What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 149 added, 310 removed, 474 unchanged (49% of the section changed)

3 unchanged sentences

(In millions, except per share data)

September 30, December 31,

March 31, December 31,

Current assets:

15 unchanged sentences

Accrued expenses and other current liabilities 2,074.3 2,074.2

Finance lease liabilities — 719.7

Deferred revenue 426.3 477.9

28 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Statements of Operations

12 unchanged sentences

Other income (expense):

Other income (expense), net 301.4 ( 16.4 ) ( 16.0 ) 558.5

Other (expense) income, net ( 70.7 ) ( 183.8 )

Interest expense ( 18.0 ) ( 13.6 )

10 unchanged sentences

Other comprehensive income (loss), net of tax:

Unrealized loss on debt securities ( 51.3 ) ( 6.4 ) ( 249.9 ) ( 20.5 )

Unrealized gain (loss) on debt securities 57.2 ( 144.9 )

Unrealized gain on cash flow hedges — 1.0

17 unchanged sentences

Net income — — — — — 817.8 — — — 817.8

Other comprehensive loss, net of tax — — — — — — ( 143.9 ) — — ( 143.9 )

Other comprehensive income, net of tax — — — — — — 57.2 — — 57.2

Balance, March 31, 2023 1.8 $ — 131.4 $ 0.1 $ 10,597.7 $ 24,124.5 $ ( 181.6 ) ( 23.5 ) $ ( 11,045.5 ) $ 23,495.2

Issuance of Common Stock for equity awards granted under long-term incentive plans — — 0.8 — 228.0 — — — — 228.0

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations — — ( 0.1 ) — ( 41.9 ) — — — — ( 41.9 )

Issuance/distribution of Common Stock for 401(k) Savings Plan — — — — 14.0 — — — 2.2 16.2

Repurchases of Common Stock — — — — — — — ( 0.7 ) ( 393.6 ) ( 393.6 )

Stock-based compensation charges — — — — 166.0 — — — — 166.0

Net income — — — — — 852.1 — — — 852.1

Other comprehensive loss, net of tax — — — — — — ( 53.7 ) — — ( 53.7 )

Balance, June 30, 2022 1.8 — 128.3 0.1 9,120.2 20,793.9 ( 223.8 ) ( 20.6 ) ( 9,002.6 ) 20,687.8

Issuance of Common Stock for equity awards granted under long-term incentive plans — — 0.9 — 322.9 — — — — 322.9

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations — — ( 0.2 ) — ( 108.9 ) — — — — ( 108.9 )

Issuance/distribution of Common Stock for 401(k) Savings Plan — — — — 12.9 — — — 1.6 14.5

Repurchases of Common Stock — — — — — — — ( 1.4 ) ( 913.0 ) ( 913.0 )

Stock-based compensation charges — — — — 171.1 — — — — 171.1

Net income — — — — — 1,315.7 — — — 1,315.7

Other comprehensive loss, net of tax — — — — — — ( 51.3 ) — — ( 51.3 )

Balance, September 30, 2022 1.8 $ — 129.0 $ 0.1 $ 9,518.2 $ 22,109.6 $ ( 275.1 ) ( 22.0 ) $ ( 9,914.0 ) $ 21,438.8

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

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

Shares Amount Shares Amount Shares Amount

Balance, December 31, 2021 1.8 $ — 126.2 $ 0.1 $ 8,087.5 $ 18,968.3 $ ( 26.2 ) ( 19.4 ) $ ( 8,260.9 ) $ 18,768.8

7 unchanged sentences

Balance, March 31, 2022 1.8 $ — 127.6 $ 0.1 $ 8,754.1 $ 19,941.8 $ ( 170.1 ) ( 19.9 ) $ ( 8,611.2 ) $ 19,914.7

Issuance of Common Stock for equity awards granted under long-term incentive plans — — 0.7 — 216.6 — — — — 216.6

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations — — ( 0.1 ) — ( 26.1 ) — — — — ( 26.1 )

Issuance/distribution of Common Stock for 401(k) Savings Plan — — — — 11.6 — — — 2.5 14.1

Repurchases of Common Stock — — — — — — — ( 0.6 ) ( 288.6 ) ( 288.6 )

Stock-based compensation charges — — — — 135.9 — — — — 135.9

Net income — — — — — 3,098.9 — — — 3,098.9

Other comprehensive loss, net of tax — — — — — — ( 0.5 ) — — ( 0.5 )

Balance, June 30, 2021 1.8 — 122.5 0.1 7,225.8 15,107.1 15.7 ( 17.7 ) ( 7,221.4 ) 15,127.3

Issuance of Common Stock for equity awards granted under long-term incentive plans — — 2.5 — 816.5 — — — — 816.5

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations — — ( 0.4 ) — ( 269.6 ) — — — — ( 269.6 )

Issuance/distribution of Common Stock for 401(k) Savings Plan — — — — 10.2 — — — 1.8 12.0

Repurchases of Common Stock — — — — — — — ( 0.2 ) ( 190.6 ) ( 190.6 )

Stock-based compensation charges — — — — 136.4 — — — — 136.4

Net income — — — — — 1,632.2 — — — 1,632.2

Other comprehensive loss, net of tax — — — — — — ( 6.2 ) — — ( 6.2 )

Balance, September 30, 2021 1.8 $ — 124.6 $ 0.1 $ 7,919.3 $ 16,739.3 $ 9.5 ( 17.9 ) $ ( 7,410.2 ) $ 17,258.0

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

2 unchanged sentences

(In millions)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

3 unchanged sentences

Stock-based compensation expense 238.7 166.9

Losses (gains) on marketable and other securities, net 117.4 ( 524.6 )

Losses on marketable and other securities, net 166.6 204.5

Other non-cash items, net 20.6 84.3

Deferred taxes ( 466.7 ) 58.8

Acquired in-process research and development in connection with asset acquisition 195.0 —

Deferred income taxes ( 216.5 ) ( 225.0 )

Changes in assets and liabilities:

Decrease (increase) in accounts receivable 488.2 ( 1,342.9 )

Decrease in accounts receivable 210.1 1,197.5

Increase in inventories ( 46.8 ) ( 88.6 )

Increase in prepaid expenses and other assets ( 5.5 ) ( 44.8 )

Increase (decrease) in deferred revenue 92.0 ( 71.2 )

(Decrease) increase in accounts payable, accrued expenses, and other liabilities ( 486.0 ) 500.4

(Decrease) increase in deferred revenue ( 35.9 ) 9.5

Increase (decrease) in accounts payable, accrued expenses, and other liabilities 119.0 ( 250.4 )

Total adjustments 549.8 1,128.2

5 unchanged sentences

Payments for Libtayo intangible asset ( 100.9 ) —

Asset acquisition, net of cash acquired ( 230.3 ) —

Net cash used in investing activities ( 235.7 ) ( 1,705.3 )

3 unchanged sentences

Repurchases of Common Stock ( 710.7 ) ( 358.1 )

Net cash used in financing activities ( 761.4 ) ( 99.2 )

Net cash (used in) provided by financing activities ( 322.5 ) 64.7

Net increase in cash, cash equivalents, and restricted cash 809.4 461.1

14 unchanged sentences

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

Beginning with the first quarter of 2022, the Company added a new line item, Acquired in-process research and development, to its Condensed Consolidated Statements of Operations and Comprehensive Income.

This line item includes in-process research and development acquired in connection with asset acquisitions as well as up-front/opt-in payments related to license and collaboration agreements.

Amounts recorded in this line item for the nine months ended September 30, 2022 would have historically been recorded to Research and development expenses.

No such amounts were recorded for the three and nine months ended September 30, 2021.

Product Sales

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022

1 unchanged sentence

$ 1,668.0 $ 1,638.6

31.0 — 31.0 —

29.7 44.8 94.5 130.0

REGEN-COV ®(c)

— 676.7 — 3,530.1

13.6 6.6 33.2 9.1

ARCALYST ®(d)

$ 1,801.4 $ 2,279.9 $ 5,194.4 $ 8,142.0

(a) 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.

Effective July 1, 2022, the Company began recording net product sales of Libtayo outside the United States.

Effective July 1, 2022, the Company records global net product sales of Libtayo.

See Note 3 for further details.

(b) Rest of world ("ROW")

(c) Net product sales of REGEN-COV in the United States relate to product sold in connection with our agreements with the U.S.

See Note 3 for further details.

(d) 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.

As of September 30, 2022 and December 31, 2021, the Company had $ 4.268 billion and $ 5.059 billion, respectively, of trade accounts receivable that were recorded within Accounts receivable, net.

The Company had product sales to certain customers that accounted for more than 10% of total gross product revenue for the three and nine months ended September 30, 2022 and 2021.

As of March 31, 2023 and December 31, 2022, the Company had $ 3.578 billion and $ 3.586 billion, respectively, of trade accounts receivable that were recorded within Accounts receivable, net.

The Company had product sales to certain customers that accounted for more than 10% of total gross product revenue for the three months ended March 31, 2023 and 2022.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Besse Medical, a subsidiary of AmerisourceBergen Corporation

56 % 40 % 56 % 33 %

McKesson Corporation 25 % 30 %

government — % 25 % — % 38 %

Collaboration, License, and Other Agreements

1 unchanged sentence

Statement of Operations Classification Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022

Regeneron's share of profits in connection with commercialization of antibodies Collaboration revenue $ 636.5 $ 415.3

Sales-based milestone earned Collaboration revenue $ — $ 50.0 $ 50.0 $ 50.0

Sales-based milestones earned Collaboration revenue $ — $ 50.0

Reimbursement for manufacturing of commercial supplies Collaboration revenue $ 161.9 $ 160.8

Other Collaboration revenue $ ( 0.2 ) $ — $ 28.7 $ —

(Regeneron's obligation for its share of Sanofi R&D expenses)/reimbursements of R&D expenses, net (R&D expense)/reduction of R&D expense $ ( 4.3 ) $ 34.9 $ 59.6 $ 89.5

Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursement of R&D expenses (R&D expense)/Reduction of R&D expense $ ( 26.4 ) $ 26.8

Reimbursement of commercialization-related expenses Reduction of SG&A expense $ 117.6 $ 91.7

Immuno-oncology:

Regeneron's share of profits (losses) in connection with commercialization of Libtayo outside the United States Collaboration revenue $ — $ ( 3.0 ) $ 6.7 $ ( 12.6 )

Immuno-oncology (a) :

Regeneron's share of profits in connection with commercialization of Libtayo outside the United States Collaboration revenue $ — $ 2.8

Reimbursement for manufacturing of ex-U.S.

6 unchanged sentences

Amounts recognized in connection with up-front payments received Other operating income $ — $ 18.1

* Net of one-time payment of $ 56.9 million to Sanofi in connection with the amendment to the Antibody License and Collaboration Agreement described below

(a) As described within the " Immuno-Oncology " section below, effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide.

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

Under the terms of the Antibody License and Collaboration Agreement, 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.

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 %.

A portion of the value associated with the increase in reimbursement percentage was deemed to be contingent consideration attributable to the Company's acquisition of the Libtayo rights described within the " Immuno-oncology " section below;

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

The Company is obligated to reimburse Sanofi for 30 % to 50 % of worldwide development expenses that were funded by Sanofi based on the Company's share of collaboration profits from commercialization of collaboration products.

Under the terms of the LCA, the Company was required to apply 10 % of its 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 LCA became effective, pursuant to which the percentage of the Company's share of profits used to reimburse Sanofi for such development costs increased from 10 % to 20 %.

A portion of the value associated with the increase in reimbursement percentage was deemed to be contingent consideration attributable to the Company's acquisition of the Libtayo (cemiplimab) rights described within the " Immuno-Oncology " section below;

this portion will be recorded as an increase to the Libtayo intangible asset over time as the Company repays such development costs to Sanofi.

2 unchanged sentences

During the three months ended March 31, 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.

During the three months ended September 30, 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 $ 1.5 billion on a rolling twelve-month basis.

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.

The Company is entitled to receive the final sales milestone payment of $ 50.0 million when such sales outside the United States exceed $ 3.0 billion on a rolling twelve-month basis.

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

September 30, December 31,

March 31, December 31,

(In millions) 2023 2022

9 unchanged sentences

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, the Company 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.

The Company will also pay Sanofi an 11 % royalty on net product sales of Libtayo through March 31, 2034.

In connection with the A&R IO LCA, in 2022, the Company made a $ 900.0 million up-front payment to Sanofi, as well as a $ 100.0 million regulatory milestone payment.

In addition, Sanofi earned a $ 65.0 million sales-based milestone upon the achievement of a specified amount of worldwide net product sales of Libtayo in 2022 and is eligible to receive an additional $ 35.0 million sales-based milestone upon the achievement of a specified amount of worldwide net product sales of Libtayo in 2023 (aggregate of $ 100.0 million in sales-based milestones eligible to be earned under the terms of the A&R IO LCA).

The Company also pays Sanofi an 11 % royalty on net product sales of Libtayo through March 31, 2034.

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.

See Note 8 for additional information related to the intangible asset recorded in connection with the transaction.

In accordance with the Amended and Restated Immuno-oncology Discovery and Development Agreement, the Company was obligated to reimburse Sanofi for half of the development costs it funded that were attributable to clinical development of antibody product candidates 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 was $ 35.0 million as of the effective date of the A&R IO LCA, and the Company pays Sanofi a 0.5 % royalty on net product sales of Libtayo until all such development costs have been reimbursed by Regeneron.

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

September 30, December 31,

(In millions) 2022 2021

Accounts receivable, net

$ 3.6 $ ( 22.5 )

Deferred revenue

Other liabilities

Other liabilities included up-front payments received from Sanofi for which recognition had been deferred.

During the three months ended September 30, 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 IO Collaboration, and, as a result, recorded a cumulative catch-up adjustment of $ 66.9 million as a reduction to other operating income.

In connection with the A&R IO LCA described above, the remaining IO Collaboration Other liabilities balance of $ 241.0 million as of July 1, 2022 was recognized as a reduction to the intangible asset during the three months ended September 30, 2022.

The Company is party to a license and collaboration agreement with Bayer for the global development and commercialization of EYLEA (aflibercept) 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 sales.

In Japan, the Company was entitled to receive a tiered percentage of between 33.5 % and 40.0 % of EYLEA net product sales through 2021, and effective January 1, 2022, the companies share equally in profits and losses from sales.

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

Bayer markets EYLEA outside the United States, and the companies share equally in profits and losses from such sales.

Amounts recognized in the Company's Statements of Operations in connection with its Bayer collaboration are as follows:

Statement of Operations Classification Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022

4 unchanged sentences

Collaboration revenue $ — $ 21.9

Reimbursement of R&D expenses Reduction of R&D expense $ 11.8

$ 14.5 $ 32.7 $ 35.2

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

R&D expense $ ( 4.7 ) $ ( 8.0 ) $ ( 22.4 ) $ ( 31.4 )

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

September 30, December 31,

Regeneron's obligation for its share of Bayer R&D expenses, net of reimbursement of R&D expenses (R&D expense)/Reduction of R&D expense $ ( 13.4 ) $ 0.3

The following table summarizes contract balances in connection with the Company's Bayer collaboration:

March 31, December 31,

(In millions) 2023 2022

2 unchanged sentences

$ 134.3 $ 131.9

In 2020 and 2021, we entered into agreements to manufacture and deliver filled and finished drug product of REGEN-COV (casirivimab and imdevimab) to the U.S.

In connection with one of our 2021 agreements, 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 its agreements with the U.S.

See Note 2 for REGEN-COV net product sales recognized during the three and nine months ended September 30, 2021.

In 2020, we entered into a collaboration agreement (the "Roche 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).

Under the terms of the collaboration agreement, we lead global development activities for casirivimab and imdevimab, and the parties jointly fund certain studies.

Under the terms of the agreement, 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 Company is a party to a collaboration agreement (the "Roche 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).

Under the terms of the collaboration agreement, the parties jointly fund certain studies, and the Company has the right to distribute the product in the United States while Roche has the right to distribute 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.

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.

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

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

Statement of Operations Classification Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022

Global gross profit payment from Roche in connection with sales of Ronapreve Collaboration revenue $ 222.2 $ 216.3

Reimbursement of research and development expenses from Roche (recorded as a reduction of Research and development expense) was $ 10.5 million and $ 138.3 million for the three and nine months ended September 30, 2021.

Such amounts were not material for the three and nine months ended September 30, 2022.

Reimbursement of research and development expenses from Roche was not material for the three months ended March 31, 2023 and 2022.

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

September 30, December 31,

March 31, December 31,

(In millions) 2023 2022

Accounts receivable, net $ 220.6 $ 396.6

Accrued expenses and other current liabilities $ — $ 268.8

In 2018, the Company 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).

The parties share equally, on an ongoing basis, development expenses for ALN-HSD.

In 2019, the parties 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.

For each program, we provide Alnylam with a specified amount of funding at program initiation and at lead candidate designation.

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 such siRNA therapeutic (cemdisiran) and a fully human monoclonal antibody being developed by the Company (pozelimab), with the Company as the licensee.

Under the C5 siRNA Co-Commercialization Collaboration Agreement, the parties share costs equally and under the License Agreement, the licensee is responsible for its own costs and expenses.

Amounts recognized in our Statements of Operations in connection with the Alnylam agreements described above were not material for the three and nine months ended September 30, 2022 and 2021.

In addition, contract balances in our Balance Sheets were not material as of September 30, 2022 and December 31, 2021.

In May 2022, the Company completed its acquisition of Checkmate Pharmaceuticals, Inc.

(“Checkmate”) for a total equity value of approximately $ 250 million.

The Company made an assessment as to whether the set of assets acquired constituted a business and should be accounted for as a business combination.

Given that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, vidutolimod, which is in clinical development for oncology, the transaction was accounted for as an asset acquisition.

As a result of the acquisition, the Company recorded (i) a charge of $ 195.0 million to Acquired in-process research and development and (ii) net assets of $ 35.3 million, net of cash, related to the assets acquired (including deferred tax assets and investments) and liabilities assumed.

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

Under the terms of the Teva Collaboration Agreement, the Company leads global development activities and the parties share development costs equally.

In connection with the agreement, Teva made a $ 250.0 million non-refundable up-front payment in 2016, and as of September 30, 2022, we had received an aggregate $ 120.0 million of development milestones from Teva.

These amounts were initially recorded within other liabilities and were being recognized (as other operating income) over the period in which the Company was to satisfy its obligation to perform development activities.

During the three months ended September 30, 2022, we discontinued further clinical development of fasinumab and, as a result, recorded $ 31.9 million as an increase to other operating income as we deemed our obligation to provide development services in connection with the Teva Collaboration Agreement to be complete.

Sonoma Biotherapeutics, Inc.

In March 2023, the Company and Sonoma Biotherapeutics, Inc.

entered into a license and collaboration agreement to bring together the Company's VelociSuite ® technologies with Sonoma's technology platform for the discovery, development, and commercialization of novel regulatory T cell (T reg ) therapies for autoimmune diseases.

In connection with the agreement, the Company made a $ 45.0 million up-front payment (which was recorded to Acquired in-process research and development expense in the first quarter of 2023) and, in April 2023, the Company purchased an aggregate of $ 30.0 million of Sonoma preferred stock.

Sonoma is also eligible to receive a $ 45.0 million development milestone payment.

The Company and Sonoma will co-fund research and development activities and share equally any future commercial expenses and profits.

The Company will have the option to lead late-stage development and commercialization on all products globally, with Sonoma retaining rights to co-promote all such products in the United States.

Net Income Per Share

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions, except per share data) 2023 2022

9 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(Shares in millions) 2023 2022

1 unchanged sentence

Marketable Securities

Marketable securities as of September 30, 2022 and December 31, 2021 consist of both available-for-sale debt securities of investment grade issuers (see below and Note 6) as well as equity securities of publicly traded companies (see Note 6).

Marketable securities as of March 31, 2023 and December 31, 2022 consist of both available-for-sale debt securities of investment grade issuers (see below and Note 6) as well as equity securities of publicly traded companies (see Note 6).

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

(In millions) Amortized Unrealized Fair

As of September 30, 2022

As of March 31, 2023

Cost Basis Gains Losses Value

15 unchanged sentences

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

The available-for-sale debt securities listed as of September 30, 2022 mature at various dates through April 2027.

The available-for-sale debt securities as of March 31, 2023 mature at various dates through August 2028.

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

September 30, December 31,

March 31, December 31,

(In millions) 2023 2022

1 unchanged sentence

Maturities after one year through five years 4,996.6 5,381.4

Maturities after five years 11.3 0.4

$ 10,051.3 $ 10,018.2

2 unchanged sentences

(In millions)

As of September 30, 2022

As of March 31, 2023

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

10 unchanged sentences

Sovereign bonds 18.6 ( 1.1 ) 45.6 ( 1.9 ) 64.2 ( 3.0 )

Commercial paper 295.7 ( 0.1 ) — — 295.7 ( 0.1 )

Certificates of deposit 40.2 ( 0.1 ) — — 40.2 ( 0.1 )

1 unchanged sentence

$ 3,300.9 $ ( 76.9 ) $ 4,332.2 $ ( 225.9 ) $ 7,633.1 $ ( 302.8 )

With respect to marketable securities, for the three and nine months ended September 30, 2022 and 2021, amounts reclassified from Accumulated other comprehensive loss into Other income (expense), net were related to realized gains and losses on sales of available-for-sale debt securities.

For the three and nine months ended September 30, 2022 and 2021, realized gains and losses on sales of marketable securities were not material.

The unrealized losses on corporate bonds as of March 31, 2023 were primarily driven by increases in interest rates.

The Company has reviewed its portfolio of available-for-sale debt securities and determined that the decline in fair value below cost did not result from credit-related factors.

In addition, the Company does not intend to sell, and it is not more likely than not that the Company will be required to sell, such securities before recovery of their amortized cost bases.

With respect to marketable securities, for the three months ended March 31, 2023 and 2022, amounts reclassified from Accumulated other comprehensive loss into Other (expense) income, net were related to realized gains and losses on sales of available-for-sale debt securities.

For the three months ended March 31, 2023 and 2022, realized gains and losses on sales of marketable securities were not material.

Fair Value Measurements

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(In millions) Fair Value Measurements at Reporting Date

As of September 30, 2022

As of March 31, 2023

Fair Value Level 1 Level 2

Cash equivalents $ 1,422.7 $ 154.1 $ 1,268.6

Available-for-sale debt securities:

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As of December 31, 2022

Cash equivalents $ 1,662.8 $ 88.3 $ 1,574.5

Available-for-sale debt securities:

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$ 12,891.0 $ 1,298.3 $ 11,592.7

The Company held certain restricted equity securities as of September 30, 2022 which are subject to transfer restrictions that expire at various dates through 2024.

During the three and nine months ended September 30, 2022, we recorded $ 254.3 million of net unrealized gains and $ 120.6 million of net unrealized losses, respectively, on equity securities in Other income (expense), net.

During the three and nine months ended September 30, 2021, we recorded $ 29.1 million of net unrealized losses and $ 523.8 million of net unrealized gains, respectively, on equity securities in Other income (expense), net.

In addition to the investments summarized in the table above, as of September 30, 2022 and December 31, 2021, the Company had $ 48.3 million and $ 40.0 million, respectively, in equity investments that do not have a readily determinable fair value.

The Company held certain restricted equity securities as of March 31, 2023 which are subject to transfer restrictions that expire at various dates through 2024.

During the three months ended March 31, 2023 and 2022, we recorded $ 164.7 million and $ 211.2 million of net unrealized losses, respectively, on equity securities in Other (expense) income, net.

In addition to the investments summarized in the table above, as of both March 31, 2023 and December 31, 2022, the Company had $ 48.3 million in equity investments that do not have a readily determinable fair value.

These investments are recorded within Other noncurrent assets.

The fair value of our long-term debt (see Note 9), which was determined based on Level 2 inputs, was estimated to be $ 1.400 billion and $ 1.887 billion as of September 30, 2022 and December 31, 2021, respectively.

The fair value of our long-term debt, which was determined based on Level 2 inputs, was estimated to be $ 1.516 billion and $ 1.443 billion as of March 31, 2023 and December 31, 2022, respectively.

Inventories consist of the following:

September 30, December 31,

March 31, December 31,

(In millions) 2023 2022

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$ 2,424.7 $ 2,401.9

Inventory balances in the table above are net of reserves of $ 752.3 million and $ 720.7 million as of March 31, 2023 and December 31, 2022, respectively.

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

For the three and nine months ended September 30, 2022, Cost of goods sold included inventory write-offs and reserves totaling $ 34.7 million and $ 101.3 million, respectively.

For the three and nine months ended September 30, 2021, Cost of goods sold included inventory write-offs and reserves totaling $ 38.7 million and $ 188.0 million, respectively.

Intangible Assets

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

Such amounts may include up-front payments and contingent consideration.

With regards to contingent consideration, the Company recognizes regulatory milestones upon achievement, royalties in the period in which the underlying sales occur, and sales-based milestones when the milestone is deemed probable by the Company of being achieved.

Intangible assets are amortized to Cost of goods sold 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 arrangement.

The Company's intangible assets are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

If an indicator of impairment exists, the Company compares 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.

Intangible assets consist of the following:

September 30, 2022 December 31, 2021

(In millions) Estimated Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross carrying Amount Accumulated Amortization Net Carrying Amount

Acquired product rights - Libtayo 13 years

$ 814.2 $ ( 15.3 ) $ 798.9 $ — $ — $ —

Other intangibles 5 – 8 years

10.0 ( 4.8 ) 5.2 29.3 ( 22.6 ) 6.7

Intangible assets, net $ 824.2 $ ( 20.1 ) $ 804.1 $ 29.3 $ ( 22.6 ) $ 6.7

As described in Note 3, the Company recorded an intangible asset in connection with obtaining the exclusive right to develop, commercialize, and manufacture Libtayo worldwide.

The intangible asset recognized upon the effective date of the A&R IO LCA primarily consisted of the $ 900.0 million up-front payment, offset by the remaining IO Collaboration Other liabilities balance of $ 241.0 million.

During the three months ended September 30, 2022, the Company recorded additions to the Libtayo intangible asset primarily related to contingent consideration and other amounts due to Sanofi in connection with obtaining the worldwide rights to Libtayo.

For the three and nine months ended September 30, 2022, amortization expense of $ 15.6 million and $ 16.8 million, respectively, was recognized.

Amortization expense for the three and nine months ended September 30, 2021 was not material.

As of September 30, 2022, assuming no changes in the gross carrying amount of intangible assets, amortization expense for the three months ending December 31, 2022 is estimated to be $ 15.6 million and approximately $ 62 million for each of the years ending December 31, 2023 through December 31, 2027.

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

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

September 30, December 31,

(In millions) 2022 2021

1.750 % Senior Notes due September 2030

$ 1,240.8 $ 1,239.9

2.800 % Senior Notes due September 2050

$ 1,981.1 $ 1,980.0

Interest expense related to the Notes was $ 11.1 million and $ 33.3 million for each of the three and nine months ended September 30, 2022, and 2021, respectively.

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.

Consistent with the original lease, the Restated Lease continues to be 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 $ 750.0 million revolving credit facility.

The Company was in compliance with all such covenants as of September 30, 2022.

The Company is subject to U.S.

federal, state, and foreign income taxes.

The Company's effective tax rate was 12.9 % and 10.2 % for the three months ended September 30, 2022 and 2021, respectively and 11.1 % and 14.3 % for the nine months ended September 30, 2022 and 2021, respectively.

The Company's effective tax rate for the three and nine months ended September 30, 2022 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, to a lesser extent, stock-based compensation.

The Company's effective tax rate for the three and nine months ended September 30, 2021 was positively impacted, compared to the U.S.

The Company's effective tax rate was 4.7 % and 8.3 % for the three months ended March 31, 2023 and 2022, respectively.

The Company's effective tax rate for the three months ended March 31, 2023 was positively impacted, compared to the U.S.

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

federal statutory rate, offset by the impact of income earned in the United States during 2021 related to REGEN-COV.

In addition, the effective tax rate for the nine months ended September 30, 2021 was positively impacted by the reversal of liabilities related to uncertain tax positions as a result of the audit of the Company's federal income tax returns for 2015 and 2016 being settled .

federal statutory rate.

In August 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law in the United States.

The IRA created a new corporate alternative minimum tax of 15% on adjusted financial statement income and an excise tax of 1% of the value of certain stock repurchases.

The provisions of the IRA became effective for periods beginning after December 31, 2022.

The IRA had no impact on the Company's financial statements for the three months ended March 31, 2023.

The Company's effective tax rate for the three months ended March 31, 2022 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.

Stockholders' Equity

Share Repurchase Programs

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

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 program described above.

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.

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

As of September 30, 2022, $ 1.186 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 and the cost of the shares, which were recorded as Treasury Stock.

In January 2023, 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 program described above.

As of March 31, 2023, an aggregate of $ 3.051 billion remained available for share repurchases under the Company's share repurchase programs.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(In millions) 2023 2022

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

September 30,

(In millions) 2023 2022

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Supplemental disclosure of non-cash investing and financing activities

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

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

(In millions) 2023 2022 2022 2021

Accrued capital expenditures $ 90.3 $ 70.8 $ 80.7 $ 74.8

Accrued payments for intangible assets $ 116.0 $ — $ — $ —

Accrued contingent consideration for Libtayo intangible asset $ 55.2 $ 135.5 $ — $ —

Legal Matters

From time to time, the Company is a party to legal proceedings in the course of the Company's business.

Costs associated with the Company's involvement in legal proceedings are expensed as incurred.

The outcome of any such proceedings, regardless of the merits, is inherently uncertain.

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

As of September 30, 2022 and December 31, 2021, the Company's accruals for loss contingencies were not material.

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

Costs associated with the Company's involvement in legal proceedings are expensed as incurred.

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

As of March 31, 2023 and December 31, 2022, the Company's accruals for loss contingencies were not material.

There are certain loss contingencies that the Company deems reasonably possible for which the possible loss or range of possible loss is not estimable at this time.

Proceedings Relating to Praluent (alirocumab) Injection

As described in greater detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and below, the Company is currently a party to patent infringement actions initiated by Amgen Inc.

As described below, the Company is currently a party to patent infringement actions initiated by Amgen Inc.

(and/or its affiliated entities) against the Company and/or Sanofi (and/or the Company's and Sanofi's respective affiliated entities) in a number of jurisdictions relating to Praluent.

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On April 14, 2021, Amgen filed a petition for a rehearing en banc with the Federal Circuit, which was denied on June 21, 2021.

On November 18, 2021, Amgen filed a petition for writ of certiorari with the United States Supreme Court.

On November 4, 2022, the United States Supreme Court granted Amgen's petition for writ of certiorari.

An oral hearing was held on March 27, 2023.

On May 27, 2022, the Company filed a lawsuit against Amgen in the United States District Court for the District of Delaware, alleging that, beginning in 2020, Amgen engaged in an anticompetitive bundling scheme which was designed to exclude Praluent from the market in violation of federal and state laws.

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On August 11, 2022, Amgen filed a motion to stay these proceedings pending resolution of the patent litigation described in the preceding paragraph.

An oral hearing on Amgen's motion to dismiss and motion to stay has been scheduled for January 6, 2023.

An oral hearing on Amgen's motion to dismiss and motion to stay was held on January 6, 2023.

On February 10, 2023, the court denied Amgen's motion to stay;

and on March 21, 2023, the court denied Amgen's motion to dismiss.

A trial has been scheduled to begin in November 2024.

Amgen has asserted European Patent No.

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The dismissal in Germany followed an earlier finding of infringement and granting of an injunction, both of which were subsequently overturned.

As a result of the overturned injunction in Germany discussed in the preceding sentence, the Company and/or certain of Sanofi's affiliated entities are seeking damages caused by Amgen's enforcement of the injunction.

As a result of the overturned injunction in Germany, the Company and/or certain of Sanofi's affiliated entities are seeking damages caused by Amgen's enforcement of the injunction.

As part of its opposition to these damages claims, on March 23, 2022, Amgen filed a counterclaim that asserted the German designation of European Patent No.

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The '917 Patent is also subject to opposition proceedings in the EPO, which were initiated by Sanofi on May 5, 2021.

An oral hearing before the EPO has been scheduled for February 21, 2023.

Proceedings Relating to Dupixent (dupilumab) Injection

On September 30, 2016, Sanofi initiated a revocation proceeding in the United Kingdom to invalidate the U.K.

counterpart of European Patent No.

2,292,665 (the "'665 Patent"), a patent owned by Immunex Corporation relating to antibodies that bind the human interleukin-4 receptor.

At the joint request of the parties to the revocation proceeding, the U.K.

Patents Court ordered on January 30, 2017 that the revocation action be stayed pending the final determination of the EPO opposition proceedings initiated by the Company and Sanofi in relation to the '665 Patent.

The oral hearing before the EPO on the oppositions occurred

on November 20, 2017, at which the claims of the '665 Patent were found invalid and the patent was revoked.

A final written decision of revocation of the '665 Patent was issued by the EPO on January 4, 2018.

Immunex filed a notice of appeal of the EPO's decision on January 31, 2018, which appeal was withdrawn at an oral hearing before the TBA on March 10, 2022 following the TBA's ruling discussed below.

On May 18, 2022, the revocation action in the U.K.

Patents Court was dismissed following the EPO's revocation of the '665 Patent.

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

2,990,420 (the "'420 Patent"), a divisional patent of the '665 Patent (i.e., a patent that shares the same priority date, disclosure, and patent term of the parent '665 Patent but contains claims to a different invention).

The oral hearing before the EPO on the oppositions occurred on February 14–15, 2019, at which the '420 Patent was revoked in its entirety.

Immunex filed a notice of appeal of the EPO's decision on May 31, 2019.

At an oral hearing before the TBA on March 10, 2022, the TBA maintained the invalidity and revocation of the '420 Patent.

The original patent term of the Immunex patents expired in May 2021.

An oral hearing before the EPO was held on February 21, 2023, at which the '917 Patent was revoked.

Amgen filed a notice to appeal to the TBA of the EPO on February 27, 2023.

Proceedings Relating to EYLEA (aflibercept) Injection

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On February 11, 2020, anonymous parties filed two requests for ex parte reexamination of the Company's U.S.

10,406,226 and 10,464,992, and the USPTO has granted both requests to initiate reexamination proceedings.

10,406,226 (the "'226 Patent") and 10,464,992 (the "'992 Patent"), and the USPTO has granted both requests.

On May 5, 2021, Mylan Pharmaceuticals Inc.

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An oral hearing was held on August 10, 2022.

On July 1, 2022, Mylan filed IPR petitions against the Company's U.S.

10,130,681 (the "'681 Patent") and 10,888,601 (the "'601 Patent"), seeking declarations of invalidity of the '681 and '601 Patents.

On November 9, 2022, the USPTO issued final written decisions finding that the claims of the '338 and '069 Patents are unpatentable and, therefore, invalid.

On January 10, 2023, the Company filed notices of appeal of the USPTO written decisions concerning the '338 and '069 Patents with the Federal Circuit.

In 2022, Mylan filed IPR petitions against the Company's U.S.

10,130,681 (the "'681 Patent") and 10,888,601 (the "'601 Patent") (each filed July 1, 2022) and 10,857,205 (the "'205 Patent") (filed October 28, 2022) seeking declarations of invalidity of each of these patents.

On January 11, 2023, the USPTO instituted IPR proceedings concerning the '681 Patent and the '601 Patent.

On February 21, 2023, the Company filed a Notice of Disclaimer with the USPTO, disclaiming all claims of the '205 Patent;

and, as a result, on March 1, 2023, the USPTO denied institution of Mylan's IPR petition against the '205 Patent.

On January 6, 2023 and March 26, 2023, Samsung Bioepis Co., Ltd.

filed separate IPR petitions against the Company's '681 Patent and '601 Patent, respectively, seeking declarations of invalidity of such patents.

On September 9, 2022, Apotex filed an IPR petition against the Company's U.S.

11,253,572 (the "'572 Patent") seeking a declaration of invalidity of the '572 Patent.

On September 7, 2021, Celltrion, Inc.

filed a post-grant review ("PGR") petition in the USPTO against the Company's U.S.

10,857,231 (the "'231 Patent") seeking a declaration of invalidity of the '231 Patent.

On March 14, 2022, the Company filed a Notice of Disclaimer with the USPTO, disclaiming all claims of the '231 Patent.

As a result, on March 15, 2022, the USPTO denied institution of Celltrion's PGR petition.

On March 10, 2023, the USPTO declined to institute an IPR proceeding concerning the '572 Patent.

On April 27, 2023, Samsung Bioepis Co., Ltd.

filed a separate IPR petition against the '572 Patent seeking a declaration of invalidity of the '572 Patent.

On January 17, 2023 and February 28, 2023, Celltrion filed IPR petitions against the '992 Patent and the '226 Patent, respectively, seeking declarations of invalidity of such patents.

On August 2, 2022, the Company filed a patent infringement lawsuit against Mylan in the United States District Court for the Northern District of West Virginia alleging that Mylan's filing for a U.S.

Food and Drug Administration approval of an aflibercept biosimilar infringes certain Company patents.

A trial has been scheduled to begin on June 12, 2023.

On April 20, 2023, Mylan filed a motion for summary judgment or partial summary judgment concerning four of the asserted patents.

On April 26, 2023, the Company filed a stipulation accepting summary judgment of noninfringement of all asserted claims of the Company's U.S.

A trial has been scheduled to begin on June 12, 2023 concerning certain claims of the '601 Patent, the '572 Patent, and the Company's U.S.

On October 26 and October 27, 2021, anonymous parties initiated opposition proceedings in the EPO against the Company's European Patent No.

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3,129,193 (the "'193 Patent") (in the lawsuit filed on October 4, 2022).

A trial for the lawsuit concerning the '510 Patent and the '276 Patent has been scheduled for March 2024 and a trial for the lawsuit concerning the '495 Patent and the '768 Patent has been scheduled for May-June 2024.

of the lawsuit concerning the '510 Patent and the '276 Patent resulted in a statutory 24-month stay of regulatory approval of Viatris Canada's aflibercept biosimilar in Canada unless the lawsuit is resolved earlier.

On October 31, 2022, Samsung Bioepis Co., Ltd.

initiated an invalidation proceeding before the Intellectual Property Trial and Appeal Board of the Korean Intellectual Property Office against the Company's Korean Patent No.

1131429 seeking revocation of such patent in its entirety.

Proceedings Relating to EYLEA (aflibercept) Injection Pre-filled Syringe

On June 19, 2020, Novartis Pharma AG, Novartis Pharmaceuticals Corporation, and Novartis Technology LLC (collectively, "Novartis") filed a complaint with the U.S.

International Trade Commission (the "ITC") pursuant to Section 337 of the Tariff Act of 1930 requesting that the ITC institute an investigation relating to the importation into the United States and/or sale within the United States after importation of EYLEA pre-filled syringes ("PFS") and/or components thereof which allegedly infringe Novartis’s U.S.

A trial for the lawsuit concerning the '510 Patent and the '276 Patent has been scheduled for March 2024;

a trial for the lawsuit concerning the '193 Patent has been scheduled for May 2024;

and a trial for the lawsuit concerning the '495 Patent and the '768 Patent has been scheduled for November/December 2024.

The filing of the lawsuit concerning the '510 Patent and the '276 Patent resulted in a statutory 24-month stay of regulatory approval of Viatris Canada's aflibercept biosimilar in Canada unless the lawsuit is resolved earlier.

On March 27, 2023, in light of the transfer of the New Drug Submission ("NDS") discussed below, the Company filed a motion in the Federal Court of Canada seeking termination of the Viatris Canada action relating to the '510 Patent and the '276 Patent in the Federal Court of Canada.

On March 23, 2023, following the transfer of Viatris Canada's NDS of its aflibercept biosimilar to Biosimilar Collaborations Ireland Limited ("BCIL"), the Company and Bayer Inc.

filed a patent infringement lawsuit against BCIL in the Federal Court of Canada seeking a declaration that the making, constructing, using, or selling of an aflibercept biosimilar would directly or indirectly infringe one or more claims of the Company's '510 and '276 Patents.

On October 31, 2022 and December 13, 2022, Samsung Bioepis Co., Ltd.

initiated invalidation proceedings before the Intellectual Property Trial and Appeal Board of the Korean Intellectual Property Office against the Company's Korean Patent Nos.

1131429 and 1406811, respectively, seeking revocation of each of such patents in its entirety.

On January 16, 2023, the Company filed patent infringement lawsuits against Samsung Bioepis Co., Ltd.

and its parent Samsung Biologics Co., Ltd.

before the Seoul Central District Court seeking a declaration that the making, constructing, using, or selling of an aflibercept biosimilar would infringe one or more claims of Company's Korean Patent No.

659477 (the "'477 Patent").

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

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

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

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

On June 19, 2020, Novartis also filed a patent infringement lawsuit (as amended on August 2, 2021) in the U.S.

District Court for the Northern District of New York asserting claims of the '631 Patent and seeking preliminary and permanent injunctions to prevent the Company from continuing to infringe the '631 Patent.

Novartis also seeks a judgment of patent infringement of the '631 Patent, monetary damages (together with interest), an order of willful infringement of the '631 Patent (which would allow the court in its discretion to award damages up to three times the amount assessed), costs and expenses of the lawsuits, and attorneys' fees.

On July 30, 2020, the court granted the Company's motion to stay these proceedings until a determination in the ITC proceedings discussed above, including any appeals therefrom, becomes final.

On June 11, 2021, the court, at the request of Novartis, lifted the stay.

On November 5, 2021, the Company filed a motion to stay these proceedings in light of the pending IPR proceeding discussed below.

On January 31, 2022, the court denied the Company's motion to stay these proceedings.

On March 2, 2023, the Company filed an affirmative scope confirmation action against Samsung Bioepis Co., Ltd.

before the Intellectual Property Tribunal and Appeal Board of the Korean Intellectual Property Office seeking a ruling that Samsung Bioepis's aflibercept biosimilar is covered by the claims of the '477 Patent.

On March 7, 2023, the action was designated for expedited proceedings.

Proceedings Relating to EYLEA (aflibercept) Injection Pre-filled Syringe

On June 19, 2020, Novartis Pharma AG, Novartis Pharmaceuticals Corporation, and Novartis Technology LLC (collectively, "Novartis") filed a patent infringement lawsuit (as amended on August 2, 2021) in the U.S.

District Court for the Northern District of New York asserting claims of Novartis's U.S.

9,220,631 (the "'631 Patent") and seeking preliminary and permanent injunctions to prevent the Company from continuing to infringe the '631 Patent.

expenses of the lawsuits, and attorneys' fees.

On November 7, 2022, the Company and Novartis entered into a stipulation staying the lawsuit in light of the decision in the IPR proceeding discussed below.

On July 16, 2020, the Company initiated two IPR petitions in the USPTO seeking a declaration of invalidity of the '631 Patent on two separate grounds.

On January 15, 2021, the USPTO declined to institute an IPR proceeding on procedural grounds in light of the pending ITC investigation discussed above;

the other IPR petition has been withdrawn.

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

On October 26, 2021, the USPTO issued a decision instituting the IPR proceeding.

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On October 25, 2022, the Patent Trial and Appeal Board ("PTAB") of the USPTO issued a final written decision invalidating all claims of the '631 Patent.

On December 23, 2022, Novartis filed a notice of appeal of the PTAB's decision to the Federal Circuit.

On July 17, 2020, the Company filed an antitrust lawsuit against Novartis and Vetter Pharma International Gmbh ("Vetter") in the United States District Court for the Southern District of New York seeking a declaration that the '631 Patent is unenforceable and a judgment that the defendants' conduct violates Sections 1 and 2 of the Sherman Antitrust Act of 1890, as amended (the "Sherman Antitrust Act").

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

("Allele") filed a lawsuit (as amended on April 8, 2021) against the Company in the United States District Court for the Southern District of New York, asserting infringement of U.S.

("Allele") filed a lawsuit (as amended on April 8, 2021 and December 12, 2022) against the Company in the United States District Court for the Southern District of New York, asserting infringement of U.S.

10,221,221 (the "'221 Patent").

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On December 4, 2020, the court denied the motion to dismiss.

On December 28, 2022, the U.S.

Attorney’s Office for the District of Massachusetts filed a motion for partial summary judgment.

On January 31, 2023, the Company filed a motion for summary judgment.

In September 2019, the Company and Regeneron Healthcare Solutions, Inc., a wholly-owned subsidiary of the Company, each received a civil investigative demand ("CID") from the U.S.

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The CID states that the investigation concerns allegations that the Company (i) violated the False Claims Act by paying kickbacks to distributors and ophthalmology practices to induce purchase of EYLEA, including through discounts, rebates, credit card fees, free units of EYLEA, and inventory management systems;

and (ii) inflated reimbursement rates for EYLEA by excluding applicable discounts, rebates, and benefits from the average sales price reported to CMS.

and (ii) inflated reimbursement rates for EYLEA by excluding applicable discounts, rebates, and benefits from the average sales price reported to the Centers for Medicare & Medicaid Services.

The CID covers the period from January 2011 through June 2021.

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and, in light of these stays, the parties to the Local 464A action have also agreed to stay that matter.

Shareholder Demands

On or about September 30, 2020, March 30, 2022, and March 31, 2022, the Company's board of directors received three demand letters from purported shareholders of the Company.

The demands allege that Regeneron and its shareholders have been damaged by the conduct alleged in the civil complaint filed by the U.S.

Attorney's Office for the District of Massachusetts discussed under "Department of Justice Matters" above.

The demand letters request that the Company's board of directors investigate alleged breaches of fiduciary duty by its officers and directors and other alleged violations of law and corporate governance practices and procedures;

bring legal action against the persons responsible for causing the alleged damages;

and implement and maintain an effective system of internal controls, compliance mechanisms, and corporate governance practices and procedures.

The Company's board of directors, working with outside counsel, investigated and evaluated the allegations in the demand letters and has concluded that pursuing the claims alleged in the demands would not be in the Company's best interests at this time.

Proceedings Relating to Shareholder Derivative Complaint

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Also on September 23, 2021, the individual defendants moved to dismiss the complaint in its entirety.

On December 19, 2022, the U.S.

District Court for the Southern District of New York denied the plaintiff's motion to remand the case and granted a motion to stay the case pending resolution of the proceedings before the U.S.

District Court for the District of Massachusetts discussed under "Department of Justice Matters" above.

As a result of the stay, the court also terminated the Company's motion to dismiss the complaint without prejudice.

The Company can therefore renew the motion to dismiss upon conclusion of the stay.

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

What changed 10-Q

Item 1. Financial Statements