What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-05 compared with 2024-02-05 · 106 added, 130 removed, 338 unchanged (41% 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 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.

In addition, our research and development activities and related costs which are not reimbursed are expected to expand and require additional resources.

Our research and development efforts have led to numerous approved products that have received marketing approval and approximately 40 product candidates in clinical development (including a number of marketed products for which we are investigating additional indications), most 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 success in commercializing EYLEA HD, EYLEA, and Dupixent.

We expect to continue to incur substantial expenses related to our research and development activities, and our research and development activities and related costs which are not reimbursed by collaborators are expected to expand and require additional resources.

We also expect to incur substantial costs related to the commercialization of our marketed products.

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and the amount of income tax expense we incur, which is partly dependent on the profits or losses we earn in each of the countries in which we operate.

We cannot predict whether or when new products or new indications for marketed products will receive regulatory approval or, if any such approval is received, whether we will be able to successfully commercialize such product(s) and whether or when they may become profitable.

There is uncertainty surrounding 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.

Critical Accounting Estimates

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Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited.

This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

In addition, we reassess our forfeiture rate assumptions at least annually, considering both historical forfeiture experience and an estimate of future forfeitures for currently outstanding unvested awards.

The forfeiture rate estimate is calculated by considering both historical forfeiture experience and an estimate of expected future forfeitures for currently outstanding unvested awards.

This estimate is reviewed at least annually and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The assumptions used in computing the fair value of equity awards reflect our best estimates but involve uncertainties related to market and other conditions, many of which are outside our control.

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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 have plans to do so.

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 criteria that include a market condition.

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

We capitalize inventory costs associated with our products prior to regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized;

We capitalize inventory costs associated with our products prior to regulatory approval when, based on management's judgment, future commercialization is considered probable and future economic benefit is expected to be realized;

otherwise, such costs are expensed.

The determination to capitalize inventory costs is based on various factors, including status and expectations of the regulatory approval process, any known safety or efficacy concerns, potential labeling restrictions, and any other impediments to obtaining regulatory approval.

We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and write down such inventories as appropriate.

We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value.

In addition, our products are subject to strict quality control and monitoring which we perform throughout the manufacturing process.

If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to write down such inventory to its estimated realizable value.

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.

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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.

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.

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787.3 538.8 374.5 248.5 164.3

Libtayo - ROW *

Libtayo - ROW (a)

429.5 324.3 73.0 105.2 251.3

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241.7 182.4 130.0 59.3 52.4

REGEN-COV - U.S.

— — 5,828.0 — (5,828.0)

Evkeeza - U.S.

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76.8 69.8 3.0 7.0 66.8

ARCALYST - U.S.

— — 2.2 — (2.2)

Total net product sales $ 7,629.2 $ 7,078.0 $ 6,893.7 $ 551.2 $ 184.3

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Total revenues $ 14,202.0 $ 13,117.2 $ 12,172.9 $ 1,084.8 $ 944.3

* 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.

Previously, the Company recorded net product sales of ARCALYST in the United States.

(a) Effective July 1, 2022, we obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide under an Amended and Restated Immuno-oncology License and Collaboration Agreement with Sanofi ("A&R IO LCA") and, as a result, we began recording net product sales of Libtayo outside the United States as of such date.

Net Product Sales

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 years ended December 31, 2023 and 2022.

Total EYLEA HD and EYLEA net product sales in the U.S.

increased in 2024 compared to 2023.

EYLEA HD was approved by the FDA in August 2023 and net product sales in 2024 were driven by the transition of patients from other anti-VEGF products, including EYLEA, as well as new patients naïve to anti-VEGF therapy.

Net product sales of EYLEA HD and EYLEA in 2024 were adversely impacted by a lower net selling price compared to 2023.

Total EYLEA HD and EYLEA net product sales for the fourth quarter of 2024 were favorably impacted by approximately $85 million as a result of higher wholesaler inventory levels for EYLEA, partially offset by lower wholesaler inventory levels for EYLEA HD, at the end of the fourth quarter of 2024 compared to the end of the third quarter of 2024.

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

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(In millions) 2024 2023 2022

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

Regeneron's share of profits

$ 3,923.5 $ 3,136.5 $ 2,082.0

Sales-based milestones earned — 50.0 100.0

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Total Sanofi collaboration revenue $ 4,531.4 $ 3,799.5 $ 2,855.7

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

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

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

(b) As the A&R IO LCA became effective July 1, 2022, the six months ended June 30, 2022 was the last period in which Sanofi collaboration revenue was recognized in connection with the Immuno-oncology collaboration.

Global net product sales of Dupixent and Kevzara are recorded by Sanofi, and we and Sanofi share profits on such sales.

Regeneron's share of profits in connection with the commercialization of Dupixent and Kevzara is summarized below:

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$ 14,606.7 $ 11,974.0 $ 9,039.2

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

Regeneron's share of collaboration profits in connection with commercialization of antibodies 4,527.2 3,596.3 2,405.5

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

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One-time payment in connection with amendment to the Antibody License and Collaboration Agreement — — (56.9)

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

Regeneron's share of profits

$ 3,923.5 $ 3,136.5 $ 2,082.0

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.

The increase in our share of profits during the year ended December 31, 2024, compared to 2023, was driven by higher profits associated with Dupixent sales.

During the year ended December 31, 2023, we earned the final $50.0 million sales-based milestone from Sanofi upon aggregate annual sales of antibodies outside the United States exceeding $3.0 billion on a rolling twelve-month basis.

Bayer Collaboration Revenue

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(In millions) 2024 2023 2022

Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 1,376.4 $ 1,317.4 $ 1,349.2

Regeneron's share of profits

$ 1,403.3 $ 1,376.4 $ 1,317.4

Reimbursement for manufacturing of ex-U.S.

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Total Bayer collaboration revenue $ 1,499.0 $ 1,487.5 $ 1,430.7

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

(a) Corresponding costs incurred by the Company in connection with such manufacturing 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.

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

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:

Year Ended December 31,

(In millions) 2024 2023 2022

EYLEA net product sales outside the United States

EYLEA 8 mg and EYLEA net product sales outside the United States

$ 3,576.8 $ 3,495.2 $ 3,382.8

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(66.4) (59.7) (57.7)

Regeneron's share of profits in connection with commercialization of EYLEA outside the United States $ 1,376.4 $ 1,317.4 $ 1,349.2

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

Regeneron's share of profits

$ 1,403.3 $ 1,376.4 $ 1,317.4

Regeneron's share of profits as a percentage of EYLEA 8 mg and EYLEA net product sales outside the United States

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

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(In millions) 2024 2023 2022

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

Regeneron's share of profits

$ 1.4 $ 224.3 $ 627.3

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Total Roche collaboration revenue $ 1.4 $ 211.0 $ 627.3

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

Roche distributes and records net product sales of Ronapreve outside the United States, and the parties share gross profits from sales based on a pre-specified formula.

Net product sales of Ronapreve outside the United States declined as a result of new variants of the SARS-CoV-2 virus emerging that are not susceptible to the treatment.

Other Revenue

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).

Other revenue in 2024 and 2023 included $328.6 million and $247.6 million, respectively, of royalties and share of profits earned in connection with license agreements.

Operating Expenses

Year Ended December 31, Change

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883.2 883.7 760.4 (0.5) 123.3

Other operating (income) expense, net (2.1) (89.9) (45.6) 87.8 (44.3)

Other operating expense (income), net 53.4 (2.1) (89.9) 55.5 87.8

Total operating expenses $ 10,211.3 $ 9,070.1 $ 7,434.0 $ 1,141.2 $ 1,636.1

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14,383 12,698 11,115 1,685 1,583

(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

(a) Includes costs incurred net of any cost reimbursements from collaborators

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

Operating expenses in 2024 and 2023 included a total of $982.8 million and $885.0 million, respectively, of stock-based compensation expense related to equity awards granted under our long-term incentive plans.

As of December 31, 2024, unrecognized stock-based compensation expense related to unvested stock options and unvested restricted stock (including performance-based restricted stock units) was $626.7 million and $1.271 billion, respectively.

We expect to recognize this stock-based compensation expense related to stock options and restricted stock over weighted-average periods of 1.8 years and 2.3 years, respectively.

We expect to recognize this stock-based compensation expense related to stock options and restricted stock over a weighted-average period of 1.9 years.

Research and Development Expenses

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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).

Clinical manufacturing costs also include pre-launch commercial supplies which did not meet the criteria to be capitalized as inventory (see "Critical Accounting Estimates - Inventories" above).

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.

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Direct research and development expenses:

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

Fianlimab $ 215.5 $ 112.2 $ 43.4 $ 103.3 $ 68.8

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

Odronextamab 96.3 66.0 34.9 30.3 31.1

Linvoseltamab 141.9 78.7 45.5 63.2 33.2

Ordspono (odronextamab)

129.4 96.3 66.0 33.1 30.3

Dupixent (dupilumab) 128.8 168.0 156.5 (39.2) 11.5

EYLEA HD (aflibercept) 8 mg

98.3 96.2 67.9 2.1 28.3

Linvoseltamab 78.7 45.5 18.7 33.2 26.8

96.2 70.3 26.5 25.9 43.8

Pozelimab 79.4 60.2 72.4 19.2 (12.2)

(5.6) 32.8 309.8 (38.4) (277.0)

Libtayo (cemiplimab) 79.1 105.3 138.0 (26.2) (32.7)

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 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 $543.8 million and $488.7 million in 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 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 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 applicable statutes and regulations, require the expenditure of substantial resources.

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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 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.

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

Acquired IPR&D expense in 2024 included a $45.0 million development milestone in connection with our collaboration agreement with Sonoma Biotherapeutics, Inc.

Acquired IPR&D expense in 2023 included a $100.0 million development milestone in connection with our collaboration agreement with Alnylam Pharmaceuticals, Inc., a $45.0 million up-front payment in connection with our collaboration agreement with Sonoma, and a $30.0 million charge to extend the period for selecting targets under our collaboration agreement with Intellia Therapeutics, Inc.

Selling, General, and Administrative Expenses

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.

Selling, general, and administrative expenses increased in 2024, compared to 2023, due to higher commercialization-related expenses to support our launch of EYLEA HD and higher headcount and headcount-related costs partly related to our international commercial expansion.

Selling, general, and administrative expenses also included stock-based compensation expense of $355.0 million and $307.1 million in 2024 and 2023, respectively.

Cost of Goods Sold

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 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, 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.

Cost of goods sold increased in 2024, compared to 2023, primarily due to higher start-up costs for our Rensselaer, New York fill/finish facility.

Other Operating Expense (Income)

Other operating expense (income), net, in 2024 reflected a charge of $53.4 million 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)

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(In millions) 2024 2023 2022

Unrealized (losses) gains on equity securities, net $ (237.8) $ (39.8) $ 386.1

Unrealized gains (losses) on equity securities, net

$ 117.7 $ (237.8) $ (39.8)

Interest income 711.4 495.9 160.1

Foreign currency (losses) gains

Foreign currency (losses) gains, net

(0.5) (12.9) 50.2

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Total other income (expense) $ 789.2 $ 152.2 $ 119.9

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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7.7% 5.9% 10.7%

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%.

Our effective tax rate for 2024 and 2023 was positively impacted, compared to the U.S.

federal statutory rate, primarily by stock-based compensation, income earned in foreign jurisdictions with tax rates lower than the U.S.

federal statutory rate, and federal tax credits for research activities.

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 year ended December 31, 2024.

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.

We continue to evaluate additional guidance released by the OECD, along with the pending legislative adoption by additional countries.

Liquidity and Capital Resources

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(In millions) 2024 2023 2022 2024 vs.

2022 2022 vs.

Cash flows provided by operating activities $ 4,420.5 $ 4,594.0 $ 5,014.9 $ (173.5) $ (420.9)

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Cash flows used in financing activities $ (2,200.5) $ (1,790.1) $ (1,009.0) $ (410.4) $ (781.1)

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 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 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 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).

Capital expenditures in 2024 included costs incurred in connection with the expansion of our research, preclinical manufacturing, and support facilities at our Tarrytown, New York corporate headquarters, as well as costs associated with the expansion of our manufacturing facilities in Rensselaer, New York (including the fill/finish facility).

In addition, in September 2024, we acquired an approximate 1,000,000 square foot facility in Saratoga Springs, New York.

We expect to incur capital expenditures of $850 million to $975 million in 2025, including in connection with the continued expansion of our facilities in Tarrytown, New York.

We expect continued significant capital expenditures over the next several years related to this expansion.

Payments for the Libtayo intangible asset of $125.7 million, $207.8 million, and $1.027 billion in 2024, 2023, and 2022, respectively, related to our acquisition (including contingent consideration paid) of the exclusive right to develop, commercialize, and manufacture Libtayo worldwide.

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.

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Proceeds from issuances of Common Stock, in connection with exercises of employee stock options, were $1.465 billion during 2024, compared to $1.146 billion during 2023 and $1.520 billion during 2022.

In addition, payments in connection with Common Stock tendered for employee tax obligations were $1.029 billion during 2024, compared to $700.6 million during 2023 and $445.7 million during 2022.

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

Credit Facility

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 Company is party to an agreement with a syndicate of lenders (the "Credit Agreement") which provides for a $750.0 million senior unsecured five-year revolving credit facility (the "Credit Facility").

The Credit Agreement includes an option for the Company 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 $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 January 2021, our board of directors authorized a share repurchase program to repurchase up to $1.5 billion of our Common Stock.

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.

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.

As of June 30, 2023, the Company had repurchased the entire $3.0 billion of its Common Stock it was authorized to repurchase under the program.

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

As of September 30, 2024, the Company had repurchased the entire $3.0 billion of its Common Stock it was authorized to repurchase under the program.

In April 2024, our board of directors authorized a share repurchase program to repurchase up to an additional $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.

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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.

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

Year Ended December 31,

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Total cost of shares $ 2,613.9 $ 2,214.6 $ 2,099.8

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.

As of December 31, 2024, $1.917 billion remained available for share repurchases under the April 2024 program.

In February 2025, our board of directors authorized a 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 repurchase programs described above.

In February 2025, our board of directors declared our first quarterly cash dividend, in the amount of $0.88 per share on our Common Stock and Class A Stock.

The cash dividend will be payable on March 20, 2025 to shareholders of record as of February 20, 2025.

We currently intend to continue to pay a quarterly cash dividend on our outstanding Common Stock and Class A Stock.

Amounts and timing of any future cash dividends are subject to authorization by our board of directors in its sole discretion, after taking into consideration our financial condition and other relevant factors described under " There can be no assurance that we will continue to repurchase shares of our Common Stock or continue to declare cash dividends " in Part I, Item 1A.

"Risk Factors."

Tarrytown, New York Corporate Headquarters Lease

We lease laboratory and office facilities for our corporate headquarters in Tarrytown, New York (the "Facility") under the Third Amended and Restated Lease and Remedies Agreement (the "Lease") with BA Leasing BSC, LLC, an affiliate of Banc of America Leasing & Capital, LLC ("BAL"), as lessor, and the Third Amended and Restated Participation Agreement (the "Participation Agreement") with Bank of America, N.A., as administrative agent, and a syndicate of lenders (collectively with BAL, the "Participants"), as rent assignees.

The Lease, Participation Agreement, and certain related agreements provide for $720.0 million of 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), which matures when the term of the Lease expires in March 2027, at which time all amounts outstanding thereunder will become payable in full.

We have the option to further extend the maturity date of the Participation Agreement and the term of the Lease for an additional five-year period, subject to the consent of the Participants and certain other conditions.

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

Pursuant to the 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 to satisfy the yield payable to the Participants on their outstanding advances under the 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.

The 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 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 Credit Agreement.

The Company was in compliance with all such covenants as of December 31, 2023.

We were in compliance with all such covenants as of December 31, 2024.

Additional Funding Requirements

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We expect that expenses related to the filing, prosecution, defense, and enforcement of patents and other intellectual property will be substantial.

Liabilities for unrecognized tax benefits totaled $696.4 million as of December 31, 2023.

Liabilities for unrecognized tax benefits totaled $1.314 billion as of December 31, 2024.

Due to their nature, there is a high degree of uncertainty regarding the period and amounts of potential future cash settlement with tax authorities.

We expect the IRS to

conclude its examination of our 2017 and 2018 federal income tax returns within the next twelve months, and, as a result, we may be required to make a payment of approximately $120 million.

See Note 15 to our Consolidated Financial Statements.

We enter into collaboration and licensing agreements that may require us to pay (i) amounts contingent upon the occurrence of various future events (e.g., upon the achievement of various development and commercial milestones), which, in the aggregate, could be significant, and/or (ii) royalties calculated based on a percentage of net product sales.

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.

The specific timing of these contingent payments cannot be predicted.

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").

"Collaboration, License, and Other Agreements," under our collaborations with Sanofi and Bayer, 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 Sanofi and Bayer for a defined percentage (generally 50%) of agreed-upon development expenses funded by Sanofi and Bayer (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 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.

As of December 31, 2024, our contingent reimbursement obligation to Sanofi in connection with the companies' Antibody Collaboration was approximately $1.635 billion and our contingent reimbursement obligation to Bayer was approximately $315 million.

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

Future Impact of Recently Issued Accounting Standards

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What changed 10-K

Item 7. Management’s Discussion and Analysis