Item 1. Financial Statements
Item 1. Financial Statements
REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except per share data)
June 30, December 31,
2023 2022
ASSETS
Current assets:
Cash and cash equivalents $ 1,937.2 $ 3,105.9
Marketable securities 6,990.5 4,636.4
Accounts receivable, net 5,121.3 5,328.7
Inventories 2,507.7 2,401.9
Prepaid expenses and other current assets 366.3 411.2
Total current assets 16,923.0 15,884.1
Marketable securities 6,327.2 6,591.8
Property, plant, and equipment, net 3,922.6 3,763.0
Intangible assets, net 953.0 915.5
Deferred tax assets 2,138.5 1,723.7
Other noncurrent assets 393.2 336.4
Total assets $ 30,657.5 $ 29,214.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 547.3 $ 589.2
Accrued expenses and other current liabilities 2,176.0 2,074.2
Deferred revenue 381.1 477.9
Total current liabilities 3,104.4 3,141.3
Long-term debt 1,982.2 1,981.4
Finance lease liabilities 720.0 720.0
Deferred revenue 116.2 69.8
Other noncurrent liabilities 716.8 638.0
Total liabilities 6,639.6 6,550.5
Stockholders' equity:
Preferred Stock, par value $ .01 per share; 30.0 shares authorized; issued and outstanding - no ne
— —
Class A Stock, convertible, par value $ .001 per share; 40.0 shares authorized; shares issued and outstanding - 1.8 in 2023 and 2022
— —
Common Stock, par value $ .001 per share; 320.0 shares authorized; shares issued - 131.6 in 2023 and 130.4 in 2022
0.1 0.1
Additional paid-in capital 10,888.5 9,949.3
Retained earnings 25,092.9 23,306.7
Accumulated other comprehensive loss ( 197.7 ) ( 238.8 )
Treasury Stock, at cost; 24.5 shares in 2023 and 22.6 shares in 2022
( 11,765.9 ) ( 10,353.3 )
Total stockholders' equity 24,017.9 22,664.0
Total liabilities and stockholders' equity $ 30,657.5 $ 29,214.5
The accompanying notes are an integral part of the financial statements.
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REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
(In millions, except per share data)
Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
Statements of Operations
Revenues:
Net product sales $ 1,772.1 $ 1,754.4 $ 3,440.1 $ 3,393.0
Collaboration revenue 1,316.7 1,043.6 2,694.8 2,276.1
Other revenue 69.3 59.2 185.3 153.2
3,158.1 2,857.2 6,320.2 5,822.3
Expenses:
Research and development 1,085.3 794.3 2,186.5 1,638.1
Acquired in-process research and development — 197.0 56.1 225.1
Selling, general, and administrative 652.0 476.3 1,253.1 926.3
Cost of goods sold 192.4 149.2 400.8 356.5
Cost of collaboration and contract manufacturing 212.5 147.9 461.6 345.5
Other operating (income) expense, net ( 0.6 ) ( 17.4 ) ( 1.1 ) ( 37.6 )
2,141.6 1,747.3 4,357.0 3,453.9
Income from operations 1,016.5 1,109.9 1,963.2 2,368.4
Other income (expense):
Other income (expense), net 85.3 ( 133.6 ) 14.6 ( 317.4 )
Interest expense ( 18.9 ) ( 13.1 ) ( 36.9 ) ( 26.7 )
66.4 ( 146.7 ) ( 22.3 ) ( 344.1 )
Income before income taxes 1,082.9 963.2 1,940.9 2,024.3
Income tax expense 114.5 111.1 154.7 198.7
Net income $ 968.4 $ 852.1 $ 1,786.2 $ 1,825.6
Net income per share - basic $ 9.05 $ 7.90 $ 16.69 $ 17.01
Net income per share - diluted $ 8.50 $ 7.47 $ 15.68 $ 16.07
Weighted average shares outstanding - basic 107.0 107.9 107.0 107.3
Weighted average shares outstanding - diluted 113.9 114.0 113.9 113.6
Statements of Comprehensive Income
Net income $ 968.4 $ 852.1 $ 1,786.2 $ 1,825.6
Other comprehensive income (loss), net of tax:
Unrealized (loss) gain on debt securities ( 15.7 ) ( 53.7 ) 41.5 ( 198.6 )
Loss on foreign currency translation ( 0.4 ) — ( 0.4 ) —
Unrealized gain on cash flow hedges — — — 1.0
Comprehensive income $ 952.3 $ 798.4 $ 1,827.3 $ 1,628.0
The accompanying notes are an integral part of the financial statements.
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REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(In millions)
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, 2022 1.8 $ — 130.4 $ 0.1 $ 9,949.3 $ 23,306.7 $ ( 238.8 ) ( 22.6 ) $ ( 10,353.3 ) $ 22,664.0
Issuance of Common Stock for equity awards granted under long-term incentive plans
— — 1.1 — 491.3 — — — — 491.3
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations
— — ( 0.1 ) — ( 99.2 ) — — — — ( 99.2 )
Issuance/distribution of Common Stock for 401(k) Savings Plan
— — — — 18.9 — — — 1.7 20.6
Repurchases of Common Stock
— — — — — — — ( 0.9 ) ( 693.9 ) ( 693.9 )
Stock-based compensation charges — — — — 237.4 — — — — 237.4
Net income — — — — — 817.8 — — — 817.8
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
— — 0.2 — 80.7 — — — — 80.7
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations
— — — — ( 14.0 ) — — — — ( 14.0 )
Issuance/distribution of Common Stock for 401(k) Savings Plan
— — — — 16.1 — — — 2.4 18.5
Repurchases of Common Stock
— — — — — — — ( 1.0 ) ( 722.8 ) ( 722.8 )
Stock-based compensation charges — — — — 208.0 — — — — 208.0
Net income — — — — — 968.4 — — — 968.4
Other comprehensive loss, net of tax — — — — — — ( 16.1 ) — — ( 16.1 )
Balance, June 30, 2023 1.8 $ — 131.6 $ 0.1 $ 10,888.5 $ 25,092.9 $ ( 197.7 ) ( 24.5 ) $ ( 11,765.9 ) $ 24,017.9
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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
Issuance of Common Stock for equity awards granted under long-term incentive plans — — 1.6 — 593.7 — — — — 593.7
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations — — ( 0.2 ) — ( 105.8 ) — — — — ( 105.8 )
Issuance/distribution of Common Stock for 401(k) Savings Plan — — — — 12.8 — — — 1.7 14.5
Repurchases of Common Stock — — — — — — — ( 0.5 ) ( 352.0 ) ( 352.0 )
Stock-based compensation charges — — — — 165.9 — — — — 165.9
Net income — — — — — 973.5 — — — 973.5
Other comprehensive loss, net of tax — — — — — — ( 143.9 ) — — ( 143.9 )
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
— — 0.8 — 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
The accompanying notes are an integral part of the financial statements.
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REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Six Months Ended
June 30,
2023 2022
Cash flows from operating activities:
Net income $ 1,786.2 $ 1,825.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 202.6 148.7
Stock-based compensation expense 440.7 326.7
Losses on marketable and other securities, net 197.5 370.9
Other non-cash items, net 29.2 138.3
Deferred income taxes ( 425.8 ) ( 381.0 )
Acquired in-process research and development in connection with asset acquisition — 195.0
Changes in assets and liabilities:
Decrease in accounts receivable 207.4 875.1
Increase in inventories ( 147.2 ) ( 328.7 )
Increase in prepaid expenses and other assets ( 8.9 ) ( 288.5 )
(Decrease) increase in deferred revenue ( 50.4 ) 109.7
Increase (decrease) in accounts payable, accrued expenses, and other liabilities 158.7 ( 325.7 )
Total adjustments 603.8 840.5
Net cash provided by operating activities 2,390.0 2,666.1
Cash flows from investing activities:
Purchases of marketable and other securities ( 6,271.1 ) ( 3,774.9 )
Sales or maturities of marketable and other securities 4,061.5 2,181.4
Capital expenditures ( 291.2 ) ( 295.4 )
Payments for Libtayo intangible asset ( 121.8 ) —
Asset acquisition, net of cash acquired — ( 230.3 )
Net cash used in investing activities ( 2,622.6 ) ( 2,119.2 )
Cash flows from financing activities:
Proceeds from issuance of Common Stock 575.9 828.4
Payments in connection with Common Stock tendered for employee tax obligations ( 113.1 ) ( 147.7 )
Repurchases of Common Stock ( 1,399.5 ) ( 717.1 )
Net cash used in financing activities ( 936.7 ) ( 36.4 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 0.4 ) —
Net (decrease) increase in cash, cash equivalents, and restricted cash ( 1,169.7 ) 510.5
Cash, cash equivalents, and restricted cash at beginning of period 3,119.4 2,898.1
Cash, cash equivalents, and restricted cash at end of period $ 1,949.7 $ 3,408.6
The accompanying notes are an integral part of the financial statements.
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REGENERON PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Interim Financial Statements
Basis of Presentation
The interim Condensed Consolidated Financial Statements of Regeneron Pharmaceuticals, Inc. and its subsidiaries ("Regeneron," "Company," "we," "us," and "our") have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company's financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, these financial statements reflect all normal recurring adjustments and accruals necessary for a fair statement of the Company's condensed consolidated financial statements for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. The December 31, 2022 Condensed Consolidated Balance Sheet data were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Certain reclassifications have been made to prior period amounts to conform with the current period's presentation.
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2. Product Sales
Net product sales consist of the following:
Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2023 2022 2023 2022
EYLEA ®
U.S. $ 1,500.1 $ 1,621.2 $ 2,933.9 $ 3,138.8
Libtayo ®(a)
U.S. 130.2 90.9 239.9 169.8
ROW (b)
79.8 — 147.0 —
Praluent ®
U.S. 40.5 31.2 80.7 64.8
Evkeeza ®
U.S. 19.3 11.1 34.2 19.6
Inmazeb ®
U.S. 2.2 — 4.4 —
$ 1,772.1 $ 1,754.4 $ 3,440.1 $ 3,393.0
(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 records global net product sales of Libtayo. See Note 3 for further details.
(b) Rest of world ("ROW")
As of June 30, 2023 and December 31, 2022, the Company had $ 3.718 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 and six months ended June 30, 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
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
Besse Medical, a subsidiary of AmerisourceBergen Corporation
51 % 57 % 51 % 56 %
McKesson Corporation 25 % 28 % 25 % 29 %
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3. Collaboration, License, and Other Agreements
a. Sanofi
Amounts recognized in our Statements of Operations in connection with our collaborations with Sanofi are detailed below:
Statement of Operations Classification Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2023 2022 2023 2022
Antibody:
Regeneron's share of profits in connection with commercialization of antibodies Collaboration revenue $ 751.1 $ 496.6 $ 1,387.6 $ 911.9
Sales-based milestones earned Collaboration revenue $ — $ — $ — $ 50.0
Reimbursement for manufacturing of commercial supplies Collaboration revenue $ 192.6 $ 145.5 $ 354.5 $ 306.3
Other Collaboration revenue $ — $ 28.9 $ — $ 28.9
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 $ ( 14.5 ) $ 37.1 $ ( 40.9 ) $ 63.9
Reimbursement of commercialization-related expenses Reduction of SG&A expense $ 130.9 $ 110.8 $ 248.5 $ 202.5
Immuno-oncology (a) :
Regeneron's share of profits in connection with commercialization of Libtayo outside the United States Collaboration revenue $ — $ 3.9 $ — $ 6.7
Reimbursement for manufacturing of ex-U.S. commercial supplies Collaboration revenue $ — $ 2.6 $ — $ 4.6
Reimbursement of R&D expenses Reduction of R&D expense $ — $ 21.2 $ — $ 42.7
Reimbursement of commercialization-related expenses Reduction of SG&A expense $ — $ 22.4 $ — $ 41.4
Regeneron's obligation for its share of Sanofi commercial expenses SG&A expense $ — $ ( 10.7 ) $ — $ ( 19.9 )
Regeneron's obligation for Sanofi's share of Libtayo U.S. gross profits Cost of goods sold $ — $ ( 37.8 ) $ — $ ( 70.1 )
Amounts recognized in connection with up-front payments received Other operating income $ — $ 17.0 $ — $ 35.1
(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.
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Antibody
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 (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.
Sanofi leads commercialization activities for products under the Antibody Collaboration, subject to the Company's right to co-commercialize such products. In addition to profit and loss sharing, the Company is entitled to receive sales milestone payments from Sanofi. 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. 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:
June 30, December 31,
(In millions) 2023 2022
Accounts receivable, net $ 876.0 $ 692.3
Deferred revenue
$ 372.2 $ 415.8
Immuno-Oncology
The Company was previously a party to a collaboration with Sanofi for antibody-based cancer treatments in the field of immuno-oncology (the "IO Collaboration"). Under the terms of the Immuno-oncology License and Collaboration Agreement, the parties were co-developing and co-commercializing Libtayo. The parties shared equally, on an ongoing basis, development and commercialization expenses for Libtayo. The Company had principal control over the development of Libtayo and led commercialization activities in the United States, while Sanofi led commercialization activities outside of the United States. The parties shared equally in profits and losses in connection with the commercialization of Libtayo.
Effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide under an Amended and Restated Immuno-oncology License and Collaboration Agreement with Sanofi (the "A&R IO LCA"). 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.
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b. Bayer
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 is responsible for commercialization activities 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
June 30, Six Months Ended
June 30,
(In millions) 2023 2022 2023 2022
Regeneron's share of profits in connection with commercialization of EYLEA outside the United States Collaboration revenue $ 349.5 $ 339.7 $ 681.1 $ 678.1
Reimbursement for manufacturing of ex-U.S. commercial supplies Collaboration revenue $ 27.2 $ 17.8 $ 52.5 $ 42.8
One-time payment in connection with change in Japan arrangement
Collaboration revenue $ — $ — $ — $ 21.9
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 $ ( 12.0 ) $ 2.9 $ ( 25.4 ) $ 3.2
The following table summarizes contract balances in connection with the Company's Bayer collaboration:
June 30, December 31,
(In millions) 2023 2022
Accounts receivable, net $ 355.6 $ 348.2
Deferred revenue
$ 124.8 $ 131.9
c. Roche
The Company is a party to a collaboration agreement with Roche to develop, manufacture, and distribute the casirivimab and imdevimab antibody cocktail (known as REGEN-COV ® in the United States and Ronapreve ™ in other countries). 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.
Amounts recognized in the Company's Statements of Operations in connection with its Roche collaboration are as follows:
Statement of Operations Classification Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2023 2022 2023 2022
Global gross profit payment from Roche in connection with sales of Ronapreve Collaboration revenue $ — $ 8.2 $ 222.2 $ 224.5
Other Collaboration revenue $ ( 3.8 ) $ — $ ( 3.8 ) $ —
Reimbursement of research and development expenses from Roche was not material for the three and six months ended June 30, 2023 and 2022.
The following table summarizes contract balances in connection with the Company's Roche collaboration:
June 30, December 31,
(In millions) 2023 2022
Accounts receivable, net $ — $ 396.6
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d. Alnylam
In 2019, the Company and Alnylam entered into a global, strategic collaboration to discover, develop, and commercialize RNA interference ("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. In connection with entering into the collaboration, the Company made an up-front payment of $ 400.0 million to Alnylam, and also purchased shares of Alnylam common stock for $ 400.0 million. For each program, the Company provides Alnylam with a specified amount of funding at program initiation and at lead candidate designation, and Alnylam is eligible to receive two $ 100.0 million clinical proof-of-principle milestones for each of the eye and CNS programs (an aggregate of $ 200.0 million in development milestones). Under the terms of the collaboration, the parties plan to perform discovery research until designation of lead candidates. Following designation of a lead candidate, the parties may further advance such lead candidate under either a co-development/co-commercialization collaboration agreement ("Co-Co Collaboration Agreement") (under which the parties are advancing ALN-APP and ALN-PNP, which are currently in clinical development) or license agreement.
Amounts recognized in the Company's Statements of Operations in connection with its Alnylam collaboration were not material for the three and six months ended June 30, 2023 and 2022. In addition, contract balances in the Company's Balance Sheets were not material as of June 30, 2023 and December 31, 2022.
e. 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.
f. Checkmate
In May 2022, the Company completed its acquisition of Checkmate Pharmaceuticals, Inc. (“Checkmate”) for a total equity value of approximately $ 250 million. As a result of the transaction, which was accounted for as an asset 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.
4. Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted average number of shares of Common Stock and Class A Stock outstanding. Net income per share is presented on a combined basis, inclusive of Common Stock and Class A Stock outstanding, as each class of stock has equivalent economic rights. Diluted net income per share includes the potential dilutive effect of other securities as if such securities were converted or exercised during the period, when the effect is dilutive. The calculations of basic and diluted net income per share are as follows:
Three Months Ended
June 30, Six Months Ended
June 30,
(In millions, except per share data) 2023 2022 2023 2022
Net income - basic and diluted $ 968.4 $ 852.1 $ 1,786.2 $ 1,825.6
Weighted average shares - basic 107.0 107.9 107.0 107.3
Effect of dilutive securities:
Stock options 4.8 4.7 4.9 4.9
Restricted stock awards and restricted stock units 2.1 1.4 2.0 1.4
Weighted average shares - diluted 113.9 114.0 113.9 113.6
Net income per share - basic $ 9.05 $ 7.90 $ 16.69 $ 17.01
Net income per share - diluted $ 8.50 $ 7.47 $ 15.68 $ 16.07
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Shares which have been excluded from diluted per share amounts because their effect would have been antidilutive include the following:
Three Months Ended
June 30, Six Months Ended
June 30,
(Shares in millions) 2023 2022 2023 2022
Stock options 1.7 2.2 1.7 2.3
5. Marketable Securities
Marketable securities as of June 30, 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 June 30, 2023
Cost Basis Gains Losses Value
Corporate bonds $ 6,911.3 $ 0.7 $ ( 221.7 ) $ 6,690.3
U.S. government and government agency obligations 4,899.7 0.5 ( 24.2 ) 4,876.0
Sovereign bonds 78.6 — ( 2.2 ) 76.4
Commercial paper 300.3 0.1 ( 0.2 ) 300.2
Certificates of deposit 259.0 — ( 0.2 ) 258.8
Asset-backed securities 90.5 0.2 ( 2.4 ) 88.3
$ 12,539.4 $ 1.5 $ ( 250.9 ) $ 12,290.0
As of December 31, 2022
Corporate bonds $ 6,975.5 $ — $ ( 291.1 ) $ 6,684.4
U.S. government and government agency obligations 2,945.4 0.9 ( 6.9 ) 2,939.4
Sovereign bonds 67.1 — ( 3.0 ) 64.1
Commercial paper 121.1 — — 121.1
Certificates of deposit 182.1 — ( 0.1 ) 182.0
Asset-backed securities 28.9 — ( 1.7 ) 27.2
$ 10,320.1 $ 0.9 $ ( 302.8 ) $ 10,018.2
The Company classifies its investments in available-for-sale debt securities based on their contractual maturity dates. The available-for-sale debt securities as of June 30, 2023 mature at various dates through April 2029. The fair values of available-for-sale debt securities by contractual maturity consist of the following:
June 30, December 31,
(In millions) 2023 2022
Maturities within one year $ 6,999.1 $ 4,636.4
Maturities after one year through five years 5,281.1 5,381.4
Maturities after five years 9.8 0.4
$ 12,290.0 $ 10,018.2
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The following table shows the fair value of the Company's available-for-sale debt securities that have unrealized losses, aggregated by investment category and length of time that the individual securities have been in a continuous loss position.
Less than 12 Months 12 Months or Greater Total
(In millions)
As of June 30, 2023
Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
Corporate bonds $ 1,567.4 $ ( 15.7 ) $ 4,856.6 $ ( 206.0 ) $ 6,424.0 $ ( 221.7 )
U.S. government and government agency obligations 2,286.8 ( 19.9 ) 79.2 ( 4.3 ) 2,366.0 ( 24.2 )
Sovereign bonds 12.3 ( 0.2 ) 53.1 ( 2.0 ) 65.4 ( 2.2 )
Commercial paper 254.8 ( 0.2 ) — — 254.8 ( 0.2 )
Certificates of deposit 158.4 ( 0.2 ) — — 158.4 ( 0.2 )
Asset-backed securities 62.6 ( 0.9 ) 24.7 ( 1.5 ) 87.3 ( 2.4 )
$ 4,342.3 $ ( 37.1 ) $ 5,013.6 $ ( 213.8 ) $ 9,355.9 $ ( 250.9 )
As of December 31, 2022
Corporate bonds $ 2,445.4 $ ( 73.1 ) $ 4,200.4 $ ( 218.0 ) $ 6,645.8 $ ( 291.1 )
U.S. government and government agency obligations 785.2 ( 2.0 ) 71.0 ( 4.9 ) 856.2 ( 6.9 )
Sovereign bonds 18.6 ( 1.1 ) 45.6 ( 1.9 ) 64.2 ( 3.0 )
Certificates of deposit 40.2 ( 0.1 ) — — 40.2 ( 0.1 )
Asset-backed securities 11.5 ( 0.6 ) 15.2 ( 1.1 ) 26.7 ( 1.7 )
$ 3,300.9 $ ( 76.9 ) $ 4,332.2 $ ( 225.9 ) $ 7,633.1 $ ( 302.8 )
The unrealized losses on corporate bonds as of June 30, 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 and six months ended June 30, 2023 and 2022, amounts reclassified from Accumulated other comprehensive loss into Other income (expense), net were related to realized gains/losses on sales of available-for-sale debt securities.
For the three months ended ended June 30, 2023, realized gains on sales of marketable securities were not material and there were no realized losses. For the six months ended June 30, 2023, and for the three and six months ended June 30, 2022, realized gains and losses on sales of marketable securities were not material.
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6. Fair Value Measurements
The table below summarizes the Company's assets which are measured at fair value on a recurring basis. The following fair value hierarchy is used to classify assets, based on inputs to valuation techniques utilized to measure fair value:
• Level 1 - Quoted prices in active markets for identical assets
• Level 2 - Significant other observable inputs, such as quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-based valuations in which significant inputs used are observable
• Level 3 - Significant other unobservable inputs
(In millions) Fair Value Measurements at Reporting Date
As of June 30, 2023
Fair Value Level 1 Level 2
Cash equivalents $ 512.5 $ 201.8 $ 310.7
Available-for-sale debt securities:
Corporate bonds 6,690.3 — 6,690.3
U.S. government and government agency obligations 4,876.0 — 4,876.0
Sovereign bonds 76.4 — 76.4
Commercial paper 300.2 — 300.2
Certificates of deposit 258.8 — 258.8
Asset-backed securities 88.3 — 88.3
Equity securities (unrestricted) 865.8 865.8 —
Equity securities (restricted) 161.9 151.0 10.9
$ 13,830.2 $ 1,218.6 $ 12,611.6
As of December 31, 2022
Cash equivalents $ 1,662.8 $ 88.3 $ 1,574.5
Available-for-sale debt securities:
Corporate bonds 6,684.4 — 6,684.4
U.S. government and government agency obligations 2,939.4 — 2,939.4
Sovereign bonds 64.1 — 64.1
Commercial paper 121.1 — 121.1
Certificates of deposit 182.0 — 182.0
Asset-backed securities 27.2 — 27.2
Equity securities (unrestricted) 24.6 24.6 —
Equity securities (restricted) 1,185.4 1,185.4 —
$ 12,891.0 $ 1,298.3 $ 11,592.7
The Company held certain restricted equity securities as of June 30, 2023 which are subject to transfer restrictions that expire at various dates through 2024.
During the three and six months ended June 30, 2023, we recorded $ 30.9 million and $ 195.6 million of net unrealized losses, respectively, on equity securities in Other income (expense), net; and during the three and six months ended June 30, 2022, we recorded $ 163.7 million and $ 374.9 million of net unrealized losses, respectively, on equity securities in Other income (expense), net.
In addition to the investments summarized in the table above, as of June 30, 2023 and December 31, 2022, the Company had $ 78.3 million and $ 48.3 million, respectively, 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, which was determined based on Level 2 inputs, was estimated to be $ 1.476 billion and $ 1.443 billion as of June 30, 2023 and December 31, 2022, respectively.
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7. Inventories
Inventories consist of the following:
June 30, December 31,
(In millions) 2023 2022
Raw materials $ 813.3 $ 818.4
Work-in-process 1,069.6 963.1
Finished goods 125.3 98.6
Deferred costs 499.5 521.8
$ 2,507.7 $ 2,401.9
Inventory balances in the table above are net of reserves of $ 747.9 million and $ 720.7 million as of June 30, 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.
8. Income Taxes
The Company is subject to U.S. federal, state, and foreign income taxes. The Company's effective tax rate was 10.6 % and 11.5 % for the three months ended June 30, 2023 and 2022, respectively, and 8.0 % and 9.8 % for the six months ended June 30, 2023 and 2022, respectively. The Company's effective tax rate for the three and six months ended June 30, 2023 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 and federal tax credits for research activities.
The Company's effective tax rate for the three and six months ended June 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.
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 did not have a material impact on the Company's financial statements for the three and six months ended June 30, 2023.
9. Stockholders' Equity
Share Repurchase Programs
In November 2021, our board of directors authorized a share repurchase program to repurchase up to $ 3.0 billion of our Common Stock. As of June 30, 2023, the Company had repurchased the entire $ 3.0 billion of its Common Stock that it was authorized to repurchase under the program.
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 permits the Company to make repurchases through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, block trades, and other transactions in compliance with Rule 10b-18 of the Exchange Act. Repurchases may be made from time to time at management's discretion, and the timing and amount of any such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors. The program has no time limit and can be discontinued at any time. There can be no assurance as to the timing or number of shares of any repurchases in the future. As of June 30, 2023, $ 2.332 billion remained available for share repurchases under the January 2023 program.
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The table below summarizes the shares of our Common Stock we repurchased and the cost of the shares, which were recorded as Treasury Stock. As described in Note 8, effective January 1, 2023 share repurchases, net of issuances, are subject to a 1% excise tax; such amount, if applicable, is recognized as an additional cost of the shares acquired.
Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2023 2022 2023 2022
Number of shares 1.0 0.7 1.9 1.2
Total cost of shares $ 722.8 $ 393.6 $ 1,416.7 $ 745.5
10. Statement of Cash Flows
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:
June 30,
(In millions) 2023 2022
Cash and cash equivalents $ 1,937.2 $ 3,395.1
Restricted cash included in Prepaid expenses and other current assets 5.5 —
Restricted cash included in Other noncurrent assets
7.0 13.5
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statement of Cash Flows
$ 1,949.7 $ 3,408.6
Restricted cash consists of amounts held by financial institutions pursuant to contractual arrangements.
Supplemental disclosure of non-cash investing and financing activities
June 30, December 31, June 30, December 31,
(In millions) 2023 2022 2022 2021
Accrued capital expenditures $ 107.5 $ 70.8 $ 81.9 $ 74.8
Accrued contingent consideration for Libtayo intangible asset $ 60.8 $ 135.5 $ — $ —
11. Legal Matters
From time to time, the Company is a party to legal proceedings in the course of the Company's business. The outcome of any such proceedings, regardless of the merits, is inherently uncertain. 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 June 30, 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 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. In addition, as described below, the Company filed a lawsuit against Amgen alleging that Amgen engaged in an anticompetitive bundling scheme which was designed to exclude Praluent from the market in violation of U.S. federal and state laws.
United States
In the United States, Amgen asserted claims of U.S. Patent Nos. 8,829,165 (the "'165 Patent") and 8,859,741 (the "'741 Patent"), and sought a permanent injunction to prevent the Company and the Sanofi defendants from commercial manufacturing, using, offering to sell, or selling within the United States (as well as importing into the United States) (collectively, "Commercializing") Praluent. Amgen also sought a judgment of patent infringement of the asserted patents,
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monetary damages (together with interest), costs and expenses of the lawsuits, and attorneys' fees. As previously reported, on February 11, 2021, the United States Court of Appeals for the Federal Circuit (the "Federal Circuit") affirmed the lower court's decision that certain of Amgen's asserted patent claims are invalid based on lack of enablement. 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 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 28, 2023, the United States Supreme Court affirmed the Federal Circuit's decision that certain of Amgen's asserted patent claims are invalid based on lack of enablement.
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. The lawsuit seeks damages for harm caused by the alleged scheme, as well as injunctive relief restraining Amgen from continuing its alleged anticompetitive conduct. On August 1, 2022, Amgen filed a motion to dismiss the complaint. 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 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.
Europe
Amgen has asserted European Patent No. 2,215,124 (the "'124 Patent"), which pertains to PCSK9 monoclonal antibodies, in certain countries in Europe. In October 2020, the '124 Patent claims directed to compositions of matter and medical use relevant to Praluent were ruled invalid based on a lack of inventive step by the Technical Board of Appeal (the "TBA") of the European Patent Office (the "EPO"). Following the EPO's decision, each of the '124 Patent infringement proceedings initiated by Amgen against the Company and certain of Sanofi's affiliated entities in these countries was dismissed, including in Germany. 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, 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. 2,641,917 (the "'917 Patent") and seeks, among other things, a judgment of patent infringement, injunctive relief, and monetary damages. The '917 Patent is a divisional patent of the '124 Patent discussed above (i.e., a patent that shares the same priority date, disclosure, and patent term of the parent '124 Patent but contains claims to a different invention). 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 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.
On June 1, 2023, Amgen filed a lawsuit against the Company and certain of Sanofi's affiliated entities in the Munich Local Division of the Unified Patent Court (the "UPC") alleging infringement of Amgen's European Patent No. 3,666,797 (the "'797 Patent"). The lawsuit seeks, among other things, a permanent injunction in several countries in Europe and monetary damages. The '797 Patent is a divisional patent of the '124 Patent discussed above. Also on June 1, 2023, Sanofi filed an action in the Munich Central Division of the UPC seeking revocation of the '797 Patent.
Proceedings Relating to EYLEA (aflibercept) Injection
Certain of the Company's patents pertaining to EYLEA are subject to post-grant proceedings before the United States Patent and Trademark Office ("USPTO"), EPO, or other comparable foreign authorities, including those described in greater detail below. In addition, the Company has filed patent infringement lawsuits in several jurisdictions alleging infringement of certain Company patents pertaining to EYLEA, including those described in greater detail below.
United States
On February 11, 2020, anonymous parties filed two requests for ex parte reexamination of the Company's U.S. Patent Nos. 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. filed inter partes review ("IPR") petitions in the USPTO against the Company's U.S. Patent Nos. 9,254,338 (the "'338 Patent") and 9,669,069 (the "'069 Patent") seeking declarations of invalidity of the '338 Patent and the '069 Patent. On November 10, 2021, the USPTO issued a decision instituting both IPR proceedings. On December 9, 2021, Apotex Inc. and Celltrion, Inc. each filed two separate IPR petitions against the Company's '338 and '069 Patents requesting that their IPRs be instituted and joined with the IPR proceedings initiated by Mylan concerning the '338 and '069 Patents, which petitions were granted on February 9, 2022. An oral hearing was held on August 10, 2022. On November 9, 2022, the USPTO issued final written decisions finding that the claims of the '338 and '069 Patents are unpatentable and,
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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. Patent Nos. 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 July 19, 2023, the USPTO instituted an IPR proceeding concerning the '681 Patent.
On September 9, 2022, Apotex filed an IPR petition against the Company's U.S. Patent No. 11,253,572 (the "'572 Patent") seeking a declaration of invalidity of the '572 Patent. 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 July 20, 2023, the USPTO instituted an IPR proceeding concerning the '992 Patent.
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. 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. Patent No. 11,104,715. A trial was held from June 12, 2023 through June 23, 2023 concerning certain claims of the '601 Patent, the '572 Patent, and the Company's U.S. Patent No. 11,084,865. Closing arguments have been scheduled for August 3, 2023.
Europe
On October 26 and October 27, 2021, anonymous parties initiated opposition proceedings in the EPO against the Company's European Patent No. 2,944,306 (the "'306 Patent") seeking revocation of the '306 Patent in its entirety.
Between May 5-10, 2023, Amgen and three anonymous parties initiated opposition proceedings in the EPO against the Company's European Patent No. 3,716,992 (the "EP '992 Patent") seeking revocation of the EP '992 Patent in its entirety.
On June 22, 2023, Samsung Bioepis NL B.V. initiated invalidation proceedings in the German Federal Patent Court against the German designation of the Company's European Patent No. 2,364,691 (the "'691 Patent") seeking revocation of the '691 Patent in its entirety.
Canada
On June 15, July 15, August 30, and October 4, 2022, the Company and Bayer Inc. filed patent infringement lawsuits against BGP Pharma ULC d.b.a Viatris Canada ("Viatris Canada") 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 Canadian Patent Nos. 2,654,510 (the "'510 Patent") and 3,007,276 (the "'276 Patent") (in the lawsuit filed on June 15, 2022); the Company's Canadian Patent No. 2,965,495 (the "'495 Patent") (in the lawsuit filed on July 15, 2022); the Company's Canadian Patent No. 2,906,768 (the "'768 Patent") (in the lawsuit filed on August 30, 2022, which has been joined with the lawsuit filed on July 15, 2022); and the Company's Canadian Patent No. 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 (the "Viatris Canada 510/276 Lawsuit") 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 Viatris Canada 510/276 Lawsuit 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 Viatris Canada's New Drug Submission ("NDS") of its aflibercept biosimilar to Biosimilar Collaborations Ireland Limited ("BCIL"), the Company filed a motion in the Federal Court of Canada seeking termination of the Viatris Canada 510/276 Lawsuit. On June 5, 2023, BCIL was added as a defendant in the Viatris Canada 510/276 Lawsuit.
On March 23, 2023 and June 14, 2023, the Company and Bayer Inc. filed patent infringement lawsuits against BCIL in the Federal Court of Canada seeking a declaration that the making, constructing, using, or selling of an aflibercept biosimilar would
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directly or indirectly infringe one or more claims of the Company's '510 and '276 Patents. The June 14, 2023 lawsuit was filed after BCIL served Bayer Inc. with a statutory notification in relation to the NDS on May 23, 2023.
On May 9, 2023, Amgen Canada Inc. ("Amgen Canada") filed invalidation proceedings against the Company in the Federal Court of Canada seeking revocation of the '510 Patent and the '276 Patent.
South Korea
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 company 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 the Company's Korean Patent No. 659477 (the "'477 Patent"). On July 20, 2023, the Company filed a preliminary injunction petition against Samsung Bioepis Co., Ltd. and its parent company Samsung Biologics Co., Ltd. before the Seoul Central District Court seeking a court order enjoining the manufacture, use, and assignment of an aflibercept biosimilar that infringes one or more claims of the '477 Patent.
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. Patent No. 9,220,631 (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 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 October 26, 2021, the USPTO issued a decision instituting the IPR proceeding. An oral hearing was held on July 21, 2022. 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"). The Company is also seeking injunctive relief and treble damages. On September 4, 2020, Novartis filed, and Vetter moved to join, a motion to dismiss the complaint, to transfer the lawsuit to the Northern District of New York, or to stay the suit; and on October 19, 2020, Novartis filed, and Vetter moved to join, a second motion to dismiss the complaint on different grounds. On January 25, 2021, the Company filed an amended complaint seeking a judgment that Novartis's conduct violates Section 2 of the Sherman Antitrust Act based on additional grounds, as well as a judgment of tortious interference with contract. On February 22, 2021, Novartis filed, and Vetter moved to join, a motion to dismiss the amended complaint. On September 21, 2021, the court granted Novartis and Vetter's motion to transfer this lawsuit to the Northern District of New York. As a result, this lawsuit was transferred to the same judge that had been assigned to the patent infringement lawsuit discussed above. On November 5, 2021, the Company filed a motion to stay these proceedings in light of the pending IPR proceeding discussed above. On January 31, 2022, the court denied the Company's motion to stay these proceedings and granted Novartis and Vetter's motion to dismiss the amended complaint. On June 10, 2022, the Company filed an appeal of the District Court's decision to dismiss the amended complaint with the U.S. Court of Appeals for the Second Circuit.
Proceedings Relating to REGEN-COV (casirivimab and imdevimab)
On October 5, 2020, Allele Biotechnology and Pharmaceuticals, Inc. ("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,
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asserting infringement of U.S. Patent No. 10,221,221 (the "'221 Patent"). Allele seeks a judgment of patent infringement of the '221 Patent, an award of monetary damages (together with interest), an order of willful infringement of the '221 Patent (which would allow the court in its discretion to award damages up to three times the amount assessed), costs and expenses of the lawsuit, and attorneys' fees. On July 16, 2021, the Company filed a motion to dismiss the complaint, which motion was denied on March 2, 2022.
Department of Justice Matters
In January 2017, the Company received a subpoena from the U.S. Attorney's Office for the District of Massachusetts requesting documents relating to its support of 501(c)(3) organizations that provide financial assistance to patients; documents concerning its provision of financial assistance to patients with respect to products sold or developed by Regeneron (including EYLEA, Praluent, ARCALYST ® , and ZALTRAP ® ); and certain other related documents and communications. On June 24, 2020, the U.S. Attorney's Office for the District of Massachusetts filed a civil complaint in the U.S. District Court for the District of Massachusetts alleging violations of the federal Anti-Kickback Statute, and asserting causes of action under the federal False Claims Act and state law. On August 24, 2020, the Company filed a motion to dismiss the complaint in its entirety. 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. An oral hearing on the parties' respective motions for summary judgment was held on July 21, 2023.
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. Department of Justice pursuant to the federal False Claims Act relating to remuneration paid to physicians in the form of consulting fees, advisory boards, speaker fees, and payment or reimbursement for travel and entertainment allegedly in violation of the federal Anti-Kickback Statute. The CIDs relate to EYLEA, Praluent, Dupixent, ZALTRAP, ARCALYST, and Kevzara and cover the period from January 2015 to the present. On June 3, 2021, the United States District Court for the Central District of California unsealed a qui tam complaint filed against the Company, Regeneron Healthcare Solutions, Inc., and Sanofi-Aventis U.S. LLC by two qui tam plaintiffs (known as relators) purportedly on behalf of the United States and various states (the "State Plaintiffs"), asserting causes of action under the federal False Claims Act and state law. Also on June 3, 2021, the United States and the State Plaintiffs notified the court of their decision to decline to intervene in the case. On October 29, 2021, the qui tam plaintiffs filed an amended complaint in this matter. On January 14, 2022, the Company filed a motion to dismiss the amended complaint in its entirety. On July 25, 2023, the court in part granted and in part denied the Company's motion to dismiss.
In June 2021, the Company received a CID from the U.S. Department of Justice pursuant to the federal False Claims Act. 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 the Centers for Medicare & Medicaid Services. The CID covers the period from January 2011 through June 2021. The Company is cooperating with this investigation.
California Department of Insurance Subpoena
In September 2022, the Company received a subpoena from the Insurance Commissioner for the State of California pursuant to the California Insurance Code. The subpoena seeks information relating to the marketing, sale, and distribution of EYLEA, including (i) discounts, rebates, credit card fees, and inventory management systems; (ii) Regeneron's relationships with distributors; (iii) price reporting; (iv) speaker programs; and (v) patient support programs. The subpoena covers the period from January 1, 2014 through August 1, 2021. The Company is cooperating with this investigation.
Proceedings Initiated by Other Payors Relating to Patient Assistance Organization Support
The Company is party to several lawsuits relating to 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. These lawsuits were filed by UnitedHealthcare Insurance Company and United Healthcare Services, Inc. (collectively, "UHC") and Humana Inc. ("Humana") in the United States District Court for the Southern District of New York on December 17, 2020 and July 22, 2021, respectively; and by Blue Cross and Blue Shield of Massachusetts, Inc. and Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc. (collectively, "BCBS"), Medical Mutual of Ohio ("MMO"), Horizon Healthcare Services, Inc. d/b/a Horizon Blue Cross Blue Shield of New Jersey ("Horizon"), and Local 464A United Food and Commercial Workers Union Welfare Service Benefit Fund ("Local 464A") in the U.S. District Court for the District of Massachusetts on December 20, 2021, February 23, 2022, April 4, 2022, and June 17, 2022, respectively. These lawsuits allege causes of action under state law and the federal Racketeer Influenced and Corrupt Organizations Act and seek monetary damages and equitable relief. The MMO and Local 464A lawsuits are putative class action lawsuits. On December 29, 2021, the lawsuits filed by UHC and Humana were stayed
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by the United States District Court for the Southern District of New York pending resolution of the proceedings before the U.S. District Court for the District of Massachusetts discussed under "Department of Justice Matters" above. On September 27, 2022, the lawsuits filed by BCBS, MMO, and Horizon were stayed by the U.S. District Court for the District of Massachusetts pending resolution of the proceedings before the same court discussed under "Department of Justice Matters" above; and, in light of these stays, the parties to the Local 464A action have also agreed to stay that matter.
Proceedings Relating to Shareholder Derivative Complaint
On June 29, 2021, an alleged shareholder filed a shareholder derivative complaint in the New York Supreme Court, naming the current and certain former members of the Company's board of directors and certain current and former executive officers of the Company as defendants and Regeneron as a nominal defendant. The complaint asserts that the individual defendants breached their fiduciary duties in relation to the allegations 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 complaint seeks an award of damages allegedly sustained by the Company; an order requiring Regeneron to take all necessary actions to reform and improve its corporate governance and internal procedures; disgorgement from the individual defendants of all profits and benefits obtained by them resulting from their sales of Regeneron stock; and costs and disbursements of the action, including attorneys' fees. On July 28, 2021, the defendants filed a notice of removal, removing the case from the New York Supreme Court to the U.S. District Court for the Southern District of New York. On September 23, 2021, the plaintiff moved to remand the case to the New York Supreme Court. 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.
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