REGENERON PHARMACEUTICALS, INC. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties relating to future events and the future performance of Regeneron Pharmaceuticals, Inc. (where applicable, together with its subsidiaries, "Regeneron," "Company," "we," "us," and "our"), and actual events or results may differ materially from these forward-looking statements. Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate," variations of such words, and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. These statements concern, and these risks and uncertainties include, among others, the nature, timing, and possible success and therapeutic applications of products marketed or otherwise commercialized by Regeneron and/or its collaborators or licensees (collectively, "Regeneron's Products") and product candidates being developed by Regeneron and/or its collaborators or licensees (collectively, "Regeneron's Product Candidates") and research and clinical programs now underway or planned, including without limitation EYLEA ® (aflibercept) Injection, EYLEA HD (aflibercept) Injection 8 mg, Dupixent ® (dupilumab) Injection, Libtayo ® (cemiplimab) Injection, Praluent ® (alirocumab) Injection, Kevzara ® (sarilumab) Injection, Evkeeza ® (evinacumab) Injection, Veopoz ™ (pozelimab) Injection, odronextamab, itepekimab, fianlimab, garetosmab, linvoseltamab, REGN5713-5714-5715, Regeneron's other oncology programs (including its costimulatory bispecific portfolio), Regeneron's and its collaborators' earlier-stage programs, and the use of human genetics in Regeneron's research programs; the likelihood and timing of achieving any of our anticipated development milestones referenced in this report; safety issues resulting from the administration of Regeneron's Products and Regeneron's Product Candidates in patients, including serious complications or side effects in connection with the use of Regeneron's Products and Regeneron's Product Candidates in clinical trials; the likelihood, timing, and scope of possible regulatory approval and commercial launch of our late-stage product candidates and new indications for Regeneron's Products, including without limitation those listed above; the extent to which the results from the research and development programs conducted by us and/or our collaborators may be replicated in other studies and/or lead to advancement of product candidates to clinical trials, therapeutic applications, or regulatory approval; ongoing regulatory obligations and oversight impacting Regeneron's Products, research and clinical programs, and business, including those relating to patient privacy; determinations by regulatory and administrative governmental authorities which may delay or restrict our ability to continue to develop or commercialize Regeneron's Products and Regeneron's Product Candidates; competing drugs and product candidates that may be superior to, or more cost effective than, Regeneron's Products and Regeneron's Product Candidates; uncertainty of the utilization, market acceptance, and commercial success of Regeneron's Products and Regeneron's Product Candidates and the impact of studies (whether conducted by Regeneron or others and whether mandated or voluntary) or recommendations and guidelines from governmental authorities and other third parties on the commercial success of Regeneron's Products and Regeneron's Product Candidates; our ability to manufacture and manage supply chains for multiple products and product candidates; the ability of our collaborators, suppliers, or other third parties (as applicable) to perform manufacturing, filling, finishing, packaging, labeling, distribution, and other steps related to Regeneron's Products and Regeneron's Product Candidates; the availability and extent of reimbursement of Regeneron's Products from third-party payors, including private payor healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies, and government programs such as Medicare and Medicaid; coverage and reimbursement determinations by such payors and new policies and procedures adopted by such payors; unanticipated expenses; the costs of developing, producing, and selling products; our ability to meet any of our financial projections or guidance, including without limitation capital expenditures, and changes to the assumptions underlying those projections or guidance; the potential for any license or collaboration agreement, including our agreements with Sanofi and Bayer (or their respective affiliated companies, as applicable), to be cancelled or terminated; the impact of public health outbreaks, epidemics, or pandemics (such as the COVID-19 pandemic) on our business; and risks associated with intellectual property of other parties and pending or future litigation relating thereto (including without limitation the patent litigation and other related proceedings described further in Note 11 to our Condensed Consolidated Financial Statements included in this report), other litigation and other proceedings and government investigations relating to the Company and/or its operations (including without limitation those described in Note 11 to our Condensed Consolidated Financial Statements included in this report), the ultimate outcome of any such proceedings and investigations, and the impact any of the foregoing may have on our business, prospects, operating results, and financial condition. These statements are made based on management's current beliefs and judgment, and the reader is cautioned not to rely on any such statements. In evaluating such statements, shareholders and potential investors should specifically consider the various factors identified under Part II, Item 1A. "Risk Factors," which could cause actual events and results to differ materially from those indicated by such forward-looking statements. We do not undertake any obligation to update (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events, or otherwise. 26 Table of Contents Overview Regeneron Pharmaceuticals, Inc. is a fully integrated biotechnology company that invents, develops, manufactures, and commercializes medicines for people with serious diseases. Our products and product candidates in development are designed to help patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, hematologic conditions, infectious diseases, and rare diseases. Our core business strategy is to maintain a strong foundation in basic scientific research and discovery-enabling technologies, and to build on that foundation with our clinical development, manufacturing, and commercial capabilities. Our objective is to continue to advance as an integrated, multi-product biotechnology company that provides patients and medical professionals with important medicines for preventing and treating human diseases. Selected financial information is summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share data) 2023 2022 2023 2022 Revenues $ 3,362.7 $ 2,936.2 $ 9,682.9 $ 8,758.5 Net income $ 1,007.8 $ 1,315.7 $ 2,794.0 $ 3,141.3 Net income per share - diluted $ 8.89 $ 11.66 $ 24.57 $ 27.73 For purposes of this report, references to our products encompass products marketed or otherwise commercialized by us and/or our collaborators or licensees and references to our product candidates encompass product candidates in development by us and/or our collaborators or licensees (in the case of collaborated or licensed products or product candidates under the terms of the applicable collaboration or license agreements), unless otherwise stated or required by the context. Products Products that have received marketing approval are summarized in the table below. Certain products have also received marketing approval in countries outside the United States, European Union ("EU"), or Japan. Product Disease Territory U.S. EU Japan EYLEA (aflibercept) Injection (a) Wet age-related macular degeneration ("wAMD") a a a Diabetic macular edema ("DME") a a a Macular edema following retinal vein occlusion ("RVO"), which includes macular edema following central retinal vein occlusion ("CRVO") and macular edema following branch retinal vein occlusion ("BRVO") a a a Myopic choroidal neovascularization ("mCNV") a a Diabetic retinopathy ("DR") a Neovascular glaucoma ("NVG") a Retinopathy of prematurity ("ROP") a a a EYLEA HD (aflibercept) Injection 8 mg (a) wAMD a DME a DR a Dupixent (dupilumab) Injection (b) Atopic dermatitis (in adults, adolescents, and pediatrics aged 6 months and older) a a a Asthma (in adults and adolescents) a a a Asthma (in pediatrics 6–11 years of age) a a Chronic rhinosinusitis with nasal polyposis ("CRSwNP") a a a 27 Table of Contents Product (continued) Disease Territory U.S. EU Japan Dupixent (dupilumab) Injection (b) (continued) Eosinophilic esophagitis ("EoE") (in adults and adolescents) a a Prurigo nodularis a a a Libtayo (cemiplimab) Injection (c) Metastatic or locally advanced first-line non-small cell lung cancer ("NSCLC") a a Metastatic or locally advanced first-line NSCLC (in combination with chemotherapy) a a Metastatic or locally advanced basal cell carcinoma ("BCC") a a Metastatic or locally advanced cutaneous squamous cell carcinoma ("CSCC") a a Metastatic or recurrent second-line cervical cancer a a Praluent (alirocumab) Injection (d) LDL-lowering in heterozygous familial hypercholesterolemia ("HeFH") or clinical atherosclerotic cardiovascular disease ("ASCVD") a a Cardiovascular risk reduction in patients with established cardiovascular disease a a Homozygous familial hypercholesterolemia ("HoFH") a REGEN-COV ®(e) COVID-19 a a Kevzara (sarilumab) Injection (b) Rheumatoid arthritis ("RA") a a a Polymyalgia rheumatica ("PMR") a Evkeeza (evinacumab) Injection (f) HoFH (in adults and adolescents) a a HoFH (in pediatrics 5–11 years of age) a Inmazeb ® (atoltivimab, maftivimab, and odesivimab) Injection Infection caused by Zaire ebolavirus a Veopoz (pozelimab) Injection CD55-deficient protein-losing enteropathy ("CHAPLE") (in adults, adolescents, and pediatrics aged 1 year and older) a ARCALYST ® (rilonacept) Injection (g) Cryopyrin-associated periodic syndromes ("CAPS"), including familial cold auto-inflammatory syndrome ("FCAS") and Muckle-Wells syndrome ("MWS") (in adults and adolescents) a Deficiency of interleukin-1 receptor antagonist ("DIRA") (in adults, adolescents, and pediatrics) a Recurrent pericarditis (in adults and adolescents) a ZALTRAP ® (ziv-aflibercept) Injection for Intravenous Infusion (h) Metastatic colorectal cancer ("mCRC") a a a Note: Refer to table below (net product sales of Regeneron-discovered products) for information regarding whether net product sales for a particular product are recorded by us or others. In addition, unless otherwise noted, products in the table above are generally approved for use in adults in the above-referenced diseases. (a) In collaboration with Bayer outside the United States (b) In collaboration with Sanofi (c) In collaboration with Sanofi prior to July 2022. Effective July 2022, the Company is solely responsible for the development, commercialization, and manufacturing of Libtayo. Refer to "Collaboration, License, and Other Agreements" section below for further details. 28 Table of Contents (d) The Company is solely responsible for the development and commercialization of Praluent in the United States and Sanofi is responsible for the development and commercialization of Praluent outside of the United States. (e) In collaboration with Roche. Product is known as REGEN-COV in the United States and Ronapreve ™ in other countries. (f) The Company is solely responsible for the development and commercialization of Evkeeza in the United States and Ultragenyx is responsible for the development and commercialization of Evkeeza outside of the United States. (g) Kiniksa is solely responsible for the development and commercialization of ARCALYST. (h) Sanofi is solely responsible for the development and commercialization of ZALTRAP. 29 Table of Contents Net product sales of Regeneron-discovered products consist of the following: Three Months Ended September 30, 2023 2022 % Change (In millions) U.S. ROW (g) Total U.S. ROW Total (Total Sales) EYLEA (a) $ 1,448.2 $ 872.2 $ 2,320.4 $ 1,629.4 $ 816.9 $ 2,446.3 (5 %) EYLEA HD (a) $ 42.7 $ — $ 42.7 $ — $ — $ — (h) Dupixent (b) $ 2,366.3 $ 731.3 $ 3,097.6 $ 1,824.0 $ 506.1 $ 2,330.1 33 % Libtayo (c) $ 144.1 $ 88.3 $ 232.4 $ 94.7 $ 48.5 $ 143.2 62 % Praluent (d) $ 40.4 $ 125.1 $ 165.5 $ 29.7 $ 84.0 $ 113.7 46 % REGEN-COV (e) $ — $ — $ — $ — $ 22.8 $ 22.8 (100 %) Kevzara (b) $ 52.4 $ 43.3 $ 95.7 $ 53.1 $ 35.0 $ 88.1 9 % Other products (f) $ 23.4 $ 15.5 $ 38.9 $ 17.5 $ 14.7 $ 32.2 21 % Nine Months Ended September 30, 2023 2022 % Change (In millions) U.S. ROW Total U.S. ROW Total (Total Sales) EYLEA (a) $ 4,382.1 $ 2,605.6 $ 6,987.7 $ 4,768.2 $ 2,544.2 $ 7,312.4 (4 %) EYLEA HD (a) $ 42.7 $ — $ 42.7 $ — $ — $ — (h) Dupixent (b) $ 6,369.6 $ 2,002.4 $ 8,372.0 $ 4,731.7 $ 1,500.6 $ 6,232.3 34 % Libtayo (c) $ 384.0 $ 241.0 $ 625.0 $ 264.5 $ 144.7 $ 409.2 53 % Praluent (d) $ 121.1 $ 330.6 $ 451.7 $ 94.5 $ 239.5 $ 334.0 35 % REGEN-COV (e) $ — $ 613.2 $ 613.2 $ — $ 681.2 $ 681.2 (10 %) Kevzara (b) $ 148.5 $ 125.2 $ 273.7 $ 153.1 $ 123.7 $ 276.8 (1 %) Other products (f) $ 64.0 $ 48.9 $ 112.9 $ 39.5 $ 54.1 $ 93.6 21 % (a) Regeneron records net product sales of EYLEA and EYLEA HD in the United States. Bayer records net product sales of EYLEA outside the United States. The Company records its share of profits/losses in connection with sales of EYLEA outside the United States. (b) Sanofi records global net product sales of Dupixent and Kevzara. The Company records its share of profits/losses in connection with global sales of Dupixent and Kevzara. (c) Prior to July 1, 2022, Regeneron recorded net product sales of Libtayo in the United States and Sanofi recorded net product sales of Libtayo outside the United States. The parties equally shared profits/losses in connection with global sales of Libtayo. Effective July 1, 2022, the Company began recording net product sales of Libtayo outside the United States and pays Sanofi a royalty on global sales. Refer to "Collaboration, License, and Other Agreements" section below for further details. Included in this line item for the nine months ended September 30, 2023 is $6 million of first quarter 2023 net product sales recorded by Sanofi in connection with sales in certain markets outside the United States (Sanofi recorded net product sales in such markets during a transition period until inventory on hand as of July 1, 2022 had been sold through to the end customers). (d) Regeneron records net product sales of Praluent in the United States. Sanofi records net product sales of Praluent outside the United States and pays the Company a royalty on such sales. (e) Regeneron records net product sales of REGEN-COV in the United States and Roche records net product sales of Ronapreve outside the United States. The parties share gross profits from global sales of REGEN-COV and Ronapreve based on a pre-specified formula. (f) Included in this line item are products which are sold by the Company and others. Refer to "Results of Operations - Revenues " below for a complete listing of net product sales recorded by the Company. Not included in this line item are net product sales of ARCALYST, which are recorded by Kiniksa; net product sales of ARCALYST were $54 million for the second quarter of 2023. (g) Rest of world ("ROW") (h) Percentage not meaningful 30 Table of Contents Programs in Clinical Development Product candidates in clinical development, which are being developed by us and/or our collaborators, are summarized in the table below. There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development (including any post-approval studies), uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes to drug pricing and reimbursement regulations and requirements, and changes in the competitive landscape affecting a product candidate. The planning, execution, and results of our clinical programs are significant factors that can affect our operating and financial results. Refer to Part II, Item 1A. "Risk Factors" for a description of risks and uncertainties that may affect our clinical programs. Any of such risks and uncertainties may, among other matters, negatively impact the development timelines set forth in the table below. 31 Table of Contents Clinical Program Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2023 Events to Date Select Upcoming Milestones Ophthalmology EYLEA HD (aflibercept) 8 mg (a) –RVO –wAMD and DME (EU and Japan) –Approved by U.S. Food and Drug Administration ("FDA") for wAMD, DME, and DR –Reported positive two-year data from Phase 3 studies in wAMD and DME –European Commission ("EC") and Japan's Ministry of Health, Labour and Welfare ("MHLW") decision on regulatory submissions for wAMD and DME (first half 2024) EYLEA (aflibercept) (a) –Approved by FDA for ROP Immunology & Inflammation Dupixent (dupilumab) (b) Antibody to IL-4R alpha subunit –Ulcerative colitis –Eosinophilic gastroenteritis (Phase 2/3) –EoE in pediatrics (c) –Chronic obstructive pulmonary disease ("COPD") (d) –Bullous pemphigoid (c) –Chronic spontaneous urticaria ("CSU") –Chronic pruritus of unknown origin –EoE in pediatrics (1–11 years of age) (U.S.) –CSU in adults and adolescents (Japan) –Approved by EC for atopic dermatitis in pediatrics (6 months–5 years of age) –Approved by MHLW for atopic dermatitis in pediatrics and adolescents (6 months–14 years of age) –Approved by EC for EoE in adults and adolescents –Approved by MHLW for prurigo nodularis –Reported that Phase 3 trial in COPD with evidence of type 2 inflammation met its primary and all key secondary endpoints; presented at 2023 American Thoracic Society International Conference and published in New England Journal of Medicine –FDA decision on supplemental Biologics License Application ("sBLA") for EoE in pediatrics (target action date of January 31, 2024) –Submit regulatory application in the EU for EoE in pediatrics (fourth quarter 2023) –Interim analysis from replicate Phase 3 trial in COPD (fourth quarter 2023) –MHLW decision on regulatory submission for CSU in adults and adolescents (first half 2024) –Report results from ongoing Phase 3 trial in CSU (in biologic-naïve patients) (fourth quarter 2024) 32 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2023 Events to Date Select Upcoming Milestones Dupixent (dupilumab) (b) (continued) –FDA issued Complete Response Letter ("CRL") for sBLA for CSU due to requirement for additional efficacy data –Phase 3 trial in chronic cold induced urticaria did not meet its required efficacy endpoints –Discontinued further clinical development in allergic fungal rhinosinusitis and chronic rhinosinusitis without nasal polyposis Kevzara (sarilumab) (b) Antibody to IL-6R –Polyarticular-course juvenile idiopathic arthritis ("pcJIA") (pivotal study) –Systemic juvenile idiopathic arthritis ("sJIA") (pivotal study) –pcJIA (U.S. and EU) –Approved by FDA for PMR –FDA decision on sBLA (target action date of June 10, 2024) and EC decision (second half 2024) on regulatory submission for pcJIA Itepekimab (b) (REGN3500) Antibody to IL-33 –COPD (e) –Phase 3 COPD program passed interim futility analysis conducted by Independent Data Monitoring Committee ("IDMC") –Report results from Phase 3 study in COPD (2025) REGN5713-5714-5715 Multi-antibody therapy to Bet v 1 –Birch allergy Solid Organ Oncology Libtayo (cemiplimab) (g) Antibody to PD-1 –Neoadjuvant CSCC –First-line NSCLC, BNT116 (r) combination –Adjuvant CSCC –Approved by EC for first-line NSCLC, chemotherapy combination 33 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2023 Events to Date Select Upcoming Milestones Fianlimab (f) (REGN3767) Antibody to LAG-3 –Solid tumors and advanced hematologic malignancies –First-line advanced NSCLC (Phase 2/3) (pivotal study) –First-line metastatic melanoma (e) –First-line adjuvant melanoma –Presented positive data from Phase 1 trial (in combination with Libtayo) in advanced melanoma at 2023 American Society of Clinical Oncology ("ASCO") Annual Meeting –Initiate potentially pivotal Phase 2 study (in combination with Libtayo) in perioperative melanoma (fourth quarter 2023) –Initiate Phase 2 study (in combination with Libtayo) in perioperative NSCLC (first half 2024) Vidutolimod Immune activator targeting TLR9 –Solid tumors Ubamatamab (f) (REGN4018) Bispecific antibody targeting MUC16 and CD3 –Platinum-resistant ovarian cancer –Presented results from Phase 1/2 study (in combination with Libtayo) in platinum-resistant ovarian cancer at European Society for Medical Oncology ("ESMO") Congress REGN5668 (n) Bispecific antibody targeting MUC16 and CD28 –Platinum-resistant ovarian cancer REGN5678 Bispecific antibody targeting PSMA and CD28 –Prostate cancer –Discontinued enrollment in cohorts in combination with full-dose Libtayo (cemiplimab) –Expanded enrollment in monotherapy cohort –Report additional results from Phase 1/2 study (in combination with Libtayo) in prostate cancer (2024) –Initiate cohorts in combination with lower doses of cemiplimab (first quarter 2024) REGN4336 Bispecific antibody targeting PSMA and CD3 –Prostate cancer Davutamig (REGN5093) Bispecific antibody targeting two distinct MET epitopes –MET-altered advanced NSCLC REGN5093-M114 Bispecific antibody-drug conjugate targeting two distinct MET epitopes –MET overexpressing advanced cancer 34 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2023 Events to Date Select Upcoming Milestones REGN6569 Antibody to GITR –Solid tumors REGN7075 Bispecific antibody targeting EGFR and CD28 –Solid tumors Hematology Pozelimab (f) (REGN3918) Antibody to C5 –Myasthenia gravis, cemdisiran combination (c)(s) –Paroxysmal nocturnal hemoglobinuria ("PNH"), cemdisiran combination (c)(s) –Veopoz (pozelimab) approved by FDA for CHAPLE in adults and children aged 1 year and older, monotherapy Odronextamab (i)(m) (REGN1979) Bispecific antibody targeting CD20 and CD3 –Certain B-cell malignancies (c) –B-cell non-Hodgkin lymphoma ("B-NHL") (pivotal study) –Follicular lymphoma ("FL") –Diffuse large B-cell lymphoma ("DLBCL") –Relapsed/refractory FL and DLBCL (U.S. and EU) –FDA decision on BLA (target action date of March 31, 2024) and EC decision on regulatory submission (second half 2024) for relapsed/refractory FL and DLBCL REGN5837 (p) Bispecific antibody targeting CD22 and CD28 –B-NHL Linvoseltamab (f) (REGN5458) Bispecific antibody targeting BCMA and CD3 –Multiple myeloma (c)(e) –Multiple myeloma (pivotal study) (c)(e) –Multiple myeloma (c)(e) –Presented updated positive data from pivotal trial in multiple myeloma at ASCO Annual Meeting –Present data from pivotal study in multiple myeloma (fourth quarter 2023/first half 2024) –Submit BLA (fourth quarter 2023) and Marketing Authorization Application ("MAA") (first quarter 2024) for relapsed/refractory multiple myeloma REGN5459 (f) Bispecific antibody targeting BCMA and CD3 –Transplant desensitization in patients with chronic kidney disease 35 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2023 Events to Date Select Upcoming Milestones REGN7257 Antibody to IL2Rg –Aplastic anemia NTLA-2001 (j) TTR gene knockout using CRISPR/Cas9 –Transthyretin ("ATTR") amyloidosis (c) –Initiate Phase 3 study in ATTR amyloidosis with cardiomyopathy ("ATTR-CM") (fourth quarter 2023) REGN9933 Antibody to Factor XI –Thrombosis REGN7508 Antibody to Factor XI –Thrombosis REGN7999 Antibody to TMPRSS6 –Transfusion dependent iron overload Internal Medicine/Genetic Medicines Praluent (alirocumab) Antibody to PCSK9 –HeFH in pediatrics and adolescents –HeFH in pediatrics and adolescents (8–17 years of age) (U.S.) –FDA decision on sBLA for HeFH in pediatrics and adolescents (target action date of March 10, 2024) Evkeeza (evinacumab) (f)(l) Antibody to ANGPTL3 –HoFH in pediatrics (5–11 years of age) (EU) –HoFH in adults, adolescents, and pediatrics (5–11 years of age) (Japan) –Approved by FDA for HoFH in pediatrics (5–11 years of age) Garetosmab (f) (REGN2477) Antibody to Activin A –Fibrodysplasia ossificans progressiva ("FOP") (c)(d)(e) Mibavademab (f) (REGN4461) Agonist antibody to leptin receptor ("LEPR") –Generalized lipodystrophy (e) –Partial lipodystrophy 36 Table of Contents Clinical Program (continued) Phase 1 Phase 2 Phase 3 Regulatory Review (h) 2023 Events to Date Select Upcoming Milestones REGN5381/REGN9035 Agonist antibody to NPR1/reversal agent to REGN5381 –Reversal agent in healthy volunteers –Heart failure –Paused enrollment in Phase 2 study pending protocol amendment –Resumed enrollment in previously paused Phase 1 study –Report initial data in healthy volunteers (fourth quarter 2023) REGN7544 Antagonist antibody to NPR1 –Healthy volunteers ALN-HSD (o) RNAi therapeutic targeting HSD17B13 –Nonalcoholic steatohepatitis ("NASH") –NASH ALN-PNP (k) RNAi therapeutic targeting PNPLA3 –NASH ALN-APP (k) RNAi therapeutic targeting APP –Early-onset Alzheimer’s disease (q) –Reported positive interim data from single dose part of Phase 1 trial in early-onset Alzheimer’s disease DB-OTO AAV-based gene therapy –Hearing loss in pediatrics (c) (Phase 1/2) –Reported preliminary, positive safety and efficacy results from first patient dosed in Phase 1/2 trial in pediatrics with hearing loss "Next Generation" Covid Antibodies (t) Antibodies to SARS-CoV-2 variants –Initiate clinical development of "next generation" antibody (fourth quarter 2023) 37 Table of Contents Note: For purposes of the table above, a program is classified in Phase 1, 2, or 3 clinical development after recruitment for the corresponding study or studies has commenced. (a) In collaboration with Bayer outside the United States (b) In collaboration with Sanofi (c) FDA granted orphan drug designation (d) FDA granted Breakthrough Therapy designation (e) FDA granted Fast Track designation (f) Sanofi did not opt-in to or elected not to continue to co-develop the product candidate. Under the terms of our agreement, Sanofi is entitled to receive royalties on sales of the product, if any. (g) Studied as monotherapy and in combination with other antibodies and treatments (h) Information in this column relates to U.S., EU, and Japan regulatory submissions only (i) In collaboration with Zai Lab in mainland China, Hong Kong, Taiwan, and Macau (j) In collaboration with Intellia (k) In collaboration with Alnylam (l) In collaboration with Ultragenyx outside the United States (m) FDA granted Fast Track designation for follicular lymphoma and diffuse large B-cell lymphoma (n) Studied in combination with ubamatamab (o) Alnylam elected to opt-out of the product candidate. Under the terms of our agreement, Alnylam is entitled to receive royalties on sales of the product, if any. (p) Studied in combination with odronextamab (q) Part B of the study (multi-dose regimen) has been placed on partial clinical hold in the U.S. by the FDA due to findings observed in prior non-clinical chronic toxicology studies. (r) BioNTech's BNT116 is an mRNA cancer vaccine (s) Under the terms of our license agreement for the combination consisting of cemdisiran and pozelimab, Alnylam is entitled to receive royalties on sales of the combination (if any), as well as sales milestones. (t) We and the Biomedical Advanced Research Development Authority ("BARDA") of the U.S. Department of Health and Human Services ("HHS") are parties to an agreement whereby HHS provides certain funding to support research and development activities. 38 Table of Contents Additional Information - Clinical Development Programs EYLEA HD (aflibercept) 8 mg In August 2023, the FDA approved the BLA for EYLEA HD for the treatment of patients with wAMD, DME, and DR. Previously, in June 2023, the FDA issued a CRL for the EYLEA HD BLA. The CRL was issued solely due to unresolved observations resulting from a May 2023 FDA inspection at a third-party contract manufacturing organization, Catalent, that the Company engaged to complete vial-filling for EYLEA HD. With the approval of EYLEA HD, the pre-approval inspection issues related to the BLA had been addressed. In June 2023 and August 2023, the Company announced top-line, two-year (96 weeks) data for EYLEA HD from the pivotal PHOTON trial in patients with DME and the pivotal PULSAR trial in patients with wAMD, respectively. In addition, in July 2023, the results from the PHOTON trial were presented at the American Society of Retina Specialists annual meeting. During both trials, EYLEA HD patients were initially randomized to either 12- or 16-week dosing intervals (after three initial monthly doses) and were able to shorten or extend dosing intervals if pre-specified criteria were met. The longer-term data among EYLEA HD patients who completed the trials demonstrated that the vast majority of patients were able to maintain or further extend these dosing intervals through two years with: PHOTON: • 89% maintaining ≥12-week dosing intervals through two years, compared to 93% through one year (48 weeks) • 84% maintaining ≥16-week dosing intervals through two years, compared to 89% maintaining a 16-week dosing interval through one year • 44% meeting the criteria for ≥20-week dosing intervals by week 96, including 17% and 27% who were eligible for 20- and 24-week dosing intervals, respectively PULSAR: • 88% on a ≥12-week dosing interval at the end of two years • 78% maintaining ≥12-week dosing intervals through two years, compared to 83% throughout the first year of study (48 weeks) • 71% meeting the extension criteria for even longer dosing intervals, including 47% for ≥20-week intervals and 28% for 24-week intervals • those assigned to ≥16-week dosing regimen at baseline, 70% maintaining ≥16-week dosing intervals throughout the two-year study period; at the end of two years, 78% were eligible for ≥16-week dosing, with 53% eligible for ≥20-dosing week intervals. The visual gains for EYLEA HD remained consistent with the first year of the trials. In both PHOTON and PULSAR, the safety of EYLEA HD also continued to be similar to EYLEA through two years and remained consistent with the known safety profile of EYLEA from previous clinical trials for DME and wAMD. In May 2023, Bayer announced that it initiated a Phase 3 study to evaluate the efficacy and safety of EYLEA HD at extended dosing intervals compared to the standard of care, EYLEA, in RVO to support potential future regulatory submissions outside the United States. Dupixent COPD In March 2023, the Company and Sanofi announced that the primary and all key secondary endpoints were met in the BOREAS trial (the first of two Phase 3 trials) in adults currently on maximal standard-of-care inhaled therapy (triple therapy) with uncontrolled COPD and evidence of type 2 inflammation. In this trial, patients receiving Dupixent experienced a 30% reduction in moderate or severe acute COPD exacerbations (rapid and acute worsening of respiratory symptoms) over 52 weeks, while also demonstrating significant improvements in lung function, quality of life, and COPD respiratory symptoms. The safety results were generally consistent with the known safety profile of Dupixent in its approved indications. Based on recent feedback from the FDA, in addition to the positive results of the BOREAS study, a positive interim analysis of the replicate Phase 3 NOTUS study would enable an sBLA submission. The independent data monitoring committee will conduct an interim analysis of the NOTUS study later this year. 39 Table of Contents CSU In October 2023, the FDA issued a CRL for the sBLA for Dupixent in CSU. The CRL states that additional efficacy data are required to support an approval; it did not identify any issues with safety or manufacturing. An ongoing Phase 3 clinical trial (in biologic-naïve patients) continues to enroll patients, with results expected in late 2024. REGN5678 In the ongoing Phase 1 study of REGN5678, the Company has observed antitumor activity in combination with Libtayo as well as with REGN5678 monotherapy. Due to the emerging safety profile, including two immune-mediated Grade 5 adverse events (death), one of which occurred in July 2023, the Company discontinued enrollment of patients receiving the combination of REGN5678 and full-dose Libtayo (cemiplimab). The Company has since expanded enrollment in a REGN5678 monotherapy cohort and plans to explore REGN5678 combinations with lower doses of cemiplimab, as well as in combination with other immunotherapy modalities. Collaboration, License, and Other Agreements Sanofi Antibody We are collaborating with Sanofi on the global development and commercialization of Dupixent, Kevzara, and itepekimab (the "Antibody Collaboration"). Under the terms of the Antibody License and Collaboration Agreement (the "LCA"), Sanofi is generally responsible for funding 80% to 100% of agreed-upon development costs. We are obligated to reimburse Sanofi for 30% to 50% of worldwide development expenses that were funded by Sanofi based on our share of collaboration profits from commercialization of collaboration products; as of December 31, 2022, the total amount of our contingent reimbursement obligation to Sanofi in connection with such development expenses was approximately $2.9 billion. Under the terms of the LCA, we were required to apply 10% of our share of the profits from the Antibody Collaboration in any calendar quarter to reimburse Sanofi for these development costs. On July 1, 2022, an amendment to the LCA became effective, pursuant to which the percentage of Regeneron’s share of profits used to reimburse Sanofi for such development costs increased from 10% to 20%. Under our collaboration agreement, Sanofi records product sales for commercialized products, and Regeneron has the right to co-commercialize such products on a country-by-country basis. We co-commercialize Dupixent in the United States and in certain countries outside the United States. We supply certain commercial bulk product to Sanofi. We and Sanofi equally share profits and losses from sales within the United States. We and Sanofi share profits outside the United States on a sliding scale based on sales starting at 65% (Sanofi)/35% (us) and ending at 55% (Sanofi)/45% (us), and share losses outside the United States at 55% (Sanofi)/45% (us). In each of 2020 and 2021, we earned a $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $1.0 billion and $1.5 billion, respectively, on a rolling twelve-month basis. In 2022, we earned two additional $50.0 million sales-based milestones, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $2.0 billion and $2.5 billion, respectively, on a rolling twelve-month basis. During the three months ended September 30, 2023, the Company earned the final $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $3.0 billion on a rolling twelve-month basis. Immuno-Oncology We previously collaborated with Sanofi for antibody-based cancer treatments in the field of immuno-oncology (the "IO Collaboration"). Under the terms of the Immuno-oncology License and Collaboration Agreement, the parties were co-developing and co-commercializing Libtayo. The parties shared equally, on an ongoing basis, development and commercialization expenses for Libtayo. We had principal control over the development of Libtayo and led commercialization activities in the United States, while Sanofi led commercialization activities outside of the United States. The parties shared equally in profits and losses in connection with the commercialization of Libtayo. Effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide under an Amended and Restated Immuno-oncology License and Collaboration Agreement with Sanofi (the "A&R IO LCA"). 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 was eligible to earn an aggregate of $100.0 million in Libtayo sales-based milestones under the terms of the A&R IO LCA, of which they earned $65.0 million in 2022 and $35.0 million in 2023. We also pay Sanofi an 11% royalty on net product sales of Libtayo through March 31, 2034. The parties have also entered into a transition services agreement, a transitional distribution agreement, and a manufacturing services 40 Table of Contents agreement, pursuant to which, during certain transitional periods, Sanofi will perform for Regeneron certain transition, distribution, and manufacturing services, respectively. Under the Amended and Restated Immuno-oncology Discovery and Development Agreement, we were obligated to reimburse Sanofi for half of the development costs it funded that were attributable to clinical development of product candidates from our share of profits from commercialized IO Collaboration products. Under the A&R IO LCA, the amount of development costs incurred under the IO Collaboration for which we are obligated to reimburse Sanofi was $35.0 million as of the effective date of the A&R IO LCA, and we pay Sanofi a 0.5% royalty on net product sales of Libtayo until all such development costs have been reimbursed by us. Bayer We and Bayer are parties to a license and collaboration agreement 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. We are obligated to reimburse Bayer for 50% of the development costs that it has incurred under the agreement from our share of the collaboration profits. The reimbursement payment in any quarter will equal 5% of the then outstanding repayment obligation, but never more than our share of the collaboration profits in the quarter unless we elect to reimburse Bayer at a faster rate. Within the United States, we retain exclusive commercialization rights and are entitled to all profits from such sales. Alnylam In 2019, we and Alnylam Pharmaceuticals, Inc. entered into a global, strategic collaboration to discover, develop, and commercialize RNAi therapeutics for a broad range of diseases by addressing therapeutic disease targets expressed in the eye and central nervous system ("CNS"), in addition to a select number of targets expressed in the liver. In connection with 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, we provide Alnylam with a specified amount of funding at program initiation and at lead candidate designation. During the three months ended September 30, 2023, the Company became obligated to pay Alnylam a $100.0 million development milestone upon the achievement of specified proof-of-principle criteria for the ALN-APP program. Alnylam is eligible to receive an additional $100.0 million clinical proof-of-principle milestone in connection with an eye program. Under the terms of the collaboration, the parties 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 a license agreement ("License Agreement") structure. The initial target nomination and discovery period is five years (which may under certain situations automatically be extended for up to seven years in the aggregate) (the "Research Term"). In addition, we have an option to extend the Research Term for an additional five-year period for a research extension fee of $300.0 million. For CNS programs and liver programs, under a Co-Co Collaboration Agreement, the party designated as the lead party will lead development and commercialization of the program and the parties will split profits and share costs equally, subject to certain co-funding opt-outs at specified clinical trial phases or under other conditions. Alnylam is the lead party for ALN-APP, and we are the lead party for ALN-PNP. In addition, during 2019, the parties entered a License Agreement for a combination consisting of cemdisiran (a small interfering RNA ("siRNA") therapeutic targeting the C5 component of the human complement pathway being developed by Alnylam) and pozelimab, with us as the licensee. Under the License Agreement, we as the licensee are responsible for our own costs and expenses. Intellia In 2016, we entered into a license and collaboration agreement with Intellia Therapeutics, Inc. to advance CRISPR/Cas9 gene-editing technology for in vivo therapeutic development. NTLA-2001, which is in clinical development, is subject to a co-development and co-commercialization arrangement pursuant to which Intellia will lead development and commercialization activities and the parties share an agreed-upon percentage of development expenses and profits (if commercialized). 41 Table of Contents In 2020, we expanded our existing collaboration with Intellia to provide us with rights to develop products for additional in vivo CRISPR/Cas9-based therapeutic targets and for the companies to jointly develop potential products for the treatment of hemophilia A and B, with Regeneron leading development and commercialization activities. In addition, we also received non-exclusive rights to independently develop and commercialize ex vivo gene edited products. In connection with the 2020 agreement, we made a $70.0 million up-front payment to Intellia. In September 2023, we further expanded our existing collaboration to develop additional in vivo CRISPR-based gene editing therapies focused on neurological and muscular diseases. Intellia will lead the design of the editing methodology, we will lead the design of the targeted viral vector delivery approach, and the parties share costs equally. Each company will have the opportunity to lead potential development and commercialization of product candidates for one target, and the company that is not leading development and commercialization will have the option to enter into a co-development and co-commercialization agreement for the target. In October 2023, we elected to extend the period for selecting targets under the 2016 license and collaboration agreement for an additional two years until April 2026; as a result, we became obligated to make a $30.0 million extension payment to Intellia. Decibel In 2017, we entered into an agreement with Decibel Therapeutics, Inc. to discover and develop new potential therapeutics to protect, repair and restore hearing (including DB-OTO, which is currently in clinical development, and preclinical programs for GJB2-related and stereocilin-related hearing loss). In August 2023, we entered into an Agreement and Plan of Merger to acquire Decibel, and in September 2023, we completed the acquisition of Decibel. We paid $101.3 million in cash (or $4.00 per share of Decibel common stock). In addition, Decibel shareholders received one non-tradeable contingent value right ("CVR") per share of Decibel common stock, which entitles the holder to receive up to $3.50 per share in cash upon achievement of certain clinical development and regulatory milestones for DB-OTO within specified time periods. The maximum aggregate amount that holders of the CVRs may be entitled to receive if all the milestones contemplated by the CVRs are achieved is approximately $97 million. BARDA In August 2023, we expanded our Other Transaction Agreement ("OTA") with BARDA, pursuant to which the HHS is obligated to fund up to 70% of our costs incurred for certain development activities related to a next-generation COVID-19 monoclonal antibody therapy for the prevention of SARS-CoV-2 infection. The agreement could result in payments to the Company of up to approximately $326 million in the aggregate to support clinical development, clinical manufacturing, and the regulatory licensure process. General Our ability to generate profits and to generate positive cash flow from operations over the next several years depends significantly on the continued success in commercializing EYLEA and Dupixent, as well as whether we are successful in commercializing EYLEA HD. We expect to continue to incur substantial expenses related to our research and development activities, a portion of which we expect to be reimbursed by our collaborators. In addition, our research and development activities and related costs which are not reimbursed are expected to expand and require additional resources. We also expect to incur substantial costs related to the commercialization of our marketed products. Our financial results may fluctuate from quarter to quarter and will depend on, among other factors, the net sales of our products; the scope and progress of our research and development efforts; the timing of certain expenses; the continuation of our collaborations, in particular with Sanofi and Bayer, including our share of collaboration profits from sales of commercialized products and the amount of reimbursement of our research and development expenses that we receive from collaborators; and the amount of income tax expense we incur, which is partly dependent on the profits or losses we earn in each of the countries in which we operate. We cannot predict whether or when new products or new indications for marketed products will receive regulatory approval or, if any such approval is received, whether we will be able to successfully commercialize such product(s) and whether or when they may become profitable. Corporate Information We were incorporated in the State of New York in 1988 and publicly listed in 1991. Our principal executive offices are located at 777 Old Saw Mill River Road, Tarrytown, New York 10591, and our telephone number at that address is (914) 847-7000. We make available free of charge on or through our Internet website ( http://www.regeneron.com ) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC"). 42 Table of Contents Investors and other interested parties should note that we use our media and investor relations website ( http://investor.regeneron.com ) and our social media channels to publish important information about Regeneron, including information that may be deemed material to investors. We encourage investors and other interested parties to review the information we may publish through our media and investor relations website and the social media channels listed on our media and investor relations website, in addition to our SEC filings, press releases, conference calls, and webcasts. The information contained on our websites and social media channels is not included as a part of, or incorporated by reference into, this report. Results of Operations Three and Nine Months Ended September 30, 2023 and 2022 Net Income Three Months Ended September 30, Nine Months Ended September 30, (In millions, except per share data) 2023 2022 2023 2022 Revenues $ 3,362.7 $ 2,936.2 $ 9,682.9 $ 8,758.5 Operating expenses 2,251.7 1,712.5 6,608.7 5,166.4 Income from operations 1,111.0 1,223.7 3,074.2 3,592.1 Other income (expense) (0.2) 286.1 (22.5) (58.0) Income before income taxes 1,110.8 1,509.8 3,051.7 3,534.1 Income tax expense 103.0 194.1 257.7 392.8 Net income $ 1,007.8 $ 1,315.7 $ 2,794.0 $ 3,141.3 Net income per share - diluted $ 8.89 $ 11.66 $ 24.57 $ 27.73 Revenues Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 $ Change 2023 2022 $ Change Net product sales: EYLEA - U.S. $ 1,448.2 $ 1,629.4 $ (181.2) $ 4,382.1 $ 4,768.2 $ (386.1) EYLEA HD - U.S. 42.7 — * 42.7 — * Libtayo - U.S. 144.1 94.7 49.4 384.0 264.5 119.5 Libtayo - ROW 88.3 31.0 57.3 235.3 31.0 * Praluent - U.S. 40.4 29.7 10.7 121.1 94.5 26.6 Evkeeza - U.S. 19.1 13.6 5.5 53.3 33.2 20.1 Inmazeb - U.S. 3.3 3.0 0.3 7.7 3.0 4.7 Total net product sales $ 1,786.1 $ 1,801.4 $ (15.3) $ 5,226.2 $ 5,194.4 $ 31.8 Collaboration revenue: Sanofi $ 1,064.5 $ 711.4 $ 353.1 $ 2,806.6 $ 2,019.8 $ 786.8 Bayer 377.1 332.8 44.3 1,110.7 1,075.6 35.1 Roche (5.7) 6.4 (12.1) 212.7 230.9 (18.2) Other 2.4 — 2.4 3.1 0.4 2.7 Other revenue 138.3 84.2 54.1 323.6 237.4 86.2 Total revenues $ 3,362.7 $ 2,936.2 $ 426.5 $ 9,682.9 $ 8,758.5 $ 924.4 * Not meaningful 43 Table of Contents Net Product Sales Net product sales of EYLEA in the United States decreased for the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to a lower net selling price resulting from increased competition. In August 2023, the FDA approved EYLEA HD for the treatment of patients with wAMD, DME, and DR. As described in "Collaboration, License, and Other Agreements - Sanofi - Immuno-Oncology " above, effective July 1, 2022, the Company became solely responsible for the research, development, and commercialization of Libtayo worldwide and began recording net product sales of Libtayo outside the United States. Collaboration Revenue Sanofi Collaboration Revenue Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Antibody: Regeneron's share of profits in connection with commercialization of antibodies $ 863.0 $ 551.1 $ 2,250.6 $ 1,463.0 Sales-based milestones earned 50.0 — 50.0 50.0 Reimbursement for manufacturing of commercial supplies (a) 151.5 160.5 506.0 466.8 Other — (0.2) — 28.7 Total Antibody 1,064.5 711.4 2,806.6 2,008.5 Total Immuno-oncology (b) — — — 11.3 Total Sanofi collaboration revenue $ 1,064.5 $ 711.4 $ 2,806.6 $ 2,019.8 (a) Corresponding costs incurred by the Company in connection with such production is recorded within Cost of collaboration and contract manufacturing. (b) As the A&R IO LCA became effective July 1, 2022, the three months ended June 30, 2022 was the last period in which Sanofi collaboration revenue was recognized in connection with the IO Collaboration. Global net product sales of Dupixent and Kevzara are recorded by Sanofi in connection with the Antibody Collaboration, and we and Sanofi share profits on such sales. As described above under "Collaboration, License, and Other Agreements - Sanofi - Antibody ", on July 1, 2022, an amendment to the LCA became effective, pursuant to which the percentage of Regeneron's share of profits in any calendar quarter used to reimburse Sanofi for development costs which were funded by Sanofi increased from 10% to 20%. Regeneron's share of profits in connection with the commercialization of Dupixent and Kevzara is summarized below: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Dupixent and Kevzara net product sales $ 3,193.3 $ 2,418.2 $ 8,645.7 $ 6,509.1 Regeneron's share of collaboration profits $ 995.6 $ 686.7 $ 2,564.8 $ 1,700.6 Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation (132.6) (78.7) (314.2) (180.7) One-time payment in connection with amendment to the Antibody License and Collaboration Agreement — (56.9) — (56.9) Regeneron's share of profits in connection with commercialization of antibodies $ 863.0 $ 551.1 $ 2,250.6 $ 1,463.0 Regeneron's share of collaboration profits as a percentage of Dupixent and Kevzara net product sales 27% 23% 26% 22% 44 Table of Contents The increase in our share of profits in connection with commercialization of antibodies during the three and nine months ended September 30, 2023, compared to the same periods in 2022, was driven by higher profits associated with Dupixent sales, partly offset by the impact of the amendment to the LCA. During the three months ended September 30, 2023, the Company earned the final $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $3.0 billion on a rolling twelve-month basis. During the nine months ended September 30, 2022, the Company earned a $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $2.0 billion on a rolling twelve-month basis. Bayer Collaboration Revenue Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 349.9 $ 315.3 $ 1,031.0 $ 993.4 Reimbursement for manufacturing of ex-U.S. commercial supplies (a) 27.2 17.5 79.7 60.3 One-time payment in connection with change in Japan arrangement (b) — — — 21.9 Total Bayer collaboration revenue $ 377.1 $ 332.8 $ 1,110.7 $ 1,075.6 (a) Corresponding costs incurred by the Company in connection with such production is recorded within Cost of collaboration and contract manufacturing. (b) Effective January 1, 2022, the Company and Bayer commenced sharing equally in profits and losses based on sales from Bayer to its distributor in Japan. Previously, the Company received from Bayer a tiered percentage of sales based on sales by Bayer's distributor in Japan. Bayer records net product sales of EYLEA outside the United States. Regeneron's share of profits in connection with commercialization of EYLEA outside the United States is summarized below: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 EYLEA net product sales outside the United States $ 872.2 $ 816.9 $ 2,605.6 $ 2,544.2 Regeneron's share of collaboration profit from sales outside the United States $ 365.0 $ 329.9 $ 1,075.4 $ 1,037.8 Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation (15.1) (14.6) (44.4) (44.4) Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 349.9 $ 315.3 $ 1,031.0 $ 993.4 Regeneron's share of profits as a percentage of EYLEA net product sales outside the United States 40% 39% 40% 39% Roche Collaboration Revenue Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Global gross profit payment from Roche in connection with sales of Ronapreve $ — $ 6.4 $ 222.2 $ 230.9 Other (5.7) — (9.5) — Total Roche collaboration revenue $ (5.7) $ 6.4 $ 212.7 $ 230.9 Roche distributes and records net product sales of Ronapreve outside the United States, and the parties share gross profits from worldwide sales. 45 Table of Contents Other Revenue Other revenue during the three and nine months ended September 30, 2023 included the recognition of $34.2 million of revenue in connection with our August 2023 agreement with BARDA to fund certain costs for a next-generation COVID-19 monoclonal antibody therapy for the prevention of SARS-CoV-2 infection. Expenses Three Months Ended September 30, Nine Months Ended September 30, (In millions, except headcount data) 2023 2022 Change 2023 2022 Change Research and development (a) $ 1,075.3 $ 911.3 $ 164.0 $ 3,261.8 $ 2,549.4 $ 712.4 Acquired in-process research and development 100.0 — 100.0 156.1 225.1 (69.0) Selling, general, and administrative (a) 640.5 529.1 111.4 1,893.6 1,455.4 438.2 Cost of goods sold 224.5 141.3 83.2 625.3 497.8 127.5 Cost of collaboration and contract manufacturing (b) 211.9 176.5 35.4 673.5 522.0 151.5 Other operating (income) expense, net (0.5) (45.7) 45.2 (1.6) (83.3) 81.7 Total operating expenses $ 2,251.7 $ 1,712.5 $ 539.2 $ 6,608.7 $ 5,166.4 $ 1,442.3 Average headcount 12,878 11,316 1,562 12,463 10,915 1,548 (a) Includes costs incurred net of any cost reimbursements from collaborators who are not deemed to be our customers (b) Includes costs incurred in connection with producing commercial drug supplies for collaborators and others Operating expenses included stock-based compensation of $203.9 million and $166.3 million for the three months ended September 30, 2023 and 2022, respectively, and $644.6 million and $493.0 million for the nine months ended September 30, 2023 and 2022, respectively. Stock-based compensation expense relates to equity awards granted under our long-term incentive plans. 46 Table of Contents Research and Development Expenses The following table summarizes our estimates of direct research and development expenses by clinical development program and other significant categories of research and development expenses. Direct research and development expenses are comprised primarily of costs paid to third parties for clinical and product development activities, including costs related to preclinical research activities, clinical trials, and the portion of research and development expenses incurred by our collaborators that we are obligated to reimburse. Indirect research and development expenses have not been allocated directly to each program, and primarily consist of costs to compensate personnel, overhead and infrastructure costs to maintain our facilities, and other costs related to activities that benefit multiple projects. Clinical manufacturing costs primarily consist of costs to manufacture bulk drug product for clinical development purposes as well as related drug filling, packaging, and labeling costs. Clinical manufacturing costs also includes pre-launch commercial supplies which did not meet the criteria to be capitalized as inventory. The table below also includes reimbursements of research and development expenses by collaborators, as when we are entitled to reimbursement of all or a portion of such expenses that we incur under a collaboration, we record those reimbursable amounts in the period in which such costs are incurred. Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 * $ Change 2023 2022 * $ Change Direct research and development expenses: Dupixent (dupilumab) $ 32.7 $ 37.1 $ (4.4) $ 132.0 $ 109.3 $ 22.7 Fianlimab 27.6 8.9 18.7 80.5 16.9 63.6 Odronextamab 24.9 17.5 7.4 66.6 42.9 23.7 Libtayo (cemiplimab) 23.9 31.3 (7.4) 82.2 107.1 (24.9) Linvoseltamab 23.3 12.4 10.9 64.3 29.5 34.8 Itepekimab 22.0 13.2 8.8 54.1 11.6 42.5 Pozelimab 19.9 17.6 2.3 42.6 35.0 7.6 EYLEA HD (aflibercept) 8 mg 18.3 10.8 7.5 71.9 44.6 27.3 Other product candidates in clinical development and other research programs 126.7 134.9 (8.2) 368.7 308.6 60.1 Total direct research and development expenses 319.3 283.7 35.6 962.9 705.5 257.4 Indirect research and development expenses: Payroll and benefits 368.9 291.4 77.5 1,130.7 860.6 270.1 Lab supplies and other research and development costs 49.5 48.1 1.4 157.9 133.4 24.5 Occupancy and other operating costs 129.7 133.6 (3.9) 373.7 376.1 (2.4) Total indirect research and development expenses 548.1 473.1 75.0 1,662.3 1,370.1 292.2 Clinical manufacturing costs 246.4 216.7 29.7 770.5 684.6 85.9 Reimbursement of research and development expenses by collaborators (38.5) (62.2) 23.7 (133.9) (210.8) 76.9 Total research and development expenses $ 1,075.3 $ 911.3 $ 164.0 $ 3,261.8 $ 2,549.4 $ 712.4 * Certain prior year amounts have been reclassified to conform to the current year's presentation. Total research and development expenses increased for the nine months ended September 30, 2023, compared to the same period in 2022, partially due to the impact of the amendments to the Sanofi collaboration agreements (which were effective July 1, 2022) described under the "Collaboration, License, and Other Agreements" section above, as (i) Sanofi is no longer reimbursing us for 50% of Libtayo development costs (such reimbursements were previously included in Reimbursement of research and development expenses by collaborators in the table above) and (ii) we recognize our 50% share of research and development expenses in connection with the Sanofi Antibody Collaboration. 47 Table of Contents Research and development expenses included stock-based compensation expense of $107.4 million and $93.7 million for the three months ended September 30, 2023 and 2022, respectively, and $356.0 million and $275.8 million for the nine months ended September 30, 2023 and 2022, respectively. There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development, uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes in the competitive landscape affecting a product candidate, and other risks and uncertainties described in Part II, Item 1A. "Risk Factors." There is also variability in the duration and costs necessary to develop a pharmaceutical product, potential opportunities and/or uncertainties related to future indications to be studied, and the estimated cost and scope of the projects. The lengthy process of seeking FDA and other applicable approvals, and subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any failure by us to obtain, or delay in obtaining, regulatory approvals could materially adversely affect our business. We are unable to reasonably estimate if our product candidates in clinical development will generate material product revenues and net cash inflows. Acquired In-process Research and Development ("IPR&D") Acquired IPR&D for the three months ended September 30, 2023 was related to a $100.0 million charge in connection with a development milestone for the Phase 1 ALN-APP program which is in collaboration with Alnylam. In addition to this Alnylam development milestone, Acquired IPR&D for the nine months ended September 30, 2023 also included a $45.0 million up-front payment in connection with our collaboration agreement with Sonoma Biotherapeutics, Inc. Acquired IPR&D for the nine months ended September 30, 2022 included a $195.0 million charge related to our acquisition of Checkmate Pharmaceuticals, Inc and a $20.0 million opt-in payment in connection with a product candidate under our collaboration agreement with Adicet Bio, Inc. Selling, General, and Administrative Expenses Selling, general, and administrative expenses increased for the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to higher headcount and headcount-related costs and higher contributions to an independent not-for-profit patient assistance organization. Selling, general, and administrative expenses also increased for the nine months ended September 30, 2023 due to higher commercialization-related expenses and integration costs for Libtayo outside the United States (as effective July 1, 2022, the Company became solely responsible for the commercialization of Libtayo worldwide). Selling, general, and administrative expenses included stock-based compensation expense of $74.4 million and $59.8 million for the three months ended September 30, 2023 and 2022, respectively, and $224.5 million and $178.0 million for the nine months ended September 30, 2023 and 2022, respectively. Cost of Collaboration and Contract Manufacturing Cost of collaboration and contract manufacturing increased for the nine months ended September 30, 2023, compared to the same period in 2022, primarily due to the recognition of costs in connection with manufacturing commercial supplies for Sanofi related to Dupixent, Praluent outside the United States, and for Bayer related to EYLEA outside the United States. Other Operating (Income) Expense Other operating (income) expense, net, for the nine months ended September 30, 2022 included recognition of amounts previously deferred in connection with up-front and development milestone payments, as applicable, received in connection with our Sanofi IO, Teva, and Mitsubishi Tanabe Pharma Corporation ("MTPC") collaborative arrangements. During the three months ended September 30, 2022, the Company discontinued further clinical development of fasinumab and, as a result, recorded $44.4 million (as an increase to other operating income) related to our Teva and MTPC collaborative arrangements as we deemed our obligation to provide development services in connection with these collaborative arrangements to be complete. As the A&R IO LCA became effective July 1, 2022, the three months ended June 30, 2022 was the last period in which such amounts were recognized in connection with our Sanofi IO Collaboration. 48 Table of Contents Other Income (Expense) Other income (expense) consists of the following: Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2023 2022 2023 2022 Unrealized (losses) gains on equity securities, net $ (100.3) $ 254.3 $ (295.9) $ (120.6) Interest income 133.7 42.9 347.2 89.6 Other (15.8) 4.2 (19.1) 15.0 Other income (expense), net 17.6 301.4 32.2 (16.0) Interest expense (17.8) (15.3) (54.7) (42.0) Total other income (expense) $ (0.2) $ 286.1 $ (22.5) $ (58.0) The increase in interest income for the three and nine months ended September 30, 2023, compared to the same periods in 2022, was primarily driven by higher interest rates. Income Taxes Three Months Ended September 30, Nine Months Ended September 30, (In millions, except effective tax rate) 2023 2022 2023 2022 Income tax expense $ 103.0 $ 194.1 $ 257.7 $ 392.8 Effective tax rate 9.3 % 12.9 % 8.4 % 11.1 % The Company's effective tax rate for the three and nine months ended September 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. Liquidity and Capital Resources Our financial condition is summarized as follows: September 30, December 31, (In millions) 2023 2022 $ Change Financial assets: Cash and cash equivalents $ 2,152.3 $ 3,105.9 $ (953.6) Marketable securities - current 7,761.3 4,636.4 3,124.9 Marketable securities - noncurrent 5,778.5 6,591.8 (813.3) $ 15,692.1 $ 14,334.1 $ 1,358.0 Working capital: Current assets $ 18,634.8 $ 15,884.1 $ 2,750.7 Current liabilities 3,598.6 3,141.3 457.3 $ 15,036.2 $ 12,742.8 $ 2,293.4 Borrowings and finance lease liabilities: Long-term debt $ 1,982.6 $ 1,981.4 $ 1.2 Finance lease liabilities $ 720.0 $ 720.0 $ — As of September 30, 2023, we also had borrowing availability of $750.0 million under a revolving credit facility. 49 Table of Contents Sources and Uses of Cash for the Nine Months Ended September 30, 2023 and 2022 Nine Months Ended September 30, (In millions) 2023 2022 $ Change Cash flows provided by operating activities $ 3,504.3 $ 3,295.0 $ 209.3 Cash flows used in investing activities $ (3,118.9) $ (1,926.9) $ (1,192.0) Cash flows used in financing activities $ (1,344.0) $ (761.4) $ (582.6) Cash Flows from Investing Activities Capital expenditures during the nine months ended September 30, 2023 included costs incurred in connection with the expansion of our Tarrytown, New York campus, as well costs associated with the expansion of our manufacturing facilities in Rensselaer, New York (including the ongoing construction of a fill/finish facility and related equipment). Additionally, capital expenditures for the nine months ended September 30, 2023 is net of grant proceeds of $60.0 million primarily related to the expansion of our facilities in New York. We expect to incur capital expenditures of $660 million to $700 million for the full year of 2023 primarily in connection with the continued expansion of our research, preclinical manufacturing, and support facilities at our Tarrytown campus and our Rensselaer manufacturing facility (including the fill/finish facility). Payments for Libtayo intangible asset of $145.7 million during the nine months ended September 30, 2023 were related to contingent consideration in connection with our acquisition of the exclusive right to develop, commercialize, and manufacture Libtayo worldwide (as described in "Collaboration, License, and Other Agreements - Sanofi - Immuno-Oncology " above). Payments for Libtayo intangible asset of $926.8 million during the nine months ended September 30, 2022 were related to our acquisition of the Libtayo rights as described above. Acquisitions, net of cash acquired, of $51.1 million during the nine months ended September 30, 2023 was related to our acquisition of Decibel (as described in "Collaboration, License, and Other Agreements - Decibel " above). Acquisitions, net of cash acquired, of $230.3 million during the nine months ended September 30, 2022 was related to our acquisition of Checkmate. Cash Flows from Financing Activities Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $844.5 million during the nine months ended September 30, 2023, compared to $1.147 billion during the nine months ended September 30, 2022. For information related to repurchases of Common Stock, see " Share Repurchase Programs " section below. 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 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 September 30, 2023, $1.826 billion remained available for share repurchases under the program. 50 Table of Contents The table below summarizes the shares of our Common Stock we repurchased and the cost of the shares, which were recorded as Treasury Stock. Nine Months Ended September 30, (In millions) 2023 2022 Number of shares 2.6 2.7 Total cost of shares $ 1,923.8 $ 1,658.6 Critical Accounting Estimates A summary of critical accounting estimates is presented in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (filed February 6, 2023). There have been no material changes to critical accounting estimates during the nine months ended September 30, 2023. Future Impact of Recently Issued Accounting Standards As of September 30, 2023, the future adoption of recently issued accounting standards is not expected to have a material impact on the Company's financial position or results of operations.