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Item 7. Management’s Discussion and Analysis

2024-02-05 compared with 2023-02-06 · 152 added, 185 removed, 316 unchanged (52% of the section changed)

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

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

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

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

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

Refer to Part I, Item 1.

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

Our ability to generate profits and to generate positive cash flow from operations over the next several years depends significantly on the continued success in commercializing EYLEA and Dupixent, as well as on whether we are able to obtain regulatory approval for aflibercept 8 mg and are successful in commercializing it.

Our research and development efforts have led to eleven FDA-approved products that have received marketing approval and approximately 35 product candidates in clinical development, almost all of which were homegrown in our laboratories.

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.

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The critical accounting estimates that impact our Consolidated Financial Statements are described below.

Revenue Recognition - Product Revenue

Product Revenue

We recognize revenue from product sales at a point in time when our customer is deemed to have obtained control of the product, which generally occurs upon receipt or acceptance by our customer.

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Calculating these provisions involves estimates and judgments.

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

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

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

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Our collaboration agreements may require us to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate.

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

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

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

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

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

Treasury rates for

securities with maturities approximating the options' expected lives.

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

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

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

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

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

The expected dividend yield is zero as we have never paid dividends and do not currently have plans to do so.

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

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Significant judgment is required in making this assessment.

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

We recognize the financial statement effects of a tax position when our assessment is that there is more than a 50% probability that the position will be sustained upon examination by a taxing authority based upon its technical merits.

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

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

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

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

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

We make certain judgments to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.

In a business combination, the acquisition method of accounting generally requires that the assets acquired and liabilities assumed be recorded as of the date of the acquisition at their respective fair values.

There can be significant judgment involved in determining the estimated fair values of such assets and liabilities.

Amounts allocated to acquired in-process research and development are capitalized as indefinite-lived intangible assets.

Any excess of the purchase price (consideration transferred) over the fair values of net assets acquired is recorded as goodwill.

In a business combination, contingent consideration obligations are recorded at fair value as of the acquisition date and remeasured each subsequent reporting period until the contingencies have been resolved.

The fair value of contingent consideration liabilities is determined using inputs that may include the probability of achieving certain milestones and estimated discount rates.

If it is determined that the assets acquired do not meet the definition of a business, or if substantially all of the fair value of the assets acquired are concentrated in a single identifiable asset, then the transaction is accounted for as an asset acquisition rather than a business combination.

In an asset acquisition, assets acquired are recorded at cost, goodwill is not recorded, and acquired in-process research and development with no alternative future use is charged to expense.

Intangible Assets

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

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

Intangible assets acquired in a business combination are recorded at fair value, while intangible assets acquired in connection with an asset acquisition are recorded at cost.

Payments to acquire intangible assets in an asset acquisition may include up-front payments and contingent consideration.

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

If contingent consideration is recognized subsequent to the acquisition date in an asset acquisition, the amount of such consideration is recorded as an addition to the cost basis of the intangible asset with a cumulative catch-up adjustment for amortization expense as if the additional amount of consideration had been accrued from the outset of the acquisition.

Indefinite-lived intangible assets are subject to impairment testing until completion or abandonment of the associated research and development efforts.

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

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

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

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

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

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

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

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

As described in Part I, Item 1.

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

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

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

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

Contingencies

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(In millions) 2023 2022 2021 2023 vs.

2021 2021 vs.

Net product sales:

EYLEA HD - U.S.

$ 165.8 $ — $ — $ 165.8 $ —

5,719.6 6,264.6 5,792.3 (545.0) 472.3

Total EYLEA HD and EYLEA - U.S.

5,885.4 6,264.6 5,792.3 (379.2) 472.3

Libtayo - U.S.

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Libtayo - ROW *

324.3 73.0 — 251.3 73.0

Total Libtayo - Global 863.1 447.5 306.3 415.6 141.2

Praluent - U.S.

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ARCALYST - U.S.

— — 2.2 — (2.2)

Total net product sales $ 7,078.0 $ 6,893.7 $ 12,117.2 $ 184.3 $ (5,223.5)

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Total revenues $ 13,117.2 $ 12,172.9 $ 16,071.7 $ 944.3 $ (3,898.8)

* Not meaningful

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

* 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.

** Effective April 1, 2021, Kiniksa records net product sales of ARCALYST in the United States.

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Net Product Sales

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

As described in Part I, Item.

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

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

Net product sales of EYLEA in the United States decreased in 2023, compared to 2022, primarily due to changing market dynamics, resulting in a lower net selling price and lower volumes.

EYLEA volumes in 2023 were impacted by the August 2023 launch of EYLEA HD and subsequent transition of EYLEA patients to EYLEA HD.

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

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

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

Refer to Part I, Item 1.

"Business - Agreements Related to COVID-19 - U.S.

Government " for further details.

as a result, there were no net product sales of REGEN-COV in the United States recorded during the years ended December 31, 2023 and 2022.

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

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$ 202.2 $ 77.2 $ 44.8 $ 324.2

1,047.1 363.6 150.4 1,561.1

Credits/payments (1,034.7) (360.8) (127.6) (1,523.1)

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214.6 80.0 67.6 362.2

1,537.3 431.1 141.1 2,109.5

Credits/payments (1,398.0) (399.7) (127.2) (1,924.9)

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353.9 111.4 81.5 546.8

2,074.5 439.2 155.3 2,669.0

Credits/payments (1,972.7) (388.3) (157.5) (2,518.5)

Balance as of December 31, 2023

$ 455.7 $ 162.3 $ 79.3 $ 697.3

Sanofi Collaboration Revenue

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Total Antibody 3,799.5 2,844.4 1,901.8

Total Immuno-oncology 11.3 0.4 (16.8)

Total Immuno-oncology (b)

Total Sanofi collaboration revenue $ 3,799.5 $ 2,855.7 $ 1,902.2

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

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

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

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

(b) As the A&R IO LCA became effective July 1, 2022, the three months ended June 30, 2022 was the last quarter 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 in Part I, Item 1.

"Business - Collaboration, License, and Other Agreements - Sanofi - Antibody", on July 1, 2022, an amendment to the Antibody License and Collaboration Agreement became effective, pursuant to which the percentage of Regeneron's share of profits in any calendar quarter used to reimburse Sanofi for development costs which were funded by Sanofi increased from 10% to 20%.

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

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

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

"Business - 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:

Year Ended December 31,

(In millions) 2023 2022 2021

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

Dupixent and Kevzara net product sales

$ 11,974.0 $ 9,039.2 $ 6,536.3

Regeneron's share of collaboration profits 3,596.3 2,405.5 1,511.5

Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation

Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation (a)

(459.8) (266.6) (148.5)

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Regeneron's share of profits in connection with commercialization of antibodies $ 3,136.5 $ 2,082.0 $ 1,363.0

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

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

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

therefore, the quarter ended March 31, 2020 was the last quarter for which net product sales of Praluent were included in the table above.

As described in Part I, Item 1.

"Business - Collaboration, License, and Other Agreements - Sanofi - Antibody", effective April 1, 2020, the Company became solely responsible for the development and commercialization of Praluent in the United States.

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

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

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

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

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

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

(a) See "Liquidity and Capital Resources - Additional Funding Requirements" below for additional details on our contingent reimbursement obligation.

The increase in our share of profits in connection with commercialization of antibodies during the year ended December 31, 2023, compared to 2022, was driven by higher profits associated with Dupixent sales, partly offset by the impact of the amendment to the LCA.

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

Reimbursements for manufacturing of commercial supplies primarily relate to Dupixent and are recognized when the product is sold by Sanofi to third-party customers;

such reimbursements decreased during the year ended December 31, 2023, compared to 2022, primarily due to lower manufacturing costs resulting from the transition to a higher-yielding manufacturing process.

Bayer Collaboration Revenue

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111.1 91.4 60.1

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

One-time payment in connection with change in Japan arrangement (b)

Total Bayer collaboration revenue $ 1,487.5 $ 1,430.7 $ 1,409.3

(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 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.

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

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

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

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$ 1,436.1 $ 1,375.1 $ 1,408.3

Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation

Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation (a)

(59.7) (57.7) (59.1)

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Regeneron's share of profits as a percentage of EYLEA net product sales outside the United States 39% 39% 39%

* Effective January 1, 2022, the Company and Bayer commenced sharing equally in profits and losses based on sales from Bayer to its distributor in Japan.

Previously, the Company received from Bayer a tiered percentage of sales based on sales by Bayer's distributor in Japan.

Consequently, the prior year net product sales amount has been revised for comparability purposes.

(a) See "Liquidity and Capital Resources - Additional Funding Requirements" below for additional details on our contingent reimbursement obligation.

Roche Collaboration Revenue

As described in Part I, Item 1.

"Business - Agreements Related to COVID-19 - Roche", Roche distributes and records net product sales of Ronapreve outside the United States, and the parties share gross profits from worldwide sales of REGEN-COV and Ronapreve, depending on the amount of manufactured product supplied by each party to the market.

Each quarter, a single payment is due from one party to the other to true-up the global gross profits between the parties.

If Regeneron is to receive a true-up payment from Roche, such amount will be recorded to collaboration revenue.

If Regeneron is to make a true-up payment to Roche, such amount will be recorded to Cost of goods sold.

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

Year Ended December 31,

(In millions) 2023 2022 2021

Global gross profit payment from Roche in connection with sales of REGEN-COV and Ronapreve

$ 224.3 $ 627.3 $ 361.8

Other (13.3) — —

Total Roche collaboration revenue $ 211.0 $ 627.3 $ 361.8

Roche distributes and records net product sales of Ronapreve outside the United States, and the parties share gross profits from worldwide sales.

Other Revenue

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

Other revenue in 2023 included the recognition of $50.4 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.

In addition, Other revenue increased in 2023, compared to 2022, primarily due to the following:

• higher reimbursements for the manufacture of commercial supplies for Sanofi related to Praluent outside the United States;

• higher share of profits earned in connection with sales of ARCALYST pursuant to our license agreement with Kiniksa Pharmaceuticals, Ltd.;

• royalties earned in connection with our license agreement with Novartis, under which we receive royalties on worldwide sales of Novartis' Ilaris ® (canakinumab).

Year Ended December 31, Change

(In millions, except headcount data) 2023 2022 2021 2023 vs.

2021 2021 vs.

Research and development (a)

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

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

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

(b) Includes costs incurred in connection with producing commercial drug supplies for collaborators and others

Operating expenses in 2023 and 2022 included a total of $885.0 million and $725.0 million, respectively, of stock-based compensation expense related to equity awards granted under our long-term incentive plans.

As of December 31, 2023, unrecognized stock-based compensation expense related to unvested stock options and unvested restricted stock (including performance-based restricted stock units) was $589.6 million and $1.127 billion, respectively.

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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.

The following table summarizes our 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 external drug filling, packaging, and labeling costs.

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 (see "Critical Accounting Policies and Use of Estimates - Inventories" above).

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(In millions) 2023 2022 *

2021 2021 vs.

Direct research and development expenses:

Dupixent (dupilumab) $ 168.0 $ 156.5 $ 146.4 $ 11.5 $ 10.1

Fianlimab 112.2 43.4 8.7 68.8 34.7

Libtayo (cemiplimab) 105.3 138.0 146.2 (32.7) (8.2)

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

Pozelimab 72.4 28.3 16.0 44.1 12.3

Odronextamab 96.3 66.0 34.9 30.3 31.1

EYLEA HD (aflibercept) 8 mg

96.2 67.9 73.5 28.3 (5.6)

Linvoseltamab 78.7 45.5 18.7 33.2 26.8

Fianlimab 43.4 8.7 9.1 34.7 (0.4)

70.3 26.5 — 43.8 26.5

Pozelimab 60.2 72.4 28.3 (12.2) 44.1

(5.6) 32.8 309.8 (38.4) (277.0)

Other product candidates in clinical development and other research programs

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

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

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

Total research and development expenses increased in 2023, compared to 2022, partially due to the impact of the amendments to the Sanofi collaboration agreements (which were effective July 1, 2022) described above in Part I, Item 1.

"Business - "Collaboration, License, and Other Agreements - Sanofi", as (i) Sanofi is no longer reimbursing us for 50% of Libtayo development costs (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.

Research and development expenses included stock-based compensation expense of $488.7 million and $406.8 million in 2023 and 2022, respectively.

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

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

There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development, uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes in the competitive landscape affecting a product candidate, and other risks and uncertainties described in Part I, Item 1A.

"Risk Factors".

There is also variability in the duration and costs necessary to develop a pharmaceutical product, potential opportunities and/or uncertainties related to future indications to be studied, and the estimated cost and scope of the projects.

"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.

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

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

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

Acquired IPR&D in 2023 included:

• $100.0 million charge in connection with a development milestone for the Phase 1 ALN-APP program, which is in collaboration with Alnylam;

• $45.0 million up-front payment in connection with our collaboration agreement with Sonoma Biotherapeutics, Inc.;

• $30.0 million charge to extend the period for selecting targets under our collaboration agreement with Intellia.

Acquired IPR&D in 2022 included:

• $195.0 million charge related to our acquisition of Checkmate Pharmaceuticals, Inc.;

• $30.0 million up-front payment in connection with our collaboration agreement with CytomX Therapeutics, Inc.;

• $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 in 2022, compared to 2021, primarily due to higher headcount and headcount-related costs, an increase in commercialization-related expenses for Libtayo (as effective July 1, 2022, the Company became solely responsible for the commercialization of Libtayo worldwide), and higher contributions to an independent not-for-profit patient assistance organization, partly offset by costs in 2021 for educational campaigns related to COVID-19 that did not recur during 2022.

Selling, general, and administrative expenses increased in 2023, compared to 2022, primarily due to higher headcount and headcount-related costs, an increase in commercialization-related expenses for Libtayo (including acquisition and integration-related costs for Libtayo outside the United States as effective July 1, 2022, the Company became solely responsible for the commercialization of Libtayo worldwide), and, to a lesser extent, commercialization-related expenses for various other products, and higher contributions to an independent not-for-profit patient assistance organization.

Selling, general, and administrative expenses also included $307.1 million and $256.4 million of stock-based compensation expense in 2023 and 2022, respectively.

Cost of Goods Sold

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

such transactions did not recur in 2022.

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

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

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

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

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

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

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

Refer to Part I, Item 1.

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

Cost of goods sold increased in 2023, compared to 2022, primarily due to higher start-up costs for our Rensselaer, New York fill/finish facility and an increase in period costs at our manufacturing facilities resulting from lower production volumes, partly offset by lower inventory write-offs and reserves.

Inventory write-offs and reserves were $102.3 million in 2023 compared to $258.7 million in 2022.

The inventory write-offs and reserves in 2022 were primarily related to REGEN-COV.

Cost of Collaboration and Contract Manufacturing

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

Cost of collaboration and contract manufacturing increased in 2023, compared to 2022, primarily due to the recognition of costs in connection with manufacturing commercial supplies for Sanofi related to Praluent outside the United States and for Bayer related to EYLEA outside the United States.

This increase was partly offset by lower Dupixent manufacturing costs as a result of the transition to a higher-yielding manufacturing process.

Other Operating (Income) Expense

Other operating (income) expense, net, includes recognition of a portion of amounts previously deferred in connection with up-front and development milestone payments, as applicable, received in connection with Sanofi IO, Teva, and MTPC collaborative arrangements.

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

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

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

Other operating (income) expense, net, in 2022 included the 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.

As we discontinued further clinical development of fasinumab (for which we had collaborative arrangements with Teva and MTPC) during 2022, and the A&R IO LCA with Sanofi became effective July 1, 2022, no such amounts were recognized in connection with these collaborative arrangements during 2023.

Other Income (Expense)

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Interest income 495.9 160.1 45.8

Foreign currency (losses) gains

(12.9) 50.2 0.4

Other (20.0) 8.8 4.0

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Total other income (expense) $ 152.2 $ 119.9 $ 379.0

The increase in interest income in 2023, compared to 2022, was primarily driven by higher interest rates.

Year Ended December 31,

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5.9% 10.7% 13.4%

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

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

The Company's effective tax rate for 2023, compared to 2022, included a higher benefit from stock-based compensation, federal tax credits for research activities, and the proportion of income earned in foreign jurisdictions with tax rates lower than the U.S.

federal statutory rate.

Certain countries in which we have operations, including Ireland, have adopted legislation influenced by the OECD Pillar Two rules, including a minimum tax rate of 15%.

It is uncertain whether the United States will enact legislation to adopt the Pillar Two framework.

While we do not expect the adoption of the Pillar Two framework to have a material impact on our effective tax rate, we are continuing to evaluate additional guidance released by the OECD, along with the pending legislative adoption by additional individual countries.

Liquidity and Capital Resources

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Finance lease liabilities $ 720.0 $ 720.0 $ —

* The $719.7 million related to finance lease liabilities was classified within current liabilities as of December 31, 2021.

See "Tarrytown, New York Leases" section below for details.

As of December 31, 2023, we also had borrowing availability of $750.0 million under a revolving credit facility (see further description under " Credit Facility " below).

Sources and Uses of Cash for the Years Ended December 31, 2023, 2022, and 2021

As of December 31, $ Change

Year Ended December 31,

(In millions) 2023 2022 2021 2023 vs.

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Cash Flows from Operating Activities

As of December 31, 2023 and 2022, deferred tax assets increased by $837.8 million and $746.4 million, respectively, primarily related to the impact of the Tax Cuts and Jobs Act of 2017, which requires, for tax purposes, the capitalization and amortization of research and development expenses effective for years beginning after December 31, 2021.

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

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

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

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

As of December 31, 2022, deferred tax assets increased by $746.4 million, compared to December 31, 2021, primarily related to the impact of the Tax Cuts and Jobs Act of 2017, which requires, for tax purposes, the capitalization and amortization of research and development expenses effective for years beginning after December 31, 2021.

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

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

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

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

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

government in connection with such sales in the fourth quarter of 2021.

Other non-cash items, net, in 2022 and 2021 included inventory write-offs and reserves primarily related to REGEN-COV.

Cash Flows from Investing Activities

Capital expenditures in 2022 included costs associated with the expansion of our manufacturing facilities in Rensselaer, New York (including the ongoing construction of a fill/finish facility and related equipment) and Limerick, Ireland, as well as costs incurred in connection with the expansion of the Tarrytown, New York campus.

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

Capital expenditures in 2023 included costs incurred in connection with the expansion of our Tarrytown, New York location, as well as 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 in 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 $825 million to $950 million in 2024 primarily in connection with the continued expansion of our research, preclinical manufacturing, and support facilities at our Tarrytown, New York campus and our manufacturing facilities.

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

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

Asset acquisition, net of cash acquired, of $230.3 million in 2022 was related to our acquisition of Checkmate.

Payments for the Libtayo intangible asset of $207.8 million and $1.027 billion in 2023 and 2022, respectively, were related to our acquisition (including contingent consideration paid) of the exclusive right to develop, commercialize, and manufacture Libtayo worldwide (as described in Part I, Item 1.

"Collaboration, License, and Other Agreements - Sanofi - Immuno-Oncology " above).

Acquisitions, net of cash acquired, of $54.9 million and $230.3 million in 2023 and 2022 was related to our acquisitions of Decibel Therapeutics, Inc.

and Checkmate Pharmaceuticals, Inc., respectively.

Cash Flows from Financing Activities

Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $1.146 billion during 2023, compared to $1.520 billion during 2022 and $1.672 billion during 2021.

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

For information related to repurchases of Common Stock, see " Share Repurchase Programs " section below.

Credit Facility

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

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

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

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

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

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Share Repurchase Programs

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

The share repurchase program permitted the Company to make repurchases through a variety of methods, including open-

market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, block trades, and other transactions in compliance with Rule 10b-18 of the Exchange Act.

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

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

The share repurchase program was approved under terms substantially similar to the November 2019 share repurchase program.

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

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

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

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.

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

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

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

As of December 31, 2023, $1.531 billion remained available for share repurchases under the program.

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

Year Ended December 31,

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Total cost of shares $ 2,214.6 $ 2,099.8 $ 1,655.0

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

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

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

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

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

Sanofi Funding of Certain Development Costs

Pursuant to a 2018 agreement, we agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to Libtayo development and/or certain activities relating to dupilumab and itepekimab incurred in periods through September 30, 2020 by selling shares of our Common Stock owned by Sanofi.

During 2020, Sanofi elected to sell, and we elected to purchase, shares of our Common Stock to satisfy Sanofi's funding obligation related to such activities.

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

Secondary Offering and Purchase of Regeneron Common Stock Held by Sanofi

In May 2020, a secondary offering of 13,014,646 shares of our Common Stock (the "Secondary Offering") held by Sanofi was completed.

In connection with the Secondary Offering, we also purchased 9,806,805 shares of our Common Stock directly from Sanofi for an aggregate purchase amount of $5.0 billion (the "Stock Purchase").

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

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

Issuance of Senior Notes

In August 2020, we issued and sold $1.250 billion aggregate principal amount of senior unsecured notes due 2030 (the "2030 Notes") and $750 million aggregate principal amount of senior unsecured notes due 2050 (the "2050 Notes" and, together with the 2030 Notes, the "Notes").

Net proceeds from the issuance and sale of the Notes (after deducting underwriting discounts and offering expenses) were used in part to repay in full the Bridge Facility described above, including accrued interest and related fees and expenses in connection therewith.

The 2030 Notes accrue interest at the rate of 1.750% per year and will mature on September 15, 2030.

The 2050 Notes accrue interest at the rate of 2.800% per year and will mature on September 15, 2050.

Interest on each series of Notes is payable semi-annually in arrears on March 15 and September 15 of each year until their respective maturity dates.

The Notes may be redeemed at the Company’s option at any time at 100% of the principal amount plus accrued and unpaid interest, and, until a specified period before maturity, a specified make-whole amount.

The Notes contain a change-of-control provision that, under certain circumstances, may require the Company to offer to repurchase the Notes at a price equal to 101% of the principal amount plus accrued and unpaid interest.

The Notes also contain certain limitations on the Company’s ability to incur liens and enter into sale and leaseback transactions, as well as customary events of default.

Tarrytown, New York Leases

We lease laboratory and office facilities in Tarrytown, New York (the "Facility").

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

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

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

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

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

In March 2022, we also entered into a Second Amended and Restated Participation Agreement (the "Restated Participation Agreement") with Bank of America, N.A., as administrative agent, the Lessor, and a syndicate of financial institutions as rent assignees (collectively with the Lessor, the "Participants"), which amends and restates the original Participation Agreement entered into in March 2017.

The original Participation Agreement and certain related agreements were amended and restated in order to, among other things, (i) effect a five-year extension of the original March 2022 maturity date of the $720.0 million lease financing and the end of the term of our lease of the Facility from the Lessor to March 2027, at which time all amounts outstanding thereunder will become due and payable in full, and (ii) modify the rate of the interest or yield that is payable to the Participants.

In accordance with the terms of the Restated Lease, we continue to pay all maintenance, insurance, taxes, and other costs arising out of the use of the Facility.

We are also required to make monthly payments of basic rent during the term of the Restated Lease in an amount equal to a variable rate per annum, which was modified in connection with the Restated Lease, to be an adjusted one-month forward-looking term rate based on the Secured Overnight Financing Rate ("SOFR"), plus an applicable margin that varies with our debt rating and total leverage ratio.

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

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

The Restated Lease is classified as a finance lease as we have the option to purchase the Facility under terms that make it reasonably certain to be exercised.

The agreements governing the Restated Lease financing contain financial and operating covenants.

Tarrytown, New York Lease

We are party to a Third Amended and Restated Lease and Remedies Agreement, dated March 27, 2023 (the "Third Amended and Restated Lease") with BA Leasing BSC, LLC, an affiliate of Banc of America Leasing & Capital, LLC ("BAL"), as lessor, which relates to our lease of laboratory and office facilities in Tarrytown, New York (the "Facility");

and a Third Amended and Restated Participation Agreement, dated March 27, 2023 (the "Third Amended and Restated Participation Agreement") with Bank of America, N.A., as administrative agent (the "Administrative Agent"), and a syndicate of lenders (collectively with BAL, the "Participants"), as rent assignees.

The Third Amended and Restated Lease and Third Amended and Restated Participation Agreement provide for a March 2027 maturity date of the $720.0 million lease financing (previously advanced by the Participants in March 2017 in connection with the acquisition by BAL of the Facility and our lease of the Facility from BAL) and the end of the term of our lease of the Facility from BAL, at which time all amounts outstanding thereunder will become due and payable in full.

In accordance with the terms of the Third Amended and Restated Lease, we pay all maintenance, insurance, taxes, and other costs arising out of the use of the Facility.

We are also required to make monthly payments of basic rent during the remaining term of the Third Amended and Restated Lease to satisfy the yield payable to the Participants on their outstanding advances under the Third Amended and Restated Participation Agreement.

Such advances accrue yield at a variable rate per annum based on the one-month forward-looking Secured Overnight Financing Rate ("SOFR") term rate, plus a spread adjustment, plus an applicable margin that varies with our debt rating and total leverage ratio.

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

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

The Third Amended and Restated Lease is classified as a finance lease as we have the option to purchase the Facility under terms that make it reasonably certain to be exercised.

The agreements governing the Third Amended and Restated Lease financing contain financial and operating covenants.

Such financial covenants and certain of the operating covenants are substantially similar to the covenants set forth in our 2022 Credit Agreement.

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

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

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

We expect to continue to incur significant costs in connection with our research and development activities (including preclinical and clinical programs).

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

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

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The payment of these amounts, however, is contingent upon the occurrence of various future events, which have a high degree of uncertainty of occurring and for which the specific timing cannot be predicted.

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

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

See Note 3 to our Consolidated Financial Statements.

As described in Part I, Item 1.

"Collaboration, License, and Other Agreements," under our collaborations with Bayer and Sanofi, we and our collaborator share profits in connection with commercialization of drug products.

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

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

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

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

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to our consolidated financial position or results of operations.

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

As of December 31, 2023, our contingent reimbursement obligation to Bayer was approximately $293 million and our contingent reimbursement obligation to Sanofi in connection with the companies' Antibody Collaboration was approximately $2.330 billion.

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

Future Impact of Recently Issued Accounting Standards

As of December 31, 2022, 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.

See Note 1 to our Consolidated Financial Statements for a description of recently issued accounting standards.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis