applications owned by others that claim compositions and methods of treatment relating to targets and conditions that we are also pursuing with our products and/or product candidates.

Although we do not believe that any of our products or our late-stage antibody-based product candidates infringe any valid claim in these patents or patent applications, these other parties could initiate lawsuits for patent infringement and assert that their patents are valid and cover our products or our late-stage antibody-based product candidates, similar to the patent infringement proceedings referred to above.

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Manufacturing facilities operated by us and by third-party contract manufacturers engaged by us would be inadequate to produce the active pharmaceutical ingredients of our current marketed products and our product candidates in sufficient clinical quantities if our clinical pipeline advances as planned.

For example, our internal manufacturing capacity may not be sufficient to cover the demand for REGEN-COV.

For example, our internal and contracted manufacturing capacity may not be sufficient to cover the demand for REGEN-COV.

In addition to expanding our internal capacity, we intend to continue to rely on our collaborators, and may also rely on contract manufacturers, to produce commercial quantities of drug material needed for commercialization of our products.

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"Management's Discussion and Analysis of Financial Condition and Results of Operations," in August 2020, we announced a collaboration agreement with Roche to develop, manufacture, and distribute REGEN-COV (known as Ronapreve in other countries outside the United States).

We cannot be certain that our

current manufacturing and distribution capacity for REGEN-COV or any increased manufacturing and distribution capacity through our collaboration with Roche will be sufficient.

cannot be certain that our current manufacturing and distribution capacity for REGEN-COV or the increased manufacturing and distribution capacity through our collaboration with Roche will be sufficient.

As we increase our production in anticipation of potential regulatory approval for our product candidates, our current manufacturing capacity will likely not be sufficient, and our dependence on our collaborators and/or contract manufacturers may increase, to produce adequate quantities of drug material for both commercial and clinical purposes.

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For example, we are currently party to patent infringement and other proceedings relating to the EYLEA pre-filled syringe, as described in Note 12 to our Condensed Consolidated Financial Statements.

A judicial or regulatory decision in favor of one or more parties making such allegations could directly or indirectly preclude the manufacture of our products to which those intellectual property rights apply on a temporary or permanent basis, which could materially harm our business, prospects, operating results, and financial condition.

A judicial or regulatory decision in favor of one or more parties making such allegations could directly or indirectly preclude the

manufacture of our products to which those intellectual property rights apply on a temporary or permanent basis, which could materially harm our business, prospects, operating results, and financial condition.

If sales of our marketed products do not meet the levels currently expected, or if the launch of any of our product candidates is delayed or unsuccessful, we may face costs related to excess inventory or unused capacity at our manufacturing facilities and at the facilities of third parties or our collaborators.

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Many of our products and product candidates are very difficult to manufacture.

As our products and product candidates are biologics, they require processing steps that are more difficult than those required for most chemical pharmaceuticals.

As our products and most of our product candidates are biologics, they require processing steps that are more difficult than those required for many other chemical pharmaceuticals.

Accordingly, multiple steps are needed to control the manufacturing processes.

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As part of the PPACA, the federal government requires that pharmaceutical manufacturers record any "transfers of value" made to U.S.

prescribers and certain other healthcare providers and teaching hospitals as well as ownership and investment interests held by physicians and their immediate family members.

licensed physicians and teaching hospitals as well as ownership and investment interests held by physicians and their immediate family members.

Information provided by companies is aggregated and posted annually on an "Open Payments" website, which is managed by CMS, the agency responsible for implementing these disclosure requirements.

Beginning in 2022, applicable manufacturers also will be required to report information (starting with information collected during 2021) regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives.

We continue to dedicate significant resources to comply with these requirements and need to be prepared to comply with additional reporting obligations outside of the United States that may apply in the future.

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Civil monetary penalties can be applied if we are found to have knowingly submitted any false price or product information to the government, if we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the required price data on a timely basis, or if we are found to have charged 340B covered entities more than the statutorily mandated ceiling price.

The CMS could also decide to terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

CMS could also decide to terminate our Medicaid drug rebate agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

Our failure to comply with our reporting and payment obligations under the Medicaid Drug Rebate program and other governmental programs could negatively impact our financial results.

CMS issued a final regulation, which became effective on April 1, 2016, to implement the changes to the Medicaid Drug Rebate program under the PPACA.

The issuance of the final regulation, as well as any other regulations and coverage expansion by various governmental agencies relating to the Medicaid Drug Rebate program, has increased and will continue to increase our costs and the complexity of compliance, has been and will continue to be time-consuming to implement, and could have a material adverse effect on our results of operations, particularly if CMS challenges the approach we take in our implementation of the final regulation.

The HRSA issued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities, which became effective on January 1, 2019.

Implementation of this regulation could affect our obligations and potential liability under the 340B program in ways we cannot anticipate.

The final regulation has increased and will continue to increase our costs and the complexity of compliance, has been and will continue to be time-consuming to implement, and could have a material adverse effect on our results of operations, particularly if CMS challenges the approach we have taken in our implementation of the final regulation.

Other regulations and coverage expansion by various governmental agencies relating to the Medicaid Drug Rebate program may have a similar impact.

HRSA issued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities, which became effective on January 1, 2019.

Implementation of this regulation has affected our obligations and potential liability under the 340B program.

We are also required to report the 340B ceiling prices for our covered outpatient drugs to HRSA, which then publishes them to 340B covered entities.

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For example, there are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Wall Street Reform and Protection Act that expressly authorized or required the SEC to adopt additional rules in these areas, a number of which have yet to be fully implemented.

Our efforts to comply with these requirements and regulations have resulted in, and are likely to continue to result in, an increase in expenses and a diversion of management's time from other business activities.

Our efforts to comply with these requirements and regulations (as well as corporate governance and disclosure expectations of investors and other stakeholders) have resulted in, and are likely to continue to result in, an increase in expenses and a diversion of management's time from other business activities.

Changes in laws and regulations affecting the healthcare industry could adversely affect our business.

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We have operations and conduct business outside the United States and we plan to expand these activities.

For example, we recently commenced co-commercialization activities under the Antibody Collaboration related to Dupixent in certain jurisdictions outside the United States.

Consequently, we are, and will continue to be, subject to risks related to operating in foreign countries, which include:

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We do not know to what extent Brexit will ultimately impact the business and regulatory environment in the United Kingdom, the rest of the EU, or other countries.

For example, the impact of Brexit on the ongoing validity in the United Kingdom of current EU authorizations for medicinal products and on the future process for obtaining and maintaining marketing authorization for pharmaceutical products manufactured or sold in the United Kingdom remains uncertain.

For example, the impact of Brexit on the ongoing validity in the United Kingdom of current EU authorizations for medicinal products and on the future

process for obtaining and maintaining marketing authorization for pharmaceutical products manufactured or sold in the United Kingdom remains uncertain.

We have large-scale manufacturing operations in Limerick, Ireland and have also established an office in the vicinity of London.

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Our clinical trial programs and research collaborations outside the U.S.

(such as our consortium with a group of companies to fund the generation of genetic exome sequence data from the UK Biobank health resource) implicate international data protection laws, including the EU's General Data Protection Regulation (the "GDPR").

(such as our consortium with a group of companies to fund the generation of genetic exome sequence data from the UK Biobank health resource) implicate international data

protection laws, including the EU's General Data Protection Regulation (the "GDPR").

The GDPR has created a range of new compliance obligations, including increased transparency requirements and new data subject rights.

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While we continue to monitor these developments, there remains some uncertainty surrounding the legal and regulatory environment for these evolving privacy and data protection laws.

Complying with varying jurisdictional requirements could increase the costs and complexity of compliance, including the risk of substantial

financial penalties for insufficient notice and consent, failure to respond to data subject rights requests, lack of a legal basis for the transfer of personal information out of the EU, or improper processing of personal data under the GDPR.

Complying with varying jurisdictional requirements could increase the costs and complexity of compliance, including the risk of substantial financial penalties for insufficient notice and consent, failure to respond to data subject rights requests, lack of a legal basis for the transfer of personal information out of the EU, or improper processing of personal data under the GDPR.

Failure by our collaborators to comply with the strict rules on the transfer of personal data outside of the EU into the U.S.

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In addition, we depend in part on third-party security measures over which we do not have full control to protect against data security breaches.

If we or our suppliers and/or service providers fail to maintain or protect our information technology systems and data security effectively, or fail to anticipate, plan for, or manage significant disruptions to these systems, we or our suppliers and/or service providers could have difficulty preventing, detecting, or controlling such disruptions or security breaches, which could result in legal proceedings, liability under laws that protect the privacy of personal information, disruptions to our operations, and damage to our reputation, which could have a material adverse effect on our business, prospects, operating results, and financial condition.

If we or our suppliers and/or service providers fail to maintain or protect our information technology systems and data security effectively, or fail to anticipate, plan for, or manage significant disruptions to these systems, we or our suppliers and/or service providers could have difficulty preventing, detecting, or controlling such disruptions or security breaches, which could result in legal proceedings, liability under laws that protect the privacy of personal information, disruptions to our operations, government investigations, breach of contract claims, and damage to our reputation, which could have a material adverse effect on our business, prospects, operating results, and financial condition.

Risks Related to Our Financial Results, Liquidity, and Need for Additional Financing

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We have certain indebtedness and contingent liabilities, including milestone and royalty payment obligations.

As of June 30, 2021, we had an aggregate of $2.698 billion of outstanding indebtedness under the Notes and the lease financing facility.

As of September 30, 2021, we had an aggregate of $2.699 billion of outstanding indebtedness under the Notes and the lease financing facility.

We may also incur additional debt in the future.

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Our investments are subject to risks and other external factors that may result in losses or affect the liquidity of these investments.

As of June 30, 2021, we had $2.072 billion in cash and cash equivalents and $5.739 billion in marketable securities (including $1.401 billion in equity securities).

As of September 30, 2021, we had $3.432 billion in cash and cash equivalents and $7.987 billion in marketable securities (including $1.372 billion in equity securities).

Our investments consist primarily of debt securities, including investment-grade corporate bonds.

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We are subject to risks related to uncertainty regarding the London Interbank Offered Rate ("LIBOR").

LIBOR is the subject of recent national, international, and other regulatory guidance and proposals for reform, which may cause LIBOR to cease to exist after 2021 or to perform differently than in the past.

LIBOR is the subject of recent national, international, and other regulatory guidance and proposals for reform, which may cause LIBOR to cease to exist, or no longer be available for new contracts, after 2021 or to perform differently than in the past.

On March 5, 2021, the Financial Conduct Authority in the U.K.

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dollar LIBOR terms.

While we expect that alternatives to LIBOR will be implemented prior to the 2021 and 2023 target dates or that the 2021 and 2023 cessation dates may be extended, we cannot predict the consequences and timing of these developments.

While regulators in various jurisdictions have been working to replace LIBOR prior to the 2021 and 2023 target dates, uncertainty exists in the markets as to the adoption and implementation of alternative reference rates.

We cannot predict the consequences and timing of these developments or other market or regulatory changes related to the phase-out of LIBOR.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee (a steering committee comprised of large U.S.

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For example, if a published U.S.

dollar LIBOR is unavailable after 2021 or 2023, interest for borrowings (if any) with an interest rate based on the LIBOR rate under our revolving credit facility, which are indexed to LIBOR, will be determined using various alternative methods, any of which may result in interest obligations which are more than, or do not otherwise correlate over time with, the payments that would have been made on such debt if U.S.

dollar LIBOR is unavailable after 2021 or 2023, interest for borrowings (if any) with an interest rate based on LIBOR under our revolving credit facility, which are indexed to LIBOR, will be determined using various alternative methods, any of which may result in interest obligations which are more than, or do not otherwise correlate over time with, the payments that would have been made on such debt if U.S.

dollar LIBOR was available in its current form.

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A small number of our shareholders beneficially own a substantial amount of our Common Stock.

As of June 30, 2021, our five largest shareholders plus Dr.

Schleifer, our Chief Executive Officer, beneficially owned approximately 40.0% of our outstanding shares of Common Stock, assuming, in the case of our Chief Executive Officer, the conversion of his Class A Stock into Common Stock and the exercise of all options held by him which are exercisable within 60 days of June 30, 2021.

As of September 30, 2021, our five largest shareholders plus Dr.

Schleifer, our Chief Executive Officer, beneficially owned approximately 37.6% of our outstanding shares of Common Stock, assuming, in the case of our Chief Executive Officer, the conversion of his Class A Stock into Common Stock and the exercise of all options held by him which are exercisable within 60 days of September 30, 2021.

If our significant shareholders or we sell substantial amounts of our Common Stock in the public market, or there is a perception that such sales may occur, the market price of our Common Stock could fall.

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There can be no assurance that we will repurchase shares of our Common Stock or that we will repurchase shares at favorable prices.

In January 2021, our board of directors authorized a share repurchase program to repurchase up to $1.5 billion of our Common Stock (of which $887.9 million remained available as of June 30, 2021).

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

There can be no assurance of any future share repurchases or share repurchase program authorizations.

Any share repurchases will depend upon, among other factors, our cash balances and potential future capital requirements, our results of operations and financial condition, the price of our Common Stock on the NASDAQ Global Select Market, and other factors that we may deem relevant.

We can provide no assurance that we will continue to repurchase shares of our Common Stock at favorable prices, if at all.

We can provide no assurance that we will repurchase shares of our Common Stock at favorable prices, if at all.

Our existing shareholders may be able to exert substantial influence over matters requiring shareholder approval and over our management.

Holders of Class A Stock, who are generally the shareholders who purchased their stock from us before our initial public offering, are entitled to ten votes per share, while holders of Common Stock are entitled to one vote per share.

As of June 30, 2021, holders of Class A Stock held 15.0% of the combined voting power of all shares of Common Stock and Class A Stock then outstanding.

As of September 30, 2021, holders of Class A Stock held 14.8% of the combined voting power of all shares of Common Stock and Class A Stock then outstanding.

These shareholders, if acting together, would be in a position to substantially influence the election of our directors and the vote on certain corporate transactions that require majority or supermajority approval of the combined classes, including mergers and other business combinations.

This may result in our taking corporate actions that other shareholders may not consider to be in their best interest and may affect the price of our Common Stock.

As of June 30, 2021:

• our current executive officers and directors beneficially owned 8.5% of our outstanding shares of Common Stock, assuming conversion of their Class A Stock into Common Stock and the exercise of all options held by such persons which are exercisable within 60 days of June 30, 2021, and 19.8% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by such persons which are exercisable within 60 days of June 30, 2021;

As of September 30, 2021:

• our current executive officers and directors beneficially owned 7.7% of our outstanding shares of Common Stock, assuming conversion of their Class A Stock into Common Stock and the exercise of all options held by such persons which are exercisable within 60 days of September 30, 2021, and 19.0% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by such persons which are exercisable within 60 days of September 30, 2021;

• our five largest shareholders plus Dr.

In addition, these five shareholders plus our Chief Executive Officer held approximately 47.0% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by our Chief Executive Officer which are exercisable within 60 days of June 30, 2021.

In addition, these five shareholders plus our Chief Executive Officer held approximately 44.9% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by our Chief Executive Officer which are exercisable within 60 days of September 30, 2021.

The anti-takeover effects of provisions of our charter, by-laws, and of New York corporate law, as well as the contractual provisions in our investor and collaboration agreements and certain provisions of our compensation plans and agreements, could deter, delay, or prevent an acquisition or other "change of control" of us and could adversely affect the price of our Common Stock.

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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 1A. Risk Factors