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Item 7. Management’s Discussion and Analysis

2023-02-06 compared with 2022-02-07 · 220 added, 170 removed, 281 unchanged (58% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report.

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Regeneron Pharmaceuticals, Inc.

is a fully integrated biotechnology company that discovers, invents, develops, manufactures, and commercializes medicines for serious diseases.

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

We currently have nine FDA-approved products that have received marketing approval and over 30 product candidates in clinical development, almost all of which were homegrown in our laboratories.

In addition, REGEN-COV has not been approved by the FDA, but has been authorized under an EUA for COVID-19 (see Part I, Item 1.

"Business - REGEN-COV - Emergency and Temporary Use Authorizations" for a description of recent revisions to the EUA to exclude its use in geographic regions where infection or exposure is likely due to a variant that is not susceptible to the treatment).

Also refer to Part I, Item 1.

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.

We currently have nine FDA-approved products that have received marketing approval and approximately 35 product candidates in clinical development, almost all of which were homegrown in our laboratories.

In addition, REGEN-COV was authorized under an EUA for COVID-19 from November 2020 until January 2022 when the EUA was revised to exclude its use in geographic regions where infection or exposure is likely due to a variant that is not susceptible to the treatment (see Part I, Item 1.

"Business - Additional Information - Clinical Development Programs").

Refer to Part I, Item 1.

"Business - Products" and "Business - Programs in Clinical Development" for additional information related to marketed products and product candidates.

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.

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, as well as on whether we are able to obtain regulatory approval for aflibercept 8 mg and are successful in commercializing it.

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.

In addition, our research and development activities and related costs 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.

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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 products and the amount of reimbursement of our research and development expenses that we receive from collaborators;

the continuation of our collaborations, in particular with Sanofi and Bayer, including our share of collaboration profits 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.

Critical Accounting Policies and Use of Estimates

A summary of the significant accounting policies that impact us is provided in Note 1 to our Consolidated Financial Statements.

Critical Accounting Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect reported amounts and related disclosures in the financial statements.

Management considers an accounting estimate to be critical if:

• it requires an assumption (or assumptions) regarding a future outcome;

• changes in the estimate or the use of different assumptions to prepare the estimate could have a material effect on our results of operations or financial condition.

Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our results of operations or financial condition.

Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate.

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Calculating these provisions involves estimates and judgments.

We review our estimates of rebates, chargebacks, and other applicable provisions each period and record any necessary adjustments in the current period's net product sales.

review our estimates of rebates, chargebacks, and other applicable provisions each period and record any necessary adjustments in the current period's net product sales.

Refer to the "Results of Operations - Revenues - Net Product Sales" section below for further details regarding our provisions, and credits/payments, for sales-related deductions.

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In agreements involving multiple goods or services promised to be transferred to our collaborator, we must assess, at the inception of the contract, whether each promise represents a separate obligation (i.e., is "distinct"), or whether such promises should be combined as a single unit of account.

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

When we have a combined unit of account which includes a license and providing research and development services to our collaborator, recognition of up-front payments and development milestones earned from our collaborator is deferred (as a liability) and recognized over the development period (i.e., over time) typically using an input method on the basis of our research and development costs incurred relative to the total expected cost which determines the extent of our progress toward completion (see "Results of Operations - Expenses - Other Operating (Income) Expense" below for further information related to amounts recognized in connection with such estimates).

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

Due to the variability in the scope of activities and length of time necessary to develop a drug product, potential delays in development programs, changes to development plans and budgets as programs progress, including if we and our collaborators decide to expand or contract our clinical plans for a drug candidate in various disease indications, and uncertainty in the ultimate requirements to obtain governmental approval for commercialization, revisions to our estimates are likely to occur periodically, potentially resulting in material changes to amounts recognized.

When we are entitled to reimbursement of all or a portion of the expenses (e.g., research and development expenses) that we incur under a collaboration, we record those reimbursable amounts in the period in which such costs are incurred.

If our collaborator performs research and development work or commercialization-related activities and share costs, we also recognize, as expense (e.g., research and development expense or selling, general and administrative expense, as applicable) in the period when our collaborator incurs such expenses, the portion of the collaborator's expenses that we are obligated to reimburse.

If our collaborator performs research and development work or commercialization-related activities and the parties share the related costs, we also recognize, as expense (e.g., research and development expense or selling, general and administrative expense, as applicable) in the period when our collaborator incurs such expenses, the portion of the collaborator's expenses that we are obligated to reimburse.

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

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In arrangements where we:

• supply commercial product to our collaborator, we may be reimbursed for our manufacturing costs as commercial product is shipped to the collaborator;

however, recognition of such cost reimbursements may be deferred until the product is sold by our collaborator to third-party customers;

• supply commercial product to our collaborator, we may be reimbursed for our manufacturing costs as commercial product is shipped to the collaborator (however, recognition of such cost reimbursements may be deferred until the product is sold by our collaborator to third-party customers);

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

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

The estimates are revised, if necessary, in subsequent periods if our share of actual profits or losses differ from those estimates.

The estimates are revised, if necessary, in subsequent periods if our actual share of profits or losses differ from those estimates.

Stock-based Compensation

We recognize stock-based compensation expense for equity grants under our long-term incentive plans to employees and non-employee members of our board of directors based on the grant-date fair value of those awards.

We recognize stock-based compensation expense for equity grants under our long-term incentive plans to employees and non-employee members of our board of directors (as applicable) based on the grant-date fair value of those awards.

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

We use the Black-Scholes model to compute the estimated fair value of stock option awards.

Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of our Common Stock price, (ii) the periods of time over

which employees and members of our board of directors are expected to hold their options prior to exercise (expected lives), (iii) expected dividend yield on our Common Stock, and (iv) risk-free interest rates, which are based on quoted U.S.

Treasury rates for securities with maturities approximating the options' expected lives.

Expected volatility has been estimated based on actual movements in our stock price over the most recent historical periods equivalent to the options' expected lives.

Expected lives are principally based on our historical exercise experience with previously issued employee and board of director option grants.

The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future.

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

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

We use a Monte Carlo simulation to compute the estimated fair value of performance-based restricted stock units, which are subject to vesting based on the Company's attainment of pre-established market performance goals.

The assumptions used in computing the fair value of equity awards reflect our best estimates but involve uncertainties related to market and other conditions, many of which are outside of our control.

In addition, we reassess our forfeiture rate assumptions at least annually, considering both historical forfeiture experience and an estimate of future forfeitures for currently outstanding unvested awards.

The assumptions used in computing the fair value of equity awards reflect our best estimates but involve uncertainties related to market and other conditions, many of which are outside our control.

Changes in any of these assumptions may materially affect the fair value of awards granted and the amount of stock-based compensation recognized in future periods.

We use the Black-Scholes model to compute the estimated fair value of stock option awards.

Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of our Common Stock price, (ii) the periods of time over which employees and members of our board of directors are expected to hold their options prior to exercise (expected lives), (iii) expected dividend yield on our Common Stock, and (iv) risk-free interest rates, which are based on quoted U.S.

Treasury rates for

securities with maturities approximating the options' expected lives.

Expected volatility is estimated based on actual movements in our stock price over the most recent historical periods equivalent to the options' expected lives.

Expected lives are principally based on our historical exercise experience with previously issued employee and board of director option grants.

The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future.

We use a Monte Carlo simulation to compute the estimated fair value of performance-based restricted stock units that are subject to vesting based on the Company's attainment of pre-established performance criteria that include a market condition.

For performance-based restricted stock units that contain a performance condition, we recognize stock-based compensation expense if and when we determine that it is probable the performance condition will be achieved (based on the number of shares expected to be vested and issued).

We reassess the probability of achievement at each reporting period and adjust compensation cost, as necessary.

If there are any changes in our probability assessment, we recognize a cumulative catch-up adjustment in the period of the change in estimate, with the remaining unrecognized expense recognized prospectively over the remaining requisite service period.

If we subsequently determine that the performance criteria are not met or are not expected to be met, any amounts previously recognized as compensation expense are reversed in the period when such determination is made.

See Note 13 to our Consolidated Financial Statements for stock-based compensation expense and related assumptions used in determining the fair value of our awards.

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns, including deferred tax assets and liabilities for expected amounts of global intangible low-taxed income ("GILTI") inclusions.

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Significant judgment is required in making this assessment.

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

The Company recognizes the financial statement effects of a tax position when management's assessment is that there is more than a 50% probability that the position will be sustained upon examination by a taxing authority based upon its technical merits.

Uncertain tax positions are recorded based upon certain recognition and measurement criteria.

Significant judgment is required in making this assessment, and, therefore, we re-evaluate uncertain tax positions and consider various factors, including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, and changes in facts or circumstances related to a tax position.

We adjust the amount of the liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the uncertain positions.

We adjust the amount of the liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the uncertain tax positions.

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

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If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to write down such inventory to its estimated realizable value.

See Note 6 to our Consolidated Financial Statements for information related to our inventory write-offs and reserves.

See "Results of Operations - Expenses - Cost of Goods Sold" below for further information related to our inventory write-offs and reserves.

Intangible Assets

Intangible assets acquired in connection with an asset acquisition are recorded at cost.

Intangible assets are amortized over the estimated useful lives of the assets based on the pattern in which the economic benefits of the intangible assets are consumed;

if that pattern cannot be reliably determined, a straight-line basis is used.

If contingent consideration is recognized subsequent to the acquisition date in an asset acquisition, the amount of such consideration is recorded as an addition to the cost basis of the

intangible asset with a cumulative catch-up adjustment for amortization expense as if the additional amount of consideration had been accrued from the outset of the acquisition.

Our intangible assets are reviewed for recoverability whenever events or changes in circumstances (e.g., changes in economic, regulatory, or legal conditions) indicate that the carrying amount of the asset may not be recoverable.

If an indicator of impairment exists, we compare the projected undiscounted cash flows to be generated by the asset to the intangible asset's carrying amount.

If the projected undiscounted cash flows of the intangible asset are less than the carrying amount, the intangible asset is written down to its fair value in the period in which the impairment occurs.

As described in Part I, Item 1.

"Business - Collaboration, License, and Other Agreements - Sanofi - Immuno-Oncology," effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide under the A&R IO LCA with Sanofi.

The transaction was accounted for as an asset acquisition and amounts paid to Sanofi in connection with obtaining the worldwide rights to Libtayo, including the up-front payment and any contingent consideration, are recorded as an intangible asset.

Due to the complexity of the terms of the amendments to the collaboration agreements in contemplation of the acquisition of the worldwide rights to Libtayo, significant judgment was applied in identifying the elements of the transaction and evaluating the timing and recognition of contingent consideration.

See Note 8 to our Consolidated Financial Statements for further information related to our intangible assets.

Contingencies

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2021 2021 vs.

Net product sales in the United States:

EYLEA $ 5,792.3 $ 4,947.2 $ 4,644.2 $ 845.1 $ 303.0

Libtayo 306.3 270.7 175.7 35.6 95.0

Praluent 170.0 150.9 * * * *

REGEN-COV 5,828.0 185.7 — 5,642.3 185.7

Evkeeza 18.4 — — 18.4 —

ARCALYST 2.2 ** 13.1 14.5 **

Net product sales:

$ 6,264.6 $ 5,792.3 $ 4,947.2 $ 472.3 $ 845.1

Libtayo - U.S.

374.5 306.3 270.7 68.2 35.6

Libtayo - ROW 73.0 — — *

Praluent - U.S.

130.0 170.0 150.9 (40.0) *

REGEN-COV - U.S.

— 5,828.0 185.7 (5,828.0) 5,642.3

Evkeeza - U.S.

48.6 18.4 — 30.2 18.4

Inmazeb - U.S.

3.0 — — 3.0 —

ARCALYST - U.S.

Total net product sales $ 6,893.7 $ 12,117.2 $ 5,567.6 $ (5,294.3) $ 6,541.4

Collaboration revenue:

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Roche 627.3 361.8 — 265.5 361.8

Other 0.4 — — 0.4 —

Other revenue 365.1 281.2 557.0 83.9 (275.8)

Total revenues $ 12,172.9 $ 16,071.7 $ 8,497.1 $ (3,969.6) $ 7,566.4

* Not meaningful

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

*** 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 in 2021, compared to 2020, due to higher sales volume (including the adverse impact of the COVID-19 pandemic on U.S.

EYLEA demand during the three months ended June 30, 2020), partly offset by an increase in sales-related deductions.

During the years ended December 31, 2021 and 2020, net product sales of REGEN-COV were recorded in connection with our agreements with the U.S.

Net product sales of EYLEA in the United States increased in 2022, compared to 2021, due to higher sales volume partly offset by an increase in sales-related deductions.

As described in Part I, Item.

"Business - Collaboration, License, and Other Agreements - Sanofi - Immuno-oncology", effective July 1, 2022, the Company became solely responsible for the research, development, and commercialization of Libtayo worldwide and began recording net product sales of Libtayo outside the United States.

During the years ended December 31, 2021 and 2020, we recorded net product sales of REGEN-COV in connection with our agreements with the U.S.

As of December 31, 2021, the Company had completed its final deliveries of drug product under its agreements with the U.S.

as a result, there were no net product sales of REGEN-COV in the United States recorded during the year ended December 31, 2022.

Refer to Part I, Item 1.

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Government " for further details.

The degree to which future sales of our COVID-19 monoclonal antibodies will continue is highly uncertain and will depend on, among other factors, the number of new COVID-19 cases and effectiveness of our product against variants of concern.

Refer to Part I, Item 1.

"Business - Products - REGEN-COV - Emergency and Temporary Use Authorizations" for additional information.

Revenue from product sales is recorded net of applicable provisions for rebates, chargebacks, and discounts;

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Sales-based milestones earned 100.0 50.0 50.0

Reimbursement for manufacturing of commercial supplies (1)

Reimbursement for manufacturing of commercial supplies (a)

633.7 488.8 368.0

Other 28.7 — —

Total Antibody 2,844.4 1,901.8 1,203.2

Immuno-oncology:

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

(13.6) (25.7) (21.7)

Reimbursement for manufacturing of commercial supplies (1)

Total Immuno-oncology 11.3 0.4 (16.8)

Total Sanofi collaboration revenue $ 2,855.7 $ 1,902.2 $ 1,186.4

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

The increase in our share of profits in connection with commercialization of antibodies in 2021, compared to 2020, was driven by higher Dupixent profits.

During each of the years ended December 31, 2021 and 2020, the Company earned $50.0 million sales-based milestones from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $1.5 billion and $1.0 billion, respectively, on a rolling twelve-month basis.

We are entitled to receive up to an aggregate of $150.0 million in additional 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 $2.0 billion on a rolling twelve-month basis.

The increase in reimbursements for manufacturing of commercial supplies in 2021, compared to 2020, was primarily due to higher Dupixent sales, as revenue for such cost reimbursements is recognized when the product is sold by Sanofi to third-party customers.

(a) Corresponding costs incurred by the Company in connection with such production is recorded within Cost of collaboration and contract manufacturing

As the A&R IO LCA became effective July 1, 2022, the three months ended June 30, 2022 was the last period in which Sanofi collaboration revenue was recognized in connection with the immuno-oncology collaborative arrangement.

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

The increase in our share of profits in connection with commercialization of antibodies during the year ended December 31, 2022, compared to 2021, was driven by profits associated with higher Dupixent sales, partly offset by the impact of the amendment to the Antibody License and Collaboration Agreement.

As described in Part I, Item 1.

"Business - 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%.

In addition, the amount of our share of profits we earned in connection with commercialization of antibodies outside the United States was adversely impacted in 2022 by the U.S.

dollar strengthening against foreign currencies, including the Japanese yen and the euro.

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

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(In millions) 2022 2021 2020

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

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

$ 9,039.2 $ 6,536.3 $ 4,394.5

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(266.6) (148.5) (86.3)

One-time payment in connection with amendment to the Antibody License and Collaboration Agreement (56.9) — —

Regeneron's share of profits in connection with commercialization of antibodies $ 2,082.0 $ 1,363.0 $ 785.2

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

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

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

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

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

During the year ended December 31, 2022, we earned two $50.0 million sales-based milestones from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $2.0 billion and $2.5 billion, respectively, on a rolling twelve-month basis.

During the year ended December 31, 2021, we earned a $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $1.5 billion on a rolling twelve-month basis.

We are entitled to receive the final sales milestone payment of $50.0 million that would be earned when such sales outside the United States exceed $3.0 billion on a rolling twelve-month basis.

The increase in reimbursements for manufacturing of commercial supplies in 2022, compared to 2021, was primarily due to higher Dupixent sales, as revenue for such cost reimbursements is recognized when the product is sold by Sanofi to third-party customers.

Bayer Collaboration Revenue

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(In millions) 2022 2021 2020

Regeneron's net profit in connection with commercialization of EYLEA outside the United States $ 1,349.2 $ 1,107.9 $ 1,091.4

Reimbursement for manufacturing of commercial supplies (1)

Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 1,317.4 $ 1,349.2 $ 1,107.9

Reimbursement for manufacturing of ex-U.S.

commercial supplies (a)

91.4 60.1 78.2

One-time payment in connection with change in Japan arrangement 21.9 — —

Total Bayer collaboration revenue $ 1,430.7 $ 1,409.3 $ 1,186.1

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

(a) Corresponding costs incurred by the Company 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.

Regeneron's net profit in connection with commercialization of EYLEA outside the United States is summarized below:

The amount of the share of profits we earned in connection with commercialization of EYLEA outside the United States was adversely impacted in 2022 by the U.S.

dollar strengthening against foreign currencies, including the Japanese yen and the euro.

Regeneron's share of profits in connection with commercialization of EYLEA outside the United States is summarized below:

Year Ended December 31,

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(57.7) (59.1) (57.9)

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

$ 1,349.2 $ 1,107.9 $ 1,091.4

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

Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 1,317.4 $ 1,349.2 $ 1,107.9

Regeneron's share of profits as a percentage of EYLEA net product sales outside the United States 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 in Part I, Item 1.

"Business - Agreements Related to COVID-19 - Roche", Roche distributes and records net product sales of the casirivimab and imdevimab antibody cocktail 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.

"Business - 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 of REGEN-COV and Ronapreve, 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 Other collaboration revenue.

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.

During the year ended December 31, 2021, the Company recorded $361.8 million of true-up payments, within Other collaboration revenue, from Roche in connection with this agreement.

During the years ended December 31, 2022 and 2021, the Company recognized $627.3 million and $361.8 million, respectively, of global gross profit payments from Roche within collaboration revenue.

Other Revenue

Other revenue decreased in 2021, compared to 2020, primarily due to lower amounts recognized in connection with our agreement with BARDA related to funding of certain development activities for COVID-19 antibodies, and, to a lesser extent, Inmazeb.

Other revenue increased in 2022, compared to 2021, primarily due to higher reimbursements for the manufacture of commercial supplies for Sanofi related to Praluent outside the United States.

Year Ended December 31, Change

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2021 2021 vs.

Research and development (1)

Research and development (a)

$ 3,592.5 $ 2,860.1 $ 2,647.0 $ 732.4 $ 213.1

Selling, general, and administrative (1)

Acquired in-process research and development 255.1 48.0 88.0 207.1 (40.0)

Selling, general, and administrative (a)

2,115.9 1,824.9 1,346.0 291.0 478.9

Cost of goods sold 800.0 1,773.1 491.9 (973.1) 1,281.2

1,773.1 491.9 362.3 1,281.2 129.6

Cost of collaboration and contract manufacturing (3)

Cost of collaboration and contract manufacturing (b)

760.4 664.4 628.0 96.0 36.4

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11,115 9,884 8,495 1,231 1,389

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

(2) Cost of goods sold primarily includes costs in connection with producing commercial supplies for products that are sold by Regeneron in the United States (i.e., for which we record net product sales), 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.

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

Operating expenses in 2021, 2020, and 2019 included a total of $601.7 million, $432.0 million, and $464.3 million, respectively, of non-cash compensation expense related to equity awards granted under our long-term incentive plans.

As of December 31, 2021, unrecognized non-cash compensation expense related to unvested stock options and unvested restricted stock (including performance-based restricted stock units) was $515.9 million and $857.1 million, respectively.

We expect to recognize this non-cash compensation expense related to stock options and restricted stock over weighted-average periods of 1.8 years and 3.0 years, respectively.

(a) Includes costs incurred net of any cost reimbursements from collaborators who are not deemed to be our customers

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

Operating expenses in 2022, 2021, and 2020 included a total of $725.0 million, $601.7 million, and $432.0 million, respectively, of stock-based compensation expense related to equity awards granted under our long-term incentive plans.

As of December 31, 2022, unrecognized stock-based compensation expense related to unvested stock options and unvested restricted stock (including performance-based restricted stock units) was $572.0 million and $1.064 billion, respectively.

We expect to recognize this stock-based compensation expense related to stock options and restricted stock over weighted-average periods of 1.8 years and 2.6 years, respectively.

Research and Development Expenses

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Direct research and development expenses:

REGEN-COV (casirivimab and imdevimab)

$ 309.8 $ 290.7 — $ 19.1 $ 290.7

Dupixent (dupilumab) $ 156.5 $ 146.4 $ 129.7 $ 10.1 $ 16.7

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EYLEA and aflibercept 8 mg 81.2 102.2 72.2 (21.0) 30.0

Fasinumab 67.7 167.8 203.4 (100.1) (35.6)

Up-front payments related to license and collaboration agreements

Pozelimab 72.4 28.3 16.0 44.1 12.3

Odronextamab 66.0 34.9 35.0 31.1 (0.1)

Linvoseltamab 45.5 18.7 11.4 26.8 7.3

Fianlimab 43.4 8.7 9.1 34.7 (0.4)

32.8 309.8 290.7 (277.0) 19.1

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

Research and development expenses in 2021 included $34.0 million in aggregate up-front payments in connection with our collaboration agreement with Nykode Therapeutics, in 2020 included $85.0 million in aggregate up-front payments in connection with our collaboration agreement with Intellia, and in 2019 included a $400.0 million up-front payment to Alnylam.

Research and development expenses included non-cash compensation expense of $316.6 million and $238.6 million in 2021 and 2020, respectively.

Reimbursement of research and development expenses by collaborators included reimbursements from Roche related to REGEN-COV of $128.1 million and $78.5 million for the years ended December 31, 2021 and 2020, respectively.

regulatory requirements, changes in the competitive landscape affecting a product candidate, and other risks and uncertainties described in Part I, Item 1A.

"Risk Factors" (including those relating to the disruptions caused by the COVID-19 pandemic).

Total research and development expenses increased in 2022, compared to 2021, partially due to the impact of the amendments to the Sanofi collaboration agreements described above in Part I, Item 1.

"Business - Collaboration, License, and Other Agreements - Sanofi," as (i) Sanofi is no longer reimbursing us for 50% of Libtayo development costs, and (ii) effective July 1, 2022, we recognize our 50% share of research and development expenses in connection with the Sanofi Antibody Collaboration.

Research and development expenses included stock-based compensation expense of $406.8 million and $316.6 million in 2022 and 2021, respectively.

Reimbursement of research and development expenses by collaborators included reimbursements from Roche related to REGEN-COV of $128.1 million for the year ended December 31, 2021.

For the year ended December 31, 2022, such reimbursements from Roche related to REGEN-COV were not material.

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 I, 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.

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We are unable to reasonably estimate if our product candidates in clinical development will generate material product revenues and net cash inflows.

Acquired In-process Research and Development ("IPR&D")

Acquired IPR&D in 2022 included a $195.0 million charge related to our acquisition of Checkmate, a $30.0 million up-front payment in connection with our collaboration agreement with CytomX Therapeutics, Inc., and a $20.0 million opt-in payment in connection with a product candidate under our collaboration agreement with Adicet Bio, Inc.

Acquired IPR&D in 2021 included $34.0 million in aggregate up-front payments in connection with our collaboration agreement with Nykode Therapeutics and in 2020 included $85.0 million in aggregate up-front payments in connection with our collaboration agreement with Intellia.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased in 2021, compared to 2020, primarily due to an increase in commercialization-related expenses for (i) EYLEA, including direct-to-consumer advertising, (ii) REGEN-COV, including costs associated with educational campaigns related to COVID-19, and (iii) Libtayo;

and higher headcount-related costs.

In addition, in 2020, we recorded a reversal of accruals for litigation-related loss contingencies as a result of the October 2020 ruling by the Technical Board of Appeal of the EPO and its impact on certain patent infringement actions in Europe relating to Praluent (see Note 15 to our Consolidated Financial Statements for additional details).

Selling, general, and administrative expenses also included $213.3 million and $153.0 million of non-cash compensation expense in 2021 and 2020, respectively.

Selling, general, and administrative expenses increased in 2022, compared to 2021, primarily due to higher headcount and headcount-related costs, an increase in commercialization-related expenses for Libtayo (as effective July 1, 2022, the Company became solely responsible for the commercialization of Libtayo worldwide), and higher contributions to an independent not-for-profit patient assistance organization, 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 $256.4 million and $213.3 million of stock-based compensation expense in 2022 and 2021, respectively.

Cost of Goods Sold

Cost of goods sold increased in 2021, compared to 2020, primarily due to the recognition of manufacturing costs in connection with the product sales of REGEN-COV.

During 2021, the Company also recorded a $259.6 million true-up payment owed in connection with global gross profits under our Roche collaboration agreement described above.

Additionally, during the fourth quarter of 2021, the Company recorded a $231.7 million charge to write down its REGEN-COV inventory as a result of data that showed REGEN-COV was highly unlikely to be active against the Omicron variant and the FDA revision of the EUA for REGEN-COV, pursuant to which REGEN-COV was no longer authorized for use in any U.S.

states, territories, or jurisdictions.

Cost of goods sold decreased in 2022, compared to 2021, primarily due to the Company recognizing REGEN-COV net product sales (and corresponding cost of goods sold) in the United States during 2021 and a 2021 payment of $259.6 million owed in connection with global gross profits under our Roche collaboration agreement;

such transactions did not recur in 2022.

Cost of goods sold also decreased during 2022 since effective July 1, 2022, as a result of the A&R IO LCA described in Part I, Item 1.

"Business - Collaboration, License, and Other Agreements - Sanofi - Immuno-Oncology", we are no longer obligated to pay Sanofi for their share of Libtayo U.S.

gross profits (during the six months ended June 30, 2022, Cost of goods sold included $70.1 million related to our obligation for Sanofi's share of Libtayo U.S.

gross profits compared to $133.0 million for full year 2021).

Cost of goods sold in 2022 also decreased, compared to 2021, due to lower inventory write-offs and reserves.

Inventory write-offs and reserves were $258.7 million in 2022 (including $157.4 million in the fourth quarter of 2022) compared to $457.1 million in 2021 (including $269.2 million in the fourth quarter of 2021).

These inventory write-offs and reserves were primarily related to REGEN-COV.

Refer to Part I, Item 1.

"Business - Products - REGEN-COV - Emergency and Temporary Use Authorizations" for additional information.

"Business - Additional Information - Clinical Development Programs - REGEN-COV (casirivimab and imdevimab)" for further information related to regulatory developments for REGEN-COV which negatively impacted the estimated realizable value of inventory on hand.

Cost of Collaboration and Contract Manufacturing

Cost of collaboration and contract manufacturing increased in 2021, compared to 2020, primarily due to the recognition of manufacturing costs associated with higher sales of Dupixent, partly offset by lower costs in connection with manufacturing ex-U.S.

commercial supplies of Praluent for Sanofi and the recognition of process validation costs during 2020 in connection with manufacturing Inmazeb under our BARDA agreement as such costs did not recur during 2021.

Cost of collaboration and contract manufacturing increased in 2022, compared to 2021, primarily due to the recognition of costs in connection with manufacturing additional commercial supplies for Sanofi related to Praluent outside the United States and Dupixent, and manufacturing costs associated with EYLEA 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 Sanofi IO, Teva, and MTPC collaborative arrangements.

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

See the Critical Accounting Policies and Use of Estimates section above for further details.

During 2022, the Company discontinued further clinical development of fasinumab, and, as a result, recorded $44.4 million (as an increase to other operating income) related to our Teva and MTPC collaborative arrangements as we deemed our obligation to provide development services in connection with these collaborative arrangements to be complete.

As the A&R IO LCA became effective July 1, 2022, the three months ended June 30, 2022 was the last period in which such amounts were recognized in connection with our Sanofi immuno-oncology collaborative arrangement.

During 2021, we updated our estimate of the total research and development costs expected to be incurred (which resulted in a change to the estimate of the stage of completion) in connection with the Sanofi IO Collaboration, and, as a result, recorded a cumulative catch-up adjustment of $66.9 million as a reduction to other operating income.

During 2020, we updated our estimate of the total research and development costs expected to be incurred (which resulted in changes to the estimate of the stage of completion) in connection with the Sanofi IO, Teva, and MTPC collaboration agreements, and therefore recorded cumulative catch-up adjustments of $99.8 million, net, as an increase to other operating income.

Other Income (Expense)

Other income (expense), net, was $379.0 million in 2021, compared to $233.8 million in 2020.

This change was primarily driven by an increase in unrealized gains on equity securities of $190.1 million.

Other income (expense) consists of the following:

Year Ended December 31,

(In millions) 2022 2021 2020

Unrealized (losses) gains on equity securities, net $ (39.8) $ 386.1 $ 196.0

Interest income 160.1 45.8 75.4

Other 59.0 4.4 19.3

Other income (expense), net 179.3 436.3 290.7

Interest expense (59.4) (57.3) (56.9)

Total other income (expense) $ 119.9 $ 379.0 $ 233.8

Year Ended December 31,

(In millions, except effective tax rate) 2022 2021 2020

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10.7% 13.4% 7.8%

Our effective tax rate for 2021 was positively impacted, compared to the U.S.

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

federal statutory rate and stock-based compensation.

Our effective tax rate for 2020 was positively impacted, compared to the U.S.

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

federal statutory rate.

The effective tax rate for 2022, compared to 2021, included a favorable benefit from the proportion of income earned in foreign jurisdictions with tax rates lower than the U.S.

federal statutory rate (including the impact from REGEN-COV income earned in the United States during 2021).

Liquidity and Capital Resources

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$ 14,334.1 $ 12,532.7 $ 1,801.4

Long-term debt $ 1,980.0 $ 1,978.5 $ 1.5

Working capital:

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$ 12,742.8 $ 10,082.4 $ 2,660.4

Borrowings and finance lease liabilities:

Long-term debt $ 1,981.4 $ 1,980.0 $ 1.4

Finance lease liabilities $ 720.0 $ 719.7 * $ 0.3

* 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 December 31, 2022, we also had borrowing availability of $750.0 million under a revolving credit facility (see further description under " Credit Facility " below).

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Cash Flows from Operating Activities

As of December 31, 2022, Accounts receivable had decreased by $707.8 million, compared to December 31, 2021, driven by the Company's collection of amounts due from the U.S.

government in connection with REGEN-COV sales in the fourth quarter of 2021.

Other non-cash items, net, in 2022 included inventory write-offs and reserves.

As of December 31, 2022, deferred tax assets increased by $746.4 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.

As of December 31, 2021, Accounts receivable had increased by $1.927 billion, compared to December 31, 2020, primarily due to REGEN-COV sales in connection with our September 2021 agreement to supply drug product to the U.S.

Other non-cash items, net, in 2021 included inventory write-offs and reserves totaling $457.1 million, primarily related to REGEN-COV.

Accounts payable, accrued expenses, and other liabilities as of December 31, 2021 included a $259.6 million fourth quarter 2021 true-up payment owed in connection with global gross profits under our Roche collaboration agreement.

Other non-cash items, net, in 2021 included inventory write-offs and reserves.

Accounts payable, accrued expenses, and other liabilities as of December 31, 2021 included a $259.6 million fourth quarter 2021 payment owed in connection with global gross profits under our Roche collaboration agreement.

As of December 31, 2020, Accounts receivable had increased by $1.356 billion, compared to December 31, 2019, partly as a result of extending payment terms to EYLEA customers due to the COVID-19 pandemic.

Inventories increased as of December 31, 2020, compared to December 31, 2019, partially as a result of purchasing additional raw materials in anticipation of potential disruptions to our supply chain due to the COVID-19 pandemic.

Deferred taxes as of December 31, 2019 increased by $130.6 million, compared to December 31, 2018, primarily due to the tax treatment of the up-front payment made to Alnylam and non-cash compensation expense.

Accounts payable, accrued expenses, and other liabilities as of December 31, 2019 increased compared to December 31, 2018 partially due to the impact of the receipt of a $461.9 million payment from Sanofi in connection with the termination of the 2015 IO Discovery Agreement.

Cash Flows from Investing Activities

Sales of marketable securities in 2020 included proceeds in connection with funding our stock repurchase from Sanofi (as described below).

In 2019, we purchased $400.0 million of Alnylam common stock in connection with entering into the collaboration agreement.

Capital expenditures in 2021 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 as initial costs incurred in connection with our planned expansion of the Tarrytown, New York campus.

We expect to incur capital expenditures of $650 million to $730 million in 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.

We also expect continued significant capital expenditures over the next several years in connection with the planned expansion of our Tarrytown, New York campus.

Capital expenditures in 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 as costs incurred in connection with the expansion of the Tarrytown, New York campus.

We expect to incur capital expenditures of $825 million to $950 million in 2023 primarily in connection with the continued expansion of our research, preclinical manufacturing, and support facilities at our Tarrytown, New York campus and our manufacturing facilities (including the fill/finish facility).

We expect continued significant capital expenditures over the next several years in connection with the planned expansion of our Tarrytown, New York campus.

Payments for Libtayo intangible asset of $1.027 billion in 2022 were related to our acquisition of the exclusive right to develop, commercialize, and manufacture Libtayo worldwide.

Asset acquisition, net of cash acquired, of $230.3 million in 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 $1.672 billion during 2021, compared to $2.575 billion during 2020 and $211.8 million during 2019.

For additional information related to cash flows from financing activities, see "Share Repurchase Program", "Sanofi Funding of Certain Development Costs", "Secondary Offering and Purchase of Regeneron Common Stock Held by Sanofi", and "Issuance of Senior Notes" sections below.

Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $1.520 billion during 2022, compared to $1.672 billion during 2021 and $2.575 billion during 2020.

For additional information related to cash flows from financing activities, see "Share Repurchase Programs", "Sanofi Funding of Certain Development Costs", "Secondary Offering and Purchase of Regeneron Common Stock Held by Sanofi", and "Issuance of Senior Notes" sections below.

Credit Facility

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

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

Proceeds of the loans under the Credit Facility may be used to finance working capital needs, and for general corporate or other lawful purposes, of Regeneron and its subsidiaries.

In December 2018, we entered into an agreement with a syndicate of lenders (the "2018 Credit Agreement") which provided for a $750.0 million senior unsecured five-year revolving credit facility.

The 2018 Credit Agreement, which was set to mature in December 2023, included an option for us to elect to increase the commitments under the Credit Facility and/or to enter into one or more tranches of term loans in the aggregate principal amount of up to $250.0 million, subject to the consent of the lenders providing the additional commitments or term loans, as applicable, and certain other conditions.

In December 2022, we entered into an agreement with a syndicate of lenders (the "2022 Credit Agreement") which provides for a $750.0 million senior unsecured five-year revolving credit facility (the "2022 Credit Facility") and replaces the 2018 Credit Agreement, which was contemporaneously terminated.

The 2022 Credit Agreement includes an option for the Company to elect to increase the commitments under the 2022 Credit Facility and/or to enter into one or more tranches of term loans in the aggregate principal amount of up to $500.0 million, subject to the consent of the lenders providing the additional commitments or term loans, as applicable, and certain other conditions.

The 2022 Credit Agreement also provides a $50.0 million sublimit for letters of credit.

As set forth in the 2022 Credit Agreement, we have the option to amend the 2022 Credit Agreement to establish environmental, social, and governance targets which will be used to adjust pricing under the 2022 Credit Facility, subject to parameters to be provided in the 2022 Credit Agreement.

Proceeds of the loans under the 2022 Credit Facility may be used to finance working capital needs, and for general corporate or other lawful purposes, of Regeneron and its subsidiaries.

Regeneron Pharmaceuticals, Inc.

has guaranteed all obligations under the 2022 Credit Facility.

The 2022 Credit Agreement includes an option for us to elect to extend the maturity date of the 2022 Credit Facility beyond December 2027, subject to the consent of the extending lenders and certain other conditions.

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We had no borrowings outstanding under the 2022 Credit Facility as of December 31, 2022.

The Credit Agreement contains financial and operating covenants.

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

We were in compliance with all covenants of the Credit Facility as of December 31, 2021.

The 2022 Credit Agreement contains operating covenants and a maximum total leverage ratio financial covenant.

We were in compliance with all covenants of the 2022 Credit Agreement as of December 31, 2022.

Share Repurchase Programs

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

The share repurchase program permitted 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.

The share repurchase program permitted 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.

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

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As of December 31, 2021, the Company had repurchased the entire $1.5 billion of its Common Stock that it was authorized to repurchase under the program.

In November 2021, our board of directors authorized an additional share repurchase program to repurchase up to $3.0 billion of our Common Stock.

The share repurchase program was approved under terms substantially similar to the share repurchase programs above.

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

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 was approved under terms substantially similar to the share repurchase programs described above.

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.

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

As of December 31, 2021, $2.845 billion remained available for share repurchases under the November 2021 program.

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

As of December 31, 2022, $745.2 million remained available for share repurchases under the November 2021 program.

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

Year Ended December 31,

(In millions) 2022 2021 2020

Number of shares repurchased 3.0 1.6 0.7

Total cost of shares received $ 1,655.0 $ 746.0 $ 254.0

Number of shares 3.3 3.0 1.6

Total cost of shares $ 2,099.8 $ 1,655.0 $ 746.0

In January 2023, our board of directors authorized a new share repurchase program to repurchase up to an additional $3.0 billion of our Common Stock.

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

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

Share 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.

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

Sanofi Funding of Certain Development Costs

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Consequently, we recorded the cost of the shares received, or $135.0 million, as Treasury Stock during 2020.

In addition, during 2019, Sanofi elected to sell, and we elected to purchase, shares of our Common Stock to satisfy Sanofi's funding obligation.

Consequently, we recorded the cost of the shares received, or $102.7 million, as Treasury Stock during 2019.

Secondary Offering and Purchase of Regeneron Common Stock Held by Sanofi

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

The Bridge Facility was repaid in August 2020 following the issuance and sale of the Company's senior unsecured notes.

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

Issuance of Senior Notes

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In 2016, we entered into a Purchase Agreement with the then lessor, pursuant to which we agreed to purchase the Facility for a purchase price of $720.0 million.

In March 2017, we entered into a Participation Agreement with BA Leasing BSC, LCC, and affiliate of Banc of America Leasing & Capital, LLC ("BAL"), as lessor, and a syndicate of lenders (collectively with BAL, the "Lease Participants"), which provided for lease financing in connection with the acquisition by BAL of the Facility and our lease of the Facility from BAL.

In March 2017, we entered into a Participation Agreement with BA Leasing BSC, LCC, an affiliate of Banc of America Leasing & Capital, LLC ("BAL"), as lessor, and a syndicate of lenders (collectively with BAL, the "Lease Participants"), which provided for lease financing in connection with the acquisition by BAL of the Facility and our lease of the Facility from BAL.

In March 2017, we assigned our right to take title to the Facility under the Purchase Agreement to BAL, and the Lease Participants advanced $720.0 million, which was used by BAL to finance the purchase price for the Facility.

Concurrent with entering into the Participation Agreement, we also entered into a lease agreement (the "Lease") for the Facility with BAL for a five-year term ending in March 2022.

The Lease requires us 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 Lease in an amount equal to a variable rate per annum based on the one-month LIBOR, plus an applicable margin that varies with our debt rating and total leverage ratio.

The Participation Agreement and the Lease include an option for us to elect to extend the maturity date of the Participation Agreement and the term of the Lease for an additional five-year period, subject to the consent of all the Lease Participants and certain other conditions.

We also have the option prior to the end of the term of the Lease to (a) purchase the Facility by paying an amount equal to the outstanding principal amount of the Lease Participants' advances under the Participation Agreement, all accrued and unpaid interest and yield thereon, and all other outstanding amounts under the Participation Agreement, the Lease, and certain related documents or (b) sell the Facility to a third party on behalf of BAL.

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

In September 2021, we delivered a request to the Lease Participants to potentially exercise the option for a five-year extension of the term of the Lease and the maturity date under the Participation Agreement.

In November 2021, the Lease Participants consented to such extension, subject to the satisfaction of certain conditions prior to the expiration of the existing term in March 2022, including the negotiation and execution of satisfactory definitive documentation setting forth the terms and conditions that would apply during such potential extended term.

We are negotiating such documentation with the Lease Participants, but there can be no assurance that such extension will become effective.

The agreements governing the 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.

We were in compliance with all such covenants as of December 31, 2021.

Concurrent with entering into the Participation Agreement, we also entered into a lease agreement for the Facility with BAL for a five-year term that was set to expire in March 2022.

In March 2022, we entered into a Second Amended and Restated Lease and Remedies Agreement (the "Restated Lease") with BAL, as lessor (the "Lessor"), which amends, restates, and extends our lease of 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 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 2018 Credit Agreement.

The Company was in compliance with all such covenants as of December 31, 2022.

Additional Funding Requirements

The amount required to fund operations will depend on various factors, including the potential regulatory approval and commercialization of our product candidates and the timing thereof and the extent and cost of our research and development programs.

We believe that our existing capital resources, borrowing availability under the Credit Facility, funds generated by anticipated product sales, and, as described above under Part I, Item 1.

"Business - Collaboration, License, and Other Agreements," funding for reimbursement of research and development costs that we are entitled to receive under our collaboration agreements, will enable us to meet our anticipated operating needs for the foreseeable future.

We believe that our existing capital resources, borrowing availability under the 2022 Credit Facility, funds generated by anticipated product sales, and funding for reimbursement of research and development costs that we are entitled to receive under our collaboration agreements, will enable us to meet our anticipated operating needs for the foreseeable future.

We expect continued increases in our expenditures, particularly in connection with our research and development activities (including preclinical and clinical programs).

The amount of funding that will be required for our clinical programs depends upon the results of our research and preclinical programs and early-stage clinical trials, regulatory requirements, the duration and results of clinical trials underway and of additional clinical trials that we decide to initiate, and the various factors that affect the cost of each trial, including the size of trials, fees charged for services provided by clinical trial investigators and other third parties, the costs for manufacturing the product candidate for use in the trials, and other expenses.

Under certain collaboration agreements, the amount of funding for reimbursement of research and development costs that we are entitled to receive is capped at a specified amount;

therefore, we may elect to independently fund certain research and development costs in excess of such capped amounts.

We expect to continue to incur development and manufacturing costs for our COVID-19 monoclonal antibodies in 2022, though the amount of funding that will be required will be subject to clinical data results, quantity of drug supply manufactured, the duration of the COVID-19 pandemic, and other factors, including regulatory outcomes, as described in Part I.

We anticipate continuing to incur substantial commercialization costs for EYLEA, Dupixent, and Libtayo.

each trial, including the size of trials, fees charged for services provided by clinical trial investigators and other third parties, the costs for manufacturing the product candidate for use in the trials, and other expenses.

We also anticipate continuing to incur substantial commercialization costs for our marketed products.

Commercialization costs over the next few years will depend on, among other things, the market potential for product candidates, whether commercialization costs are shared with a collaborator, and regulatory approval of additional product candidates.

We expect that expenses related to the filing, prosecution, defense, and enforcement of patents and other intellectual property will be substantial.

Liabilities for unrecognized tax benefits totaled $410.9 million at December 31, 2021.

Liabilities for unrecognized tax benefits totaled $542.8 million as of December 31, 2022.

Due to their nature, there is a high degree of uncertainty regarding the period and amounts of potential future cash settlement with tax authorities.

See Note 15 to our Consolidated Financial Statements.

In addition, the Tax Cuts and Jobs Act of 2017 requires the capitalization and amortization of research and development expenses effective for years beginning after December 31, 2021, which we expect will have a material impact on our cash flows beginning in 2022.

We enter into collaboration and licensing agreements that may require us to pay (i) amounts contingent upon the occurrence of various future events (e.g., upon the achievement of various development and commercial milestones), which, in the aggregate, could be significant, and/or (ii) royalties calculated based on a percentage of net product sales.

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See Note 3 and Note 11 to our Consolidated Financial Statements.

Under our collaboration with Bayer for EYLEA outside the United States and our Antibody and IO Collaborations with Sanofi, we and our collaborator share profits and losses in connection with commercialization of drug products.

Under our collaboration with Bayer for EYLEA outside the United States and our Antibody Collaboration with Sanofi, we and our collaborator share profits and losses in connection with commercialization of drug products.

If the applicable collaboration is profitable, we have contingent contractual obligations to reimburse Bayer and Sanofi for a defined percentage (generally 50%) of agreed-upon development expenses funded by Bayer and Sanofi (i.e., "development balance").

These reimbursements are deducted each quarter, in accordance with a formula, from our share of the collaboration profits (and, for our EYLEA collaboration with Bayer, inclusive of our percentage on product sales in Japan) otherwise payable to us, unless, in the case of EYLEA, we elect to reimburse these expenses at a faster rate.

As of December 31, 2021, our contingent reimbursement obligation to Bayer for EYLEA was approximately $282 million and our contingent reimbursement obligation to Sanofi in connection with the companies' Antibody Collaboration and IO Collaboration was approximately $3.152 billion and $103 million, respectively.

These reimbursements are deducted each quarter, in accordance with a formula, from our share of the collaboration profits otherwise payable to us, unless, in the case of EYLEA, we elect to reimburse these expenses at a faster rate.

As of December 31, 2022, our contingent reimbursement obligation to Bayer for EYLEA was approximately $273 million and our contingent reimbursement obligation to Sanofi in connection with the companies' Antibody Collaboration was approximately $2.864 billion.

Therefore, we expect that, for the foreseeable future, a portion of our share of profits from sales under our collaborations with Bayer and Sanofi will be used to reimburse our collaborators for these obligations.

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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-K

Item 7. Management’s Discussion and Analysis