FORM 10-Q
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(Mark One)
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(X)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
June 30, 2014
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OR
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( )
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from __________ to __________
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Commission File Number
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0-19034
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New York
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13-3444607
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(State or other jurisdiction of
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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777 Old Saw Mill River Road, Tarrytown, New York
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10591-6707
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(Address of principal executive offices)
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(Zip Code)
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Yes
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X
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No
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Yes
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X
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No
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Large accelerated filer
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X
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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Yes
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No
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X
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Class of Common Stock
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Number of Shares
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Class A Stock, $.001 par value
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1,979,055
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Common Stock, $.001 par value
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99,086,588
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Page Numbers
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"ARCALYST
®
", "EYLEA
®
", "ZALTRAP
®
", "
VelocImmune
®
", "
VelociGene
®
", "
VelociMouse
®
", "
VelociMab
®
", and "
VelociSuite
®
" are trademarks of Regeneron Pharmaceuticals, Inc. Trademarks and trade names of other companies appearing in this report are, to the knowledge of Regeneron Pharmaceuticals, Inc., the property of their respective owners.
|
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June 30,
|
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December 31,
|
||||
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2014
|
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2013
|
||||
ASSETS
|
|||||||
Current assets:
|
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|
||||
Cash and cash equivalents
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$
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600,135
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$
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535,608
|
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Marketable securities
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216,774
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158,376
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|
||
Accounts receivable - trade, net
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664,075
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|
787,071
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|
||
Accounts receivable from Sanofi
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116,865
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104,707
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|
||
Accounts receivable from Bayer HealthCare
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112,984
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63,189
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|
||
Inventories
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109,897
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70,354
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|
||
Deferred tax assets
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37,291
|
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44,677
|
|
||
Prepaid expenses and other current assets
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60,674
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32,952
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|
||
Total current assets
|
1,918,695
|
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1,796,934
|
|
||
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|
||||
Marketable securities
|
550,818
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|
|
389,891
|
|
||
Property, plant, and equipment, at cost, net of accumulated depreciation and amortization
|
707,321
|
|
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526,983
|
|
||
Deferred tax assets
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270,367
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|
231,878
|
|
||
Other assets
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8,877
|
|
|
5,327
|
|
||
Total assets
|
$
|
3,456,078
|
|
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$
|
2,951,013
|
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|
||||
LIABILITIES and STOCKHOLDERS' EQUITY
|
|||||||
Current liabilities:
|
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|
||||
Accounts payable and accrued expenses
|
$
|
283,385
|
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$
|
250,896
|
|
Deferred revenue from Sanofi, current portion
|
12,979
|
|
|
12,815
|
|
||
Deferred revenue - other, current portion
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54,154
|
|
|
34,185
|
|
||
Facility lease obligations, current portion
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1,060
|
|
|
939
|
|
||
Total current liabilities
|
351,578
|
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|
298,835
|
|
||
|
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||||
Deferred revenue from Sanofi
|
75,862
|
|
|
76,522
|
|
||
Deferred revenue - other
|
128,042
|
|
|
107,677
|
|
||
Facility lease obligations
|
234,525
|
|
|
184,258
|
|
||
Convertible senior notes
|
282,261
|
|
|
320,315
|
|
||
Other long-term liabilities
|
14,968
|
|
|
11,330
|
|
||
Total liabilities
|
1,087,236
|
|
|
998,937
|
|
||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $.01 par value; 30,000,000 shares authorized; issued and outstanding - none
|
—
|
|
|
—
|
|
||
Class A Stock, convertible, $.001 par value; 40,000,000 shares authorized; shares issued and outstanding - 1,998,785 in 2014 and 2,020,481 in 2013
|
2
|
|
|
2
|
|
||
Common Stock, $.001 par value; 160,000,000 shares authorized; shares issued and outstanding - 99,545,307 in 2014 and 97,666,814 in 2013
|
100
|
|
|
97
|
|
||
Additional paid-in capital
|
2,342,839
|
|
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2,045,857
|
|
||
Retained earnings (accumulated deficit)
|
65,486
|
|
|
(92,692
|
)
|
||
Accumulated other comprehensive income (loss)
|
4,263
|
|
|
(1,188
|
)
|
||
Treasury stock, at cost; 521,876 shares in 2014 and none in 2013
|
(43,848
|
)
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|
—
|
|
||
Total stockholders' equity
|
2,368,842
|
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|
1,952,076
|
|
||
Total liabilities and stockholders' equity
|
$
|
3,456,078
|
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$
|
2,951,013
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|
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|
||||
The accompanying notes are an integral part of the financial statements.
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Three months ended June 30,
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Six months ended June 30,
|
||||||||||||
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2014
|
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2013
|
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2014
|
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2013
|
||||||||
Statements of Operations
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|
||||||||
Revenues:
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||||||||
Net product sales
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$
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418,022
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$
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333,893
|
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$
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780,400
|
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$
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652,633
|
|
Sanofi collaboration revenue
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142,595
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85,529
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273,103
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184,802
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|
||||
Bayer HealthCare collaboration revenue
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97,295
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31,104
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222,607
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46,011
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|
||||
Technology licensing and other revenue
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7,788
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7,116
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15,330
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13,860
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|
||||
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665,700
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457,642
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1,291,440
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897,306
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||||
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||||||||
Expenses:
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||||||||
Research and development
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294,501
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187,463
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581,880
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367,762
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|
||||
Selling, general, and administrative
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102,414
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72,463
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211,264
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149,723
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|
||||
Cost of goods sold
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29,945
|
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27,283
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57,418
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55,304
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|
||||
Cost of collaboration manufacturing
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16,434
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12,330
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|
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32,533
|
|
|
13,364
|
|
||||
|
|
443,294
|
|
|
299,539
|
|
|
883,095
|
|
|
586,153
|
|
||||
|
|
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|
|
|
|
|
|
||||||||
Income from operations
|
|
222,406
|
|
|
158,103
|
|
|
408,345
|
|
|
311,153
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
||||||||
Investment income
|
|
1,677
|
|
|
954
|
|
|
2,614
|
|
|
1,410
|
|
||||
Interest expense
|
|
(10,177
|
)
|
|
(11,365
|
)
|
|
(21,790
|
)
|
|
(23,040
|
)
|
||||
Loss on extinguishment of debt
|
|
(10,787
|
)
|
|
—
|
|
|
(10,787
|
)
|
|
—
|
|
||||
|
|
(19,287
|
)
|
|
(10,411
|
)
|
|
(29,963
|
)
|
|
(21,630
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
|
203,119
|
|
|
147,692
|
|
|
378,382
|
|
|
289,523
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
|
(110,384
|
)
|
|
(60,316
|
)
|
|
(220,204
|
)
|
|
(103,273
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
92,735
|
|
|
$
|
87,376
|
|
|
$
|
158,178
|
|
|
$
|
186,250
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share - basic
|
|
$
|
0.92
|
|
|
$
|
0.89
|
|
|
$
|
1.58
|
|
|
$
|
1.91
|
|
Net income per share - diluted
|
|
$
|
0.82
|
|
|
$
|
0.79
|
|
|
$
|
1.40
|
|
|
$
|
1.69
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding - basic
|
|
100,391
|
|
|
97,700
|
|
|
100,085
|
|
|
97,289
|
|
||||
Weighted average shares outstanding - diluted
|
|
113,032
|
|
|
111,060
|
|
|
113,121
|
|
|
110,305
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
92,735
|
|
|
$
|
87,376
|
|
|
$
|
158,178
|
|
|
$
|
186,250
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on marketable securities, net of tax
|
|
2,798
|
|
|
(1,785
|
)
|
|
5,451
|
|
|
(2,263
|
)
|
||||
Comprehensive income
|
|
$
|
95,533
|
|
|
$
|
85,591
|
|
|
$
|
163,629
|
|
|
$
|
183,987
|
|
|
|
|
|
|
|
|
|
|
||||||||
The accompanying notes are an integral part of the financial statements.
|
|
|
Class A Stock
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings (Accumulated Deficit)
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Stockholders' Equity
|
|||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||||||
Balance, December 31, 2013
|
|
2,020
|
|
|
$
|
2
|
|
|
97,667
|
|
|
$
|
97
|
|
|
$
|
2,045,857
|
|
|
$
|
(92,692
|
)
|
|
—
|
|
|
—
|
|
|
$
|
(1,188
|
)
|
|
$
|
1,952,076
|
|
|
Issuance of Common Stock in connection with exercise of stock options
|
|
—
|
|
|
—
|
|
|
1,514
|
|
|
2
|
|
|
62,115
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,117
|
|
|||||||
Common Stock tendered upon exercise of stock options in connection with employee tax obligations
|
|
—
|
|
|
—
|
|
|
(205
|
)
|
|
—
|
|
|
(64,990
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(64,990
|
)
|
|||||||
Issuance of Common Stock in connection with conversion of convertible senior notes
|
|
—
|
|
|
—
|
|
|
522
|
|
|
1
|
|
|
156,367
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
156,368
|
|
|||||||
Issuance of Common Stock in connection with Company 401(k) Savings Plan contribution
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuance of restricted Common Stock under Long-Term Incentive Plan
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Conversion of Class A Stock to Common Stock
|
|
(21
|
)
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155,137
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
155,137
|
|
|||||||
Excess tax benefit from stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
244,197
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
244,197
|
|
|||||||
Acquisition of Common Stock in connection with exercise of convertible note hedges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,848
|
|
|
—
|
|
|
(522
|
)
|
|
$
|
(43,848
|
)
|
|
—
|
|
|
—
|
|
||||||
Reduction of warrants in connection with conversion of senior notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(143,041
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(143,041
|
)
|
|||||||
Reduction of equity component of convertible senior notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(156,651
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(156,651
|
)
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158,178
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
158,178
|
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,451
|
|
|
5,451
|
|
|||||||
Balance, June 30, 2014
|
|
1,999
|
|
|
$
|
2
|
|
|
99,545
|
|
|
$
|
100
|
|
|
$
|
2,342,839
|
|
|
$
|
65,486
|
|
|
(522
|
)
|
|
$
|
(43,848
|
)
|
|
$
|
4,263
|
|
|
$
|
2,368,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
158,178
|
|
|
$
|
186,250
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
24,546
|
|
|
19,109
|
|
||
Non-cash compensation expense
|
|
151,920
|
|
|
97,473
|
|
||
Non-cash interest expense
|
|
10,871
|
|
|
11,315
|
|
||
Loss on extinguishment of debt
|
|
10,787
|
|
|
—
|
|
||
Other non-cash charges and expenses, net
|
|
6,598
|
|
|
18,323
|
|
||
Deferred taxes
|
|
(32,543
|
)
|
|
92,522
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Decrease (increase) in Sanofi, Bayer HealthCare, and trade accounts receivable
|
|
61,043
|
|
|
(206,149
|
)
|
||
Increase in inventories
|
|
(37,295
|
)
|
|
(31,144
|
)
|
||
(Increase) decrease in prepaid expenses and other assets
|
|
(29,446
|
)
|
|
2,700
|
|
||
Increase (decrease) in deferred revenue
|
|
39,838
|
|
|
(11,579
|
)
|
||
Increase in accounts payable, accrued expenses, and other liabilities
|
|
16,820
|
|
|
35,592
|
|
||
Total adjustments
|
|
223,139
|
|
|
28,162
|
|
||
Net cash provided by operating activities
|
|
381,317
|
|
|
214,412
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of marketable securities
|
|
(374,509
|
)
|
|
(282,643
|
)
|
||
Sales or maturities of marketable securities
|
|
155,850
|
|
|
307,244
|
|
||
Capital expenditures
|
|
(135,695
|
)
|
|
(55,656
|
)
|
||
Net cash used in investing activities
|
|
(354,354
|
)
|
|
(31,055
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Payments in connection with facility and capital lease obligations
|
|
(534
|
)
|
|
(997
|
)
|
||
Repayments of convertible senior notes
|
|
(61,125
|
)
|
|
—
|
|
||
Payments in connection with reduction of outstanding warrants
|
|
(143,041
|
)
|
|
—
|
|
||
Proceeds from issuance of Common Stock
|
|
63,057
|
|
|
34,300
|
|
||
Payments in connection with Common Stock tendered for employee tax obligations
|
|
(64,990
|
)
|
|
(73,137
|
)
|
||
Excess tax benefit from stock-based compensation
|
|
244,197
|
|
|
7,876
|
|
||
Net cash provided by (used in) financing activities
|
|
37,564
|
|
|
(31,958
|
)
|
||
|
|
|
|
|
||||
Net increase in cash and cash equivalents
|
|
64,527
|
|
|
151,399
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
|
535,608
|
|
|
230,276
|
|
||
|
|
|
|
|
||||
Cash and cash equivalents at end of period
|
|
$
|
600,135
|
|
|
$
|
381,675
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of the financial statements.
|
|
Rebates &
Chargebacks
|
|
Distribution-
Related
Fees
|
|
Other Sales-
Related
Deductions
|
|
Total
|
||||||||
Balance as of December 31, 2013
|
$
|
4,400
|
|
|
$
|
19,663
|
|
|
$
|
538
|
|
|
$
|
24,601
|
|
Provision related to current period sales
|
14,817
|
|
|
36,206
|
|
|
818
|
|
|
51,841
|
|
||||
Credits/payments
|
(15,077
|
)
|
|
(35,449
|
)
|
|
(834
|
)
|
|
(51,360
|
)
|
||||
Balance as of June 30, 2014
|
$
|
4,140
|
|
|
$
|
20,420
|
|
|
$
|
522
|
|
|
$
|
25,082
|
|
|
|
Three months ended
June 30,
|
||||||
Sanofi Collaboration Revenue
|
|
2014
|
|
2013
|
||||
ZALTRAP:
|
|
|
|
|
||||
Regeneron's share of losses in connection with commercialization of ZALTRAP
|
|
$
|
(692
|
)
|
|
$
|
(8,216
|
)
|
Reimbursement of Regeneron research and development expenses
|
|
1,338
|
|
|
1,992
|
|
||
Other
|
|
1,484
|
|
|
2,227
|
|
||
Total ZALTRAP
|
|
2,130
|
|
|
(3,997
|
)
|
||
Antibody:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses
|
|
137,893
|
|
|
105,274
|
|
||
Regeneron's share of commercialization expenses
|
|
(4,295
|
)
|
|
—
|
|
||
Up-front payments to Sanofi for acquisition of rights related to two antibodies
|
|
—
|
|
|
(20,000
|
)
|
||
Other
|
|
6,867
|
|
|
4,252
|
|
||
Total Antibody
|
|
140,465
|
|
|
89,526
|
|
||
Total Sanofi collaboration revenue
|
|
$
|
142,595
|
|
|
$
|
85,529
|
|
|
|
Six months ended
June 30,
|
||||||
Sanofi Collaboration Revenue
|
|
2014
|
|
2013
|
||||
ZALTRAP:
|
|
|
|
|
||||
Regeneron's share of losses in connection with commercialization of ZALTRAP
|
|
$
|
(3,904
|
)
|
|
$
|
(16,005
|
)
|
Reimbursement of Regeneron research and development expenses
|
|
2,430
|
|
|
4,081
|
|
||
Other
|
|
3,661
|
|
|
4,084
|
|
||
Total ZALTRAP
|
|
2,187
|
|
|
(7,840
|
)
|
||
Antibody:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses
|
|
264,715
|
|
|
204,898
|
|
||
Regeneron's share of commercialization expenses
|
|
(4,295
|
)
|
|
—
|
|
||
Up-front payments to Sanofi for acquisition of rights related to two antibodies
|
|
—
|
|
|
(20,000
|
)
|
||
Other
|
|
10,496
|
|
|
7,744
|
|
||
Total Antibody
|
|
270,916
|
|
|
192,642
|
|
||
Total Sanofi collaboration revenue
|
|
$
|
273,103
|
|
|
$
|
184,802
|
|
|
|
Three months ended
June 30,
|
||||||
Bayer HealthCare Collaboration Revenue
|
|
2014
|
|
2013
|
||||
EYLEA:
|
|
|
|
|
||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
66,781
|
|
|
$
|
19,055
|
|
Sales milestones
|
|
15,000
|
|
|
—
|
|
||
Cost-sharing of Regeneron EYLEA development expenses
|
|
1,494
|
|
|
3,629
|
|
||
Other
|
|
10,813
|
|
|
8,420
|
|
||
Total EYLEA
|
|
94,088
|
|
|
31,104
|
|
||
PDGFR-beta antibody:
|
|
|
|
|
||||
Cost-sharing of REGN2176-3 development expenses
|
|
626
|
|
|
—
|
|
||
Other
|
|
2,581
|
|
|
—
|
|
||
Total PDGFR-beta
|
|
3,207
|
|
|
—
|
|
||
Total Bayer HealthCare collaboration revenue
|
|
$
|
97,295
|
|
|
$
|
31,104
|
|
|
|
Six months ended
June 30,
|
||||||
Bayer HealthCare Collaboration Revenue
|
|
2014
|
|
2013
|
||||
EYLEA:
|
|
|
|
|
||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
127,940
|
|
|
$
|
25,417
|
|
Sales milestones
|
|
45,000
|
|
|
—
|
|
||
Cost-sharing of Regeneron EYLEA development expenses
|
|
21,841
|
|
|
9,466
|
|
||
Other
|
|
21,745
|
|
|
11,128
|
|
||
Total EYLEA
|
|
216,526
|
|
|
46,011
|
|
||
PDGFR-beta antibody:
|
|
|
|
|
||||
Cost-sharing of REGN2176-3 development expenses
|
|
1,139
|
|
|
—
|
|
||
Other
|
|
4,942
|
|
|
—
|
|
||
Total PDGFR-beta
|
|
6,081
|
|
|
—
|
|
||
Total Bayer HealthCare collaboration revenue
|
|
$
|
222,607
|
|
|
$
|
46,011
|
|
|
|
Three months ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
Net income - basic and diluted
|
|
$
|
92,735
|
|
|
$
|
87,376
|
|
|
|
|
|
|
||||
(Shares in thousands)
|
|
|
|
|
||||
Weighted average shares - basic
|
|
100,391
|
|
|
97,700
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
Stock options
|
|
9,359
|
|
|
10,291
|
|
||
Restricted stock
|
|
405
|
|
|
424
|
|
||
Warrants
|
|
2,877
|
|
|
2,645
|
|
||
Dilutive potential shares
|
|
12,641
|
|
|
13,360
|
|
||
Weighted average shares - diluted
|
|
113,032
|
|
|
111,060
|
|
||
|
|
|
|
|
||||
Net income per share - basic
|
|
$
|
0.92
|
|
|
$
|
0.89
|
|
Net income per share - diluted
|
|
$
|
0.82
|
|
|
$
|
0.79
|
|
|
|
Six months ended June 30,
|
||||||
|
|
2014
|
|
2013
|
||||
Net income - basic and diluted
|
|
$
|
158,178
|
|
|
$
|
186,250
|
|
|
|
|
|
|
||||
(Shares in thousands)
|
|
|
|
|
||||
Weighted average shares - basic
|
|
100,085
|
|
|
97,289
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
Stock options
|
|
9,615
|
|
|
10,296
|
|
||
Restricted stock
|
|
403
|
|
|
383
|
|
||
Warrants
|
|
3,018
|
|
|
2,337
|
|
||
Dilutive potential shares
|
|
13,036
|
|
|
13,016
|
|
||
Weighted average shares - diluted
|
|
113,121
|
|
|
110,305
|
|
||
|
|
|
|
|
||||
Net income per share - basic
|
|
$
|
1.58
|
|
|
$
|
1.91
|
|
Net income per share - diluted
|
|
$
|
1.40
|
|
|
$
|
1.69
|
|
|
|
Three months ended June 30,
|
||||
(Shares in thousands)
|
|
2014
|
|
2013
|
||
Stock options
|
|
3,765
|
|
|
1,247
|
|
Convertible senior notes
|
|
4,662
|
|
|
4,761
|
|
|
|
Six months ended June 30,
|
||||
(Shares in thousands)
|
|
2014
|
|
2013
|
||
Stock options
|
|
3,714
|
|
|
3,599
|
|
Convertible senior notes
|
|
4,711
|
|
|
4,761
|
|
|
|
Amortized
|
|
Unrealized
|
|
Fair
|
||||||||||
At June 30, 2014
|
|
Cost Basis
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
U.S. government and government agency obligations
|
|
$
|
52,071
|
|
|
$
|
97
|
|
|
—
|
|
|
$
|
52,168
|
|
|
Corporate bonds
|
|
647,052
|
|
|
1,108
|
|
|
$
|
(368
|
)
|
|
647,792
|
|
|||
Municipal bonds
|
|
46,336
|
|
|
190
|
|
|
—
|
|
|
46,526
|
|
||||
International government agency obligations
|
|
6,211
|
|
|
—
|
|
|
(1
|
)
|
|
6,210
|
|
||||
Certificates of deposit
|
|
7,920
|
|
|
2
|
|
|
—
|
|
|
7,922
|
|
||||
Equity securities
|
|
1,166
|
|
|
5,808
|
|
|
—
|
|
|
6,974
|
|
||||
Total marketable securities
|
|
$
|
760,756
|
|
|
$
|
7,205
|
|
|
$
|
(369
|
)
|
|
$
|
767,592
|
|
|
|
|
|
|
|
|
|
|
||||||||
At December 31, 2013
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and government agency obligations
|
|
$
|
107,493
|
|
|
$
|
55
|
|
|
$
|
(27
|
)
|
|
$
|
107,521
|
|
Corporate bonds
|
|
369,321
|
|
|
233
|
|
|
(361
|
)
|
|
369,193
|
|
||||
Commercial paper
|
|
23,891
|
|
|
53
|
|
|
—
|
|
|
23,944
|
|
||||
Municipal bonds
|
|
36,935
|
|
|
45
|
|
|
(59
|
)
|
|
36,921
|
|
||||
International government agency obligations
|
|
2,007
|
|
|
1
|
|
|
—
|
|
|
2,008
|
|
||||
Certificates of deposit
|
|
7,509
|
|
|
5
|
|
|
—
|
|
|
7,514
|
|
||||
Equity securities
|
|
1,166
|
|
|
—
|
|
|
—
|
|
|
1,166
|
|
||||
Total marketable securities
|
|
$
|
548,322
|
|
|
$
|
392
|
|
|
$
|
(447
|
)
|
|
$
|
548,267
|
|
|
|
June 30,
2014
|
|
December 31, 2013
|
||||
Maturities within one year
|
|
$
|
216,774
|
|
|
$
|
158,376
|
|
Maturities after one year through five years
|
|
538,647
|
|
|
383,410
|
|
||
Maturities after five years through ten years
|
|
4,043
|
|
|
4,138
|
|
||
Maturities after ten years
|
|
1,154
|
|
|
1,177
|
|
||
|
|
$
|
760,618
|
|
|
$
|
547,101
|
|
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||
At June 30, 2014
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||
Corporate bonds
|
$
|
157,970
|
|
|
$
|
(368
|
)
|
|
—
|
|
|
—
|
|
|
$
|
157,970
|
|
|
$
|
(368
|
)
|
International government agency obligations
|
6,210
|
|
|
(1
|
)
|
|
|
|
|
|
6,210
|
|
|
(1
|
)
|
||||||
|
$
|
164,180
|
|
|
$
|
(369
|
)
|
|
—
|
|
|
—
|
|
|
$
|
164,180
|
|
|
$
|
(369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. government and government agency obligations
|
$
|
49,241
|
|
|
$
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
$
|
49,241
|
|
|
$
|
(27
|
)
|
Corporate bonds
|
176,140
|
|
|
(361
|
)
|
|
—
|
|
|
—
|
|
|
176,140
|
|
|
(361
|
)
|
||||
Municipal bonds
|
14,431
|
|
|
(59
|
)
|
|
—
|
|
|
—
|
|
|
14,431
|
|
|
(59
|
)
|
||||
|
$
|
239,812
|
|
|
$
|
(447
|
)
|
|
—
|
|
|
—
|
|
|
$
|
239,812
|
|
|
$
|
(447
|
)
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||
At June 30, 2014
|
Fair Value
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
||||||
Available-for-sale marketable securities:
|
|
|
|
|
|
||||||
U.S. government and government agency obligations
|
$
|
52,168
|
|
|
—
|
|
|
$
|
52,168
|
|
|
Corporate bonds
|
647,792
|
|
|
—
|
|
|
647,792
|
|
|||
Municipal bonds
|
46,526
|
|
|
—
|
|
|
46,526
|
|
|||
International government agency obligations
|
6,210
|
|
|
—
|
|
|
6,210
|
|
|||
Certificates of deposit
|
7,922
|
|
|
—
|
|
|
7,922
|
|
|||
Equity securities
|
6,974
|
|
|
$
|
6,974
|
|
|
—
|
|
||
|
$
|
767,592
|
|
|
$
|
6,974
|
|
|
$
|
760,618
|
|
|
|
|
|
|
|
||||||
At December 31, 2013
|
|
|
|
|
|
||||||
Available-for-sale marketable securities:
|
|
|
|
|
|
||||||
U.S. government and government agency obligations
|
$
|
107,521
|
|
|
—
|
|
|
$
|
107,521
|
|
|
Corporate bonds
|
369,193
|
|
|
—
|
|
|
369,193
|
|
|||
Commercial paper
|
23,944
|
|
|
—
|
|
|
23,944
|
|
|||
Municipal bonds
|
36,921
|
|
|
—
|
|
|
36,921
|
|
|||
International government agency obligations
|
2,008
|
|
|
—
|
|
|
2,008
|
|
|||
Certificates of deposit
|
7,514
|
|
|
—
|
|
|
7,514
|
|
|||
Equity securities
|
1,166
|
|
|
$
|
1,166
|
|
|
—
|
|
||
|
$
|
548,267
|
|
|
$
|
1,166
|
|
|
$
|
547,101
|
|
|
June 30,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
Raw materials
|
$
|
10,220
|
|
|
$
|
9,120
|
|
Work-in-process
|
60,110
|
|
|
35,868
|
|
||
Finished goods
|
12,215
|
|
|
14,352
|
|
||
Deferred costs
|
27,352
|
|
|
11,014
|
|
||
|
$
|
109,897
|
|
|
$
|
70,354
|
|
|
June 30,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
Accounts payable
|
$
|
47,231
|
|
|
$
|
61,936
|
|
Accrued payroll and related costs
|
51,786
|
|
|
69,429
|
|
||
Accrued clinical trial expense
|
35,498
|
|
|
23,654
|
|
||
Accrued sales-related charges, deductions, and royalties
|
100,333
|
|
|
66,855
|
|
||
Other accrued expenses and liabilities
|
48,537
|
|
|
29,022
|
|
||
|
$
|
283,385
|
|
|
$
|
250,896
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
EYLEA (aflibercept) Injection
, known in the scientific literature as VEGF Trap-Eye, which is available in the United States, European Union (EU), Japan, and certain other countries outside the United States for the treatment of neovascular age-related macular degeneration (wet AMD) and macular edema following central retinal vein occlusion (CRVO). In July 2014, the U.S. Food and Drug Administration (FDA) approved EYLEA for the treatment of diabetic macular edema (DME). We are collaborating with Bayer HealthCare on the global development and commercialization of EYLEA outside the United States. Regulatory applications have been submitted for EYLEA in Europe for the treatment of DME and in the United States and Europe for the treatment of macular edema following branch retinal vein occlusion (BRVO). Regulatory submissions have also been made for DME and myopic choroidal neovascularization (mCNV) in Japan.
|
•
|
ZALTRAP
®
(ziv-aflibercept) Injection for Intravenous Infusion
, known in the scientific literature as VEGF Trap, which is available in the United States, EU, and certain other countries for treatment, in combination with 5-fluorouracil, leucovorin, irinotecan (FOLFIRI), of patients with metastatic colorectal cancer (mCRC) that is resistant to or has progressed following an oxaliplatin-containing regimen. Regulatory applications for marketing authorization of ZALTRAP for the treatment of previously treated mCRC patients in other countries have also been submitted and are
|
•
|
ARCALYST
®
(rilonacept) Injection for Subcutaneous Use
, which is available in the United States for the treatment of Cryopyrin-Associated Periodic Syndromes (CAPS), including Familial Cold Auto-inflammatory Syndrome (FCAS) and Muckle-Wells Syndrome (MWS), in adults and children 12 years and older.
|
•
|
12% to 33% of dupilumab-treated patients achieved clearing or near-clearing of skin lesions, as measured by an IGA score of 0 or 1, compared to 2% with placebo (p=0.02 to p<0.0001).
|
•
|
Dupilumab-treated patients experienced a 16.5% to 47% mean reduction in itching, as measured by the pruritus numerical-rating scale (NRS) score, compared to an increase of 5% in the placebo group (p=0.0005 to p<0.0001).
|
|
|
2014 Events to Date
|
|
2014-2015 Plans (next 12 months)
|
Sarilumab (IL-6R Antibody)
|
|
Obtained positive results from Phase 1b RA trial in Japan
|
|
Continue enrollment in Phase 3 SARIL-RA program
|
|
|
Positive results from Phase 3 SARIL-RA-MOBILITY trial were presented at EULAR 2014 conference
|
|
Continue patient enrollment in SARIL-NIU-SATURN Phase 2 study in non-infectious uveitis
|
|
|
|
|
Report results from additional Phase 3 trials
|
|
|
|
|
Initiate additional clinical studies
|
Alirocumab (PCSK9 Antibody)
|
|
Initiated Phase 3 ODYSSEY CHOICE II trial
|
|
Continue enrollment of Phase 3 ODYSSEY OUTCOMES trial
|
|
|
Completed patient enrollment in the ODYSSEY CHOICE I and CHOICE II trials
|
|
Report results from additional Phase 3 ODYSSEY trials
|
|
|
Initiated Phase 3 program in Japan
|
|
File for regulatory approvals in the U.S. and EU
|
|
|
Reported positive topline results from nine Phase 3 ODYSSEY studies
|
|
|
Dupilumab (IL-4R Antibody)
|
|
Reported positive Phase 2a data in atopic dermatitis
|
|
Initiate Phase 3 trial in atopic dermatitis
|
|
|
Reported positive results from Phase 2b study in atopic dermatitis
|
|
Report results from Phase 2 trials in asthma and nasal polyposis
|
|
|
Completed patient enrollment of Phase 2b asthma study
|
|
|
|
|
Completed patient enrollment of Phase 2a nasal polyposis study
|
|
|
Enoticumab (Dll4 Antibody)
|
|
Completed patient enrollment of Phase 1 expansion study
|
|
|
Nesvacumab (Ang2 Antibody)
|
|
On partial clinical hold by the FDA for systemic use in oncology
|
|
|
REGN1033 (GDF8 Antibody)
|
|
Continued patient enrollment in Phase 1 and Phase 2a studies
|
|
Complete patient enrollment in Phase 1 and Phase 2a programs
|
REGN2009 (target not disclosed)
|
|
Development discontinued
|
|
|
REGN2222 (target not disclosed)
|
|
Initiated Phase 1 program
|
|
Continue patient enrollment in Phase 1 program
|
REGN1400 (ErbB3 Antibody)
|
|
Continued patient enrollment in Phase 1 program
|
|
Continue patient enrollment in Phase 1 program
|
REGN1154 (target not disclosed)
|
|
|
|
Determine future development plan
|
REGN1500 (target not disclosed)
|
|
Continued patient enrollment in Phase 1 program
|
|
Complete patient enrollment in Phase 1 program
|
REGN1193 (target not disclosed)
|
|
Continued patient enrollment in Phase 1 program
|
|
Continue patient enrollment in Phase 1 program
|
REGN1908-1909 (target not disclosed)
|
|
Completed patient enrollment of First in Human study
|
|
Initiate Phase 1b trial
|
REGN2176-3 (PDGFR-beta Antibody in combination with EYLEA)
|
|
Initiated Phase 1 program
|
|
Complete Phase 1 study
|
|
Completed patient enrollment of Phase 1 study
|
|
|
|
Fasinumab (NGF Antibody)
|
|
On partial clinical hold by the FDA
|
|
Determine future development plan
|
(In millions)
|
2014
|
|
2013
|
||||
Revenues
|
$
|
665.7
|
|
|
$
|
457.6
|
|
Operating expenses
|
(443.3
|
)
|
|
(299.5
|
)
|
||
Other expenses
|
(19.3
|
)
|
|
(10.4
|
)
|
||
Income before income taxes
|
203.1
|
|
|
147.7
|
|
||
Income tax expense
|
(110.4
|
)
|
|
(60.3
|
)
|
||
Net income
|
$
|
92.7
|
|
|
$
|
87.4
|
|
(In millions)
|
2014
|
|
2013
|
||||
Net product sales
|
$
|
418.0
|
|
|
$
|
333.9
|
|
Collaboration revenue:
|
|
|
|
||||
Sanofi
|
142.6
|
|
|
85.5
|
|
||
Bayer HealthCare
|
97.3
|
|
|
31.1
|
|
||
Total collaboration revenue
|
239.9
|
|
|
116.6
|
|
||
Technology licensing and other revenue
|
7.8
|
|
|
7.1
|
|
||
Total revenues
|
$
|
665.7
|
|
|
$
|
457.6
|
|
(In millions)
|
Rebates &
Chargebacks
|
|
Distribution-
Related
Fees
|
|
Other Sales-
Related
Deductions
|
|
Total
|
||||||||
Balance as of March 31, 2014
|
$
|
4.6
|
|
|
$
|
20.3
|
|
|
$
|
0.5
|
|
|
$
|
25.4
|
|
Provision related to current period sales
|
7.9
|
|
|
19.3
|
|
|
0.4
|
|
|
27.6
|
|
||||
Credits/payments
|
(8.4
|
)
|
|
(19.2
|
)
|
|
(0.4
|
)
|
|
(28.0
|
)
|
||||
Balance as of June 30, 2014
|
$
|
4.1
|
|
|
$
|
20.4
|
|
|
$
|
0.5
|
|
|
$
|
25.0
|
|
|
|
|
|
|
|
|
|
||||||||
Balance as of March 31, 2013
|
$
|
3.7
|
|
|
$
|
17.7
|
|
|
$
|
0.5
|
|
|
$
|
21.9
|
|
Provision related to current period sales
|
5.6
|
|
|
15.5
|
|
|
0.3
|
|
|
21.4
|
|
||||
Credits/payments
|
(5.2
|
)
|
|
(14.7
|
)
|
|
(0.3
|
)
|
|
(20.2
|
)
|
||||
Balance as of June 30, 2013
|
$
|
4.1
|
|
|
$
|
18.5
|
|
|
$
|
0.5
|
|
|
$
|
23.1
|
|
Sanofi Collaboration Revenue
|
|
Three months ended June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
ZALTRAP:
|
|
|
|
|
||||
Regeneron's share of losses in connection with commercialization of ZALTRAP
|
|
$
|
(0.7
|
)
|
|
$
|
(8.2
|
)
|
Reimbursement of Regeneron research and development expenses
|
|
1.3
|
|
|
2.0
|
|
||
Other
|
|
1.5
|
|
|
2.2
|
|
||
Total ZALTRAP
|
|
2.1
|
|
|
(4.0
|
)
|
||
Antibody:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses
|
|
137.9
|
|
|
105.3
|
|
||
Regeneron's share of commercialization expenses
|
|
(4.3
|
)
|
|
—
|
|
||
Up-front payments to Sanofi for acquisition of rights related to two antibodies
|
|
—
|
|
|
(20.0
|
)
|
||
Other
|
|
6.9
|
|
|
4.2
|
|
||
Total Antibody
|
|
140.5
|
|
|
89.5
|
|
||
Total Sanofi collaboration revenue
|
|
$
|
142.6
|
|
|
$
|
85.5
|
|
Regeneron's share of losses in connection with commercialization of ZALTRAP
|
|
Three months ended June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
Net product sales recorded by Sanofi
|
|
$
|
21.2
|
|
|
$
|
18.6
|
|
Regeneron's share of collaboration losses
|
|
(0.7
|
)
|
|
(8.2
|
)
|
Bayer HealthCare Collaboration Revenue
|
|
Three months ended June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
EYLEA:
|
|
|
|
|
||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
66.8
|
|
|
$
|
19.0
|
|
Sales milestones
|
|
15.0
|
|
|
—
|
|
||
Cost-sharing of Regeneron EYLEA development expenses
|
|
1.5
|
|
|
3.7
|
|
||
Other
|
|
10.8
|
|
|
8.4
|
|
||
Total EYLEA
|
|
94.1
|
|
|
31.1
|
|
||
PDGFR-beta antibody:
|
|
|
|
|
||||
Cost-sharing of REGN2176-3 development expenses
|
|
0.6
|
|
|
—
|
|
||
Other
|
|
2.6
|
|
|
—
|
|
||
Total PDGFR-beta antibody
|
|
3.2
|
|
|
—
|
|
||
Total Bayer HealthCare collaboration revenue
|
|
$
|
97.3
|
|
|
$
|
31.1
|
|
Regeneron's Net Profit from EYLEA Sales Outside the United States
|
|
Three months ended June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
Net product sales outside the United States
|
|
$
|
246.8
|
|
|
$
|
101.5
|
|
Regeneron's share of collaboration profit from sales outside the United States
|
|
81.5
|
|
|
34.2
|
|
||
Reimbursement of EYLEA development expenses incurred by Bayer HealthCare in accordance with Regeneron's payment obligation
|
|
(14.7
|
)
|
|
(15.2
|
)
|
||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
66.8
|
|
|
$
|
19.0
|
|
Research and Development Expenses*
|
|
Three months ended June 30,
|
|
Increase
|
||||||||
(In millions)
|
|
2014
|
|
2013
|
|
(Decrease)
|
||||||
Payroll and benefits
(1)
|
|
$
|
93.4
|
|
|
$
|
70.4
|
|
|
$
|
23.0
|
|
Clinical trial expenses
|
|
52.7
|
|
|
27.1
|
|
|
25.6
|
|
|||
Clinical manufacturing costs
(2)
|
|
61.3
|
|
|
46.0
|
|
|
15.3
|
|
|||
Research and other development costs
|
|
24.4
|
|
|
17.0
|
|
|
7.4
|
|
|||
Occupancy and other operating costs
|
|
29.1
|
|
|
21.0
|
|
|
8.1
|
|
|||
Cost-sharing of Bayer HealthCare and Sanofi development expenses
(3)
|
|
33.6
|
|
|
6.0
|
|
|
27.6
|
|
|||
Total research and development expenses
|
|
$
|
294.5
|
|
|
$
|
187.5
|
|
|
$
|
107.0
|
|
Project Costs
|
|
Three months ended
June 30,
|
|
Increase
|
||||||||
(In millions)
|
|
2014
|
|
2013
|
|
(Decrease)
|
||||||
EYLEA
|
|
$
|
27.8
|
|
|
$
|
32.0
|
|
|
$
|
(4.2
|
)
|
Alirocumab
|
|
63.9
|
|
|
26.9
|
|
|
37.0
|
|
|||
Sarilumab
|
|
24.3
|
|
|
6.1
|
|
|
18.2
|
|
|||
Dupilumab
|
|
39.4
|
|
|
20.7
|
|
|
18.7
|
|
|||
Other antibody candidates in clinical development
|
|
39.9
|
|
|
25.8
|
|
|
14.1
|
|
|||
Other research programs and unallocated costs
|
|
99.2
|
|
|
76.0
|
|
|
23.2
|
|
|||
Total research and development expenses
|
|
$
|
294.5
|
|
|
$
|
187.5
|
|
|
$
|
107.0
|
|
(In millions)
|
2014
|
|
2013
|
||||
Revenues
|
$
|
1,291.4
|
|
|
$
|
897.3
|
|
Operating expenses
|
(883.1
|
)
|
|
(586.2
|
)
|
||
Other expenses
|
(30.0
|
)
|
|
(21.6
|
)
|
||
Income before income taxes
|
378.3
|
|
|
289.5
|
|
||
Income tax expense
|
(220.2
|
)
|
|
(103.3
|
)
|
||
Net income
|
$
|
158.1
|
|
|
$
|
186.2
|
|
(In millions)
|
2014
|
|
2013
|
||||
Net product sales
|
$
|
780.4
|
|
|
$
|
652.6
|
|
Collaboration revenue:
|
|
|
|
||||
Sanofi
|
273.1
|
|
|
184.8
|
|
||
Bayer HealthCare
|
222.6
|
|
|
46.0
|
|
||
Total collaboration revenue
|
495.7
|
|
|
230.8
|
|
||
Technology licensing and other revenue
|
15.3
|
|
|
13.9
|
|
||
Total revenues
|
$
|
1,291.4
|
|
|
$
|
897.3
|
|
(In millions)
|
Rebates &
Chargebacks
|
|
Distribution-
Related
Fees
|
|
Other Sales-
Related
Deductions
|
|
Total
|
||||||||
Balance as of December 31, 2013
|
$
|
4.4
|
|
|
$
|
19.7
|
|
|
$
|
0.5
|
|
|
$
|
24.6
|
|
Provision related to current period sales
|
14.8
|
|
|
36.2
|
|
|
0.8
|
|
|
51.8
|
|
||||
Credits/payments
|
(15.1
|
)
|
|
(35.5
|
)
|
|
(0.8
|
)
|
|
(51.4
|
)
|
||||
Balance as of June 30, 2014
|
$
|
4.1
|
|
|
$
|
20.4
|
|
|
$
|
0.5
|
|
|
$
|
25.0
|
|
|
|
|
|
|
|
|
|
||||||||
Balance as of December 31, 2012
|
$
|
3.0
|
|
|
$
|
15.3
|
|
|
$
|
0.5
|
|
|
$
|
18.8
|
|
Provision related to current period sales
|
11.1
|
|
|
29.4
|
|
|
0.5
|
|
|
41.0
|
|
||||
Credits/payments
|
(10.1
|
)
|
|
(26.2
|
)
|
|
(0.5
|
)
|
|
(36.8
|
)
|
||||
Balance as of June 30, 2013
|
$
|
4.0
|
|
|
$
|
18.5
|
|
|
$
|
0.5
|
|
|
$
|
23.0
|
|
Sanofi Collaboration Revenue
|
|
Six months ended
June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
ZALTRAP:
|
|
|
|
|
||||
Regeneron's share of losses in connection with commercialization of ZALTRAP
|
|
$
|
(3.9
|
)
|
|
$
|
(16.0
|
)
|
Reimbursement of Regeneron research and development expenses
|
|
2.4
|
|
|
4.1
|
|
||
Other
|
|
3.7
|
|
|
4.1
|
|
||
Total ZALTRAP
|
|
2.2
|
|
|
(7.8
|
)
|
||
Antibody:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses
|
|
264.7
|
|
|
204.9
|
|
||
Regeneron's share of commercialization expenses
|
|
(4.3
|
)
|
|
—
|
|
||
Up-front payments to Sanofi for acquisition of rights related to two antibodies
|
|
—
|
|
|
(20.0
|
)
|
||
Other
|
|
10.5
|
|
|
7.7
|
|
||
Total Antibody
|
|
270.9
|
|
|
192.6
|
|
||
Total Sanofi collaboration revenue
|
|
$
|
273.1
|
|
|
$
|
184.8
|
|
Regeneron's share of losses in connection with commercialization of ZALTRAP
|
|
Six months ended
June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
Net product sales recorded by Sanofi
|
|
$
|
42.8
|
|
|
$
|
32.7
|
|
Regeneron's share of collaboration losses
|
|
(3.9
|
)
|
|
(16.0
|
)
|
Bayer HealthCare Collaboration Revenue
|
|
Six months ended
June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
EYLEA:
|
|
|
|
|
||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
128.0
|
|
|
$
|
25.4
|
|
Sales milestones
|
|
45.0
|
|
|
—
|
|
||
Cost-sharing of Regeneron EYLEA development expenses
|
|
21.8
|
|
|
9.5
|
|
||
Other
|
|
21.7
|
|
|
11.1
|
|
||
Total EYLEA
|
|
216.5
|
|
|
46.0
|
|
||
PDGFR-beta antibody:
|
|
|
|
|
||||
Cost-sharing of REGN2176-3 development expenses
|
|
1.1
|
|
|
—
|
|
||
Other
|
|
5.0
|
|
|
—
|
|
||
Total PDGFR-beta antibody
|
|
6.1
|
|
|
—
|
|
||
Total Bayer HealthCare collaboration revenue
|
|
$
|
222.6
|
|
|
$
|
46.0
|
|
Regeneron's Net Profit from EYLEA Sales Outside the United States
|
|
Six months ended
June 30,
|
||||||
(In millions)
|
|
2014
|
|
2013
|
||||
Net product sales outside the United States
|
|
$
|
464.9
|
|
|
$
|
163.5
|
|
Regeneron's share of collaboration profit from sales outside the United States
|
|
157.1
|
|
|
53.8
|
|
||
Reimbursement of EYLEA development expenses incurred by Bayer HealthCare in accordance with Regeneron's payment obligation
|
|
(29.1
|
)
|
|
(28.4
|
)
|
||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
128.0
|
|
|
$
|
25.4
|
|
Research and Development Expenses*
|
|
Six months ended
June 30,
|
|
Increase
|
||||||||
(In millions)
|
|
2014
|
|
2013
|
|
(Decrease)
|
||||||
Payroll and benefits
(1)
|
|
$
|
189.3
|
|
|
$
|
138.9
|
|
|
$
|
50.4
|
|
Clinical trial expenses
|
|
100.8
|
|
|
51.8
|
|
|
49.0
|
|
|||
Clinical manufacturing costs
(2)
|
|
119.5
|
|
|
96.7
|
|
|
22.8
|
|
|||
Research and other development costs
|
|
52.3
|
|
|
31.1
|
|
|
21.2
|
|
|||
Occupancy and other operating costs
|
|
56.6
|
|
|
40.9
|
|
|
15.7
|
|
|||
Cost-sharing of Bayer HealthCare and Sanofi development expenses
(3)
|
|
63.4
|
|
|
8.4
|
|
|
55.0
|
|
|||
Total research and development expenses
|
|
$
|
581.9
|
|
|
$
|
367.8
|
|
|
$
|
214.1
|
|
Project Costs
|
|
Six months ended June 30,
|
|
Increase
|
||||||||
(In millions)
|
|
2014
|
|
2013
|
|
(Decrease)
|
||||||
EYLEA
|
|
$
|
61.2
|
|
|
$
|
62.4
|
|
|
$
|
(1.2
|
)
|
Alirocumab
|
|
117.4
|
|
|
58.1
|
|
|
59.3
|
|
|||
Sarilumab
|
|
43.7
|
|
|
11.6
|
|
|
32.1
|
|
|||
Dupilumab
|
|
82.5
|
|
|
32.9
|
|
|
49.6
|
|
|||
Other antibody candidates in clinical development
|
|
83.7
|
|
|
53.7
|
|
|
30.0
|
|
|||
Other research programs and unallocated costs
|
|
193.4
|
|
|
149.1
|
|
|
44.3
|
|
|||
Total research and development expenses
|
|
$
|
581.9
|
|
|
$
|
367.8
|
|
|
$
|
214.1
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||
Investment type
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
U.S. government and government agency obligations
|
|
$
|
52.2
|
|
|
7
|
%
|
|
$
|
107.5
|
|
|
20
|
%
|
Corporate bonds
|
|
647.8
|
|
|
84
|
%
|
|
369.2
|
|
|
68
|
%
|
||
Commercial paper
|
|
—
|
|
|
—
|
|
|
24.0
|
|
|
4
|
%
|
||
Municipal bonds
|
|
46.5
|
|
|
6
|
%
|
|
36.9
|
|
|
7
|
%
|
||
International government agency obligations
|
|
6.2
|
|
|
1
|
%
|
|
2.0
|
|
|
—
|
|
||
Certificates of deposit
|
|
7.9
|
|
|
1
|
%
|
|
7.5
|
|
|
1
|
%
|
||
Equity securities
|
|
7.0
|
|
|
1
|
%
|
|
1.2
|
|
|
—
|
|
||
Total marketable securities
|
|
$
|
767.6
|
|
|
100
|
%
|
|
$
|
548.3
|
|
|
100
|
%
|
•
|
effectiveness of the commercial strategy in and outside the United States for the marketing of EYLEA, including pricing strategy and the continued effectiveness of efforts to obtain, and the timing of obtaining, adequate third-party reimbursements;
|
•
|
maintaining and successfully monitoring commercial manufacturing arrangements for EYLEA with third parties who perform fill/finish or other steps in the manufacture of EYLEA to ensure that they meet our standards and those of regulatory authorities, including the FDA, which extensively regulate and monitor pharmaceutical manufacturing facilities;
|
•
|
our ability to meet the demand for commercial supplies of EYLEA;
|
•
|
our ability to effectively communicate to the marketplace the benefits of the dosing regimen of EYLEA as compared to the dosing regimen of Lucentis
®
, and the willingness of retinal specialists and patients to switch from Lucentis
®
or off-label use of Avastin
®
to EYLEA;
|
•
|
the ability of patients, retinal specialists, and other providers to obtain and maintain sufficient coverage and reimbursement from third-party payers, including Medicare and Medicaid in the United States and other government and private payers in the United States and foreign jurisdictions;
|
•
|
our ability to maintain sales of EYLEA in the face of competitive products, including those currently in clinical development; and
|
•
|
the effect of existing and new health care laws and regulations currently being implemented in the United States, including reporting and disclosure requirements of such laws and regulations and the potential impact of such requirements on physician prescription practices.
|
•
|
changes in the FDA and foreign regulatory processes for new therapeutics that may delay or prevent the approval of any of our current or future product candidates;
|
•
|
new laws, regulations, or judicial decisions related to healthcare availability or the payment for healthcare products and services, including prescription drugs, that would make it more difficult for us to market and sell products once they are approved by the FDA or foreign regulatory agencies;
|
•
|
changes in FDA and foreign regulations that may require additional safety monitoring prior to or after the introduction of new products to market, which could materially increase our costs of doing business; and
|
•
|
changes in FDA and foreign cGMPs that may make it more difficult and costly for us to maintain regulatory compliance and/or manufacture our marketed product and product candidates in accordance with cGMPs.
|
•
|
unfamiliar foreign laws or regulatory requirements or unexpected changes to those laws or requirements;
|
•
|
other laws and regulatory requirements to which our business activities abroad are subject, such as the FCPA and the U.K. Bribery Act (discussed in greater detail above under "
Risks from the improper conduct of employees, agents, contractors, or collaborators could adversely affect our reputation and our business, prospects, operating results, and financial condition
");
|
•
|
changes in the political or economic condition of a specific country or region;
|
•
|
fluctuations in the value of foreign currency versus the U.S. dollar and the cost of currency exchange;
|
•
|
our ability to deploy overseas funds in an efficient manner;
|
•
|
adverse tax consequences, including those that might result from the failure to operate in conformity with the requirements for certain tax treatment, tax incentives, or grants;
|
•
|
tariffs, trade protection measures, import or export licensing requirements, trade embargoes, and other trade barriers;
|
•
|
difficulties in attracting and retaining qualified personnel; and
|
•
|
cultural differences in the conduct of business.
|
•
|
fluctuations in our operating results, in particular net product sales of EYLEA and, to a lesser degree, sales of ZALTRAP;
|
•
|
if any of our product candidates or our new indications for our marketed products receive regulatory approval, net product sales of, and profits from, these product candidates and new indications;
|
•
|
market acceptance of, and fluctuations in market share for, our marketed products, especially EYLEA;
|
•
|
whether our net products sales and net profits underperform, meet, or exceed the expectations of investors or analysts;
|
•
|
announcement of actions by the FDA or foreign regulatory authorities or their respective advisory committees regarding our, or our collaborators', or our competitors', currently pending or future application(s) for regulatory approval of product candidate(s) or new indications for marketed products;
|
•
|
announcement of submission of an application for regulatory approval of one or more of our, or our competitors', product candidates or new indications for marketed products;
|
•
|
progress, delays, or results in clinical trials of our or our competitors’ product candidates or new indications for marketed products;
|
•
|
announcement of technological innovations or product candidates by us or competitors;
|
•
|
claims by others that our products or technologies infringe their patents;
|
•
|
challenges by others to our patents in the European Patent Office and in the U.S. Patent and Trademark Office;
|
•
|
public concern as to the safety or effectiveness of any of our marketed products or product candidates or new indications for our marketed products;
|
•
|
pricing or reimbursement actions or decisions by government authorities or insurers affecting the coverage or reimbursement of any of our marketed products or competitors’ products;
|
•
|
our ability to raise additional capital as needed on favorable terms;
|
•
|
developments in our relationships with collaborative partners or key customers;
|
•
|
developments in the biotechnology industry or in government regulation of healthcare, including those relating to compounding;
|
•
|
large sales of our Common Stock by our executive officers, directors, or significant shareholders;
|
•
|
changes in tax rates, laws, or interpretation of tax laws;
|
•
|
arrivals and departures of key personnel; and
|
•
|
general market conditions.
|
•
|
our current executive officers and directors beneficially owned 10.1% of our outstanding shares of Common Stock, assuming conversion of their Class A Stock into Common Stock and the exercise of all options held by such persons which are exercisable within 60 days of July 17, 2014, and 22.0% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by such persons which are exercisable within 60 days of July 17, 2014; and
|
•
|
our five largest shareholders plus Dr. Schleifer, our Chief Executive Officer, beneficially owned approximately 46.7% of our outstanding shares of Common Stock, assuming, in the case of our Chief Executive Officer, the conversion of his Class A Stock into Common Stock and the exercise of all options held by him which are exercisable within 60 days of July 17, 2014. In addition, these five shareholders plus our Chief Executive Officer held approximately 52.6% of the combined voting power of our outstanding shares of Common Stock and Class A Stock, assuming the exercise of all options held by our Chief Executive Officer which are exercisable within 60 days of July 17, 2014.
|
•
|
authorization to issue “blank check” preferred stock, which is preferred stock that can be created and issued by the board of directors without prior shareholder approval, with rights senior to those of our Common Stock and Class A Stock;
|
•
|
a staggered board of directors, so that it would take three successive annual meetings to replace all of our directors;
|
•
|
a requirement that removal of directors may only be effected for cause and only upon the affirmative vote of at least eighty percent (80%) of the outstanding shares entitled to vote for directors, as well as a requirement that any vacancy on the board of directors may be filled only by the remaining directors;
|
•
|
a provision whereby any action required or permitted to be taken at any meeting of shareholders may be taken without a meeting, only if, prior to such action, all of our shareholders consent, the effect of which is to require that shareholder action may only be taken at a duly convened meeting;
|
•
|
a requirement that any shareholder seeking to bring business before an annual meeting of shareholders must provide timely notice of this intention in writing and meet various other requirements; and
|
•
|
under the New York Business Corporation Law, in addition to certain restrictions which may apply to “business combinations” involving our company and an “interested shareholder”, a plan of merger or consolidation of our company must be approved by two-thirds of the votes of all outstanding shares entitled to vote thereon. See the risk factor above captioned "
Our existing shareholders may be able to exert significant influence over matters requiring shareholder approval and over our management.
"
|
|
|
|
REGENERON PHARMACEUTICALS, INC.
|
|
|
|
|
|
|
|
|
Date:
|
August 5, 2014
|
|
By:
|
/s/ Robert E. Landry
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Landry
|
|
|
|
|
|
Senior Vice President, Finance and
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
(Duly Authorized Officer)
|
|
Date:
|
May 13, 2014
|
To:
|
Regeneron Pharmaceuticals, Inc.
|
Attention:
|
Dominick Agron
|
Facsimile:
|
(914) 847-1555
|
From:
|
Citibank, N.A.
|
Attention:
|
James Heathcote
|
Re:
|
Amendment of the Warrant Transaction between Citibank, N.A. and Regeneron Pharmaceuticals, Inc.
|
To:
|
Regeneron Pharmaceuticals, Inc.
|
Attention:
|
Dominick Agron
|
Facsimile:
|
(914) 847-5892
|
From:
|
Credit Suisse Capital LLC
|
Re:
|
Amendment of the Warrant Transaction between Credit Suisse Capital LLC and Regeneron Pharmaceuticals, Inc.
|
|
|
To:
|
Regeneron Pharmaceuticals, Inc.
|
Attention:
|
Dominick Agron
|
Facsimile:
|
(914) 847-1555
|
From:
|
Goldman, Sachs & Co.
|
Re:
|
Amendment of the Warrant Transaction between Goldman, Sachs & Co. and Regeneron Pharmaceuticals, Inc.
|
To:
|
Regeneron Pharmaceuticals, Inc.
|
Attention:
|
Dominick Agron
|
Facsimile:
|
(914) 847-1555
|
From:
|
Morgan Stanley & Co. International plc c/o Morgan Stanley & Co. LLC
|
Re:
|
Amendment of the Warrant Transaction between Morgan Stanley and Regeneron Pharmaceuticals, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Regeneron Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 5, 2014
|
/s/ Leonard S. Schleifer
|
|
|
|
Leonard S. Schleifer, M.D., Ph.D.
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Regeneron Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 5, 2014
|
/s/ Robert E. Landry
|
|
|
|
Robert E. Landry
|
|
|
|
Senior Vice President, Finance and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Leonard S. Schleifer
|
Leonard S. Schleifer, M.D., Ph.D.
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
August 5, 2014
|
|
/s/ Robert E. Landry
|
Robert E. Landry
|
Senior Vice President, Finance and Chief Financial Officer
|
(Principal Financial Officer)
|
August 5, 2014
|