What changed in this filing

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Item 1A. Risk Factors

2023-08-03 compared with 2023-05-04 · 101 added, 79 removed, 880 unchanged (17% of the section changed)

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• Sales of our products are dependent on the availability and extent of reimbursement from third-party payors, including private payors and government programs such as Medicare and Medicaid, which could change due to various factors such as drug price control measures that have been or may be enacted or introduced in the United States by various federal and state authorities.

• The commercial success of our products is subject to significant competition from products or product candidates that may be superior to, or more cost effective than, our products or product candidates.

• The commercial success of our products is subject to significant competition from products or product candidates that may be superior to, or more established or cost effective than, our products or product candidates.

• We and our collaborators on which we rely to commercialize some of our marketed products may be unable to continue to successfully commercialize or co-commercialize our products, both in the United States and abroad.

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• We rely on limited internal and contracted manufacturing and supply chain capacity, which could adversely affect our ability to commercialize our products and to advance our clinical pipeline.

As we increase our production in response to higher product demand or in anticipation of a potential regulatory approval, our current manufacturing capacity will

likely not be sufficient, and our dependence on our collaborators and/or contract manufacturers may increase, to produce adequate quantities of drug material for both commercial and clinical purposes.

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

• Expanding our manufacturing capacity and establishing fill/finish capabilities will be costly and we may be unsuccessful in doing so in a timely manner, which could delay or prevent the launch and successful commercialization of our products approved for marketing and could jeopardize our clinical development programs.

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

For the three months ended March 31, 2023 and 2022, EYLEA net product sales in the United States represented 45% and 51% of our total revenues, respectively.

For the three months ended March 31, 2023, EYLEA global net product sales decreased by 4%, compared to the same period in 2022, as discussed in Part I, Item 2.

For the six months ended June 30, 2023 and 2022, EYLEA net product sales in the United States represented 46% and 54% of our total revenues, respectively.

For the six months ended June 30, 2023, EYLEA U.S.

net product sales decreased by 7%, compared to the same period in 2022, as discussed in Part I, Item 2.

"Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." If we were to experience difficulty with the commercialization of EYLEA in the United States or if Bayer were to experience any difficulty with the commercialization of EYLEA outside the United States, if EYLEA net product sales experience a sustained decline in or outside the United States, or if we and Bayer are unable to maintain current marketing approvals of EYLEA, we may experience a reduction in revenue and may not be able to stay profitable at the levels we previously achieved or at all, and our business, prospects, operating results, and financial condition may be materially harmed.

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As a result, we face the risk of lower EYLEA net product sales due to biosimilar competition following such expiration, which may have a material adverse impact on our results of operations.

While we have submitted a BLA for aflibercept 8 mg with the FDA, the degree to which any future net product sales of aflibercept 8 mg (if approved) may offset any potential decrease in EYLEA net product sales, resulting from the factors discussed above or otherwise, is highly uncertain.

While we are planning to commercialize aflibercept 8 mg, the potential approval of this product candidate has been delayed following issuance by the FDA of a Complete Response Letter ("CRL") concerning the aflibercept 8 mg BLA (as previously reported and further discussed in this report).

For additional information, see "Risks Related to Manufacturing and Supply - Our or our collaborators' failure to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates could result in incurring substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if regulatory approval is obtained, and a reduction in sales.

" In addition, the degree to which any future net product sales of aflibercept 8 mg (if approved) may offset any potential decrease in EYLEA net product sales, resulting from the factors discussed above or otherwise, is uncertain.

In addition, we are dependent on our share of profits from the commercialization of Dupixent under our Antibody Collaboration with Sanofi.

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and, in the case of EYLEA, the existing and potential new branded and biosimilar competition for EYLEA (discussed further under " The commercial success of our products and product candidates is subject to significant competition - Marketed Products" below) and the willingness of retinal specialists and patients to start or continue treatment with EYLEA or to switch from another product to EYLEA;

• the effect of existing and new health care laws and regulations currently being considered or implemented in the United States, including measures requiring the U.S.

• the effect of existing and new health care laws and regulations currently being considered or implemented in the United States and globally, including measures requiring the U.S.

government in the future to negotiate the prices of certain drugs and price reporting and other disclosure requirements and the potential impact of such requirements on physician prescribing practices and payor coverage;

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• our ability to meet the demand for commercial supplies of our marketed products;

• the outcome of the pending proceedings relating to EYLEA, Praluent, and REGEN-COV (described further in Note 11 to our Condensed Consolidated Financial Statements included in this report), as well as other risks relating to our marketed products and product candidates associated with intellectual property of other parties and pending or future litigation relating thereto (as discussed under "Risks Related to Intellectual Property and Market Exclusivity" below);

• the outcome of the pending proceedings relating to EYLEA and REGEN-COV (described further in Note 11 to our Condensed Consolidated Financial Statements included in this report), as well as other risks relating to our marketed products and product candidates associated with intellectual property of other parties and pending or future litigation relating thereto (as discussed under "Risks Related to Intellectual Property and Market Exclusivity" below);

• the outcome of the pending government proceedings and investigations and other matters described in Note 11 to our Condensed Consolidated Financial Statements included in this report (including the civil complaint filed against us on June 24, 2020 in the U.S.

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

Given cost sensitivities in many health care systems, our currently marketed products and product candidates are

likely to be subject to continued pricing pressures, which may have an adverse impact on our business, prospects, operating results, and financial condition.

Given cost sensitivities in many health care systems, our currently marketed products and product candidates are likely to be subject to continued pricing pressures, which may have an adverse impact on our business, prospects, operating results, and financial condition.

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

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

Notably, the U.S.

Congress recently passed the Inflation Reduction Act ("IRA"), which includes, among other items, provisions regarding the following:

Notably, in 2022 the U.S.

Congress passed the Inflation Reduction Act ("IRA"), which includes, among other items, provisions regarding the following:

• Implementation of a Medicare Drug Price Negotiation Program (the "Medicare Drug Price Negotiation Program").

The Medicare Drug Price Negotiation Program requires the government to set prices for select high-expenditure drugs covered under Medicare Parts B and D.

In the first two years, only Part D drugs are eligible for inclusion in the Medicare Drug Price Negotiation Program.

Starting in 2026, the government is authorized to select both Part B and Part D drugs for inclusion in the Medicare Drug Price Negotiation Program, with established prices for selected drugs to go into effect in 2028 absent certain disqualifying events.

Starting in 2023 and 2026, the government is authorized to select Part D and Part B drugs, respectively, for inclusion in the Medicare Drug Price Negotiation Program, with established prices to go into effect for selected Part D drugs in 2026 and for selected Part B drugs in 2028, in each case absent certain disqualifying events.

• Medicare Inflation Based Rebates .

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If approved, we expect that aflibercept 8 mg will be entering a highly competitive environment;

and our success in potentially commercializing aflibercept 8 mg will depend on a number of factors, including the extent to which we and our collaborators are able to differentiate aflibercept 8 mg from competitive products and the applicability of any restrictions imposed by payors at the time, such as step therapy.

and our success in potentially commercializing aflibercept 8 mg will depend on a number of factors, including the relative timing of any commercial launch of aflibercept 8 mg as compared to relevant competition, the extent to which we and our collaborators are able to differentiate aflibercept 8 mg from competitive products, and the applicability of any restrictions imposed by payors at the time, such as step therapy.

The market for Dupixent's current and potential future indications is also increasingly competitive.

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Our VelocImmune ® technology, other antibody generation technologies, and late-stage and earlier-stage clinical candidates face competition from many pharmaceutical and biotechnology companies using various technologies, including antibody generation technologies and other approaches such as RNAi, chimeric antigen receptor T cell (CAR-T cell), and gene therapy technologies.

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

For example, we are aware of other pharmaceutical and biotechnology companies actively engaged in the

research and development of antibody-based products against targets that are also the targets of our early- and late-stage product candidates.

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

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Therefore, termination of the Bayer collaboration agreement or our Antibody Collaboration would create substantial new and additional risks to the successful commercialization of the applicable products, particularly outside the United States.

For additional information regarding our collaborations with Bayer and Sanofi, see "Risks Related to Our Reliance on or Transactions with Third Parties - If our collaboration with Bayer for EYLEA is terminated, or Bayer materially breaches its obligations thereunder, our business, prospects, operating results, and financial condition, and our ability to continue to commercialize EYLEA outside the United States would be materially harmed " below and "Risks Related to Our Reliance on or Transactions with Third Parties - If our Antibody Collaboration with Sanofi is terminated, or Sanofi materially breaches its obligations thereunder, our business, prospects, operating results, and financial

condition, and our ability to develop, manufacture, and commercialize certain of our products and product candidates in the time expected, or at all, would be materially harmed " below.

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

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

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

Prices for our marketed products in jurisdictions outside the United States are based on

local market economics and competition and are likely to differ from country to country.

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

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

For the three months ended March 31, 2023 and 2022, our gross product sales of such products to two customers accounted on a combined basis for 77% and 85% of our total gross product revenue, respectively.

For the six months ended June 30, 2023 and 2022, our gross product sales of such products to two customers accounted on a combined basis for 76% and 85% of our total gross product revenue, respectively.

We expect significant customer concentration to continue for the foreseeable future.

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Although we believe we can find additional distributors, if necessary, our revenue during any period of disruption could suffer and we might incur additional costs.

In addition, these customers are responsible for a significant portion

of our net trade accounts receivable balances.

In addition, these customers are responsible for a significant portion of our net trade accounts receivable balances.

The loss of any large customer, a significant reduction in sales we make to them, any cancellation of orders they have made with us, or any failure to pay for the products we have shipped to them could adversely affect our results of operations.

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We will need to establish some or all of these capabilities outside the United States for any product we decide to independently commercialize or co-commercialize outside the United States.

For example, in 2022, we and Sanofi amended the IO Collaboration to transfer all rights to develop, commercialize, and manufacture Libtayo exclusively to our Company, on a worldwide basis, over the course of a defined transition period, and we will need to establish certain sales, marketing, distribution, and manufacturing capabilities for Libtayo to support certain markets outside the United States.

We will also need to obtain and/or maintain regulatory approvals for Libtayo in many jurisdictions outside of the United States.

In addition, following the exercise of our option under the Antibody Collaboration to co-commercialize Dupixent in certain jurisdictions outside the United States, we have established certain commercial capabilities for Dupixent in some of these jurisdictions and are in the process of establishing these capabilities in others.

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

For example, in 2022, we and Sanofi amended the IO Collaboration to transfer all rights to develop, commercialize, and manufacture Libtayo exclusively to our Company, on a worldwide basis, over the course of a defined transition period, and we will need to fully establish certain sales, marketing, distribution, and/or manufacturing capabilities for Libtayo to support markets outside the United States.

We will also need to obtain and/or maintain regulatory approvals and secure pricing and reimbursement for Libtayo in many jurisdictions outside of the United States, including Europe and Japan.

In addition, following the exercise of our option under the Antibody Collaboration to co-commercialize Dupixent in certain jurisdictions outside the United States, we have established certain co-commercialization capabilities for Dupixent in some of

these jurisdictions and are in the process of establishing these capabilities in others.

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

we are unable to find an appropriate collaborator;

or an existing collaborator decides to opt out or breaches its obligations to us with respect to a particular product.

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

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

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

We cannot be certain that we will be able to successfully develop commercial capabilities outside the United States (particularly as it relates to Libtayo, for which we plan to expand our global commercialization footprint as noted above) within an acceptable time frame, without incurring substantial expenses, or at all.

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

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Depending on the extent of these or any other studies that might be required, approval of any applications that we submit may be delayed significantly, or we may be required to expend more resources.

also possible that any such additional studies, if performed and completed, may not be considered sufficient by the FDA to make our applications approvable.

It is also possible that any such additional studies, if performed and completed, may not be considered sufficient by the FDA to make our applications approvable.

If any of these outcomes occur, we may be forced to delay or abandon our applications for approval.

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The FDA has the explicit authority to require post-marketing studies (also referred to as post-approval or Phase 4 studies), labeling changes based on new safety information, and compliance with FDA-approved risk evaluation and mitigation strategies.

Post-approval studies, whether conducted by us or by others and whether mandated by regulatory agencies or voluntary, and other data about our marketed products (or data about products similar to our marketed products that implicate an entire class of products or are perceived to do so) may result in changes in product labeling, restrictions on use, product withdrawal or recall, loss of approval, or lower sales of our products.

perceived to do so) may result in changes in product labeling, restrictions on use, product withdrawal or recall, loss of approval, or lower sales of our products.

Obligations equivalent in scope, but which can vary widely in application, apply in foreign countries.

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In addition, the FDA may later decide that any of our development programs no longer meets the conditions for a beneficial regulatory designation (including due to factors beyond our control, such as intervening competitive developments) or decide that the time period for FDA review or approval will not be shortened.

Recent FDA draft guidance relating to accelerated approval of oncology therapeutics indicates that a confirmatory trial for a particular oncology product candidate should be underway when the related BLA is submitted to the FDA and also states that the FDA may require that a confirmatory trial for a particular oncology product candidate be well underway, if not fully enrolled, by the time of the accelerated approval action.

Application of this guidance to our product candidates may result in a delay of the FDA review and approval process despite any earlier beneficial regulatory designation such product candidates may have received.

The FDA and comparable foreign regulatory authorities enforce Good Clinical Practice requirements ("GCPs") and other regulations and legal requirements through periodic inspections of trial sponsors, clinical research organizations ("CROs"), principal investigators, and trial sites.

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Before approving a new drug or biologic product, the FDA and such comparable foreign regulatory authorities require that the facilities at which the product will be manufactured or advanced through the supply chain be in compliance with current Good Manufacturing Practices, or cGMP, requirements and regulations governing the manufacture, shipment, and storage of the product.

Additionally, manufacturers of biological products and their facilities are subject to payment of substantial user fees

and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations and adherence to any commitments made in the applicable BLA.

Additionally, manufacturers of biological products and their facilities are subject to payment of substantial user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations and adherence to any commitments made in the applicable BLA.

These cGMP requirements and regulations are not prescriptive instructions on how to manufacture products, but rather a series of principles that must be observed during manufacturing;

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If we or any of our third-party manufacturers, product packagers, labelers, or other parties performing steps in the supply chain are unable to maintain regulatory compliance with cGMP, the FDA and comparable foreign regulatory authorities can impose monetary penalties or other civil or criminal sanctions, including, among other things, refusal to approve a pending application for a new drug or biologic product, or revocation of a pre-existing approval.

For example, in June 2023, the FDA issued a CRL concerning the Company's BLA for aflibercept 8 mg for the treatment of wet AMD, DME, and DR due to unresolved observations resulting from an inspection at the contract manufacturing organization Catalent.

This has resulted in a delay of the potential FDA approval of aflibercept 8 mg, and may also impact the FDA's upcoming decision on the BLA for

pozelimab monotherapy for the ultra-rate CHAPLE disease (which is filled on the same manufacturing line in Catalent's facility that is used to fill vials with aflibercept 8 mg).

While we have since resubmitted the BLA for aflibercept 8 mg, the BLA resubmission still needs to be supplemented with the Catalent manufacturing data and other information and it is uncertain whether and how timely the issues identified in the aflibercept 8 mg CRL will be resolved.

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In addition to the standard drug approval process, the Secretary of the U.S.

Department of Health and Human Services ("HHS") may authorize the issuance of, and the FDA Commissioner may issue, an EUA to allow an unapproved medical product to be used in an emergency based on criteria established by the Food, Drug, and Cosmetic Act, including that the product at issue may be effective in diagnosing, treating, or preventing serious or life-threatening diseases when there are no adequate, approved, and available alternatives.

Department of Health and Human Services ("HHS") may authorize the issuance of, and the FDA Commissioner may issue, an Emergency Use Authorization ("EUA") to allow an unapproved medical product to be used in an emergency based on criteria established by the Food, Drug, and Cosmetic Act, including that the product at issue may be effective in diagnosing, treating, or preventing serious or life-threatening diseases when there are no adequate, approved, and available alternatives.

An EUA terminates when the emergency determination underlying the EUA terminates.

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From time to time, we may hold a product's marketing approval in a jurisdiction outside the United States where we may have less experience and where our regulatory capabilities may be more limited;

this will be the case for Libtayo in many jurisdictions outside the United States (including Europe and Japan) once we complete the transition from Sanofi pursuant to the amendment to the IO Collaboration discussed above.

In addition, actions by a regulatory agency in a country or region with respect to a product candidate may have an impact on the approval process for that product candidate in another country or region.

Foreign regulatory authorities may ask for additional data in order to begin a clinical study, including Phase 3 clinical trials required to submit a MAA in the EU.

Foreign regulatory authorities may ask for additional data in order to begin a clinical study, including Phase 3 clinical trials required to submit a Marketing Authorization Application ("MAA") in the EU.

In addition, such authorities often have the authority to require post-approval studies, such as a post-authorization safety study ("PASS") and/or post-authorization efficacy study ("PAES"), which involve various risks similar to those described above.

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Any such clinical program delays or terminations may adversely affect our business.

Many of our clinical trials are conducted under the oversight of Independent Data Monitoring Committees ("IDMCs").

Many of our clinical trials are conducted under the oversight of IDMCs.

These independent oversight bodies are made up of external experts who review the progress of ongoing clinical trials, including available safety and efficacy data, and make recommendations concerning a trial's continuation, modification, or termination based on interim, unblinded data.

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If additional clinical experience indicates that any of our product candidates or new indications for our marketed products has many side effects or causes serious or life-threatening side effects, the development of the product candidate may be delayed or fail, or, if the product candidate has received regulatory approval, such approval may be revoked, which would severely harm our business, prospects, operating results, and financial condition.

With respect to EYLEA and aflibercept 8 mg, there are many potential safety concerns associated with significant blockade of VEGF that may limit our ability to further successfully commercialize EYLEA and to obtain regulatory approval for aflibercept

These serious and potentially life-threatening risks, based on clinical and preclinical experience of VEGF inhibitors, include bleeding, intestinal perforation, hypertension, proteinuria, congestive heart failure, heart attack, and stroke.

These serious and potentially life-threatening risks, based on clinical and preclinical experience of VEGF inhibitors,

include bleeding, intestinal perforation, hypertension, proteinuria, congestive heart failure, heart attack, and stroke.

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

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For example, in the United States and the EU, EYLEA is approved in the 2mg pre-filled syringe.

The success of our products and product candidates may depend to a significant extent on the performance of such devices, some of which may be novel or comprised of

complex components.

Given the increased complexity of the review process when approval of the product and device is sought under a single marketing application and the additional risks resulting from a product candidate's designation as a combination product discussed below, our product candidates used with such drug-delivery devices may be substantially delayed in receiving regulatory approval or may not be approved at all.

The success of our products and product candidates may depend to a significant extent on the performance of such devices, some of which may be novel or comprised of complex components.

Given the increased complexity of the review process when approval of the product and device is sought

under a single marketing application and the additional risks resulting from a product candidate's designation as a combination product discussed below, our product candidates used with such drug-delivery devices may be substantially delayed in receiving regulatory approval or may not be approved at all.

The FDA review process and criteria for such applications are not well established, which could also lead to delays in the approval process.

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If our trade secrets are improperly disclosed, by our current or former employees, our collaborators, or otherwise, it could help our competitors and adversely affect our business.

Our ability to protect our trade secrets may be impaired by a number of risks and uncertainties, including those discussed under "Other Regulatory and Litigation Risks - Increasing use of social media and artificial intelligence-based platforms could give rise to liability, breaches of data security and privacy laws, or reputational damage " and "Other Risks Related to Our Business - Significant disruptions of information technology systems or breaches of data security could adversely affect our business " below.

We will be able to protect our proprietary rights only to the extent that our proprietary technologies and other information are covered by valid and enforceable patents or are effectively maintained as trade secrets.

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Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions or our ability to obtain, maintain, and enforce our intellectual property rights.

Any such changes could

also affect the value of our intellectual property or narrow the scope of our patents.

Any such changes could also affect the value of our intellectual property or narrow the scope of our patents.

We cannot be certain that our intellectual property rights related to any current or future product or product candidate or technology would not be eliminated, narrowed, or weakened by any such change or other rulemaking.

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

For example, we and/or Sanofi are currently party to patent infringement proceedings initiated by Amgen against us and/or Sanofi relating to Praluent, as described in Note 11 to our Condensed Consolidated Financial Statements.

In addition, we are currently party to patent infringement and other proceedings relating to EYLEA and REGEN-COV, as described in Note 11 to our Condensed Consolidated Financial Statements.

For example, we are currently party to patent infringement and other proceedings relating to EYLEA and REGEN-COV, as described in Note 11 to our Condensed Consolidated Financial Statements.

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

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In addition, we rely on certain third parties or our collaborators to perform filling, finishing, distribution, laboratory testing, and other services related to the manufacture of our marketed products and product candidates, and to supply various raw materials and other products.

We would be unable to obtain these raw materials, other products, or services for an indeterminate period of time if any of these third parties were to cease or interrupt production or otherwise fail to supply these materials, products, or services to us for any reason, including due to regulatory requirements or actions (including recalls), adverse financial developments at or affecting the supplier, failure by the supplier to comply with cGMPs, contaminations, business interruptions, or labor shortages or disputes (in each case, including as a result of the COVID-19 pandemic and Russia's invasion of Ukraine, which have exacerbated many of these issues).

In any such circumstances, we may not be able to engage a backup or alternative supplier or service provider in a timely manner or at all.

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Certain of the raw materials required in the manufacture and testing of our products and product candidates may be derived from biological sources, including mammalian tissues, bovine serum, and human serum albumin.

There are certain regulatory restrictions on using these biological source materials.

There are certain regulatory

restrictions on using these biological source materials.

If we or our collaborators are required to substitute for these sources to comply with such regulatory requirements, our clinical development or commercial activities may be delayed or interrupted.

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Any finding of non-compliance could also increase our costs, cause us to delay the development of our product candidates, result in delay in our obtaining, or our not obtaining, regulatory approval of product candidates or new indications for our marketed products, and cause us to lose revenue from any marketed products, which could be seriously detrimental to our business, prospects, operating results, and financial condition.

Significant noncompliance could also result in the imposition of monetary penalties or other civil or criminal sanctions and damage our reputation.

This has resulted in a delay of the potential FDA approval of aflibercept 8 mg and may also impact the FDA's upcoming decision on the BLA for pozelimab monotherapy for the ultra-rare CHAPLE disease (with a target action date of August 20, 2023), which is filled on the same manufacturing line in Catalent's facility that is used to fill vials with aflibercept 8 mg.

While Catalent has been working closely with the FDA to address the findings and we have since resubmitted the BLA for aflibercept 8 mg, the BLA resubmission still needs to be supplemented with the Catalent manufacturing data and other information (collectively, "supplemental Catalent information") and it is, therefore, uncertain whether and how timely the issues identified in the aflibercept 8 mg CRL will be resolved.

The FDA has informed us that its review of the supplemental Catalent information in the context of the pozelimab BLA will support actions for both the pozelimab BLA and the aflibercept 8 mg BLA resubmission and that it will prioritize its review.

However, the FDA has also noted that it may not be able to complete its review by the pozelimab BLA target action date and that it may consider the supplemental Catalent information submission to constitute a major amendment to the pozelimab BLA, thereby extending the review of the pozelimab BLA by up to three months from the pozelimab BLA target action date and also further delaying the FDA's decision on the aflibercept 8 mg BLA resubmission.

In addition, if the FDA concludes that the supplemental Catalent information is insufficient to resolve the issues identified in the aflibercept 8 mg CRL, the FDA may require in its sole discretion additional quality-related studies, data, facility reinspections, or other information demonstrating compliance with applicable cGMP regulations and FDA guidance, further extending the timing of the FDA's review beyond what is discussed above.

Therefore, the timing and outcome of the completion of the FDA's review of the aflibercept 8 mg BLA resubmission and the pozelimab BLA are uncertain, and the potential FDA approval of aflibercept 8 mg and pozelimab may be delayed beyond what is currently expected.

Significant noncompliance with the requirements discussed in this paragraph could also result in the imposition of monetary penalties or other civil or criminal sanctions and damage our reputation.

Other Regulatory and Litigation Risks

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Even in a circumstance in which we do not believe that an adverse event is related to our products or product candidates, the related investigation may be time consuming or inconclusive and may have a negative impact on our reputation or business.

We may face product liability claims and be found responsible even if injury arises from the acts or omissions of third parties who provide fill/finish or other services.

We may face product liability claims and be found responsible even if injury arises from the acts or

omissions of third parties who provide fill/finish or other services.

To the extent we maintain product liability insurance in relevant periods, such insurance may not cover all potential liabilities or may not completely cover any liability arising from any such litigation.

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We also have similar reporting obligations in other countries based on laws, regulations, and/or industry trade association requirements.

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

We continue to dedicate significant resources to comply with these requirements and need to be prepared to comply with additional reporting obligations outside the United States.

In addition, several states have legislation requiring pharmaceutical companies to establish marketing compliance programs, file periodic reports with the state, or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities;

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Moreover, under a final regulation effective January 13, 2021, HRSA established an ADR process for claims by covered entities that a manufacturer has engaged in overcharging, and by manufacturers that a covered entity violated the prohibitions against diversion or duplicate discounts.

Such claims are to be resolved through an ADR panel of government officials rendering a decision that could be appealed only in federal court.

Such claims are to be resolved through an ADR panel of government officials rendering a decision that could be appealed only

in federal court.

An ADR proceeding could subject us to onerous procedural requirements and could result in additional liability.

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Failure to make necessary disclosures or to identify contract overcharges can result in allegations against us under the False Claims Act and other laws and regulations.

Unexpected refunds to the government, and/or response to a government

investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations, and future prospects.

Unexpected refunds to the government, and/or response to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations, and future prospects.

Risks from the improper conduct of employees, agents, contractors, or collaborators could adversely affect our reputation and our business, prospects, operating results, and financial condition.

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For example, in March 2022, the SEC proposed new rules for extensive and prescriptive climate-related disclosure in annual reports and registration statements, which would also require inclusion of certain climate-related financial metrics in companies' audited financial statements.

Also in March 2022, the SEC proposed rules that are intended to enhance and standardize disclosures regarding cybersecurity risk management, strategy, and governance, as well as cybersecurity incident reporting, by public companies.

In July 2023, the SEC adopted new rules that are intended to enhance and standardize disclosures regarding cybersecurity risk management, strategy, and governance, as well as cybersecurity incident reporting, by public companies.

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

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We have operations and conduct business in several countries outside the United States and we plan to significantly expand the scope of these activities in existing and/or additional countries.

For example, as discussed above, we will need to establish commercial capabilities related to Libtayo in certain markets outside the United States following the amendment to the IO Collaboration;

For example, as discussed above, we will need to establish commercial capabilities related to Libtayo in many jurisdictions outside the United States following the amendment to the IO Collaboration;

and we perform co-commercialization activities under the Antibody Collaboration related to Dupixent in certain jurisdictions outside the United States.

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

Violations of the GDPR carry significant financial penalties for noncompliance (including possible fines of up to 4% of global annual turnover for the preceding financial year or €20 million (whichever is higher)).

Violations of the GDPR carry significant financial penalties for noncompliance (including possible fines of up to 4% of global annual turnover for the

preceding financial year or €20 million (whichever is higher)).

In addition to the GDPR, certain EU Member States have issued or will be issuing their own implementation legislation.

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Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly receive PHI from a health care provider or research institution that has not satisfied HIPAA's requirements for its disclosure.

There are instances where we collect and maintain personal data, which may include

health information that is outside the scope of HIPAA but within the scope of state health privacy laws or similar state level privacy legislation.

There are instances where we collect and maintain personal data, which may include health information that is outside the scope of HIPAA but within the scope of state health privacy laws or similar state level privacy legislation.

This information may be received throughout the clinical trial process, in the course of our research collaborations, directly from individuals who enroll in our patient assistance programs, and from our own employees in a pandemic response process (such as in connection with the COVID-19 pandemic).

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These laws and regulations are constantly evolving and may impose limitations on our business activities.

Several other U.S.

states have introduced similar consumer protection laws, some of which are set to go into effect in the near future.

Additional state consumer privacy laws are expected to come into effect in 2023 and in 2024-2025.

Notably, these state laws provide more restrictions on the use of sensitive personal data, including health information.

These states require robust consent and authorizations prior to any collection or use of this data, which may have a large impact on our ability to market to individuals in these jurisdictions based on their health conditions.

At the federal level, Section 5 of the FTC Act is a consumer protection law that bars unfair and deceptive acts and practices and requires, among other things, companies to notify individuals that they will safeguard their personal data and that they will fulfil the commitments made in their privacy notices.

The FTC has brought legal actions against organizations that have violated consumers' privacy rights or have misled them by failing to maintain appropriate security.

For example, in 2023 to date the FTC issued several enforcement actions related to privacy in the healthcare space, under both Section 5 of the FTC Act and the Health Breach Notification Rule, involving companies allegedly using consumer health data for marketing purposes in violation of their own policies and assurances.

Furthermore, health privacy laws, data breach notification laws, consumer protection laws, data localization laws, and genetic privacy laws may apply directly to our operations and/or those of our collaborators and may impose restrictions on our collection, use, and dissemination of individuals' health and other personal data.

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Moreover, individuals about whom we or our collaborators obtain health or other personal data, as well as the providers and third parties who share this information with us, may have statutory or contractual limits that impact our ability to use and disclose the information.

We are likely to be required to expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data security laws both inside and outside the United States.

We are likely to be required to expend significant capital and other resources to ensure ongoing

compliance with applicable privacy and data security laws both inside and outside the United States.

Many of these laws differ from each other in significant ways and have different effects.

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Any threatened or actual government enforcement action could also generate adverse publicity and require that we devote substantial resources that could otherwise be used in other aspects of our business.

Increasing use of social media could give rise to liability, breaches of data security, or reputational damage.

Increasing use of social media and artificial intelligence-based platforms could give rise to liability, breaches of data security and privacy laws, or reputational damage.

We and our employees are increasingly utilizing social media tools as a means of communication both internally and externally.

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Furthermore, negative posts or comments about us or our products in social media could seriously damage our reputation, brand image, and goodwill.

Additionally, artificial intelligence ("AI")-based platforms, including generative AI platforms, are increasingly being used in the biopharmaceutical industry.

The use of public AI platforms by our employees or third parties on which we rely with access to our proprietary and confidential information, including trade secrets, may continue to increase and may lead to the public disclosure of such information, which may impact our ability to realize the benefit of our intellectual property or comply with data security and privacy laws.

Any of these events could have a material adverse effect on our business, prospects, operating results, and financial condition and could adversely affect the price of our Common Stock.

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We also depend, or will depend, on some of these or other third parties in connection with the commercialization of our marketed products and our product candidates and new indications for our marketed products if they are approved for marketing.

or other relevant constraints, such as due to Russia's invasion of Ukraine) or in compliance with applicable GMPs, GLPs, or GCP standards, we could experience additional costs, delays, and difficulties in the manufacture or development of, or in obtaining approval by regulatory authorities for, or successfully commercializing our product candidates.

If any of our existing collaborators or service providers breaches or terminates its agreement with us or does not perform its development or manufacturing services under an agreement in a timely manner (including as a result of its inability to perform due to financial or other relevant constraints, such as due to Russia's invasion of Ukraine) or in compliance with applicable GMPs, GLPs, or GCP standards, we could experience additional costs, delays, and difficulties in the manufacture or development of, or in obtaining approval by regulatory authorities for, or successfully commercializing our product candidates.

See also "Risks Related to Manufacturing and Supply - Our or our collaborators' failure to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates could result in incurring substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if regulatory approval is obtained, and a reduction in sales.

We and our collaborators rely on third-party service providers to support the distribution of our marketed products and for many other related activities in connection with the commercialization of these marketed products.

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The diversion of our management’s attention and any delay or difficulties encountered in connection with any acquisitions we may consummate could result in the disruption of our ongoing business or inconsistencies in standards and controls that could negatively affect our ability to maintain third-party relationships.

Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses, products, or product candidates, which may result in dilution for shareholders or the incurrence of indebtedness.

Moreover, we may need to raise additional funds through public or private debt

or equity financing to acquire any businesses, products, or product candidates, which may result in dilution for shareholders or the incurrence of indebtedness.

As part of our efforts to acquire companies, businesses, products, or product candidates or to enter into other significant transactions, we will conduct business, legal, and financial due diligence with the goal of identifying and evaluating material risks involved in the transaction.

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• Impacts on our clinical trials due to delays in site initiation and patient enrollment as a result of prioritization of hospital resources to address the public health outbreak, epidemic, or pandemic, patients' inability to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, and restrictions on trial initiations imposed by hospitals and other trial sites.

Similarly, our ability to recruit and retain patients and principal investigators and site staff could be delayed or disrupted.

Similarly, our ability to recruit and retain patients and principal

investigators and site staff could be delayed or disrupted.

Any such disruptions could negatively impact the progress of our clinical trials, including the readouts of trial results, the timing of regulatory review, and any anticipated program milestones.

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We may require additional financing in the future and we may not be able to raise additional funds on acceptable terms or at all.

For example, there is no guarantee that we will have the ability to pay the principal amount due on

our senior unsecured notes at maturity or redeem, repurchase, or refinance the notes prior to maturity on acceptable terms or at all.

For example, there is no guarantee that we will have the ability to pay the principal amount due on our senior unsecured notes at maturity or redeem, repurchase, or refinance the notes prior to maturity on acceptable terms or at all.

In addition, in March 2022, we completed an extension of the $720.0 million lease financing for our existing corporate headquarters and other rentable area consisting of approximately 150 acres of predominately office buildings and laboratory space located in Tarrytown, New York, which is set to expire in March 2027.

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

As of March 31, 2023, we had an aggregate of $2.702 billion of outstanding indebtedness under our senior unsecured notes and the lease financing facility.

As of June 30, 2023, we had an aggregate of $2.702 billion of outstanding indebtedness under our senior unsecured notes and the lease financing facility.

We may also incur additional debt in the future.

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

As of March 31, 2023, we had $3.916 billion in cash and cash equivalents and $11.110 billion in marketable securities (including $1.059 billion in equity securities).

As of June 30, 2023, we had $1.937 billion in cash and cash equivalents and $13.318 billion in marketable securities (including $1.028 billion in equity securities).

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

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• whether our net product sales and net profits underperform, meet, or exceed the expectations of investors or analysts;

• announcement of actions by the FDA or foreign regulatory authorities or their respective advisory committees regarding our, or our collaborators', or our competitors', currently pending or future application(s) for regulatory approval of product candidate(s) or new indications for marketed products;

• announcement of submission of an application for regulatory approval of one or more of our, or our competitors', product candidates or new indications for marketed products;

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

As of April 11, 2023, our five largest shareholders plus Dr.

Schleifer, our Chief Executive Officer, beneficially owned approximately 40.4% of our outstanding shares of Common Stock, assuming, in the case of our Chief Executive Officer, the conversion of his Class A Stock into Common Stock and the exercise of all options held by him which are exercisable within 60 days of April 11, 2023.

As of June 30, 2023, our five largest shareholders plus Dr.

Schleifer, our Chief Executive Officer, beneficially owned approximately 39.4% of our outstanding shares of Common Stock, assuming, in the case of our Chief Executive Officer, the conversion of his Class A Stock into Common Stock and the exercise of all options held by him which are exercisable within 60 days of June 30, 2023.

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

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

In November 2021, our board of directors authorized a share repurchase program to repurchase up to $3.0 billion of our Common Stock;

and, in January 2023, our board of directors authorized an additional $3.0 billion for share repurchases (of which $3.051 billion remained available in the aggregate as of March 31, 2023).

In January 2023, our board of directors authorized a share repurchase program to repurchase up to $3.0 billion of our Common Stock (of which $2.332 billion remained available as of June 30, 2023).

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

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

As of April 11, 2023, holders of Class A Stock held 14.4% of the combined voting power of all shares of Common Stock and Class A Stock then outstanding.

As of June 30, 2023, holders of Class A Stock held 14.5% of the combined voting power of all shares of Common Stock and Class A Stock then outstanding.

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

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

As of April 11, 2023:

• our current executive officers and directors beneficially owned 7.0% of our outstanding shares of Common Stock, assuming conversion of their Class A Stock into Common Stock and the exercise of all options held by such persons which are exercisable within 60 days of April 11, 2023, and 18.4% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by such persons which are exercisable within 60 days of April 11, 2023;

As of June 30, 2023:

• our current executive officers and directors beneficially owned 6.1% of our outstanding shares of Common Stock, assuming conversion of their Class A Stock into Common Stock and the exercise of all options held by such persons which are exercisable within 60 days of June 30, 2023, and 17.8% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by such persons which are exercisable within 60 days of June 30, 2023;

• our five largest shareholders plus Dr.

In addition, these five shareholders plus our Chief Executive Officer held approximately 47.4% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by our Chief Executive Officer which are exercisable within 60 days of April 11, 2023.

In addition, these five shareholders plus our Chief Executive Officer held approximately 46.6% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by our Chief Executive Officer which are exercisable within 60 days of June 30, 2023.

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

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

What changed 10-Q

Item 1A. Risk Factors