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 those discussed or referenced in this report, 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 discussed or referenced in this report; • 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 23 Table of Contents 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. 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 March 31, (In millions, except per share data) 2024 2023 Revenues $ 3,145.0 $ 3,162.1 Net income $ 722.0 $ 817.8 Net income per share - diluted $ 6.27 $ 7.17 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 ® HD (aflibercept) Injection 8 mg (a) Wet age-related macular degeneration ("wAMD") a a a Diabetic macular edema ("DME") a a a Diabetic retinopathy ("DR") a EYLEA ® (aflibercept) Injection (a) wAMD a a a DME a a a DR 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 Neovascular glaucoma ("NVG") a Retinopathy of prematurity ("ROP") a a 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 24 Table of Contents Product (continued) Disease Territory U.S. EU Japan Asthma (in pediatrics 6–11 years of age) a a Chronic rhinosinusitis with nasal polyposis ("CRSwNP") a a a Eosinophilic esophagitis ("EoE") (in adults and adolescents) a a EoE (in pediatrics 1–11 years of age) a Prurigo nodularis a a a Chronic spontaneous urticaria ("CSU") (in adults and adolescents) a Libtayo ® (cemiplimab) Injection 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 (c) LDL-lowering in heterozygous familial hypercholesterolemia ("HeFH") or clinical atherosclerotic cardiovascular disease ("ASCVD") a a HeFH in pediatrics and adolescents (8–17 years of age) a a Cardiovascular risk reduction in patients with established cardiovascular disease a a Homozygous familial hypercholesterolemia ("HoFH") a Kevzara (sarilumab) Injection (b) Rheumatoid arthritis ("RA") a a a Polymyalgia rheumatica ("PMR") a REGEN-COV ®(d) COVID-19 a a Evkeeza ® (evinacumab) Injection (e) HoFH (in adults, adolescents, and pediatrics aged 5 years and older) a a 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 (f) 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 (g) Metastatic colorectal cancer ("mCRC") a a a 25 Table of Contents 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. Aflibercept 8 mg is known as EYLEA HD in the United States and EYLEA 8 mg in other countries. (b) In collaboration with Sanofi (c) 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 the United States. (d) In collaboration with Roche. Product is known as REGEN-COV in the United States and Ronapreve ™ in other countries. (e) 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 the United States. (f) Kiniksa is solely responsible for the development and commercialization of ARCALYST. (g) Sanofi is solely responsible for the development and commercialization of ZALTRAP. Net product sales of Regeneron-discovered products consist of the following: Three Months Ended March 31, 2024 2023 % Change (In millions) U.S. ROW (g) Total U.S. ROW Total (Total Sales) EYLEA HD and EYLEA (a) $ 1,401.6 $ 849.4 $ 2,251.0 $ 1,433.8 $ 847.1 $ 2,280.9 (1 %) Dupixent (b) $ 2,218.0 $ 858.8 $ 3,076.8 $ 1,898.1 $ 586.9 $ 2,485.0 24 % Libtayo (c) $ 159.2 $ 104.7 $ 263.9 $ 109.7 $ 72.9 $ 182.6 45 % Praluent (d) $ 70.0 $ 131.3 $ 201.3 $ 40.2 $ 105.7 $ 145.9 38 % Kevzara (b) $ 50.0 $ 44.1 $ 94.1 $ 39.2 $ 39.3 $ 78.5 20 % REGEN-COV (e) $ — $ 1.2 $ 1.2 $ — $ 613.2 $ 613.2 (100 %) Other products (f) $ 25.3 $ 17.7 $ 43.0 $ 18.1 $ 16.5 $ 34.6 24 % (a) Regeneron records net product sales of EYLEA HD and EYLEA in the United States, and Bayer records net product sales outside the United States. The Company records its share of profits in connection with sales outside the United States. (b) Sanofi records global net product sales of Dupixent and Kevzara, and the Company records its share of profits in connection with global sales of such products. (c) 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. Included in this line item for the first quarter of 2023 is approximately $6 million of 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). (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) Roche records net product sales outside the United States and the parties share gross profits from sales 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 $71 million for the fourth quarter of 2023. (g) Rest of world ("ROW") 26 Table of Contents Programs in Clinical Development Product candidates in Phase 2 and Phase 3 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. 27 Table of Contents Clinical Program Phase 2 Phase 3 Regulatory Review (h) 2024 Events to Date Select Upcoming Milestones Ophthalmology EYLEA HD (aflibercept) 8 mg (a) –RVO –Approved by European Commission ("EC") and Japan's Ministry of Health, Labour and Welfare ("MHLW") for wAMD and DME –Initiate Phase 3 study in RVO (mid-2024) to enable U.S. Food and Drug Administration ("FDA") submission –Submit supplemental Biologics License Application ("sBLA") with two-year data for wAMD and DME (mid-2024) Pozelimab (f) (REGN3918) Antibody to C5 –Initiate Phase 3 study in combination with cemdisiran in geographic atrophy (second half 2024) Immunology & Inflammation Dupixent (dupilumab) (b) Antibody to IL-4R alpha subunit –Ulcerative colitis –Eosinophilic gastroenteritis (Phase 2/3) –Asthma in pediatrics (2–5 years of age) –Chronic obstructive pulmonary disease ("COPD") (d) –Bullous pemphigoid (c) –CSU –Chronic pruritus of unknown origin –EoE in pediatrics (1–11 years of age) (EU) –COPD with type 2 inflammatory phenotype (U.S., EU, and Japan) –CSU in adults and adolescents (EU) –Approved by FDA for EoE in pediatrics (1–11 years of age) –Approved by MHLW for CSU in adults and adolescents –EC decision on regulatory submission for EoE in pediatrics (second half 2024) –FDA decision on sBLA (target action date of June 27, 2024) and EC decision on regulatory submission (second half 2024) for COPD with type 2 inflammatory phenotype –EC decision on regulatory submission for CSU in adults and adolescents (first half 2025) –Report results from ongoing Phase 3 trial in CSU (in biologic-naïve patients) (fourth quarter 2024) –Report results from Phase 3 trial in bullous pemphigoid (second half 2024) 28 Table of Contents Clinical Program (continued) Phase 2 Phase 3 Regulatory Review (h) 2024 Events to Date Select Upcoming Milestones Kevzara (sarilumab) (b) Antibody to IL-6R –Polyarticular-course juvenile idiopathic arthritis ("pcJIA") (pivotal study) –Systemic juvenile idiopathic arthritis ("sJIA") (pivotal study) –PMR (EU) –pcJIA (U.S. and EU) –EC decision on regulatory submission for PMR (second half 2024) –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 –Non-cystic fibrosis bronchiectasis ("NCFB") –COPD (e) –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 (i) combination –Neoadjuvant hepatocellular carcinoma ("HCC") –Adjuvant CSCC –Conduct interim analysis from Phase 3 study in adjuvant CSCC (second half 2024) Fianlimab (f) (REGN3767) Antibody to LAG-3 –First-line advanced NSCLC (Phase 2/3) (pivotal study) –First-line metastatic melanoma (e) –First-line adjuvant melanoma –Initiate potentially pivotal Phase 2 study (in combination with Libtayo) in perioperative melanoma (first half 2024) –Initiate Phase 2 study (in combination with Libtayo) in perioperative NSCLC (first half 2024) –Initiate Phase 2 study (in combination with Libtayo) in perioperative head and neck squamous cell carcinoma (2025) –Initiate Phase 3 study (in combination with Libtayo) in first-line metastatic melanoma versus the combination of relatlimab and nivolumab (second half 2024) 29 Table of Contents Clinical Program (continued) Phase 2 Phase 3 Regulatory Review (h) 2024 Events to Date Select Upcoming Milestones Fianlimab (f) (REGN3767) (continued) –Report results from Phase 3 study in first-line metastatic melanoma (2025) –Report initial data from Phase 2/3 study in first-line advanced NSCLC (second half 2024) Vidutolimod Immune activator targeting TLR9 –Solid tumors –Company paused enrollment in Phase 2 study related to drug supply Ubamatamab (f) (REGN4018) Bispecific antibody targeting MUC16 and CD3 –Platinum-resistant ovarian cancer Nezastomig (REGN5678) Bispecific antibody targeting PSMA and CD28 –Prostate cancer –Initiate cohorts in combination with REGN4336 (PSMAxCD3) in metastatic castration-resistant prostate cancer (first half 2024) REGN7075 Bispecific antibody targeting EGFR and CD28 –Solid tumors Hematology Pozelimab (f) (REGN3918) Antibody to C5 –Myasthenia gravis, cemdisiran combination (c)(l) –Paroxysmal nocturnal hemoglobinuria ("PNH"), cemdisiran combination (c)(l) Odronextamab (m) (REGN1979) Bispecific antibody targeting CD20 and CD3 –B-cell non-Hodgkin lymphoma ("B-NHL") (pivotal study) –Follicular lymphoma ("FL") –Diffuse large B-cell lymphoma ("DLBCL") –Relapsed/refractory FL and DLBCL (EU) –FDA issued Complete Response Letters ("CRLs") for BLA for relapsed/refractory FL and DLBCL due to enrollment status of confirmatory Phase 3 trials –EC decision on Marketing Authorization Application ("MAA") for relapsed/refractory FL and DLBCL (second half 2024) Linvoseltamab (f) (REGN5458) Bispecific antibody targeting BCMA and CD3 –Multiple myeloma (pivotal study) (c)(e) –Earlier (pre-malignant) multiple myeloma –Multiple myeloma (c)(e) –Relapsed/refractory multiple myeloma (U.S. (n) and EU) –FDA decision on BLA (target action date of August 22, 2024) and EC decision on MAA (first half 2025) for relapsed/refractory multiple myeloma 30 Table of Contents Clinical Program (continued) Phase 2 Phase 3 Regulatory Review (h) 2024 Events to Date Select Upcoming Milestones NTLA-2001 (j) TTR gene knockout using CRISPR/Cas9 –Transthyretin amyloidosis (c) with cardiomyopathy ("ATTR-CM") REGN9933 Antibody to Factor XI –Thrombosis –Report results from Phase 2 study in thrombosis (second half 2024) Internal Medicine/Genetic Medicines Garetosmab (f) (REGN2477) Antibody to Activin A –Fibrodysplasia ossificans progressiva ("FOP") (c)(d)(e) Trevogrumab (f) (REGN1033) Antibody to myostatin (GDF8) –Healthy volunteers –Initiate Phase 2 obesity study of trevogrumab in combination with semaglutide with and without garetosmab (mid-2024) Mibavademab (f) (REGN4461) Agonist antibody to leptin receptor ("LEPR") –Generalized lipodystrophy (d)(e) REGN5381 Agonist antibody to NPR1 –Heart failure ALN-HSD (o) RNAi therapeutic targeting HSD17B13 –Nonalcoholic steatohepatitis ("NASH") ALN-APP (k) RNAi therapeutic targeting APP –Cerebral amyloid angiopathy ("CAA") 31 Table of Contents Note: For purposes of the table above, a program is classified in Phase 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) BioNTech's BNT116 is an mRNA cancer vaccine. (j) In collaboration with Intellia (k) In collaboration with Alnylam (l) 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. (m) FDA granted Fast Track designation for follicular lymphoma and diffuse large B-cell lymphoma (n) Company is seeking accelerated approval in the United States (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. 32 Table of Contents Additional Information - Clinical Development Programs In 2024, a Phase 1 study of linvoseltamab, in combination with dupilumab, in severe food allergy was initiated. A Phase 1/2 study of DB-OTO, an AAV-based gene therapy, in children with profound genetic hearing loss due to mutations of the oteoferlin gene is ongoing. The Company will present updated data from the Phase 1/2 trial at the May 2024 American Society of Gene and Cell Therapy ("ASGCT") annual conference. Collaboration, License, and Other Agreements Sanofi We are collaborating with Sanofi on the global development and commercialization of Dupixent, Kevzara, and itepekimab (the "Antibody Collaboration"). Under the terms of the collaboration, 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; however, we are only required to apply 20% of our share of profits from the collaboration each calendar quarter to reimburse Sanofi for these development expenses. As of March 31, 2024, the total amount of our contingent reimbursement obligation to Sanofi (i.e., "development balance") in connection with such development expenses was approximately $2.200 billion. 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 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). Bayer We and Bayer are parties to a license and collaboration agreement for the global development and commercialization of EYLEA 8 mg and EYLEA 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 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. During 2023, we paid a $100.0 million development milestone to Alnylam upon the achievement of specified proof-of-principle criteria for the ALN-APP program and 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) or a 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. Under a license agreement, the lead party is designated as the licensee and has the right to develop and commercialize the collaboration product under such program. The licensee will be responsible for its own costs and expenses incurred. The 33 Table of Contents licensee will pay to the licensor certain development and/or commercialization milestone payments, as well as certain tiered royalty payments to the licensor based on the aggregate annual net sales of the collaboration product. The parties have entered into various license agreements, including 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. 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). The collaboration was expanded in 2020 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 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 addition, 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 made a $30.0 million extension payment to Intellia. In March 2024, Intellia elected to opt-out of further development activities pursuant to the Factor IX co-development and co-commercialization agreement; as a result, we retain the right to develop and commercialize products directed to Factor IX, and Intellia will be entitled to receive milestone payments and royalties on sales (if any). 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 acquired Decibel by paying $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, entitling them to receive up to an additional $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. 2seventy bio In 2018, we entered into a collaboration agreement with bluebird bio, Inc. (which subsequently spun out 2seventy bio, Inc. in 2021) to research, develop, and commercialize novel cell therapy approaches to address cancer. In April 2024, we acquired full development and commercialization rights to 2seventy bio's oncology and autoimmune preclinical and clinical stage cell therapy pipeline. Under the terms of the agreement, we made a $5.0 million up-front payment, and have assumed ongoing program, infrastructure, and personnel costs related to the product candidates acquired. In addition, we are obligated to pay 2seventy bio a regulatory milestone upon the first major market approval of the first approved product; and, with respect to any approved product, a low single-digit percent royalty on sales. General Our ability to generate profits and to generate positive cash flow from operations over the next several years depends significantly on the success in commercializing EYLEA HD, EYLEA, and Dupixent. 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 34 Table of Contents 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 products 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"). 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 Net Income Three Months Ended March 31, (In millions, except per share data) 2024 2023 Revenues $ 3,145.0 $ 3,162.1 Operating expenses 2,393.6 2,215.4 Income from operations 751.4 946.7 Other income (expense) (50.7) (88.7) Income before income taxes 700.7 858.0 Income tax (benefit) expense (21.3) 40.2 Net income $ 722.0 $ 817.8 Net income per share - diluted $ 6.27 $ 7.17 35 Table of Contents Revenues Three Months Ended March 31, (In millions) 2024 2023 $ Change Net product sales: EYLEA HD - U.S. $ 200.0 $ — $ 200.0 EYLEA - U.S. 1,201.6 1,433.8 (232.2) Total EYLEA HD and EYLEA - U.S. 1,401.6 1,433.8 (32.2) Libtayo - U.S. 159.2 109.7 49.5 Libtayo - ROW 104.7 67.2 37.5 Total Libtayo - Global 263.9 176.9 87.0 Praluent - U.S. 70.0 40.2 29.8 Evkeeza - U.S. 24.8 14.9 9.9 Inmazeb - Global 1.0 2.2 (1.2) Total net product sales $ 1,761.3 $ 1,668.0 $ 93.3 Collaboration revenue: Sanofi $ 909.8 $ 798.4 $ 111.4 Bayer 356.0 356.9 (0.9) Roche 0.5 222.2 (221.7) Other 0.5 0.6 (0.1) Other revenue 116.9 116.0 0.9 Total revenues $ 3,145.0 $ 3,162.1 $ (17.1) Net Product Sales In August 2023, the FDA approved EYLEA HD in the United States. Net product sales of EYLEA in the United States decreased for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to changing market dynamics, resulting in lower volumes and a lower net selling price. Collaboration Revenue Sanofi Collaboration Revenue Three Months Ended March 31, (In millions) 2024 2023 Regeneron's share of profits in connection with commercialization of antibodies $ 804.0 $ 636.5 Reimbursement for manufacturing of commercial supplies (a) 105.8 161.9 Total Sanofi collaboration revenue $ 909.8 $ 798.4 (a) Corresponding costs incurred by the Company in connection with such production is recorded within Cost of collaboration and contract manufacturing. 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. 36 Table of Contents Regeneron's share of profits in connection with the commercialization of Dupixent and Kevzara is summarized below: Three Months Ended March 31, (In millions) 2024 2023 Dupixent and Kevzara net product sales $ 3,170.9 $ 2,563.5 Regeneron's share of collaboration profits $ 925.9 $ 711.4 Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation (121.9) (74.9) Regeneron's share of profits in connection with commercialization of antibodies $ 804.0 $ 636.5 Regeneron's share of profits as a percentage of Dupixent and Kevzara net product sales 25% 25% The increase in our share of profits in connection with commercialization of antibodies for the three months ended March 31, 2024, compared to the same periods in 2023, was driven by higher profits associated with Dupixent sales. Bayer Collaboration Revenue Three Months Ended March 31, (In millions) 2024 2023 Regeneron's share of profits in connection with commercialization of EYLEA 8 mg and EYLEA outside the United States $ 333.9 $ 331.6 Reimbursement for manufacturing of ex-U.S. commercial supplies (a) 22.1 25.3 Total Bayer collaboration revenue $ 356.0 $ 356.9 (a) Corresponding costs incurred by the Company in connection with such production is recorded within Cost of collaboration and contract manufacturing. Bayer records net product sales of EYLEA 8 mg and EYLEA outside the United States. Regeneron's share of profits in connection with commercialization of EYLEA 8 mg and EYLEA outside the United States is summarized below: Three Months Ended March 31, (In millions) 2024 2023 EYLEA 8 mg and EYLEA net product sales outside the United States $ 849.4 $ 847.1 Regeneron's share of collaboration profit from sales outside the United States $ 350.5 $ 346.9 Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation (16.6) (15.3) Regeneron's share of profits in connection with commercialization of EYLEA 8 mg and EYLEA outside the United States $ 333.9 $ 331.6 Regeneron's share of profits as a percentage of EYLEA 8 mg and EYLEA net product sales outside the United States 39% 39% Roche Collaboration Revenue Roche distributes and records net product sales of Ronapreve outside the United States, and the parties share gross profits from sales. For the three months ended March 31, 2024 and 2023, our share of gross profits in connection with sales of Ronapreve outside the United States was $0.5 million and $222.2 million, respectively. 37 Table of Contents Expenses Three Months Ended March 31, (In millions, except headcount data) 2024 2023 Change Research and development (a) $ 1,248.4 $ 1,101.2 $ 147.2 Acquired in-process research and development 7.1 56.1 (49.0) Selling, general, and administrative (a) 689.0 601.1 87.9 Cost of goods sold 240.4 208.4 32.0 Cost of collaboration and contract manufacturing (b) 193.4 249.1 (55.7) Other operating expense (income), net 15.3 (0.5) 15.8 Total operating expenses $ 2,393.6 $ 2,215.4 $ 178.2 Average headcount 13,677 12,099 1,578 (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 for the three months ended March 31, 2024 and 2023 included a total of $230.1 million and $238.7 million, respectively, of stock-based compensation expense related to equity awards granted under our long-term incentive plans. 38 Table of Contents 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 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 March 31, (In millions) 2024 2023 * $ Change Direct research and development expenses: Fianlimab $ 64.0 $ 34.8 $ 29.2 Linvoseltamab 63.3 14.8 48.5 Dupixent (dupilumab) 36.3 49.2 (12.9) Odronextamab 26.1 22.1 4.0 Libtayo (cemiplimab) 22.6 32.9 (10.3) EYLEA HD (aflibercept) 8 mg 21.9 25.7 (3.8) Itepekimab 19.3 19.4 (0.1) Pozelimab 12.0 9.9 2.1 Other product candidates in clinical development and other research programs 142.8 113.6 29.2 Total direct research and development expenses 408.3 322.4 85.9 Indirect research and development expenses: Payroll and benefits 418.9 399.0 19.9 Lab supplies and other research and development costs 55.9 49.9 6.0 Occupancy and other operating costs 134.6 121.9 12.7 Total indirect research and development expenses 609.4 570.8 38.6 Clinical manufacturing costs 274.5 250.1 24.4 Reimbursement of research and development expenses by collaborators (43.8) (42.1) (1.7) Total research and development expenses $ 1,248.4 $ 1,101.2 $ 147.2 * Certain prior year amounts have been reclassified to conform to the current year's presentation. Research and development expenses included stock-based compensation expense of $123.0 million and $139.5 million for the three months ended March 31, 2024 and 2023, 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 product candidate, 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 39 Table of Contents 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 March 31, 2023 included a $45.0 million up-front payment in connection with our collaboration agreement with Sonoma Biotherapeutics, Inc. Selling, General, and Administrative Expenses Selling, general, and administrative expenses increased for the three months ended March 31, 2024, compared to the same period in 2023, due to an increase in commercialization-related expenses to support our launch of EYLEA HD and higher headcount and headcount-related costs primarily related to the international expansion in support of Libtayo and hematology product launch preparations. Selling, general, and administrative expenses also included stock-based compensation expense of $86.2 million and $76.8 million for the three months ended March 31, 2024 and 2023, respectively. Cost of Goods Sold Cost of goods sold increased for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to higher start-up costs for our Rensselaer, New York fill/finish facility. Cost of Collaboration and Contract Manufacturing Cost of collaboration and contract manufacturing decreased for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to the recognition of lower Dupixent manufacturing costs as a result of the transition to a higher-yielding manufacturing process. Other Operating Expense (Income) Other operating expense (income), net, for the three months ended March 31, 2024 reflects a $15.3 million charge related to the increase in the estimated fair value of the contingent consideration liability recognized in connection with our 2023 acquisition of Decibel Therapeutics, Inc. Other Income (Expense) Other income (expense) consists of the following: Three Months Ended March 31, (In millions) 2024 2023 Unrealized losses on equity securities, net $ (196.2) $ (164.7) Interest income 161.5 95.2 Other 0.1 (1.2) Other (expense) income, net (34.6) (70.7) Interest expense (16.1) (18.0) Total other income (expense) $ (50.7) $ (88.7) 40 Table of Contents Income Taxes Three Months Ended March 31, (In millions, except effective tax rate) 2024 2023 Income tax (benefit) expense $ (21.3) $ 40.2 Effective tax rate (3.0 %) 4.7 % The Company's effective tax rate for the three months ended March 31, 2024 was positively impacted, compared to the U.S. federal statutory rate, primarily by stock-based compensation and income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate. The effective tax rate for the three months ended March 31, 2024 was positively impacted, compared to the same period in 2023, primarily by additional stock-based compensation. Certain countries in which we have operations, including Ireland, have adopted legislation influenced by the Organization for Economic Co-operation and Development ("OECD") Global Anti-Base Erosion Model Rules ("Pillar Two") framework, including a minimum tax rate of 15%. The adoption of the Pillar Two framework did not have a material impact on our effective tax rate for the three months ended March 31, 2024. It is uncertain whether the United States will enact legislation to adopt the Pillar Two framework. We continue to evaluate additional guidance released by the OECD, along with the pending legislative adoption by additional individual countries. Liquidity and Capital Resources Our financial condition is summarized as follows: March 31, December 31, (In millions) 2024 2023 $ Change Financial assets: Cash and cash equivalents $ 2,602.0 $ 2,730.0 $ (128.0) Marketable securities - current 7,917.5 8,114.8 (197.3) Marketable securities - noncurrent 6,978.8 5,396.5 1,582.3 $ 17,498.3 $ 16,241.3 $ 1,257.0 Working capital: Current assets $ 18,871.5 $ 19,479.2 $ (607.7) Current liabilities 3,580.9 3,423.4 157.5 $ 15,290.6 $ 16,055.8 $ (765.2) Borrowings and finance lease liabilities: Long-term debt $ 1,983.3 $ 1,982.9 $ 0.4 Finance lease liabilities $ 720.0 $ 720.0 $ — As of March 31, 2024, we also had borrowing availability of $750.0 million under a revolving credit facility. Sources and Uses of Cash for the Three Months Ended March 31, 2024 and 2023 Three Months Ended March 31, (In millions) 2024 2023 $ Change Cash flows provided by operating activities $ 1,512.5 $ 1,367.6 $ 144.9 Cash flows used in investing activities $ (1,687.1) $ (235.7) $ (1,451.4) Cash flows provided by (used in) financing activities $ 47.1 $ (322.5) $ 369.6 Cash Flows from Investing Activities Capital expenditures for the three months ended March 31, 2024 included costs incurred in connection with the expansion of our research, preclinical manufacturing, and support facilities at our Tarry town, New York location, as well as costs associated 41 Table of Contents with the expansion of our manufacturing facilities in Rensselaer, New York (including equipment related to the fill/finish facility). We expect to incur capital expenditures of $780 million to $880 million for the full year of 2024 primarily in connection with the continued expansion of our facilities in Tarrytown and Rensselaer (including the fill/finish facility). Payments for the Libtayo intangible asset of $27.9 million and $100.9 million for the three months ended March 31, 2024 and 2023, respectively, were related to contingent consideration in connection with our acquisition of the exclusive right to develop, commercialize, and manufacture Libtayo worldwide. Cash Flows from Financing Activities Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $682.1 million for the three months ended March 31, 2024, compared to $485.2 million for the three months ended March 31, 2023. For information related to repurchases of Common Stock, see " Share Repurchase Programs " section below. Share Repurchase Programs In January 2023, our board of directors authorized a share repurchase program to repurchase up to $3.0 billion of our Common Stock. The share repurchase program permits the Company to make repurchases through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, block trades, and other transactions in compliance with Rule 10b-18 of the Exchange Act. Repurchases may be made from time to time at management's discretion, and the timing and amount of any such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors. 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 March 31, 2024, $1.233 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. Three Months Ended March 31, (In millions) 2024 2023 Number of shares 0.3 0.9 Total cost of shares $ 298.0 $ 693.9 In April 2024, 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 program described above. 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, 2023 (filed February 5, 2024). There have been no material changes to critical accounting estimates during the three months ended March 31, 2024. Future Impact of Recently Issued Accounting Standards See Note 1 to our Condensed Consolidated Financial Statements for a summary of recently issued accounting standards.