REGENERON PHARMACEUTICALS, INC. 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties relating to future events and the future performance of Regeneron Pharmaceuticals, Inc. (where applicable, together with its subsidiaries, "Regeneron," "Company," "we," "us," and "our"), and actual events or results may differ materially from these forward-looking statements. Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate," variations of such words, and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. These statements concern, and these risks and uncertainties include, among others, the impact of SARS-CoV-2 (the virus that has caused the COVID-19 pandemic) on Regeneron's business and its employees, collaborators, and suppliers and other third parties on which Regeneron relies, Regeneron's and its collaborators’ ability to continue to conduct research and clinical programs, Regeneron's ability to manage its supply chain, net product sales of products marketed or otherwise commercialized by Regeneron and/or its collaborators or licensees (collectively, "Regeneron’s Products"), and the global economy; the nature, timing, and possible success and therapeutic applications of Regeneron's Products and product candidates being developed by Regeneron and/or its collaborators or licensees (collectively, "Regeneron's Product Candidates") and research and clinical programs now underway or planned, including without limitation EYLEA ® (aflibercept) Injection, Dupixent ® (dupilumab) Injection, Libtayo ® (cemiplimab) Injection, Praluent ® (alirocumab) Injection, Kevzara ® (sarilumab) Injection, Evkeeza ® (evinacumab), REGEN-COV ® (casirivimab and imdevimab), aflibercept 8 mg, fasinumab, pozelimab, odronextamab, itepekimab, fianlimab, REGN5458, REGN5713-5714-5715, REGN1908-1909, Regeneron's other oncology programs (including its costimulatory bispecific portfolio), Regeneron's and its collaborators' earlier-stage programs, and the use of human genetics in Regeneron's research programs; the likelihood and timing of achieving any of our anticipated development milestones referenced in this report; safety issues resulting from the administration of Regeneron's Products and Regeneron's Product Candidates in patients, including serious complications or side effects in connection with the use of Regeneron's Products and Regeneron's Product Candidates in clinical trials; the likelihood, timing, and scope of possible regulatory approval and commercial launch of our late-stage product candidates and new indications for Regeneron's Products, including without limitation those listed above; the extent to which the results from the research and development programs conducted by us and/or our collaborators may be replicated in other studies and/or lead to advancement of product candidates to clinical trials, therapeutic applications, or regulatory approval; ongoing regulatory obligations and oversight impacting Regeneron's Products, research and clinical programs, and business, including those relating to patient privacy; determinations by regulatory and administrative governmental authorities which may delay or restrict our ability to continue to develop or commercialize Regeneron's Products and Regeneron's Product Candidates; competing drugs and product candidates that may be superior to, or more cost effective than, Regeneron's Products and Regeneron's Product Candidates; uncertainty of the utilization, market acceptance, and commercial success of Regeneron's Products and Regeneron's Product Candidates and the impact of studies (whether conducted by Regeneron or others and whether mandated or voluntary) or recommendations and guidelines from governmental authorities and other third parties on the commercial success of Regeneron's Products and Regeneron's Product Candidates; our ability to manufacture and manage supply chains for multiple products and product candidates; the ability of our collaborators, suppliers, or other third parties (as applicable) to perform manufacturing, filling, finishing, packaging, labeling, distribution, and other steps related to Regeneron's Products and Regeneron's Product Candidates; the availability and extent of reimbursement of Regeneron’s Products from third-party payors, including private payor healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies, and government programs such as Medicare and Medicaid; coverage and reimbursement determinations by such payors and new policies and procedures adopted by such payors; unanticipated expenses; the costs of developing, producing, and selling products; our ability to meet any of our financial projections or guidance, including without limitation capital expenditures, and changes to the assumptions underlying those projections or guidance; the potential for any license or collaboration agreement, including our agreements with Sanofi, Bayer, and Teva Pharmaceutical Industries Ltd. (or their respective affiliated companies, as applicable), to be cancelled or terminated; and risks associated with intellectual property of other parties and pending or future litigation relating thereto (including without limitation the patent litigation and other related proceedings relating to EYLEA, Dupixent, Praluent, and REGEN-COV described further in Note 13 to our Condensed Consolidated Financial Statements included in this report), other litigation and other proceedings and government investigations relating to the Company and/or its operations (including without limitation those described in Note 13 to our Condensed Consolidated Financial Statements included in this report), the ultimate outcome of any such proceedings and investigations, and the impact any of the foregoing may have on our business, prospects, operating results, and financial condition. These statements are made based on management's current beliefs and judgment, and the reader is cautioned not to rely on any such statements. In evaluating such statements, shareholders and potential investors should specifically consider the various factors identified under Part II, Item 1A. "Risk Factors," which could cause actual events and results to differ materially from those indicated by such forward-looking statements. We do not undertake any obligation to update (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events, or otherwise. 24 Table of Contents Overview Regeneron Pharmaceuticals, Inc. is a fully integrated biotechnology company that invents, develops, manufactures, and commercializes medicines for people with serious diseases. Our products and product candidates in development are designed to help patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, hematologic conditions, infectious diseases, and rare diseases. Our core business strategy is to maintain a strong foundation in basic scientific research and discovery-enabling technologies, and to build on that foundation with our clinical development, manufacturing, and commercial capabilities. Our objective is to continue to be an integrated, multi-product biotechnology company that provides patients and medical professionals with important medicines for preventing and treating human diseases. Selected financial information is summarized as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share data) 2022 2021 2022 2021 Revenues $ 2,857.2 $ 5,138.5 $ 5,822.3 $ 7,667.2 Net income $ 852.1 $ 3,098.9 $ 1,825.6 $ 4,214.1 Net income per share - diluted $ 7.47 $ 27.97 $ 16.07 $ 38.07 For purposes of this report, 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. Products Products that have received marketing approval are summarized in the table below. Product Disease Territory U.S. EU Japan ROW (e) EYLEA (aflibercept) Injection (a) - Neovascular age-related macular degeneration ("wet AMD") a a a a - Diabetic macular edema ("DME") a a a a - Macular edema following retinal vein occlusion ("RVO"), which includes macular edema following central retinal vein occlusion ("CRVO") and macular edema following branch retinal vein occlusion ("BRVO") a a a a - Myopic choroidal neovascularization ("mCNV") a a a - Diabetic retinopathy ("DR") a - Neovascular glaucoma ("NVG") a Dupixent (dupilumab) Injection (b) - Atopic dermatitis (in adults and adolescents) a a a a - Atopic dermatitis (in pediatrics 6–11 years of age) a a a - Atopic dermatitis (in pediatrics 6 months–5 years of age) a - Asthma (in adults and adolescents) a a a a - Asthma (in pediatrics 6–11 years of age) a a 25 Table of Contents Product (continued) Disease Territory U.S. EU Japan ROW (e) Dupixent (dupilumab) Injection (b) (continued) - Chronic rhinosinusitis with nasal polyposis ("CRSwNP") a a a a - Eosinophilic esophagitis ("EoE") (in adults and adolescents) a Libtayo (cemiplimab) Injection (c) - Metastatic or locally advanced first-line non-small cell lung cancer ("NSCLC") a a a - Metastatic or locally advanced basal cell carcinoma ("BCC") a a a - Metastatic or locally advanced cutaneous squamous cell carcinoma ("CSCC") a a a - Metastatic or recurrent second-line cervical cancer a Praluent (alirocumab) Injection (d) - LDL-lowering in heterozygous familial hypercholesterolemia ("HeFH") or clinical atherosclerotic cardiovascular disease ("ASCVD") a a a - Cardiovascular risk reduction in patients with established cardiovascular disease a a a - Homozygous familial hypercholesterolemia ("HoFH") a REGEN-COV (f) - COVID-19 a a a Kevzara (sarilumab) Solution for Subcutaneous Injection (b) - Rheumatoid arthritis ("RA") a a a a Evkeeza (evinacumab) Injection (g) - HoFH (in adults and adolescents) a a Inmazeb (atoltivimab, maftivimab, and odesivimab-ebgn) Injection - Infection caused by Zaire ebolavirus a ARCALYST ® (rilonacept) Injection for Subcutaneous Use (h) - Cryopyrin-associated periodic syndromes ("CAPS"), including familial cold auto-inflammatory syndrome ("FCAS") and Muckle-Wells syndrome ("MWS") (in adults and adolescents) a - Deficiency of interleukin-1 receptor antagonist ("DIRA") (in adults and pediatrics) a - Recurrent pericarditis (in adults and adolescents) a ZALTRAP ® (ziv-aflibercept) Injection for Intravenous Infusion (i) - Metastatic colorectal cancer ("mCRC") a a a a Note: Refer to "Net Product Sales of Regeneron-Discovered Products" section below for information regarding whether net product sales for a particular product are recorded by us or others. In addition, unless otherwise noted, products in the table above are approved for use in adults in the above-referenced diseases. (a) In collaboration with Bayer outside the United States (b) In collaboration with Sanofi (c) In collaboration with Sanofi prior to July 2022. Effective July 2022, the Company is solely responsible for the development, commercialization, and manufacturing of Libtayo. Refer to "Collaboration, License, and Other Agreements" section below for further details. (d) The Company is solely responsible for the development and commercialization of Praluent in the United States, and Sanofi is solely responsible for the development and commercialization of Praluent outside of the United States. (e) Rest of world ("ROW"). A checkmark in this column indicates that the product has received marketing approval in at least one country outside of the United States, European Union ("EU"), or Japan. 26 Table of Contents (f) Known as REGEN-COV in the United States and Ronapreve in other countries. Refer to "Additional Information - Clinical Development Programs" section below for further details regarding the status of the Emergency Use Authorization ("EUA") for REGEN-COV in the United States. (g) In January 2022, the Company entered into a license and collaboration agreement for Ultragenyx to develop and commercialize Evkeeza outside of the United States. (h) Kiniksa is solely responsible for the development and commercialization of ARCALYST. (i) Sanofi is solely responsible for the development and commercialization of ZALTRAP. Net Product Sales of Regeneron-Discovered Products Three Months Ended June 30, 2022 2021 % Change (In millions) U.S. ROW Total U.S. ROW Total (Total Sales) EYLEA (a) $ 1,621.2 $ 869.8 $ 2,491.0 $ 1,424.7 $ 857.6 * $ 2,282.3 9 % Dupixent (b) $ 1,582.1 $ 509.7 $ 2,091.8 $ 1,146.6 $ 352.4 $ 1,499.0 40 % Libtayo (c) $ 90.9 $ 50.4 $ 141.3 $ 78.0 $ 38.9 $ 116.9 21 % Praluent (d) $ 31.2 $ 77.7 $ 108.9 $ 41.9 $ 57.5 $ 99.4 10 % REGEN-COV (e) $ — $ 22.8 $ 22.8 $ 2,591.2 $ 470.2 $ 3,061.4 (99 %) Kevzara (b) $ 43.0 $ 39.3 $ 82.3 $ 30.7 $ 36.0 $ 66.7 23 % Other products (f) $ 12.1 $ 19.0 $ 31.1 $ 3.3 $ 22.2 $ 25.5 22 % Six Months Ended June 30, 2022 2021 % Change (In millions) U.S. ROW Total U.S. ROW Total (Total Sales) EYLEA (a) $ 3,138.8 $ 1,738.3 $ 4,877.1 $ 2,771.7 $ 1,668.8 * $ 4,440.5 10 % Dupixent (b) $ 2,907.7 $ 994.5 $ 3,902.2 $ 2,108.1 $ 653.8 $ 2,761.9 41 % Libtayo (c) $ 169.8 $ 96.2 $ 266.0 $ 147.1 $ 70.6 $ 217.7 22 % Praluent (d) $ 64.8 $ 155.5 $ 220.3 $ 85.2 $ 118.8 $ 204.0 8 % REGEN-COV (e) $ — $ 658.4 $ 658.4 $ 2,853.4 $ 654.4 $ 3,507.8 (81 %) Kevzara (b) $ 100.0 $ 88.7 $ 188.7 $ 61.4 $ 74.4 $ 135.8 39 % Other products (f) $ 22.0 $ 39.4 $ 61.4 $ 7.4 $ 45.2 $ 52.6 17 % * Effective January 1, 2022, the Company and Bayer commenced sharing equally in profits and losses based on sales from Bayer to its distributor in Japan. Previously, the Company received from Bayer a tiered percentage of sales based on sales by Bayer's distributor in Japan. Consequently, the prior year net product sales amount has been revised for comparability purposes. (a) Regeneron records net product sales of EYLEA in the United States. Bayer records net product sales of EYLEA outside the United States. The Company records its share of profits/losses in connection with sales of EYLEA outside the United States. (b) Sanofi records global net product sales of Dupixent and Kevzara. The Company records its share of profits/losses in connection with global sales of Dupixent and Kevzara. (c) Prior to July 1, 2022, Regeneron recorded net product sales of Libtayo in the United States and Sanofi recorded net product sales of Libtayo outside the United States. The parties equally shared profits/losses in connection with global sales of Libtayo. Effective July 1, 2022, the Company will record global net product sales of Libtayo and pay Sanofi a royalty on such sales. Refer to "Products" section above and "Collaboration, License, and Other Agreements" section below for further details. (d) Regeneron records net product sales of Praluent in the United States. Sanofi records net product sales of Praluent outside the United States and pays the Company a royalty on such sales. (e) Regeneron records net product sales of REGEN-COV in the United States. Roche records net product sales of the antibody cocktail outside the United States and the parties share gross profits from global sales based on a pre-specified formula. (f) Included in this line item are products which are sold by the Company and others. Refer to "Results of Operations - Revenues " below for a complete listing of net product sales recorded by the Company. In addition, not included in this line item are net product sales of ARCALYST subsequent to the first quarter of 2021, which are recorded by Kiniksa; net product sales of ARCALYST were $22.2 million for the first quarter of 2022. 27 Table of Contents Programs in Clinical Development Product candidates in clinical development, which are being developed by us and/or our collaborators, are summarized in the table below. There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development (including any post-approval studies), uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes to drug pricing and reimbursement regulations and requirements, and changes in the competitive landscape affecting a product candidate. The planning, execution, and results of our clinical programs are significant factors that can affect our operating and financial results. Refer to Part II, Item 1A. "Risk Factors" for a description of risks and uncertainties that may affect our clinical programs. Any of such risks and uncertainties may, among other matters, negatively impact the development timelines set forth in the table below. 28 Table of Contents Clinical Program Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2022 Events to Date Select Upcoming Milestones Ophthalmology EYLEA (aflibercept) (a) –Retinopathy of prematurity ("ROP") (c) –ROP (EU and Japan) –Every-16-weeks dosing regimen in patients with DR (U.S.) –Submit supplemental Biologics License Application ("sBLA") for ROP (third quarter 2022) –U.S. Food and Drug Administration ("FDA") decision on sBLA for every-16-weeks dosing regimen in patients with DR (target action date of February 28, 2023) Aflibercept 8 mg (a) –Wet AMD –DME –Reported detailed results from Phase 2 trial in wet AMD –Report results from Phase 3 studies in wet AMD and DME (second half 2022) Immunology & Inflammation Dupixent (dupilumab) (b) Antibody to IL-4R alpha subunit –Grass allergy –EoE in pediatrics (c) –Chronic obstructive pulmonary disease ("COPD") –Bullous pemphigoid (Phase 2/3) (c) –Chronic spontaneous urticaria ("CSU") –Prurigo nodularis –Allergic bronchopulmonary aspergillosis ("ABPA") –Chronic inducible urticaria - cold –Chronic rhinosinusitis without nasal polyposis –Atopic dermatitis in pediatrics (6 months–5 years of age) (EU) –EoE in adults and adolescents (EU) –Prurigo nodularis (U.S., EU, and Japan) –Approved by FDA for atopic dermatitis in pediatrics (6 months–5 years of age) –Approved by European Commission ("EC") for severe asthma in pediatrics (6–11 years of age) –Approved by FDA for EoE in adults and adolescents –Reported that Phase 3 trial in EoE in pediatrics (1–11 years of age) met its primary endpoint –Reported that second Phase 3 trial in prurigo nodularis met its primary and key secondary endpoints –EC decision on regulatory submission for atopic dermatitis in pediatrics (6 months–5 years of age) (first half 2023) –Submit regulatory application in Japan for atopic dermatitis in pediatrics and adolescents (6 months–14 years of age) (second half 2022) –EC decision on regulatory submission for EoE in adults and adolescents (first half 2023) –Submit sBLA for EoE in pediatrics (first half 2023) –Report initial results from Phase 3 study in COPD (first half 2023) 29 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2022 Events to Date Select Upcoming Milestones Dupixent (dupilumab) (b) (continued) –Allergic fungal rhinosinusitis –Chronic pruritis of unknown origin –Stopped one of the Phase 3 trials in CSU (in patients refractory to omalizumab) due to futility, based on pre-specified interim analysis –Discontinued further clinical development in peanut allergy –FDA decision on sBLA (target action date of September 30, 2022) and EC decision on regulatory submission (first half 2023) for prurigo nodularis –Report results from Phase 3 study in chronic inducible urticaria - cold (first half 2023) Kevzara (sarilumab) (b) Antibody to IL-6R –Polyarticular-course juvenile idiopathic arthritis ("pcJIA") –Systemic juvenile idiopathic arthritis ("sJIA") Itepekimab (b) (REGN3500) Antibody to IL-33 –COPD REGN1908-1909 (f) Multi-antibody therapy to Fel d 1 –Cat allergy REGN5713-5714-5715 Multi-antibody therapy to Bet v 1 –Birch allergy Solid Organ Oncology Libtayo (cemiplimab) (o)(g) Antibody to PD-1 –Metastatic or locally advanced CSCC (d) –Neoadjuvant CSCC –Second-line cervical cancer, ISA101b combination –First-line NSCLC, chemotherapy combination –Second-line cervical cancer (e) –Adjuvant CSCC –Second-line cervical cancer (EU and Japan) –First-line NSCLC, chemotherapy combination (U.S. and EU) –Voluntarily withdrew sBLA for cervical cancer due to inability to align with FDA on certain post-marketing studies –FDA decision on sBLA (target action date of September 19, 2022) (p) and EC decision on regulatory submission for NSCLC, chemotherapy combination (first half 2023) –EC decision on regulatory submission for cervical cancer (first quarter 2023) 30 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2022 Events to Date Select Upcoming Milestones Fianlimab (f) (REGN3767) Antibody to LAG-3 –Solid tumors and advanced hematologic malignancies –First-line metastatic melanoma –Initiate Phase 3 study in first-line adjuvant melanoma (second half 2022) Vidutolimod Immune activator targeting TLR9 –CSCC and Merkel cell carcinoma Ubamatamab (f) (REGN4018) Bispecific antibody targeting MUC16 and CD3 –Platinum-resistant ovarian cancer –Report results from Phase 1 study in platinum-resistant ovarian cancer (second half 2022) REGN5668 Bispecific antibody targeting MUC16 and CD28 –Platinum-resistant ovarian cancer REGN5678 Bispecific antibody targeting PSMA and CD28 –Prostate cancer –Reported preliminary data from dose escalation portion of Phase 1/2 study in prostate cancer REGN4336 Bispecific antibody targeting PSMA and CD3 –Prostate cancer REGN5093 Bispecific antibody targeting two distinct MET epitopes –MET-altered advanced NSCLC –Report results from Phase 1 study in MET-altered advanced NSCLC (second half 2022) REGN5093-M114 Bispecific antibody-drug conjugate targeting two distinct MET epitopes –MET overexpressing advanced cancer REGN6569 Antibody to GITR –Solid tumors REGN7075 Bispecific antibody targeting EGFR and CD28 –Solid tumors Hematology Odronextamab (REGN1979) Bispecific antibody targeting CD20 and CD3 –Certain B-cell malignancies (c)(n) –B-cell non-Hodgkin lymphoma ("B-NHL") (n) (potentially pivotal study) –Report additional results from potentially pivotal Phase 2 study in B-NHL and submit BLA (second half 2022) 31 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2022 Events to Date Select Upcoming Milestones Odronextamab (REGN1979) (continued) –Initiate Phase 3 program (first half 2023) REGN5458 (f) Bispecific antibody targeting BCMA and CD3 –Multiple myeloma (c) –Multiple myeloma (potentially pivotal study) (c) –Complete enrollment in potentially pivotal Phase 2 study in multiple myeloma (second half 2022) –Report results from potentially pivotal Phase 2 study in multiple myeloma (second half 2022) REGN5459 (f) Bispecific antibody targeting BCMA and CD3 –Transplant desensitization in patients with chronic kidney disease Pozelimab (f) (REGN3918) Antibody to C5; studied as monotherapy and in combination with cemdisiran –CD55-deficient protein-losing enteropathy, monotherapy (c) (potentially pivotal study) –Myasthenia gravis, cemdisiran combination (l) –Paroxysmal nocturnal hemoglobinuria ("PNH"), cemdisiran combination (c)(l) –Submit BLA for CD55-deficient protein-losing enteropathy, monotherapy (second half 2022) Cemdisiran (l) siRNA therapeutic targeting C5 –Immunoglobulin A nephropathy –Reported positive topline results from Phase 2 trial in immunoglobulin A nephropathy REGN7257 Antibody to IL2Rg –Aplastic anemia NTLA-2001 (k) TTR gene knockout using CRISPR/Cas9 –Transthyretin ("ATTR") amyloidosis (c) –Reported updated positive interim data from Phase 1 trial in ATTR REGN9933 Antibody to Factor XI –Thrombosis 32 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2022 Events to Date Select Upcoming Milestones General Medicine REGEN-COV (casirivimab and imdevimab) (e)(j) Multi-antibody therapy to SARS-CoV-2 virus –COVID-19 treatment of non-hospitalized patients and pre-and post-exposure prophylaxis (U.S.) –COVID-19 treatment of hospitalized patients (EU) –Submitted additional data to the FDA from prophylaxis trial in connection with BLA –FDA revised EUA to exclude use in geographic regions where infection or exposure is likely due to a variant that is not susceptible to the treatment –FDA decision on BLA for COVID-19 treatment of non-hospitalized patients and prevention –EC decision on regulatory submission for COVID-19 treatment of hospitalized patients (first half 2023) "Next Generation" Covid Antibodies Antibodies to SARS-CoV-2 variants –Healthy volunteers Praluent (alirocumab) Antibody to PCSK9 –HeFH in pediatrics Fasinumab (i)(f) (REGN475) Antibody to NGF –Osteoarthritis pain of the knee or hip (e) –Continue discussions with regulatory authorities and determine next steps for the program (second half 2022) Evkeeza (evinacumab) (f)(m) Antibody to ANGPTL3 –Reported that Phase 3 trial for HoFH in pediatrics (5–11 years of age) met its primary endpoint –Submit sBLA for HoFH in pediatrics (5–11 years of age) (second half 2022) Garetosmab (f) (REGN2477) Antibody to Activin A –Fibrodysplasia ossificans progressiva ("FOP") (c)(d)(e) –Initiate Phase 3 study in FOP (second half 2022) Mibavademab (f) (REGN4461) Agonist antibody to leptin receptor ("LEPR") –Generalized lipodystrophy (e) –Partial lipodystrophy REGN5381/REGN9035 Agonist antibody to NPR1/reversal agent to REGN5381 –Reversal agent in healthy volunteers –Heart failure 33 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2022 Events to Date Select Upcoming Milestones ALN-HSD (l) RNAi therapeutic targeting HSD17B13 –Nonalcoholic steatohepatitis ("NASH") ALN-APP (l) RNAi therapeutic targeting APP –Early-onset Alzheimer’s disease Note 1: For purposes of the table above, a program is classified in Phase 1, 2, or 3 clinical development after recruitment for the corresponding study or studies has commenced. Note 2: We have discontinued further clinical development of REGN6490, an antibody to IL-36R, which was previously being studied in palmo-plantar pustulosis. (a) In collaboration with Bayer outside the United States (b) In collaboration with Sanofi (c) FDA granted orphan drug designation (d) FDA granted Breakthrough Therapy designation (e) FDA granted Fast Track designation (f) Sanofi did not opt-in to or elected not to continue to co-develop the product candidate. Under the terms of our agreement, Sanofi is entitled to receive royalties on sales of the product, if any. (g) Studied as monotherapy and in combination with other antibodies and treatments (h) Information in this column relates to U.S., EU, and Japan regulatory submissions only (i) In collaboration with Teva and Mitsubishi Tanabe Pharma (j) In collaboration with Roche outside the United States (k) In collaboration with Intellia (l) In collaboration with Alnylam (m) In collaboration with Ultragenyx outside the United States (n) FDA granted Fast Track designation for follicular lymphoma and diffuse large B-cell lymphoma (o) In collaboration with Sanofi prior to July 2022. Effective July 2022, the Company is solely responsible for the research, development, and commercialization of Libtayo. Refer to "Collaboration, License, and Other Agreements" section below for further details. (p) We were recently informed that an FDA travel complication related to scheduling a routine clinical trial site inspection in eastern Europe will likely delay its decision on the NSCLC chemotherapy combination sBLA until after the September 19, 2022 target action date. 34 Table of Contents Additional Information - Clinical Development Programs REGEN-COV (casirivimab and imdevimab) REGEN-COV has not been approved by the FDA, but is currently authorized under an EUA for use in certain post-exposure prophylaxis settings and as a treatment for people with mild to moderate COVID-19 who are at high risk of serious consequences from COVID-19. The EUA is temporary and does not replace a formal BLA submission review and approval process. This use is authorized only for the duration of the declaration that circumstances exist justifying the authorization of the emergency use, unless terminated or revoked sooner. Based on laboratory data that showed markedly decreased binding to the Omicron spike protein, REGEN-COV is highly unlikely to be active against the Omicron-lineage variants. In January 2022, the FDA revised the EUA for REGEN-COV to exclude its use in geographic regions where, based on available information including variant susceptibility and regional variant frequency, infection or exposure is likely due to a variant such as an Omicron-lineage variant that is not susceptible to the treatment. With this EUA revision, REGEN-COV is not currently authorized for use in any U.S. states, territories, or jurisdictions, since Omicron-lineage variants are currently dominant across the United States. If, in the future, patients in certain geographic regions are likely to be infected or exposed to a variant that is susceptible to REGEN-COV, then the limitation on use may be revised in these areas. In April 2022, the Company announced that the FDA extended by three months (to July 2022) its review of the BLA for REGEN-COV to treat COVID-19 in non-hospitalized patients and as prophylaxis in certain individuals. The extension was due to ongoing discussions with the FDA relating to pre-exposure prophylactic use, for which the Company has submitted additional data from its completed prophylaxis trial that the FDA has accepted for review. In July 2022, the FDA notified the Company that its review of the BLA for REGEN-COV to treat COVID-19 in non-hospitalized patients and as prophylaxis in certain individuals is ongoing. Agreements Related to COVID-19 U.S. Government In the first quarter of 2020, the Company announced an expansion of its 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, the Company entered into an agreement with entities acting at the direction of BARDA and the U.S. Department of Defense to manufacture and deliver filled and finished drug product of REGEN-COV to the U.S. government. The agreement, as subsequently amended, provided for payments to the Company of up to $465.9 million in the aggregate for bulk manufacturing of the drug substance, as well as fill/finish, storage, and other activities. 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. government. Pursuant to the agreement, the U.S. government was obligated to purchase 1.25 million doses of drug product, resulting in payments to the Company of $2.625 billion. In September 2021, the Company announced an amendment to its January 2021 agreement to supply the U.S. government with an additional 1.4 million doses of REGEN-COV. Pursuant to the agreement, the U.S. government was obligated to purchase all filled and finished doses of such additional drug product delivered by January 31, 2022, resulting in payments to the Company of $2.940 billion in the aggregate. Additionally, Roche supplied a portion of the doses to Regeneron to fulfill our agreement with the U.S. government (see "Roche" section below for further details regarding our collaboration agreement with Roche). As of December 31, 2021, the Company had completed its final deliveries of drug product under the agreements described above. See "Results of Operations - Revenues" below for REGEN-COV net product sales recognized during the three and six months ended June 30, 2021. Roche In 2020, we entered into a collaboration agreement with Roche to develop, manufacture, and distribute the casirivimab and imdevimab antibody cocktail (known as REGEN-COV in the United States and Ronapreve in other countries). 35 Table of Contents Under the terms of the agreement, the parties jointly fund certain studies and each party is obligated to dedicate a certain amount of manufacturing capacity to casirivimab and 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. Collaboration, License, and Other Agreements Sanofi Antibody We are collaborating with Sanofi on the global development and commercialization of Dupixent, Kevzara, and itepekimab (the "Antibody Collaboration"). Under the terms of the Antibody License and Collaboration Agreement, Sanofi is generally responsible for funding 80% to 100% of agreed-upon development costs. We are obligated to reimburse Sanofi for 30% to 50% of worldwide development expenses that were funded by Sanofi based on our share of collaboration profits from commercialization of collaboration products. As of June 30, 2022, the total amount of our contingent reimbursement obligation to Sanofi in connection with such development expenses was approximately $3.1 billion. Under the terms of the Antibody License and Collaboration Agreement, we were required to apply 10% of our share of the profits from the Antibody Collaboration in any calendar quarter to reimburse Sanofi for these development costs. On July 1, 2022, an amendment to the Antibody License and Collaboration Agreement became effective, pursuant to which the percentage of Regeneron’s share of profits used to reimburse Sanofi for such development costs increased from 10% to 20%. Under our collaboration agreement, Sanofi records product sales for commercialized products, and Regeneron has the right to co-commercialize such products on a country-by-country basis. We co-commercialize Dupixent in the United States and in certain countries outside the United States. We supply certain commercial bulk product to Sanofi. We and Sanofi equally share profits and losses from sales within the United States. We and Sanofi share profits outside the United States on a sliding scale based on sales starting at 65% (Sanofi)/35% (us) and ending at 55% (Sanofi)/45% (us), and share losses outside the United States at 55% (Sanofi)/45% (us). In addition to profit and loss sharing, we are entitled to receive sales milestone payments from Sanofi. In each of the years ended 2020 and 2021, the Company earned a $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $1.0 billion and $1.5 billion, respectively, on a rolling twelve-month basis, and, in first quarter of 2022, the Company earned a $50.0 million sales-based milestone upon aggregate sales of antibodies outside the United States exceeding $2.0 billion. We are entitled to receive up to an aggregate of $100.0 million in additional sales milestone payments from Sanofi, which includes the next sales milestone payment of $50.0 million that would be earned when such sales outside the United States exceed $2.5 billion on a rolling twelve-month basis. Immuno-oncology The Company has been collaborating with Sanofi for antibody-based cancer treatments in the field of immuno-oncology (the "IO Collaboration"). Under the terms of the Immuno-oncology License and Collaboration Agreement, the parties were co-developing and co-commercializing Libtayo. The parties shared equally, on an ongoing basis, development and commercialization expenses for Libtayo. We had principal control over the development of Libtayo and led commercialization activities in the United States, while Sanofi led commercialization activities outside of the United States. The parties shared equally in profits and losses in connection with the commercialization of Libtayo. Effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide under an Amended and Restated Immuno-oncology License and Collaboration Agreement with Sanofi (the "A&R IO LCA"). Consequently, in July 2022, we made a $900.0 million up-front payment to Sanofi, and Sanofi is eligible to receive a $100.0 million regulatory milestone and up to an aggregate of $100.0 million in sales-based milestones upon achieving certain amounts of worldwide net product sales of Libtayo through 2023. We will also pay Sanofi an 11% royalty on net product sales of Libtayo through March 31, 2034. The parties have also entered into a transition services agreement, a transitional distribution agreement, and a manufacturing services agreement, pursuant to which, during certain transitional periods, Sanofi will perform for Regeneron certain transition, distribution, and manufacturing services, respectively. We were obligated to reimburse Sanofi for half of the development costs it funded that were attributable to clinical development of antibody product candidates under the Amended and Restated Immuno-oncology Discovery and Development Agreement from our share of profits from commercialized IO Collaboration products. Under the A&R IO LCA, the amount of development costs incurred under the IO Collaboration for which we are obligated to reimburse Sanofi is $35.0 million, and we will reimburse Sanofi for such development costs by paying Sanofi a 0.5% royalty on net product sales of Libtayo until all such development costs have been reimbursed by us. 36 Table of Contents Bayer We and Bayer are parties to a license and collaboration agreement for the global development and commercialization of EYLEA and aflibercept 8 mg outside the United States. Agreed-upon development expenses incurred by the Company and Bayer are generally shared equally. Bayer markets EYLEA outside the United States, and the companies share equally in profits and losses from such sales. In Japan, we were entitled to receive a tiered percentage of between 33.5% and 40.0% of EYLEA net sales through 2021, and, effective January 1, 2022, the companies share equally in profits and losses from sales. We are obligated to reimburse Bayer for 50% of the development costs that it has incurred under the agreement from our share of the collaboration profits. The reimbursement payment in any quarter will equal 5% of the then outstanding repayment obligation, but never more than our share of the collaboration profits in the quarter unless we elect to reimburse Bayer at a faster rate. Within the United States, we retain exclusive commercialization rights and are entitled to all profits from such sales. Teva We and Teva are parties to a collaboration agreement to develop and commercialize fasinumab globally, excluding certain Asian countries that are subject to our collaboration agreement with Mitsubishi Tanabe Pharma Corporation ("MTPC"). In connection with the agreement, Teva made a $250.0 million non-refundable up-front payment. We lead global development activities, and the parties share equally, on an ongoing basis, development costs under a global development plan. As of June 30, 2022, we had received an aggregate $120.0 million of development milestones from Teva, and we are entitled to receive up to an aggregate of $340.0 million in additional development milestones and up to an aggregate of $1.890 billion in contingent payments upon achievement of specified annual net sales amounts. We are responsible for the manufacture and supply of fasinumab globally. Within the United States, we will lead commercialization activities, and the parties will share equally in any profits or losses in connection with commercialization of fasinumab. In the territory outside of the United States, Teva will lead commercialization activities and we will supply product to Teva at a tiered purchase price, which is calculated as a percentage of net sales of the product (subject to adjustment in certain circumstances). Alnylam In 2018, we and Alnylam Pharmaceuticals, Inc. entered into a collaboration to discover RNA interference ("RNAi") therapeutics for NASH and potentially other related diseases, as well as to research, co-develop and commercialize any therapeutic product candidates that emerge from these discovery efforts (including ALN-HSD, which is currently in clinical development). ALN-HSD is being co-developed with Alnylam with terms generally consistent with the form of a Co-Commercialization Collaboration Agreement in connection with the 2019 collaboration agreement as described below. Alnylam is conducting the Phase 1 clinical trial for ALN-HSD and Regeneron will be the lead party for all future development. In 2019, we and Alnylam entered into a global, strategic collaboration to discover, develop, and commercialize RNAi therapeutics for a broad range of diseases by addressing therapeutic disease targets expressed in the eye and central nervous system ("CNS"), in addition to a select number of targets expressed in the liver. Under the terms of the agreement, we made an up-front payment of $400.0 million to Alnylam. For each program, we will provide Alnylam with a specified amount of funding at program initiation and at lead candidate designation, and Alnylam is eligible to receive up to an aggregate of $200.0 million in clinical proof-of-principle milestones for eye and CNS programs. Following designation of a lead candidate, the parties may further advance such lead candidate under either a co-commercialization collaboration agreement structure (under which the parties are advancing ALN-APP, which is currently in clinical development) or a license agreement. In addition, during 2019, the parties entered into a Co-Commercialization Collaboration Agreement for a silencing RNA ("siRNA") therapeutic targeting the C5 component of the human complement pathway being developed by Alnylam, with Alnylam as the lead party, and a License Agreement for a combination product consisting of cemdisiran and pozelimab, with us as the licensee. Under the C5 siRNA Co-Commercialization Collaboration agreement, the parties share costs equally and will split profits (if commercialized); and under the License Agreement, the licensee is responsible for its own costs and expenses. The C5 siRNA License Agreement contains a flat low double-digit royalty payable to Alnylam on our potential future net sales of the combination product only subject to customary reductions, as well as up to $325.0 million in sales milestones. 37 Table of Contents Intellia 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. NTLA-2001, which is in clinical development, is subject to a co-development and co-commercialization arrangement pursuant to which Intellia will lead development and commercialization activities and the parties share an agreed-upon percentage of development expenses and profits (if commercialized) . In 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 companies to jointly develop potential products for the treatment of hemophilia A and B, with Regeneron leading development and commercialization activities. In addition, we also received non-exclusive rights to independently develop and commercialize ex vivo gene edited products. In connection with the 2020 agreement, we made a $70.0 million up-front payment and purchased shares of Intellia common stock for an aggregate purchase price of $30.0 million. BARDA We and BARDA are parties to agreements pursuant to which HHS provided certain funding to develop, test, and manufacture a treatment for Ebola virus infection. In July 2020, HHS exercised its option under an existing agreement to provide up to $344.6 million of additional funding for the manufacture and supply of Inmazeb. We expect to deliver a pre-specified number of Inmazeb treatment doses over the course of approximately six years. See "Agreements Related to COVID-19 - U.S. Government" section above for information related to our COVID-19 agreements. Kiniksa Pursuant to a 2017 license agreement, we granted Kiniksa Pharmaceuticals, Ltd. the right to develop and commercialize certain new indications for ARCALYST. During the first quarter of 2021, Kiniksa received marketing approval in the United States for a new indication of ARCALYST, recurrent pericarditis. The quarterly period ended March 31, 2021 was the last quarter for which the Company recorded net product sales of ARCALYST. Following this approval, Kiniksa is solely responsible for the U.S. development and commercialization of ARCALYST in all approved indications, and Regeneron will continue to supply clinical and commercial product to Kiniksa. Kiniksa will pay Regeneron 50% of its profits from sales of ARCALYST and the parties will not share in any losses incurred by Kiniksa in connection with commercialization of ARCALYST. Ultragenyx In January 2022, we entered into a license and collaboration agreement for Ultragenyx Pharmaceutical Inc. to develop and commercialize Evkeeza in countries outside of the United States. In connection with the agreement, Ultragenyx made a $30.0 million non-refundable up-front payment to the Company. Ultragenyx will share in certain costs for global trials led by the Company and also have the right to continue to clinically develop Evkeeza in countries outside of the U.S. We will supply commercial product to Ultragenyx at a tiered purchase price, which is calculated as a percentage of net sales of the product (subject to adjustment in certain circumstances), and are eligible to receive additional regulatory and sales milestone payments. Checkmate In May 2022, the Company completed its acquisition of Checkmate Pharmaceuticals, Inc. for a total equity value of approximately $250 million. In connection with the acquisition, the Company obtained the rights to vidutolimod, which is in clinical development for oncology. 38 Table of Contents General Our ability to generate profits and to generate positive cash flow from operations over the next several years depends significantly on the continued success in commercializing EYLEA and Dupixent. We expect to continue to incur substantial expenses related to our research and development activities, a portion of which we expect to be reimbursed by our collaborators. Also, our research and development activities outside our collaborations, the costs of which are not reimbursed, are expected to expand and require additional resources. We also expect to incur substantial costs related to the commercialization of our marketed products. Our financial results may fluctuate from quarter to quarter and will depend on, among other factors, the net sales of our products; the scope and progress of our research and development efforts; the timing of certain expenses; the continuation of our collaborations, in particular with Sanofi and Bayer, including our share of collaboration profits or losses from sales of commercialized products and the amount of reimbursement of our research and development expenses that we receive from collaborators; and the amount of income tax expense we incur, which is partly dependent on the profits or losses we earn in each of the countries in which we operate. We cannot predict whether or when new products or new indications for marketed products will receive regulatory approval or, if any such approval is received, whether we will be able to successfully commercialize such product(s) and whether or when they may become profitable. Corporate Information We were incorporated in the State of New York in 1988 and publicly listed in 1991. Our principal executive offices are located at 777 Old Saw Mill River Road, Tarrytown, New York 10591, and our telephone number at that address is (914) 847-7000. We make available free of charge on or through our Internet website ( http://www.regeneron.com ) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC"). Investors and other interested parties should note that we use our media and investor relations website ( http://newsroom.regeneron.com ) and our social media channels to publish important information about Regeneron, including information that may be deemed material to investors. We encourage investors and other interested parties to review the information we may publish through our media and investor relations website and the social media channels listed on our media and investor relations website, in addition to our SEC filings, press releases, conference calls, and webcasts. The information contained on our websites and social media channels is not included as a part of, or incorporated by reference into, this report. 39 Table of Contents Results of Operations Three and Six Months Ended June 30, 2022 and 2021 Net Income Three Months Ended June 30, Six Months Ended June 30, (In millions, except per share data) 2022 2021 2022 2021 Revenues $ 2,857.2 $ 5,138.5 $ 5,822.3 $ 7,667.2 Operating expenses 1,747.3 1,791.3 3,453.9 3,207.3 Income from operations 1,109.9 3,347.2 2,368.4 4,459.9 Other income (expense) (146.7) 405.6 (344.1) 545.9 Income before income taxes 963.2 3,752.8 2,024.3 5,005.8 Income tax expense 111.1 653.9 198.7 791.7 Net income $ 852.1 $ 3,098.9 $ 1,825.6 $ 4,214.1 Net income per share - diluted $ 7.47 $ 27.97 $ 16.07 $ 38.07 Revenues Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 $ Change 2022 2021 $ Change Net product sales in the United States: EYLEA $ 1,621.2 $ 1,424.7 $ 196.5 $ 3,138.8 $ 2,771.7 $ 367.1 Libtayo 90.9 78.0 12.9 169.8 147.1 22.7 Praluent 31.2 41.9 (10.7) 64.8 85.2 (20.4) REGEN-COV — 2,591.2 (2,591.2) — 2,853.4 (2,853.4) Evkeeza 11.1 2.0 9.1 19.6 2.5 17.1 ARCALYST — * — * * — * 2.2 * Collaboration revenue: Sanofi 677.5 437.7 239.8 1,308.4 802.5 505.9 Bayer 357.5 349.1 8.4 742.8 671.9 70.9 Roche 8.2 167.9 (159.7) 224.5 234.7 (10.2) Other collaboration revenue 0.4 — 0.4 0.4 — 0.4 Other revenue 59.2 46.0 13.2 153.2 96.0 57.2 Total revenues $ 2,857.2 $ 5,138.5 $ (2,281.3) $ 5,822.3 $ 7,667.2 $ (1,844.9) * Effective April 1, 2021, Kiniksa records net product sales of ARCALYST in the United States. Previously, the Company recorded net product sales of ARCALYST in the United States. Net Product Sales Net product sales of EYLEA in the United States increased for the three and six months ended June 30, 2022, compared to the same periods in 2021, due to higher sales volume. During the three and six months ended June 30, 2021, we recorded net product sales of REGEN-COV in connection with our agreements with the U.S. government. As of December 31, 2021, the Company had completed its final deliveries of drug product under its agreements with the U.S. government; as a result, there were no net product sales of REGEN-COV in the United States recorded during the three and six months ended June 30, 2022. Refer to "Agreements Related to COVID-19 - U.S. Government " section above for further details. 40 Table of Contents As described under "Collaboration, License, and Other Agreements - Sanofi - Immuno-oncology " above, effective July 1, 2022, the Company became solely responsible for the research, development, and commercialization of Libtayo and will record worldwide net product sales of Libtayo. Collaboration Revenue Sanofi Collaboration Revenue Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Antibody: Regeneron's share of profits in connection with commercialization of antibodies $ 496.6 $ 327.6 $ 911.9 $ 588.2 Sales-based milestone earned — — 50.0 — Reimbursement for manufacturing of commercial supplies (a) 145.5 110.9 306.3 216.5 Other 28.9 — 28.9 — Total Antibody 671.0 438.5 1,297.1 804.7 Immuno-oncology: Regeneron's share of profits (losses) in connection with commercialization of Libtayo outside the United States 3.9 (3.5) 6.7 (9.6) Reimbursement for manufacturing of ex-U.S. commercial supplies (a) 2.6 2.7 4.6 7.4 Total Immuno-oncology 6.5 (0.8) 11.3 (2.2) Total Sanofi collaboration revenue $ 677.5 $ 437.7 $ 1,308.4 $ 802.5 (a) Corresponding costs incurred by us in connection with such production is recorded within Cost of collaboration and contract manufacturing Antibody Global net product sales of Dupixent and Kevzara are recorded by Sanofi. Sanofi provides us with an estimate of our share of the profits or losses from commercialization of antibodies for the most recent fiscal quarter; these estimates are reconciled to actual results in the subsequent fiscal quarter, and our portion of the profits or losses is adjusted accordingly, as necessary. The increase in our share of profits in connection with commercialization of antibodies during the three and six months ended June 30, 2022, compared to the same periods in 2021, was driven by higher Dupixent profits. Regeneron's share of profits in connection with the commercialization of Dupixent and Kevzara is summarized below: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Dupixent and Kevzara net product sales $ 2,174.1 $ 1,565.7 $ 4,090.9 $ 2,897.7 Regeneron's share of collaboration profits $ 551.7 $ 364.5 $ 1,013.9 $ 654.4 Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation (55.1) (36.9) (102.0) (66.2) Regeneron's share of profits in connection with commercialization of antibodies $ 496.6 $ 327.6 $ 911.9 $ 588.2 Regeneron's share of collaboration profits as a percentage of Dupixent and Kevzara net product sales 23% 21% 22% 20% As described above under "Collaboration, License, and Other Agreements - Sanofi - Antibody ", on July 1, 2022, an amendment to the Antibody License and Collaboration Agreement became effective, pursuant to which the percentage of Regeneron's share of profits in any calendar quarter used to reimburse Sanofi for development costs which were funded by Sanofi increased from 10% to 20%. 41 Table of Contents During the six months ended June 30, 2022, the Company earned a $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $2.0 billion on a rolling twelve-month basis. Bayer Collaboration Revenue Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 339.7 $ 335.4 $ 678.1 $ 644.3 Reimbursement for manufacturing of ex-U.S. commercial supplies (a) 17.8 13.7 42.8 27.6 One-time payment in connection with change in Japan arrangement — — 21.9 — Total Bayer collaboration revenue $ 357.5 $ 349.1 $ 742.8 $ 671.9 (a) Corresponding costs incurred by us in connection with such production is recorded within Cost of collaboration and contract manufacturing Bayer records net product sales of EYLEA outside the United States. Bayer provides us with an estimate of our share of the profits from commercialization of EYLEA outside the United States for the most recent fiscal quarter; these estimates are reconciled to actual results in the subsequent fiscal quarter, and our portion of the profit is adjusted accordingly, as necessary. Regeneron's share of profits in connection with commercialization of EYLEA outside the United States is summarized below: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 EYLEA net product sales outside the United States $ 869.8 $ 857.6* $ 1,738.3 $ 1,668.8* Regeneron's share of collaboration profit from sales outside the United States $ 354.5 $ 350.4 $ 707.9 $ 674.1 Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation (14.8) (15.0) (29.8) (29.8) Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 339.7 $ 335.4 $ 678.1 $ 644.3 Regeneron's share of profits as a percentage of EYLEA net product sales outside the United States 39% 39% 39% 39% * Effective January 1, 2022, the Company and Bayer commenced sharing equally in profits and losses based on sales from Bayer to its distributor in Japan. Previously, the Company received from Bayer a tiered percentage of sales based on sales by Bayer's distributor in Japan. Consequently, the prior year net product sales amount has been revised for comparability purposes. Roche Collaboration Revenue As described above under "Agreements Related to COVID-19 - Roche ", Roche distributes and records net product sales of Ronapreve outside the United States, and the parties share gross profits from worldwide sales, depending on the amount of manufactured product supplied by each party to the market. Each quarter, a single payment is due from one party to the other to true-up the global gross profits between the parties. If Regeneron is to receive a true-up payment from Roche, such amount will be recorded to Collaboration revenue. If Regeneron is to make a true-up payment to Roche, such amount will be recorded to Cost of goods sold. 42 Table of Contents Amounts recognized in Collaboration revenue in connection with the Roche collaboration agreement are as follows: Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 2022 2021 Global gross profit payment from Roche in connection with sales of Ronapreve $ 8.2 $ 167.9 $ 224.5 $ 234.7 Roche provides us with an estimate of its gross profits for the most recent fiscal quarter; these estimates are reconciled to actual results in the subsequent fiscal quarter, and the true-up of global gross profits is adjusted accordingly, as necessary. Other Revenue Other revenue during the six months ended June 30, 2022 included a $30.0 million up-front payment received from Ultragenyx in connection with our January 2022 license and collaboration agreement for Evkeeza outside the United States. Expenses Three Months Ended June 30, Six Months Ended June 30, (In millions, except headcount data) 2022 2021 Change 2022 2021 Change Research and development (a) $ 794.3 $ 714.2 $ 80.1 $ 1,638.1 $ 1,457.1 $ 181.0 Acquired in-process research and development 197.0 — 197.0 225.1 — 225.1 Selling, general, and administrative (a) 476.3 414.7 61.6 926.3 820.3 106.0 Cost of goods sold (b) 149.2 539.4 (390.2) 356.5 722.6 (366.1) Cost of collaboration and contract manufacturing (c) 147.9 154.3 (6.4) 345.5 279.1 66.4 Other operating (income) expense, net (17.4) (31.3) 13.9 (37.6) (71.8) 34.2 Total operating expenses $ 1,747.3 $ 1,791.3 $ (44.0) $ 3,453.9 $ 3,207.3 $ 246.6 Average headcount 10,939 9,822 1,117 10,715 9,635 1,080 (a) Includes costs incurred as well as cost reimbursements from collaborators who are not deemed to be our customers (b) Cost of goods sold primarily includes costs in connection with producing commercial supplies for products that are sold by Regeneron (i.e. , for which we record net product sales), any royalties we are obligated to pay on such sales, and amounts we are obligated to pay to collaborators for their share of gross profits. (c) Cost of collaboration and contract manufacturing includes costs we incur in connection with producing commercial drug supplies for collaborators and others. Operating expenses included a total of $159.8 million and $145.5 million for the three months ended June 30, 2022 and 2021, respectively, and $326.7 million and $276.4 million for the six months ended June 30, 2022 and 2021, respectively, of stock-based compensation expense related to equity awards granted under our long-term incentive plans. Research and Development Expenses The following table summarizes our estimates of direct research and development expenses by clinical development program and other significant categories of research and development expenses. Direct research and development expenses are comprised primarily of costs paid to third parties for clinical and product development activities, including costs related to preclinical research activities, clinical trials, and the portion of research and development expenses incurred by our collaborators that we are obligated to reimburse. Indirect research and development expenses have not been allocated directly to each program, and primarily consist of costs to compensate personnel, overhead and infrastructure costs to maintain our facilities, and other costs related to activities that benefit multiple projects. Clinical manufacturing costs primarily consist of costs to manufacture bulk drug product for clinical development purposes as well as related external drug filling, packaging, and labeling costs. Clinical manufacturing costs also includes pre-launch commercial supplies which did not meet the criteria to be capitalized as inventory. The table below also includes reimbursements of research and development expenses by collaborators, as when we are entitled to reimbursement of all or a portion of such expenses that we incur under a collaboration, we record those reimbursable amounts in the period in which such costs are incurred. 43 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (In millions) 2022 2021 * $ Change 2022 2021 * $ Change Direct research and development expenses: Dupixent (dupilumab) $ 40.1 $ 37.0 $ 3.1 $ 72.2 $ 64.4 $ 7.8 Libtayo (cemiplimab) 37.2 38.2 (1.0) 75.8 78.0 (2.2) EYLEA 16.3 26.7 (10.4) 40.7 54.8 (14.1) REGEN-COV 10.9 97.2 (86.3) 13.6 305.9 (292.3) Other product candidates in clinical development and other research programs 121.6 128.7 (7.1) 219.5 244.9 (25.4) Total direct research and development expenses 226.1 327.8 (101.7) 421.8 748.0 (326.2) Indirect research and development expenses: Payroll and benefits 285.5 236.9 48.6 569.3 469.9 99.4 Lab supplies and other research and development costs 47.3 33.4 13.9 85.3 66.8 18.5 Occupancy and other operating costs 122.1 98.5 23.6 242.4 193.6 48.8 Total indirect research and development expenses 454.9 368.8 86.1 897.0 730.3 166.7 Clinical manufacturing costs 196.2 153.8 42.4 467.9 287.4 180.5 Reimbursement of research and development expenses by collaborators (82.9) (136.2) 53.3 (148.6) (308.6) 160.0 Total research and development expenses $ 794.3 $ 714.2 $ 80.1 $ 1,638.1 $ 1,457.1 $ 181.0 * Certain prior year amounts have been reclassified to conform to the current year's presentation Reimbursement of research and development expenses by collaborators included $41.0 million and $127.8 million of reimbursements from Roche related to REGEN-COV for the three and six months ended June 30, 2021, respectively. For the three and six months ended June 30, 2022, reimbursements from Roche related to REGEN-COV were not material. Research and development expenses included stock-based compensation expense of $89.7 million and $70.9 million for the three months ended June 30, 2022 and 2021, respectively, and $182.1 million and $140.6 million for the six months ended June 30, 2022 and 2021, respectively. There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development, uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes in the competitive landscape affecting a product candidate, and other risks and uncertainties described in Part II, Item 1A. "Risk Factors". There is also variability in the duration and costs necessary to develop a pharmaceutical product, potential opportunities and/or uncertainties related to future indications to be studied, and the estimated cost and scope of the projects. The lengthy process of seeking FDA and other applicable approvals, and subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any failure by us to obtain, or delay in obtaining, regulatory approvals could materially adversely affect our business. We are unable to reasonably estimate if our product candidates in clinical development will generate material product revenues and net cash inflows. 44 Table of Contents Acquired In-process Research and Development ("IPR&D") Acquired IPR&D for the three and six months ended June 30, 2022 included a $195.0 million charge related to the Company's acquisition of Checkmate. Additionally, Acquired IPR&D for the six months ended June 30, 2022 included a $20.0 million opt-in payment in connection with a product candidate under our collaboration agreement with Adicet Bio, Inc. Selling, General, and Administrative Expenses Selling, general, and administrative expenses increased for the three and six months ended June 30, 2022, compared to the same periods in 2021, primarily due to higher headcount and headcount-related costs and an increase in commercialization-related expenses for EYLEA, partly offset by costs in 2021 for educational campaigns related to COVID-19 that did not recur during 2022. Selling, general, and administrative expenses also included stock-based compensation expense of $57.5 million and $49.6 million for the three months ended June 30, 2022 and 2021, respectively, and $118.2 million and $100.4 million for the six months ended June 30, 2022 and 2021, respectively. Cost of Goods Sold Cost of goods sold decreased for the three and six months ended June 30, 2022, compared to the same periods in 2021, primarily due to the Company not recognizing any REGEN-COV net product sales in the United States during 2022. In addition, Cost of goods sold included inventory write-offs and reserves totaling $139.9 million and $149.3 million for the three and six months ended June 30, 2021, respectively, primarily related to REGEN-COV. The six months ended June 30, 2022 included $58.0 million of costs related to REGEN-COV, including inventory write-offs and reserves. Cost of Collaboration and Contract Manufacturing Cost of collaboration and contract manufacturing increased for the six months ended June 30, 2022, compared to the same period in 2021, primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent and an increase in shipments of commercial supplies of Praluent for Sanofi outside the United States. Other Operating (Income) Expense Other operating (income) expense, net, includes recognition of a portion of amounts previously deferred in connection with up-front and development milestone payments, as applicable, received in connection with our Sanofi immuno-oncology, Teva, and MTPC collaborative arrangements. As the A&R IO LCA became effective July 1, 2022 (as further described under "Collaboration, License, and Other Agreements - Sanofi - Immuno-oncology " above), the three months ended June 30, 2022 will be the last period in which such amounts will be recognized in connection with our Sanofi immuno-oncology collaborative arrangement. Other Income (Expense) Other income (expense) for the three and six months ended June 30, 2022, compared to the same periods in 2021, was primarily impacted by the recognition of net unrealized losses on equity securities of $163.7 million and $374.9 million for the three and six months ended June 30, 2022, respectively, compared to $409.0 million and $552.9 million of net unrealized gains for the three and six months ended June 30, 2021, respectively. Income Taxes Three Months Ended June 30, Six Months Ended June 30, (In millions, except effective tax rate) 2022 2021 2022 2021 Income tax expense $ 111.1 $ 653.9 $ 198.7 $ 791.7 Effective tax rate 11.5 % 17.4 % 9.8 % 15.8 % The decrease in the effective tax rate for the three and six months ended June 30, 2022, compared to the same periods in 2021, was primarily driven by the proportion of income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate, the impact of income earned in the United States during 2021 related to REGEN-COV, and, to a lesser extent, stock-based compensation. 45 Table of Contents Liquidity and Capital Resources Our financial condition is summarized as follows: June 30, December 31, (In millions) 2022 2021 $ Change Financial assets: Cash and cash equivalents $ 3,395.1 $ 2,885.6 $ 509.5 Marketable securities - current 4,171.3 2,809.1 1,362.2 Marketable securities - noncurrent 6,415.9 6,838.0 (422.1) $ 13,982.3 $ 12,532.7 $ 1,449.6 Borrowings and finance lease liabilities: Long-term debt $ 1,980.7 $ 1,980.0 $ 0.7 Finance lease liabilities $ 720.0 $ 719.7 * $ 0.3 Working capital: Current assets $ 15,529.9 $ 14,014.9 $ 1,515.0 Current liabilities 3,033.9 3,932.5 * (898.6) $ 12,496.0 $ 10,082.4 $ 2,413.6 * The $719.7 million related to finance lease liabilities was classified within current liabilities as of December 31, 2021. See " Tarrytown, New York Leases " section below for details. As of June 30, 2022, we also had borrowing availability of $750.0 million under a revolving credit facility. Sources and Uses of Cash for the Six Months Ended June 30, 2022 and 2021 Six Months Ended June 30, (In millions) 2022 2021 $ Change Cash flows provided by operating activities $ 2,666.1 $ 1,295.2 $ 1,370.9 Cash flows used in investing activities $ (2,119.2) $ (933.2) $ (1,186.0) Cash flows used in financing activities $ (36.4) $ (484.6) $ 448.2 Cash Flows from Operating Activities As of June 30, 2022, Accounts receivable had decreased by $875.1 million, compared to December 31, 2021, primarily due to the Company's collection of amounts due from the U.S. government in connection with REGEN-COV sales in the fourth quarter of 2021. As of June 30, 2022, deferred tax assets increased by $381.0 million, compared to December 31, 2021, primarily related to the impact of the Tax Cuts and Jobs Act of 2017, which requires, for tax purposes, the capitalization and amortization of research and development expenses effective for years beginning after December 31, 2021. Cash Flows from Investing Activities Capital expenditures during the six months ended June 30, 2022 included costs associated with the expansion of our manufacturing facilities in Rensselaer, New York (including the ongoing construction of a fill/finish facility and related equipment) and Limerick, Ireland, as well costs incurred in connection with our expansion of the Tarrytown, New York campus. We expect to incur capital expenditures of $620 million to $670 million for the full year of 2022 primarily in connection with the continued expansion of our manufacturing facilities (including the fill/finish facility) and the expansion of our research, preclinical manufacturing, and support facilities at our Tarrytown, New York campus. 46 Table of Contents Asset acquisition, net of cash acquired, of $230.3 million during the six months ended June 30, 2022 was related to our acquisition of Checkmate. Cash Flows from Financing Activities Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $828.4 million during the six months ended June 30, 2022, compared to $308.2 million during the six months ended June 30, 2021. For additional information related to cash flows from financing activities, see the " Share Repurchase Program " section below. Share Repurchase Program In November 2021, our board of directors authorized a share repurchase program to repurchase up to $3.0 billion of our Common Stock. The share repurchase program permits the Company to make repurchases through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, block trades, and other transactions in compliance with Rule 10b-18 of the Exchange Act. Repurchases may be made from time to time at management’s discretion, and the timing and amount of any such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors. The program has no time limit and can be discontinued at any time. There can be no assurance as to the timing or number of shares of any repurchases in the future. During the six months ended June 30, 2022, we repurchased 1,227,288 shares of our Common Stock under the program and recorded the cost of the shares received, or $745.5 million, as Treasury Stock. As of June 30, 2022, $2.099 billion remained available for share repurchases under the program. Tarrytown, New York Leases In March 2022, we entered into a Second Amended and Restated Lease and Remedies Agreement (the "Restated Lease") with BA Leasing BSC, LLC, an affiliate of Banc of America Leasing & Capital, LLC ("BAL"), as lessor (the "Lessor"), which amends, restates, and extends our lease of laboratory and office facilities in Tarrytown, New York (the "Facility"). In March 2022, we also entered into a Second Amended and Restated Participation Agreement (the "Restated Participation Agreement") with Bank of America, N.A., as administrative agent, the Lessor, and a syndicate of financial institutions as rent assignees (collectively with the Lessor, the "Participants"), which amends and restates the original Participation Agreement entered into in March 2017. The original Participation Agreement and certain related agreements were amended and restated in order to, among other things, (i) effect a five-year extension of the original March 2022 maturity date of the $720.0 million lease financing (which was previously advanced in March 2017 to finance the purchase price for the Facility) and the end of the term of our lease of the Facility from the Lessor to March 2027, at which time all amounts outstanding thereunder will become due and payable in full, and (ii) modify the rate of the interest or yield that is payable to the Participants. In accordance with the terms of the Restated Lease, we continue to pay all maintenance, insurance, taxes, and other costs arising out of the use of the Facility. We are also required to make monthly payments of basic rent during the term of the Restated Lease in an amount equal to a variable rate per annum, which was modified in connection with the Restated Lease, to be an adjusted one-month forward-looking term rate based on the Secured Overnight Financing Rate ("SOFR"), plus an applicable margin that varies with our debt rating and total leverage ratio. The Restated Participation Agreement and Restated Lease include an option for us to elect to further extend the maturity date of the Restated Participation Agreement and the term of the Restated Lease for an additional five-year period, subject to the consent of all the Participants and certain other conditions. We also have the option prior to the end of the term of the Restated Lease to (a) purchase the Facility by paying an amount equal to the outstanding principal amount of the Participants' advances under the Restated Participation Agreement, all accrued and unpaid yield thereon, and all other outstanding amounts under the Restated Participation Agreement, Restated Lease, and certain related documents or (b) sell the Facility to a third party on behalf of the Lessor. The Restated Lease is classified as a finance lease as we have the option to purchase the Facility under terms that make it reasonably certain to be exercised. The agreements governing the Restated Lease financing contain financial and operating covenants. Such financial covenants and certain of the operating covenants are substantially similar to the covenants set forth in our credit facility. The Company was in compliance with all such covenants as of June 30, 2022. 47 Table of Contents Critical Accounting Policies and Use of Estimates A summary of our critical accounting policies and use of estimates are presented in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (filed February 7, 2022). There have been no material changes to our critical accounting policies and use of estimates during the six months ended June 30, 2022. Future Impact of Recently Issued Accounting Standards As of June 30, 2022, the future adoption of recently issued accounting standards is not expected to have a material impact on the Company's financial position or results of operations.