FORM 10-Q
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(Mark One)
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ý
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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
March 31, 2018
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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: 0-19034
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New York
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13-3444607
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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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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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Yes
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ý
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No
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¨
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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Yes
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ý
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No
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¨
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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(Do not check if a smaller reporting company)
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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¨
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes
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¨
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No
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ý
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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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1,911,354
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Common Stock, $.001 par value
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105,949,824
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Page Numbers
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"ARCALYST
®
", "EYLEA
®
", "ZALTRAP
®
", "
VelocImmune
®
", "
VelociGene
®
", "
VelociMouse
®
", "
VelociMab
®
", "
VelociSuite
®
", and "Regeneron Genetics Center
®
" 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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March 31,
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December 31,
|
||||
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2018
|
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2017
|
||||
ASSETS
|
|||||||
Current assets:
|
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|
||||
Cash and cash equivalents
|
$
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1,019,491
|
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$
|
812,733
|
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Marketable securities
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605,461
|
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596,847
|
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Accounts receivable - trade, net
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1,531,936
|
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1,538,642
|
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Accounts receivable from Sanofi
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168,855
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193,684
|
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Accounts receivable from Bayer
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243,141
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242,014
|
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Inventories
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820,397
|
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726,138
|
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||
Prepaid expenses and other current assets
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155,451
|
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224,972
|
|
||
Total current assets
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4,544,732
|
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4,335,030
|
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||
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||||
Marketable securities
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1,821,985
|
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1,486,494
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Property, plant, and equipment, net
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2,394,727
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2,358,605
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Deferred tax assets
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532,268
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506,291
|
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Other noncurrent assets
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78,984
|
|
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77,866
|
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||
Total assets
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$
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9,372,696
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$
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8,764,286
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||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||
Current liabilities:
|
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|
||||
Accounts payable
|
$
|
207,611
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$
|
178,183
|
|
Accrued expenses and other current liabilities
|
666,216
|
|
|
637,162
|
|
||
Deferred revenue from Sanofi
|
231,447
|
|
|
177,746
|
|
||
Deferred revenue - other
|
160,466
|
|
|
142,392
|
|
||
Total current liabilities
|
1,265,740
|
|
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1,135,483
|
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||
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||||
Capital and facility lease obligations
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704,645
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703,453
|
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||
Deferred revenue from Sanofi
|
406,778
|
|
|
379,936
|
|
||
Deferred revenue - other
|
257,967
|
|
|
249,263
|
|
||
Other noncurrent liabilities
|
169,922
|
|
|
152,073
|
|
||
Total liabilities
|
2,805,052
|
|
|
2,620,208
|
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||
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||||
Stockholders' equity:
|
|
|
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||||
Preferred Stock, $.01 par value; 30,000,000 shares authorized; issued and outstanding - none
|
—
|
|
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—
|
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||
Class A Stock, convertible, $.001 par value; 40,000,000 shares authorized; shares issued and outstanding - 1,911,354 in 2018 and 2017
|
2
|
|
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2
|
|
||
Common Stock, $.001 par value; 320,000,000 shares authorized; shares issued - 109,703,771 in 2018 and 109,477,222 in 2017
|
110
|
|
|
110
|
|
||
Additional paid-in capital
|
3,611,599
|
|
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3,512,833
|
|
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Retained earnings
|
3,287,767
|
|
|
2,946,733
|
|
||
Accumulated other comprehensive (loss) income
|
(15,594
|
)
|
|
640
|
|
||
Treasury Stock, at cost; 3,763,868 shares in 2018 and 2017
|
(316,240
|
)
|
|
(316,240
|
)
|
||
Total stockholders' equity
|
6,567,644
|
|
|
6,144,078
|
|
||
Total liabilities and stockholders' equity
|
$
|
9,372,696
|
|
|
$
|
8,764,286
|
|
|
|
|
|
||||
The accompanying notes are an integral part of the financial statements.
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|
Three Months Ended
March 31, |
||||||
|
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2018
|
|
2017
|
||||
Statements of Operations
|
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|
||||
Revenues:
|
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|
||||
Net product sales
|
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$
|
987,909
|
|
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$
|
858,245
|
|
Sanofi collaboration revenue
|
|
189,490
|
|
|
210,367
|
|
||
Bayer collaboration revenue
|
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247,928
|
|
|
193,939
|
|
||
Other revenue
|
|
86,158
|
|
|
56,440
|
|
||
|
|
1,511,485
|
|
|
1,318,991
|
|
||
|
|
|
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|
||||
Expenses:
|
|
|
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|
||||
Research and development
|
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498,586
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507,435
|
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Selling, general, and administrative
|
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330,770
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296,846
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Cost of goods sold
|
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69,243
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|
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61,253
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|
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Cost of collaboration and contract manufacturing
|
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45,655
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22,915
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||
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944,254
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888,449
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||
|
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|
||||
Income from operations
|
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567,231
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|
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430,542
|
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||
|
|
|
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|
||||
Other income (expense):
|
|
|
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|
||||
Other income, net
|
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24,606
|
|
|
9,248
|
|
||
Interest expense
|
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(6,439
|
)
|
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(7,501
|
)
|
||
|
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18,167
|
|
|
1,747
|
|
||
|
|
|
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|
||||
Income before income taxes
|
|
585,398
|
|
|
432,289
|
|
||
|
|
|
|
|
||||
Income tax expense
|
|
(107,418
|
)
|
|
(183,358
|
)
|
||
|
|
|
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|
||||
Net income
|
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$
|
477,980
|
|
|
$
|
248,931
|
|
|
|
|
|
|
||||
Net income per share - basic
|
|
$
|
4.44
|
|
|
$
|
2.36
|
|
Net income per share - diluted
|
|
$
|
4.16
|
|
|
$
|
2.16
|
|
|
|
|
|
|
||||
Weighted average shares outstanding - basic
|
|
107,648
|
|
|
105,572
|
|
||
Weighted average shares outstanding - diluted
|
|
114,906
|
|
|
115,106
|
|
||
|
|
|
|
|
||||
Statements of Comprehensive Income
|
|
|
|
|
||||
Net income
|
|
$
|
477,980
|
|
|
$
|
248,931
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Unrealized (loss) gain on marketable securities
|
|
(11,080
|
)
|
|
6,956
|
|
||
Unrealized gain on cash flow hedges
|
|
1,439
|
|
|
—
|
|
||
Comprehensive income
|
|
$
|
468,339
|
|
|
$
|
255,887
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of the financial statements.
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
477,980
|
|
|
$
|
248,931
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
36,358
|
|
|
38,115
|
|
||
Non-cash compensation expense
|
|
82,422
|
|
|
133,789
|
|
||
Other non-cash items, net
|
|
(4,193
|
)
|
|
3,956
|
|
||
Deferred taxes
|
|
(6,366
|
)
|
|
(40,988
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Decrease (increase) in Sanofi, Bayer, and trade accounts receivable
|
|
30,408
|
|
|
(137,928
|
)
|
||
Increase in inventories
|
|
(88,760
|
)
|
|
(69,744
|
)
|
||
Decrease (increase) in prepaid expenses and other assets
|
|
68,836
|
|
|
(20,325
|
)
|
||
(Decrease) increase in deferred revenue
|
|
(54,596
|
)
|
|
12,400
|
|
||
Increase in accounts payable, accrued expenses, and other liabilities
|
|
76,654
|
|
|
187,695
|
|
||
Total adjustments
|
|
140,763
|
|
|
106,970
|
|
||
Net cash provided by operating activities
|
|
618,743
|
|
|
355,901
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of marketable and other securities
|
|
(601,313
|
)
|
|
(208,694
|
)
|
||
Sales or maturities of marketable securities
|
|
255,276
|
|
|
119,012
|
|
||
Capital expenditures
|
|
(79,375
|
)
|
|
(50,461
|
)
|
||
Net cash used in investing activities
|
|
(425,412
|
)
|
|
(140,143
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds in connection with capital and facility lease obligations
|
|
—
|
|
|
57,000
|
|
||
Payments in connection with capital and facility lease obligations
|
|
—
|
|
|
(12,861
|
)
|
||
Proceeds from issuance of Common Stock
|
|
13,427
|
|
|
16,673
|
|
||
Net cash provided by financing activities
|
|
13,427
|
|
|
60,812
|
|
||
|
|
|
|
|
||||
Net increase in cash, cash equivalents, and restricted cash
|
|
206,758
|
|
|
276,570
|
|
||
|
|
|
|
|
||||
Cash, cash equivalents, and restricted cash at beginning of period
|
|
825,233
|
|
|
547,703
|
|
||
|
|
|
|
|
||||
Cash, cash equivalents, and restricted cash at end of period
|
|
$
|
1,031,991
|
|
|
$
|
824,273
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of the financial statements.
|
|
|
March 31, 2018
|
||||||||||
Balance Sheet Data
|
|
As Reported
|
|
Adjustments
|
|
Balance Without Adoption of ASC 606
|
||||||
Deferred tax assets
|
|
$
|
532,268
|
|
|
$
|
(18,206
|
)
|
|
$
|
514,062
|
|
Total assets
|
|
$
|
9,372,696
|
|
|
$
|
(18,206
|
)
|
|
$
|
9,354,490
|
|
Accrued expenses and other current liabilities
|
|
$
|
666,216
|
|
|
$
|
(1,513
|
)
|
|
$
|
664,703
|
|
Deferred revenue from Sanofi (current)
|
|
$
|
231,447
|
|
|
$
|
(33,632
|
)
|
|
$
|
197,815
|
|
Deferred revenue - other (current)
|
|
$
|
160,466
|
|
|
$
|
(69,241
|
)
|
|
$
|
91,225
|
|
Total current liabilities
|
|
$
|
1,265,740
|
|
|
$
|
(104,386
|
)
|
|
$
|
1,161,354
|
|
Deferred revenue from Sanofi (noncurrent)
|
|
$
|
406,778
|
|
|
$
|
(51,604
|
)
|
|
$
|
355,174
|
|
Deferred revenue - other (noncurrent)
|
|
$
|
257,967
|
|
|
$
|
18,277
|
|
|
$
|
276,244
|
|
Total liabilities
|
|
$
|
2,805,052
|
|
|
$
|
(137,713
|
)
|
|
$
|
2,667,339
|
|
Retained earnings
|
|
$
|
3,287,767
|
|
|
$
|
119,507
|
|
|
$
|
3,407,274
|
|
Total stockholders' equity
|
|
$
|
6,567,644
|
|
|
$
|
119,507
|
|
|
$
|
6,687,151
|
|
Total liabilities and stockholders' equity
|
|
$
|
9,372,696
|
|
|
$
|
(18,206
|
)
|
|
$
|
9,354,490
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
Consolidated Statement of Operations Data
|
|
As Reported
|
|
Adjustments
|
|
Balance Without Adoption of ASC 606
|
||||||
Sanofi collaboration revenue
|
|
$
|
189,490
|
|
|
$
|
(8,407
|
)
|
|
$
|
181,083
|
|
Other revenue
|
|
$
|
86,158
|
|
|
$
|
(17,310
|
)
|
|
$
|
68,848
|
|
Total revenues
|
|
$
|
1,511,485
|
|
|
$
|
(25,717
|
)
|
|
$
|
1,485,768
|
|
Income from operations
|
|
$
|
567,231
|
|
|
$
|
(25,717
|
)
|
|
$
|
541,514
|
|
Income before income taxes
|
|
$
|
585,398
|
|
|
$
|
(25,717
|
)
|
|
$
|
559,681
|
|
Income tax expense
|
|
$
|
(107,418
|
)
|
|
$
|
1,789
|
|
|
$
|
(105,629
|
)
|
Net income
|
|
$
|
477,980
|
|
|
$
|
(23,928
|
)
|
|
$
|
454,052
|
|
|
|
Three Months Ended
March 31, |
||||||
Net Product Sales in the United States
|
|
2018
|
|
2017
|
||||
EYLEA
®
|
|
$
|
984,049
|
|
|
$
|
854,387
|
|
ARCALYST
®
|
|
3,860
|
|
|
3,858
|
|
||
|
|
$
|
987,909
|
|
|
$
|
858,245
|
|
|
Rebates &
Chargebacks
|
|
Distribution-
Related
Fees
|
|
Other Sales-
Related
Deductions
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
$
|
29,840
|
|
|
$
|
34,142
|
|
|
$
|
21,320
|
|
|
$
|
85,302
|
|
Provisions
|
48,495
|
|
|
51,716
|
|
|
11,170
|
|
|
111,381
|
|
||||
Credits/payments
|
(30,674
|
)
|
|
(42,025
|
)
|
|
(14,665
|
)
|
|
(87,364
|
)
|
||||
Balance as of March 31, 2018
|
$
|
47,661
|
|
|
$
|
43,833
|
|
|
$
|
17,825
|
|
|
$
|
109,319
|
|
|
|
|
|
|
|
|
|
||||||||
Balance as of December 31, 2016
|
$
|
12,712
|
|
|
$
|
29,465
|
|
|
$
|
3,674
|
|
|
$
|
45,851
|
|
Provisions
|
38,908
|
|
|
41,175
|
|
|
9,520
|
|
|
89,603
|
|
||||
Credits/payments
|
(28,502
|
)
|
|
(42,287
|
)
|
|
(8,632
|
)
|
|
(79,421
|
)
|
||||
Balance as of March 31, 2017
|
$
|
23,118
|
|
|
$
|
28,353
|
|
|
$
|
4,562
|
|
|
$
|
56,033
|
|
|
|
Three Months Ended
March 31, |
||||||
Sanofi Collaboration Revenue
|
|
2018
|
|
2017
|
||||
Antibody:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses
|
|
$
|
60,394
|
|
|
$
|
155,245
|
|
Reimbursement of Regeneron commercialization-related expenses
|
|
85,424
|
|
|
73,559
|
|
||
Regeneron's share of losses in connection with commercialization of antibodies
|
|
(74,874
|
)
|
|
(108,402
|
)
|
||
Other
|
|
17,330
|
|
|
11,286
|
|
||
Total Antibody
|
|
88,274
|
|
|
131,688
|
|
||
Immuno-oncology:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses
|
|
73,824
|
|
|
58,679
|
|
||
Reimbursement of Regeneron commercialization-related expenses
|
|
1,210
|
|
|
—
|
|
||
Other
|
|
26,182
|
|
|
20,000
|
|
||
Total Immuno-oncology
|
|
101,216
|
|
|
78,679
|
|
||
|
|
$
|
189,490
|
|
|
$
|
210,367
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Accounts receivable, net
|
|
$
|
94,022
|
|
|
$
|
121,001
|
|
Deferred revenue
|
|
$
|
132,991
|
|
|
$
|
117,682
|
|
|
Three Months Ended March 31, 2018
|
||
Increase due to shipments of commercial supplies to Sanofi
|
$
|
37,036
|
|
Revenue recognized that was included in deferred revenue at the beginning of the period
|
$
|
(21,727
|
)
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Accounts receivable, net
|
|
$
|
70,887
|
|
|
$
|
59,274
|
|
Deferred revenue
|
|
$
|
505,235
|
|
|
$
|
440,000
|
|
|
Three Months Ended March 31, 2018
|
||
Increase as a result of cumulative-effect adjustment arising from the adoption of ASC 606
|
$
|
93,643
|
|
Revenue recognized that was included in deferred revenue at the beginning of the period
|
$
|
(28,408
|
)
|
|
|
Three Months Ended
March 31, |
||||||
Bayer EYLEA Collaboration Revenue
|
|
2018
|
|
2017
|
||||
EYLEA:
|
|
|
|
|
||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
232,068
|
|
|
$
|
174,876
|
|
Reimbursement of Regeneron EYLEA development expenses
|
|
3,457
|
|
|
2,451
|
|
||
Other
|
|
11,863
|
|
|
10,603
|
|
||
Total EYLEA
|
|
$
|
247,388
|
|
|
$
|
187,930
|
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Accounts receivable, net
|
|
$
|
243,141
|
|
|
$
|
241,153
|
|
Deferred revenue
|
|
$
|
70,378
|
|
|
$
|
68,734
|
|
|
Three Months Ended March 31, 2018
|
||
Increase due to shipments of commercial supplies to Bayer
|
$
|
11,436
|
|
Revenue recognized that was included in deferred revenue at the beginning of the period
|
$
|
(9,792
|
)
|
|
|
March 31,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
Accounts receivable, net (recorded within Prepaid expenses and other current assets)
|
|
$
|
40,625
|
|
|
$
|
71,297
|
|
Deferred revenue
|
|
$
|
227,714
|
|
|
$
|
197,357
|
|
|
Three Months Ended March 31, 2018
|
||
Increase as a result of cumulative-effect adjustment arising from the adoption of ASC 606
|
$
|
48,216
|
|
Revenue recognized that was included in deferred revenue at the beginning of the period
|
$
|
(18,917
|
)
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2018
|
|
2017
|
||||
Net income - basic and diluted
|
|
$
|
477,980
|
|
|
$
|
248,931
|
|
|
|
|
|
|
||||
(Shares in thousands)
|
|
|
|
|
||||
Weighted average shares - basic
|
|
107,648
|
|
|
105,572
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
Stock options
|
|
7,244
|
|
|
9,050
|
|
||
Restricted stock
|
|
14
|
|
|
484
|
|
||
Dilutive potential shares
|
|
7,258
|
|
|
9,534
|
|
||
Weighted average shares - diluted
|
|
114,906
|
|
|
115,106
|
|
||
|
|
|
|
|
||||
Net income per share - basic
|
|
$
|
4.44
|
|
|
$
|
2.36
|
|
Net income per share - diluted
|
|
$
|
4.16
|
|
|
$
|
2.16
|
|
|
|
Three Months Ended
March 31, |
||||
(Shares in thousands)
|
|
2018
|
|
2017
|
||
Stock options
|
|
14,878
|
|
|
11,535
|
|
Restricted stock
|
|
57
|
|
|
18
|
|
|
|
Amortized
|
|
Unrealized
|
|
Fair
|
||||||||||
As of March 31, 2018
|
|
Cost Basis
|
|
Gains
|
|
Losses
|
|
Value
|
||||||||
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
$
|
2,126,820
|
|
|
$
|
1,948
|
|
|
$
|
(18,159
|
)
|
|
$
|
2,110,609
|
|
U.S. government and government agency obligations
|
|
156,281
|
|
|
30
|
|
|
(1,611
|
)
|
|
154,700
|
|
||||
Municipal bonds
|
|
2,591
|
|
|
—
|
|
|
(11
|
)
|
|
2,580
|
|
||||
Commercial paper
|
|
70,385
|
|
|
—
|
|
|
—
|
|
|
70,385
|
|
||||
Certificates of deposit
|
|
20,097
|
|
|
—
|
|
|
—
|
|
|
20,097
|
|
||||
|
|
$
|
2,376,174
|
|
|
$
|
1,978
|
|
|
$
|
(19,781
|
)
|
|
$
|
2,358,371
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Available-for-sale debt securities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
$
|
1,717,976
|
|
|
$
|
2,176
|
|
|
$
|
(7,672
|
)
|
|
$
|
1,712,480
|
|
U.S. government and government agency obligations
|
|
186,699
|
|
|
34
|
|
|
(1,241
|
)
|
|
185,492
|
|
||||
Municipal bonds
|
|
4,600
|
|
|
—
|
|
|
(13
|
)
|
|
4,587
|
|
||||
Commercial paper
|
|
106,973
|
|
|
—
|
|
|
—
|
|
|
106,973
|
|
||||
Certificates of deposit
|
|
11,024
|
|
|
—
|
|
|
—
|
|
|
11,024
|
|
||||
|
|
$
|
2,027,272
|
|
|
$
|
2,210
|
|
|
$
|
(8,926
|
)
|
|
$
|
2,020,556
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Maturities within one year
|
|
$
|
605,461
|
|
|
$
|
593,783
|
|
Maturities after one year through five years
|
|
1,752,910
|
|
|
1,426,773
|
|
||
|
|
$
|
2,358,371
|
|
|
$
|
2,020,556
|
|
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
As of March 31, 2018
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
|
Fair Value
|
|
Unrealized Loss
|
||||||||||||
Corporate bonds
|
$
|
1,343,778
|
|
|
$
|
(13,950
|
)
|
|
$
|
234,258
|
|
|
$
|
(4,209
|
)
|
|
$
|
1,578,036
|
|
|
$
|
(18,159
|
)
|
U.S. government and government agency obligations
|
70,872
|
|
|
(623
|
)
|
|
76,793
|
|
|
(988
|
)
|
|
147,665
|
|
|
(1,611
|
)
|
||||||
Municipal bonds
|
2,579
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
2,579
|
|
|
(11
|
)
|
||||||
|
$
|
1,417,229
|
|
|
$
|
(14,584
|
)
|
|
$
|
311,051
|
|
|
$
|
(5,197
|
)
|
|
$
|
1,728,280
|
|
|
$
|
(19,781
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate bonds
|
$
|
930,970
|
|
|
$
|
(4,924
|
)
|
|
$
|
256,750
|
|
|
$
|
(2,748
|
)
|
|
$
|
1,187,720
|
|
|
$
|
(7,672
|
)
|
U.S. government and government agency obligations
|
110,532
|
|
|
(409
|
)
|
|
67,921
|
|
|
(832
|
)
|
|
178,453
|
|
|
(1,241
|
)
|
||||||
Municipal bonds
|
2,582
|
|
|
(10
|
)
|
|
2,005
|
|
|
(3
|
)
|
|
4,587
|
|
|
(13
|
)
|
||||||
|
$
|
1,044,084
|
|
|
$
|
(5,343
|
)
|
|
$
|
326,676
|
|
|
$
|
(3,583
|
)
|
|
$
|
1,370,760
|
|
|
$
|
(8,926
|
)
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||
As of March 31, 2018
|
Fair Value
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
||||||
Available-for-sale debt securities:
|
|
|
|
|
|
||||||
Corporate bonds
|
$
|
2,110,609
|
|
|
—
|
|
|
$
|
2,110,609
|
|
|
U.S. government and government agency obligations
|
154,700
|
|
|
—
|
|
|
154,700
|
|
|||
Municipal bonds
|
2,580
|
|
|
—
|
|
|
2,580
|
|
|||
Commercial paper
|
70,385
|
|
|
—
|
|
|
70,385
|
|
|||
Certificates of deposit
|
20,097
|
|
|
—
|
|
|
20,097
|
|
|||
Equity securities
|
69,075
|
|
|
$
|
69,075
|
|
|
—
|
|
||
|
$
|
2,427,446
|
|
|
$
|
69,075
|
|
|
$
|
2,358,371
|
|
|
|
|
|
|
|
||||||
As of December 31, 2017
|
|
|
|
|
|
||||||
Available-for-sale debt securities:
|
|
|
|
|
|
||||||
Corporate bonds
|
$
|
1,712,480
|
|
|
—
|
|
|
$
|
1,712,480
|
|
|
U.S. government and government agency obligations
|
185,492
|
|
|
—
|
|
|
185,492
|
|
|||
Municipal bonds
|
4,587
|
|
|
—
|
|
|
4,587
|
|
|||
Commercial paper
|
106,973
|
|
|
—
|
|
|
106,973
|
|
|||
Certificates of deposit
|
11,024
|
|
|
—
|
|
|
11,024
|
|
|||
Equity securities
|
62,785
|
|
|
$
|
62,785
|
|
|
—
|
|
||
|
$
|
2,083,341
|
|
|
$
|
62,785
|
|
|
$
|
2,020,556
|
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Raw materials
|
$
|
201,429
|
|
|
$
|
190,045
|
|
Work-in-process
|
374,505
|
|
|
302,042
|
|
||
Finished goods
|
22,848
|
|
|
21,791
|
|
||
Deferred costs
|
221,615
|
|
|
212,260
|
|
||
|
$
|
820,397
|
|
|
$
|
726,138
|
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Interest rate swap contracts
|
$
|
75,000
|
|
|
$
|
75,000
|
|
Interest rate cap contracts
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
|
March 31,
|
|
March 31,
|
||||
|
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
|
$
|
1,019,491
|
|
|
$
|
811,773
|
|
Restricted cash included in Other noncurrent assets
|
|
12,500
|
|
|
12,500
|
|
||
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statement of Cash Flows
|
|
$
|
1,031,991
|
|
|
$
|
824,273
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Net Product Sales of Regeneron-Discovered Products
(1)
|
|
Three Months Ended
March 31, |
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
EYLEA in the United States
|
|
$
|
984.0
|
|
|
$
|
854.4
|
|
ARCALYST
|
|
3.9
|
|
|
3.8
|
|
||
Net product sales recorded by Regeneron
|
|
$
|
987.9
|
|
|
$
|
858.2
|
|
|
|
|
|
|
||||
EYLEA outside of the United States
(1)
|
|
$
|
624.0
|
|
|
$
|
483.9
|
|
EYLEA global
|
|
$
|
1,608.0
|
|
|
$
|
1,338.3
|
|
|
|
|
|
|
||||
Global net product sales recorded by Sanofi
(1)
:
|
|
|
|
|
||||
Praluent
|
|
$
|
59.9
|
|
|
$
|
35.9
|
|
Dupixent
|
|
131.4
|
|
|
—
|
|
||
Kevzara
|
|
12.4
|
|
|
—
|
|
||
ZALTRAP
|
|
26.3
|
|
|
17.4
|
|
||
Net product sales recorded by Sanofi
|
|
$
|
230.0
|
|
|
$
|
53.3
|
|
|
|
|
|
|
||||
(1)
Bayer records net product sales of EYLEA outside the United States and Sanofi records global net product sales of Praluent, Dupixent, Kevzara, and ZALTRAP. Refer to "Overview" above and "Collaboration Agreements" below for further details.
|
Phase 1
|
|
Phase 2
|
|
Phase 3
|
|||
Cemiplimab (REGN2810)
(a)
|
|
Dupilumab
(a)
|
|
EYLEA
|
|||
Antibody to programmed cell death protein 1 (PD-1)
(h)
|
|
Antibody to the interleukin-4 receptor (IL-4R) alpha subunit
|
|
|
Non-proliferative diabetic retinopathy (NPDR) in patients without DME
|
||
|
Solid tumors and advanced hematologic malignancies
|
|
|
Eosinophilic esophagitis (EoE)
(c)
|
|
Dupilumab
(a)
|
|
REGN3767
(a)
|
|
REGN3500
(a)
|
|
|
Atopic dermatitis in adolescents and pediatrics (6–17 years of age)
|
||
Antibody to Lymphocyte Activation Gene 3 (LAG-3) protein
|
|
Antibody to interleukin-33 (IL-33). Studied as monotherapy and in combination with dupilumab.
|
|
|
Atopic dermatitis in pediatrics (6 months–5 years of age) (Phase 2/3)
|
||
|
Advanced malignancies (administered alone or in combination with cemiplimab)
|
|
|
Asthma
|
|
|
Asthma in adults and adolescents
|
|
|
Sarilumab
(a)
|
|
|
Asthma in pediatrics (6–11 years of age)
|
||
REGN1979
|
|
Antibody to the interleukin-6 receptor (IL-6R)
|
|
|
Nasal polyps
|
||
Bispecific antibody against CD20 and CD3
|
|
|
Polyarticular-course juvenile idiopathic arthritis (pcJIA)
|
|
Alirocumab
(a)
|
||
|
Certain B-cell malignancies (monotherapy and in combination cemiplimab)
(c)
|
|
Cemiplimab
(a)
|
|
Antibody to PCSK9
|
||
|
|
|
Metastatic or locally advanced and unresectable cutaneous squamous cell carcinoma (CSCC) (pivotal study)
(d)
|
|
|
LDL cholesterol reduction and prevention of cardiovascular events
|
|
REGN3470-3471-3479
(g)
|
|
|
|
|
Homozygous familial hypercholesterolemia (HoFH)
(c)
|
||
Multi-antibody therapy to Ebola virus
|
|
|
Basal cell carcinoma (BCC) (potentially pivotal study)
|
|
Cemiplimab
(a)
|
||
|
Ebola virus infection
(c)
|
|
Evinacumab (REGN1500)
(f)
|
|
|
First-line treatment for non-small cell lung cancer (NSCLC)
|
|
REGN3048-3051
(g)
|
|
Antibody to angiopoietin-like protein 3 (ANGPTL3)
|
|
|
Cervical cancer
|
||
Multi-antibody therapy to Middle East Respiratory Syndrome (MERS) virus
|
|
|
Refractory hypercholesterolemia (both HeFH and non-FH)
|
|
Fasinumab (REGN475)
(b)(f)
|
||
|
MERS virus infection
|
|
REGN2477
(f)
|
|
|
Osteoarthritis of knee and hip
(e)
|
|
REGN1908-1909
(f)
|
|
|
Fibrodysplasia ossificans progressiva (FOP)
(c)(e)
|
|
|
Chronic low back pain in patients with concomitant osteoarthritis of the knee and hip
|
|
Multi-antibody therapy to Feld1
|
|
|
|
|
|
||
|
Allergic disease
|
|
|
|
|
Evinacumab
(f)
|
|
Trevogrumab (REGN1033)
(f)
|
|
|
|
|
|
HoFH
(c)(d)
|
|
Antibody to myostatin (GDF8)
|
|
|
|
|
|
|
|
|
Muscle wasting diseases (in combination with REGN2477)
|
|
|
|
|
|
|
REGN2477
(f)
|
|
|
|
|
|
|
|
Antibody to Activin A
|
|
|
|
|
|
|
|
|
Muscle-wasting diseases (in combination with trevogrumab)
|
|
|
|
|
|
|
REGN3918
(f)
|
|
|
|
|
|
|
|
Antibody to complement 5 (C5)
|
|
|
|
|
|
|
|
|
Paroxysmal nocturnal hemoglobinuria (PNH)
|
|
|
|
|
|
|
REGN4461
|
|
|
|
|
|
|
|
Agonist antibody to leptin receptor (LEPR)
|
|
|
|
|
|
|
|
|
Lipodystrophy and obesity
|
|
|
|
|
|
|
(a)
In collaboration with Sanofi
|
||||
(b)
In collaboration with Teva and Mitsubishi Tanabe Pharma
|
||||
(c)
FDA granted orphan drug designation
|
||||
(d)
FDA granted Breakthrough Therapy designation
|
||||
(e)
FDA granted Fast Track designation
|
||||
(f)
Sanofi did not opt-in to or elected not to continue to co-develop the product candidate. Under the terms of our agreement, Sanofi is entitled to receive royalties on any future global sales of the product candidate.
|
||||
(g)
Sanofi did not opt-in to the product candidate. Under the terms of our agreement, Sanofi is entitled to receive royalties on any future sales of the product candidate. We and the Biomedical Advanced Research Development Authority (BARDA) of the U.S. Department of Health and Human Services (HHS) are parties to agreements whereby HHS provides certain funding to support research, development, and manufacturing of these antibodies.
|
||||
(h)
Studied as monotherapy and in combination with other antibodies and treatments
|
Trap-based Clinical Program:
|
|
|
|
|
|
|
2018 Events to Date
|
|
2018–2019 Plans (next 12 months)
|
EYLEA
|
|
Chinese State Food and Drug Administration (CFDA) approved EYLEA for DME
|
|
FDA decision on sBLA for every 12-week dosing interval in wet AMD (target action date of August 11, 2018)
|
|
Reported positive top-line results from Phase 3 PANORAMA study for the treatment of NPDR in patients without DME (see "Clinical Programs - Recent Developments" below)
|
|
Submit sBLA for pre-filled syringe
|
|
|
|
Regulatory agency decision on wet AMD in China
|
||
|
Submitted sBLA for "vial-only" presentation
|
|
Submit sBLA for the treatment of NPDR in patients without DME
|
|
Antibody-based Clinical Programs:
|
|
|
|
|
|
|
2018 Events to Date
|
|
2018–2019 Plans (next 12 months)
|
Dupixent (dupilumab; IL-4R Antibody)
|
|
Ministry of Health, Labor and Welfare (MHLW) in Japan approved Dupixent for the treatment of atopic dermatitis in adults not adequately controlled with existing therapies
|
|
Submit for additional regulatory approvals in atopic dermatitis and asthma outside the United States
|
|
|
Initiated Phase 2/3 study in pediatric patients (6 months–5 years of age) with severe atopic dermatitis
|
|
Report data from Phase 3 study in adolescent patients (12–17 years of age) with atopic dermatitis and submit sBLA and Marketing Authorization Application (MAA) for expanded indication
|
|
|
sBLA for asthma in adult and adolescent patients (12 years of age and older) filed with FDA
|
|
FDA decision on sBLA for asthma in adult and adolescent patients (target action date of October 20, 2018)
|
|
|
Regulatory application for asthma accepted for review by the European Medicines Agency (EMA) and Pharmaceuticals and Medical Devices Agency (PMDA) in Japan
|
|
Regulatory agency decisions on atopic dermatitis and asthma applications outside the United States
|
|
|
|
|
Report data from Phase 3 studies in nasal polyps
|
|
|
|
|
Initiate Phase 3 study in eosinophilic esophagitis
|
|
|
|
|
Initiate Phase 2 study in peanut allergy
|
|
|
|
|
Initiate Phase 2 study as an adjunct to immunotherapy for grass allergy
|
|
|
|
|
Initiate Phase 3 program in chronic obstructive pulmonary disease (COPD)
|
|
|
|
|
Initiate clinical program in co-morbid allergic conditions
|
Praluent (alirocumab; PCSK9 Antibody)
|
|
Reported positive results from ODYSSEY OUTCOMES study (see "Clinical Programs - Recent Developments" below)
|
|
Submit for regulatory approval for cardiovascular risk reduction in the United States and EU and for first-line treatment of hyperlipidemia in the United States
|
|
|
|
|
FDA decision on sBLA for use with apheresis (target action date of August 24, 2018)
|
|
|
|
|
Initiate Phase 3 pediatric studies in HoFH and HeFH
|
Net Income
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
||||||||
(In millions)
|
2018
|
|
2017
|
|
|||||||
Revenues
|
$
|
1,511.5
|
|
|
$
|
1,319.0
|
|
|
$
|
192.5
|
|
Operating expenses
|
(944.3
|
)
|
|
(888.4
|
)
|
|
(55.9
|
)
|
|||
Other income (expense), net
|
18.2
|
|
|
1.7
|
|
|
16.5
|
|
|||
Income before income taxes
|
585.4
|
|
|
432.3
|
|
|
153.1
|
|
|||
Income tax expense
|
(107.4
|
)
|
|
(183.4
|
)
|
|
76.0
|
|
|||
Net income
|
$
|
478.0
|
|
|
$
|
248.9
|
|
|
$
|
229.1
|
|
|
|
|
|
|
|
||||||
Net income per share - diluted
|
$
|
4.16
|
|
|
$
|
2.16
|
|
|
$
|
2.00
|
|
Revenues
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
||||||||
(In millions)
|
2018
|
|
2017
|
|
|||||||
Net product sales in the United States:
|
|
|
|
|
|
||||||
EYLEA
|
$
|
984.0
|
|
|
$
|
854.4
|
|
|
$
|
129.6
|
|
ARCALYST
|
3.9
|
|
|
3.8
|
|
|
0.1
|
|
|||
Sanofi and Bayer collaboration revenue:
|
|
|
|
|
|
||||||
Sanofi
|
189.5
|
|
|
210.4
|
|
|
(20.9
|
)
|
|||
Bayer
|
247.9
|
|
|
193.9
|
|
|
54.0
|
|
|||
Other revenue
|
86.2
|
|
|
56.5
|
|
|
29.7
|
|
|||
Total revenues
|
$
|
1,511.5
|
|
|
$
|
1,319.0
|
|
|
$
|
192.5
|
|
(In millions)
|
Rebates &
Chargebacks
|
|
Distribution-
Related
Fees
|
|
Other Sales-
Related
Deductions
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
$
|
29.9
|
|
|
$
|
34.1
|
|
|
$
|
21.3
|
|
|
$
|
85.3
|
|
Provisions
|
48.5
|
|
|
51.7
|
|
|
11.2
|
|
|
111.4
|
|
||||
Credits/payments
|
(30.7
|
)
|
|
(42.0
|
)
|
|
(14.7
|
)
|
|
(87.4
|
)
|
||||
Balance as of March 31, 2018
|
$
|
47.7
|
|
|
$
|
43.8
|
|
|
$
|
17.8
|
|
|
$
|
109.3
|
|
|
|
|
|
|
|
|
|
||||||||
Balance as of December 31, 2016
|
$
|
12.7
|
|
|
$
|
29.5
|
|
|
$
|
3.6
|
|
|
$
|
45.8
|
|
Provisions
|
38.9
|
|
|
41.2
|
|
|
9.5
|
|
|
89.6
|
|
||||
Credits/payments
|
(28.5
|
)
|
|
(42.3
|
)
|
|
(8.6
|
)
|
|
(79.4
|
)
|
||||
Balance as of March 31, 2017
|
$
|
23.1
|
|
|
$
|
28.4
|
|
|
$
|
4.5
|
|
|
$
|
56.0
|
|
Sanofi Collaboration Revenue
|
|
Three Months Ended
March 31, |
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Antibody:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses - Discovery Agreement
|
|
—
|
|
|
$
|
48.1
|
|
|
Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement
|
|
$
|
60.4
|
|
|
107.1
|
|
|
Reimbursement of Regeneron commercialization-related expenses
|
|
85.4
|
|
|
73.6
|
|
||
Regeneron's share of losses in connection with commercialization of antibodies
|
|
(74.8
|
)
|
|
(108.4
|
)
|
||
Other
|
|
17.3
|
|
|
11.3
|
|
||
Total Antibody
|
|
88.3
|
|
|
131.7
|
|
||
Immuno-oncology:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses - Discovery Agreement
|
|
35.3
|
|
|
38.2
|
|
||
Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement
|
|
38.5
|
|
|
20.5
|
|
||
Reimbursement of Regeneron commercialization-related expenses
|
|
1.2
|
|
|
—
|
|
||
Other
|
|
26.2
|
|
|
20.0
|
|
||
Total Immuno-oncology
|
|
101.2
|
|
|
78.7
|
|
||
Total Sanofi collaboration revenue
|
|
$
|
189.5
|
|
|
$
|
210.4
|
|
|
|
Three Months Ended
March 31, |
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Praluent in the United States
|
|
$
|
31.7
|
|
|
$
|
25.4
|
|
Praluent outside of the United States
|
|
28.2
|
|
|
10.5
|
|
||
Praluent global
|
|
$
|
59.9
|
|
|
$
|
35.9
|
|
|
|
|
|
|
||||
Dupixent in the United States
|
|
$
|
116.8
|
|
|
—
|
|
|
Dupixent outside of the United States
|
|
14.6
|
|
|
—
|
|
||
Dupixent global
|
|
$
|
131.4
|
|
|
—
|
|
|
|
|
|
|
|
||||
Kevzara in the United States
|
|
$
|
9.3
|
|
|
—
|
|
|
Kevzara outside of the United States
|
|
3.1
|
|
|
—
|
|
||
Kevzara global
|
|
$
|
12.4
|
|
|
—
|
|
Bayer Collaboration Revenue
|
|
Three Months Ended
March 31, |
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
EYLEA:
|
|
|
|
|
||||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
232.1
|
|
|
$
|
174.9
|
|
Reimbursement of Regeneron EYLEA development expenses
|
|
3.5
|
|
|
2.4
|
|
||
Other
|
|
11.8
|
|
|
10.6
|
|
||
Total EYLEA
|
|
247.4
|
|
|
187.9
|
|
||
Ang2 antibody and PDGFR-beta antibody:
|
|
|
|
|
||||
Reimbursement of development expenses
|
|
0.5
|
|
|
3.9
|
|
||
Other
|
|
—
|
|
|
2.1
|
|
||
Total Ang2 antibody and PDGFR-beta antibody
|
|
0.5
|
|
|
6.0
|
|
||
Total Bayer collaboration revenue
|
|
$
|
247.9
|
|
|
$
|
193.9
|
|
Regeneron's Net Profit from EYLEA Sales Outside the United States
|
|
Three Months Ended
March 31, |
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Net product sales outside the United States
|
|
$
|
624.0
|
|
|
$
|
483.9
|
|
Regeneron's share of collaboration profit from sales outside the United States
|
|
$
|
245.1
|
|
|
$
|
188.5
|
|
Reimbursement of EYLEA development expenses incurred by Bayer in accordance with Regeneron's payment obligation
|
|
(13.0
|
)
|
|
(13.6
|
)
|
||
Regeneron's net profit in connection with commercialization of EYLEA outside the United States
|
|
$
|
232.1
|
|
|
$
|
174.9
|
|
Other Revenue
|
|
Three Months Ended
March 31, |
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
Teva collaboration revenue:
|
|
|
|
|
||||
Reimbursement of Regeneron research and development expenses
|
|
$
|
39.1
|
|
|
$
|
22.1
|
|
Other
|
|
19.5
|
|
|
11.0
|
|
||
Total Teva collaboration revenue
|
|
58.6
|
|
|
33.1
|
|
||
Other revenue
|
|
27.6
|
|
|
23.4
|
|
||
Total other revenue
|
|
$
|
86.2
|
|
|
$
|
56.5
|
|
•
|
Recognition of a portion of deferred revenue from up-front and other payments received from MTPC in connection with our fasinumab collaboration.
|
•
|
Sanofi's reimbursement for manufacturing commercial supplies of ZALTRAP and a percentage of aggregate net sales of ZALTRAP under the terms of the Amended ZALTRAP Agreement.
|
•
|
Recognition of revenue related to amortization of the $165.0 million up-front payment we received in August 2010, which was deferred upon receipt and is being recognized as revenue through mid-2018, in connection with the
VelocImmune
license agreement with Astellas. In accordance with the terms of the license agreement, in the first quarter of 2018, Astellas provided notice to us that the agreement will terminate effective June 2018.
|
•
|
Royalties in connection with a June 2009 agreement with Novartis, under which we receive royalties on worldwide sales of Novartis' Ilaris
®
(canakinumab). The royalty rates in the agreement start at 4% and reach 15% when annual sales exceed $1.5 billion, and we are entitled to royalties until Novartis ceases sale of products subject to royalty.
|
|
|
Three Months Ended
March 31, |
|
Increase
|
||||||||
(In millions)
|
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
Research and development
|
|
$
|
498.6
|
|
|
$
|
507.4
|
|
|
$
|
(8.8
|
)
|
Selling, general, and administrative
|
|
330.8
|
|
|
296.8
|
|
|
34.0
|
|
|||
Cost of goods sold
|
|
69.2
|
|
|
61.3
|
|
|
7.9
|
|
|||
Cost of collaboration and contract manufacturing
|
|
45.7
|
|
|
22.9
|
|
|
22.8
|
|
|||
Total operating expenses
|
|
$
|
944.3
|
|
|
$
|
888.4
|
|
|
$
|
55.9
|
|
|
|
|
|
|
|
|
||||||
Average headcount
|
|
6,401
|
|
|
5,505
|
|
|
896
|
|
Research and Development Expenses
|
|
Three Months Ended
March 31, |
|
Increase
|
||||||||
(In millions)
|
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
Direct research and development expenses:
|
|
|
|
|
|
|
||||||
Dupilumab
|
|
$
|
34.6
|
|
|
$
|
49.7
|
|
|
$
|
(15.1
|
)
|
Cemiplimab
|
|
41.0
|
|
|
15.0
|
|
|
26.0
|
|
|||
Fasinumab
|
|
62.2
|
|
|
35.9
|
|
|
26.3
|
|
|||
Alirocumab
|
|
17.9
|
|
|
21.3
|
|
|
(3.4
|
)
|
|||
Other product candidates in clinical development and other research programs
|
|
51.9
|
|
|
68.9
|
|
|
(17.0
|
)
|
|||
Total direct research and development expenses
|
|
207.6
|
|
|
190.8
|
|
|
16.8
|
|
|||
Indirect research and development expenses:
|
|
|
|
|
|
|
||||||
Payroll and benefits
|
|
130.1
|
|
|
145.6
|
|
|
(15.5
|
)
|
|||
Clinical manufacturing costs
|
|
78.4
|
|
|
107.4
|
|
|
(29.0
|
)
|
|||
Research, licensing, and other development costs
|
|
23.6
|
|
|
13.6
|
|
|
10.0
|
|
|||
Occupancy and other operating costs
|
|
58.9
|
|
|
50.0
|
|
|
8.9
|
|
|||
Total indirect research and development expenses
|
|
291.0
|
|
|
316.6
|
|
|
(25.6
|
)
|
|||
Total research and development expenses
|
|
$
|
498.6
|
|
|
$
|
507.4
|
|
|
$
|
(8.8
|
)
|
|
March 31,
|
|
December 31,
|
|
Increase
|
||||||
(In millions)
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
Financial assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,019.5
|
|
|
$
|
812.7
|
|
|
$
|
206.8
|
|
Marketable securities - current
|
605.5
|
|
|
596.8
|
|
|
8.7
|
|
|||
Marketable securities - noncurrent
|
1,822.0
|
|
|
1,486.5
|
|
|
335.5
|
|
|||
|
$
|
3,447.0
|
|
|
$
|
2,896.0
|
|
|
$
|
551.0
|
|
|
|
|
|
|
|
||||||
Working capital:
|
|
|
|
|
|
||||||
Current assets
|
$
|
4,544.7
|
|
|
$
|
4,335.0
|
|
|
$
|
209.7
|
|
Current liabilities
|
1,265.7
|
|
|
1,135.5
|
|
|
130.2
|
|
|||
|
$
|
3,279.0
|
|
|
$
|
3,199.5
|
|
|
$
|
79.5
|
|
|
March 31,
|
|
March 31,
|
|
Increase
|
||||||
(In millions)
|
2018
|
|
2017
|
|
(Decrease)
|
||||||
Cash flows provided by operating activities
|
$
|
618.7
|
|
|
$
|
355.9
|
|
|
$
|
262.8
|
|
Cash flows used in investing activities
|
$
|
(425.4
|
)
|
|
$
|
(140.1
|
)
|
|
$
|
(285.3
|
)
|
Cash flows provided by financing activities
|
$
|
13.4
|
|
|
$
|
60.8
|
|
|
$
|
(47.4
|
)
|
•
|
effectiveness of the commercial strategy in and outside the United States for the marketing of our products, including pricing strategy;
|
•
|
sufficient coverage of, and reimbursement for, our marketed products by third-party payers, including Medicare and Medicaid in the United States and other government and private payers in the United States and foreign jurisdictions, as well as payer restrictions on eligible patient populations and the reimbursement process, both in the United States and abroad;
|
•
|
our ability and our collaborators' ability to maintain sales of our marketed products in the face of competitive products and to differentiate our marketed products from competitive products, including as applicable product candidates currently in clinical development; and, in the case of EYLEA, the willingness of retinal specialists and patients to switch from Lucentis
®
(ranibizumab) or off-label use of repackaged Avastin
®
(bevacizumab) to EYLEA or to start treatment with EYLEA;
|
•
|
maintaining and successfully monitoring commercial manufacturing arrangements for our marketed products with third parties who perform fill/finish or other steps in the manufacture of such products 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 our marketed products;
|
•
|
the outcome of the pending patent infringement proceedings relating to Dupixent and Praluent (described further in Note 11 to our Condensed Consolidated Financial Statements included in this report), and other risks relating to our marketed products associated with intellectual property of other parties and pending or future litigation relating thereto, as discussed under "Risks Related to Intellectual Property and Market Exclusivity" below;
|
•
|
the results of post-approval studies, whether conducted by us or by others and whether mandated by regulatory agencies or voluntary, and studies of other products that could implicate an entire class of products or are perceived to do so; and
|
•
|
the effect of existing and new health care laws and regulations currently being considered or 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,
|
•
|
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;
|
•
|
our ability to deploy overseas funds in an efficient manner;
|
•
|
tariffs, trade protection measures, import or export licensing requirements, trade embargoes, and sanctions (including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury), and other trade barriers;
|
•
|
difficulties in attracting and retaining qualified personnel; and
|
•
|
cultural differences in the conduct of business.
|
•
|
net product sales of our marketed products, in particular EYLEA and Dupixent, as well as our overall operating results;
|
•
|
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 the market share for, our marketed products, especially EYLEA and Dupixent;
|
•
|
whether our net product 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 EPO and in the USPTO;
|
•
|
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, decisions, or recommendations by government authorities, insurers, or other organizations (such as health maintenance organizations and pharmacy benefit management companies) affecting the coverage, reimbursement, or use 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 collaborators or key customers;
|
•
|
developments in the biotechnology industry or in government regulation of healthcare, including those relating to compounding (
i.e.
, a practice in which a pharmacist, a physician, or, in the case of an outsourcing facility, a person under the supervision of a pharmacist, combines, mixes, or alters ingredients of a drug to create a medication tailored to the needs of an individual patient);
|
•
|
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;
|
•
|
general market conditions;
|
•
|
trading activity that results from the rebalancing of stock indices in which our Common Stock is included, or the inclusion or exclusion of our Common Stock from such indices;
|
•
|
other factors identified in these "Risk Factors"; and
|
•
|
the perception by the investment community or our shareholders of any of the foregoing factors.
|
•
|
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 April 12, 2018, and
21.2%
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 April 12, 2018; and
|
•
|
our five largest shareholders plus Dr. Schleifer, our Chief Executive Officer, beneficially owned approximately
45.5%
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 April 12, 2018. In addition, these five shareholders plus our Chief Executive Officer held approximately
51.5%
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 April 12, 2018.
|
•
|
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 shareholder 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.
"
|
Exhibit Number
|
|
Description
|
10.1 +
|
|
|
10.2
|
|
|
31.1
|
|
|
31.2
|
|
|
32
|
|
|
101
|
|
Interactive Data File
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
______
|
|
|
|
|
|
|
|
|
+
|
|
Indicates a management contract or compensatory plan or arrangement.
|
|
|
|
REGENERON PHARMACEUTICALS, INC.
|
|
|
|
|
|
|
|
|
Date:
|
May 3, 2018
|
|
By:
|
/s/ Robert E. Landry
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Landry
|
|
|
|
|
|
Senior Vice President, Finance and
|
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
(Duly Authorized Officer)
|
|
Re:
|
Retirement from Regeneron
|
Date:
January 15, 2018
|
/s/ Robert Terifay
|
|
Robert Terifay
|
|
/s/ Lynne E. Baycora
|
|
Notary Public
|
|
|
Regeneron Pharmaceuticals, Inc.
|
|
|
|
Date:
1/19/18
|
By:
|
/s/ Sally A. Paull
|
|
|
Name: Sally A. Paull
|
|
|
Title: Senior Vice President, Human Resources
|
(1)
|
Increase in REGN2810 Budget Amount
. Section 1.138 of the IO LCA is hereby amended and restated in its entirety to read as follows:
|
(2)
|
Separate Tracking and Invoicing of Development Costs with Respect to REGN2810
. During the REGN2810 Amendment Term (as defined below):
|
a.
|
All of the aggregate Development Costs incurred by or on behalf of the Parties (as defined in the IO LCA) with respect to REGN2810 shall be excluded from the definition of “Development Cost True-Up” for each Quarter commencing on October 1, 2017 and ending on September 30, 2020 (such Quarters, the “
REGN2810 Covered Periods
”), and shall instead be tracked and invoiced separately for each REGN2810 Covered Period in a dedicated cost true-up utilizing the principles of Part III of Schedule 2 to the IO LCA (each such amount, the “
REGN2810 Development Cost True-Up Amount
”).
|
b.
|
For each REGN2810 Covered Period, Regeneron shall invoice Sanofi SAS for the REGN2810 Development Cost True-Up Amount (each such invoice, a “
REGN2810 Development Cost Invoice
”) separately from other invoices provided to Sanofi SAS pursuant to the IO LCA. Regeneron shall deliver electronically to Sanofi SAS each REGN2810 Development Cost Invoice within 60 days of the end of the applicable Quarter (followed by physical delivery thereof as soon as reasonably practicable), and payment by Sanofi SAS shall be due within 15 days of the electronic delivery thereof. Notwithstanding the foregoing, the REGN2810 Development Cost Invoice for the Quarter commencing on October 1, 2017 shall not be delivered to Sanofi SAS earlier than February 28, 2018.
|
c.
|
Sections 9.6, 9.7 and 9.8 of the IO LCA shall otherwise apply
mutatis mutandis
to the reporting of the Development Costs with respect to REGN2810, the calculation of the REGN2810 Development Cost True-Up Amount and the establishment of the REGN2810 Development Cost Invoice.
|
(3)
|
REGN2810 Funding Mechanics and Related Provisions
. During the REGN2810 Amendment Term, subject to the other applicable terms and conditions of this Letter Agreement (including, without limitation, the provisions relating to the REGN2810
|
a.
|
Within three (3) Trading Days (as defined below) after Sanofi SAS’s electronic receipt of the applicable REGN2810 Development Cost Invoice, any of the Purchaser Parties may send a written notice (such notice, a “
REGN2810 Sale Notice
”) to Regeneron (which shall be done electronically), indicating the dollar amount of such invoice in respect of which such Purchaser Party (on behalf of itself and the other Purchaser Parties) may be willing (but is not obligated) to sell Regeneron Shares either to Regeneron or in the open market (such dollar amount, the “
REGN2810 Sale Value
”
), which shall not exceed the REGN2810 Development Cost True-Up Amount set forth in such REGN2810 Development Cost Invoice. Any such REGN2810 Sale Notice shall be deemed to have been received by Regeneron one (1) Trading Day after it is sent by a Purchaser Party. “
Trading Day
” means any day on which the NASDAQ (or such other exchange where Regeneron is primarily listed and traded) (the “
NASDAQ
”) is open for business.
|
b.
|
The “
REGN2810 Measurement Price
” shall mean the volume-weighted average price of a share of Common Stock on the NASDAQ on the next (1) Trading Day subsequent to Regeneron’s receipt of the REGN2810 Sale Notice, as published by Thomson Reuters.
|
c.
|
If a REGN2810 Sale Notice has been provided to Regeneron in accordance with the terms of this Letter Agreement, on the next Trading Day after the date of the establishment of the REGN2810 Measurement Price (such day, the “
REGN2810
Decision Date
”), representatives of Regeneron and the Purchaser Parties shall, as soon as reasonably practicable and in any event no later than 4:00 p.m. Eastern Time, discuss the number of Regeneron Shares to be purchased by Regeneron, if any, which shall be no greater than the number equal to the quotient of (x) the REGN2810 Sale Value specified in the REGN2810 Sale Notice for the REGN2810 Development Cost Invoice for that REGN2810 Covered Period and (y) the applicable REGN2810 Measurement Price (such quotient, rounded down to the nearest whole number, the “
Full Number of REGN2810 Shares
”), and the following provisions shall apply:
|
i.
|
If, on the REGN2810 Decision Date, Regeneron is willing to purchase, and the Purchaser Parties are willing to sell, any of such Regeneron Shares, then the Purchaser Parties shall commit in writing (which may be done electronically) to the sale of such Regeneron Shares (such shares, the “
REGN2810 Shares to Be Purchased
”) before 5:00 p.m. Eastern Time on the REGN2810 Decision Date. The purchase of such REGN2810 Shares to Be Purchased shall be settled via a customary method of settlement for such a purchase (based on account information provided by the parties to this Letter Agreement to one another in writing (which may be done electronically)) within three (3) Trading Days after the REGN2810
|
ii.
|
If, on the REGN2810 Decision Date, Regeneron is willing to purchase any Regeneron Shares subject to the REGN2810 Sale Notice for a particular REGN2810 Development Cost Invoice, and the Purchaser Parties either (A) decline in writing to sell all such Regeneron Shares to Regeneron or (B) fail to respond to outreach by Regeneron to discuss the purchase of any Regeneron Shares, (x) the Purchaser Parties shall not be permitted to effect sales of any Regeneron Shares in open-market transactions with respect to that REGN2810 Development Cost Invoice and (y) Sanofi SAS shall remit to Regeneron by the due date of the applicable REGN2810 Development Cost Invoice an amount in cash equal to the full REGN2810 Development Cost True-Up Amount for such REGN2810 Covered Period.
|
iii.
|
If, on the REGN2810 Decision Date, Regeneron either (A) declines in writing to purchase the Full Number of REGN2810 Shares for a particular REGN2810 Development Cost Invoice or (B) fails to respond to outreach by the Purchaser Parties to discuss the purchase of any Regeneron Shares, and the Purchaser Parties are willing to sell all such Regeneron Shares to Regeneron, then (x) Sanofi SAS shall remit to Regeneron by the due date of the applicable REGN2810 Development Cost Invoice an amount in cash equal to the full REGN2810 Development Cost True-Up Amount for such REGN2810 Covered Period and (y) the Purchaser Parties may sell in open-market transactions Regeneron Shares in an amount not to exceed the difference between (I) the Full Number of REGN2810 Shares and (II) REGN2810 Shares to Be Purchased (which, in the case of clause (B) of this Section 3(c)(iii), shall be deemed to be zero) (the “
Open-Market REGN2810 Shares
”), subject to the provisions of Sections 3(e) and 9 of this Letter Agreement.
|
iv.
|
If, on the REGN2810 Decision Date, Regeneron does not attempt to contact any of the Purchaser Parties and none of the Purchaser Parties attempts to contact Regeneron, in each case, prior to 4:00 p.m. Eastern
|
d.
|
In the event that, for any REGN2810 Covered Period, the REGN2810 Development Cost True-Up Amount set forth in a given REGN2810 Development Cost Invoice exceeds the product of (x) the REGN2810 Shares to Be Purchased and (y) the REGN2810 Measurement Price (such difference, the “
Cash-Settled REGN2810 Development Costs
”), and subject to Section 9.15 (Resolution of Payment Disputes) of the IO LCA, Sanofi SAS shall remit to Regeneron by the due date of the applicable REGN2810 Development Cost Invoice an amount in cash equal to the Cash-Settled REGN2810 Development Costs. For so long as Sanofi SAS is in arrears on any payment of Cash-Settled REGN2810 Development Costs (or is otherwise in arrears on the payment of any REGN2810 Development Cost Invoice), the limited waiver of the Purchaser Parties’ lock-up obligations under Section 5.1 of the Investor Agreement pursuant to Section 10 of this Letter Agreement shall not apply.
|
e.
|
Any sale of the Open-Market REGN2810 Shares for a given REGN2810 Covered Period shall be effected on or before the six (6) month anniversary of the due date of the REGN2810 Development Cost Invoice for that REGN2810 Covered Period (the “
REGN2810 Sale Period
”);
provided
that if the Purchaser Parties are restricted by applicable Law from effecting any such open-market transaction for a period of time during the REGN2810 Sale Period (the “
REGN2810 Restricted Period
”), the REGN2810 Sale Period shall be extended by the length of the applicable REGN2810 Restricted Period, except that in no event shall such extension of any REGN2810 Sale Period exceed two (2) months.
|
(4)
|
Other Amendments to the IO LCA
.
|
a.
|
As a result of the increase in the REGN2810 Budget Amount under this Letter Agreement (from six hundred fifty million dollars ($650,000,000) to one billion six hundred forty million dollars ($1,640,000,000)), each of the REGN2810 Global Development Plan (the “
REGN2810 Global Development Plan
”) and the REGN2810 Global Development Budget (including an itemization of the costs per year) are revised as set forth in Part A of a separate side letter, dated as of the date hereof, by and among Regeneron, the Investor and Sanofi SAS (the “
Side Letter
”), and shall be deemed an integral part of the IO LCA.
|
b.
|
Notwithstanding anything to the contrary in Section 5.3(b) of the IO LCA, the REGN2810 Global Development Budget shall be broken down on a yearly basis in accordance with Part A of the Side Letter. In addition, at least twice each Contract Year during the Term, Regeneron will provide Sanofi SAS with a good-faith forecast of anticipated Development Costs to be incurred for REGN2810 for the remainder of the current Contract Year and the subsequent two (2) Contract Years.
|
c.
|
Notwithstanding anything to the contrary in Sections 5.3(a) and 5.3(b) of the IO LCA, each of Regeneron and Sanofi SAS agree to discuss any material proposed change(s) to the REGN2810 Global Development Plan or the REGN2810 Global Development Budget prior to the implementation of such changes during meetings between Regeneron’s and Sanofi SAS’s respective IOSC co-chairs and their designated subject matter experts, which meetings are to be held monthly, or at such other times as the Parties agree, and which may be conducted by telephone, video-conference, webcast or in person. In addition to these monthly meetings, Regeneron may call an ad-hoc meeting of Regeneron’s and Sanofi SAS’s respective IOSC co-chairs and their designated subject matter experts to be held within five (5) Business Days of the date Regeneron provides Sanofi SAS notice if, in Regeneron’s opinion, any material proposed change(s) to the REGN2810 Global Development Plan or the REGN2810 Global Development Budget is urgent and should be commenced prior to the next monthly meeting. If Sanofi SAS’s IOSC co-chair and designated subject matter experts cannot attend such an ad-hoc meeting within five (5) Business Days, Regeneron may provide a written summary of such proposed change(s) to Sanofi SAS at least seven (7) Business Days prior to the commencement of such activities. In addition, the following provisions shall apply:
|
i.
|
Such meetings shall provide (x) a forum for reviewing recent clinical data and discussing REGN2810 clinical trial plans, updates on the REGN2810 program progress and regulatory strategy, and (y) the opportunity for Sanofi SAS to provide input and comments on the REGN2810 clinical strategy and study design.
|
ii.
|
Regeneron shall inform Sanofi SAS in writing of any contemplated material change to the REGN2810 Global Development Plan as soon as possible. In order to enable Sanofi SAS to provide valuable input and comments on any such contemplated material changes, Regeneron shall provide each of the IOSC co-chairs with relevant information and materials at least ten (10) Business Days in advance of the meeting at which such material change shall be discussed.
|
iii.
|
Regeneron shall take into good faith consideration Sanofi SAS’s input and comments expressed during such meetings. In the event that the Parties remain in disagreement concerning the initiation of a pivotal trial (including any Phase III Trial) in a tumor type that has not been studied in a previous clinical trial conducted under the IO LCA, the matter will be referred to the respective Executive Officers to attempt
|
iv.
|
If no agreement can be reached by the Executive Officers within such five (5) Business Day period, Regeneron will retain final decision-making authority with respect to the REGN2810 Global Development Plan;
provided
,
however
, that such REGN2810 Global Development Plan shall be at all times consistent with the (x) Collaboration Purpose and (y) the REGN2810 Global Development Budget which shall not exceed the REGN2810 Budget Amount.
|
d.
|
For the avoidance of doubt, this Section 4 shall survive the Termination Date (as defined below).
|
(5)
|
Mutual Understanding
. The parties to this Letter Agreement agree that, for the purpose of this Letter Agreement, “
Dupilumab/REGN3500 Eligible Investments
” shall mean certain proposed activities relating to the Development of dupilumab (an antibody to the interleukin-4 receptor (IL-4R) alpha subunit) (“
Dupilumab
”) and REGN3500 (an antibody to interleukin-33) (“
REGN3500
”), each a Licensed Product under the Antibody LCA, and Non-Approval Trials of Dupilumab, which activities, together with associated high level cost estimates for each activity from 2018 to 2023, are listed in Part B of the Side Letter. The Dupilumab/REGN3500 Eligible Investments are comprised of (i) the Dupilumab LCM studies that are currently defined, as set forth in Part B to the Side Letter (the “
Dupilumab Currently Defined Eligible LCM Studies
”); (ii) the Dupilumab LCM studies to be further defined, as set forth in Part B to the Side Letter (the “
Dupilumab Further Eligible LCM Studies
”); and (iii) the REGN3500 studies set forth in Part B to the Side Letter (the “
REGN3500 Eligible Studies
”).
|
(6)
|
Separate Tracking of Development Costs with Respect to Dupilumab/REGN3500 Eligible Investments and Costs Relating to Non-Approval Trials of Dupilumab; Quarterly Statement
.
|
a.
|
All of the aggregate Development Costs and/or conduct of Non-Approval Trials incurred by or on behalf of the Parties (as defined in the Antibody LCA) with respect to the Dupilumab/REGN3500 Eligible Investments during a Quarter commencing on January 1, 2018 and ending on September 30, 2020 (such Quarters, the “
Dupilumab/REGN3500 Eligible Investment Covered Periods
”) shall be tracked as set forth in
Schedule A
hereto; and the aggregate amount thereof borne by Sanofi for each Dupilumab/REGN3500 Eligible Investment Covered Period, as calculated pursuant to the methodology set forth in
Schedule A
(the “
Dupilumab/REGN3500 Eligible Investment Amount
”), will be set forth in a separate statement (a “
Dupilumab/REGN3500 Eligible Investment Statement
”).
|
b.
|
For each Dupilumab/REGN3500 Eligible Investment Covered Period, Sanofi SAS shall deliver electronically to Regeneron each Dupilumab/REGN3500 Eligible Investment Statement within 65 days of the end of the applicable Quarter (followed by physical delivery thereof as soon as reasonably practicable).
|
(7)
|
Dupilumab/REGN3500 Eligible Investment Funding Mechanics and Related Provisions
. During the Dupilumab/REGN3500 Eligible Investment Amendment Term, subject to the other applicable terms and conditions of this Letter Agreement (including, without limitation, the provisions relating to the Dupilumab/REGN3500 Eligible Investment Share Sale Cap set forth in Section 10(b) of this Letter Agreement), the parties to this Letter Agreement agree to the following:
|
a.
|
Within three (3) Trading Days after Regeneron’s electronic receipt of the applicable Dupilumab/REGN3500 Eligible Investment Statement, any of the Purchaser Parties may send a written notice (such notice, a “
Dupilumab/REGN3500 Eligible Investment Sale Notice
”) to Regeneron (which shall be done electronically), indicating the dollar amount of the Dupilumab/REGN3500 Eligible Investment Amount in respect of which such Purchaser Party (on behalf of itself and the other Purchaser Parties) may be willing (but is not obligated) to sell Regeneron Shares either to Regeneron or in the open market (such dollar amount, the “
Dupilumab/REGN3500 Eligible Investment Sale Value
”), which shall not exceed the Dupilumab/REGN3500 Eligible Investment Amount set forth in such Dupilumab/REGN3500 Eligible Investment Statement. Any such Dupilumab/REGN3500 Eligible Investment Statement or any such Dupilumab/REGN3500 Eligible Investment Sale Notice shall be deemed to have been received by Regeneron one (1) Trading Day after it is sent by a Purchaser Party.
|
b.
|
The “
Dupilumab/REGN3500 Eligible Investment Measurement Price
” shall mean the volume-weighted average price of a share of Common Stock on the NASDAQ on the next (1) Trading Day subsequent to Regeneron’s receipt of the Dupilumab/REGN3500 Eligible Investment Sale Notice, as published by Thomson Reuters.
|
c.
|
If a Dupilumab/REGN3500 Eligible Investment Sale Notice has been provided to Regeneron in accordance with the terms of this Letter Agreement,
|
i.
|
If, on the Dupilumab/REGN3500 Eligible Investment Decision Date, Regeneron is willing to purchase, and the Purchaser Parties are willing to sell, any of such Regeneron Shares, then the Purchaser Parties shall commit in writing (which may be done electronically) to the sale of such Regeneron Shares (such shares, the “
Dupilumab/REGN3500 Eligible Investment Shares to Be Purchased
”) before 5:00 p.m. Eastern Time on the Dupilumab/REGN3500 Eligible Investment Decision Date. The purchase of such Dupilumab/REGN3500 Eligible Investment Shares to Be Purchased shall be settled via a customary method of settlement for such a purchase (based on account information provided by the parties to this Letter Agreement to one another in writing (which may be done electronically)) within three (3) Trading Days after the Dupilumab/REGN3500 Eligible Investment Decision Date, with the purchase price to be equal to the product of (x) the number of the Dupilumab/REGN3500 Eligible Investment Shares to Be Purchased and (y) the applicable Dupilumab/REGN3500 Eligible Investment Measurement Price and to be paid by Regeneron by wire transfer of immediately available funds.
|
ii.
|
If, on the Dupilumab/REGN3500 Eligible Investment Decision Date, Regeneron is willing to purchase any Regeneron Shares subject to the Dupilumab/REGN3500 Eligible Investment Sale Notice for a particular Dupilumab/REGN3500 Eligible Investment Statement, and the Purchaser Parties either (A) decline in writing to sell all such Regeneron Shares to Regeneron or (B) fail to respond to outreach by Regeneron to discuss the purchase of any Regeneron Shares, the Purchaser Parties shall not be permitted to effect sales of any Regeneron Shares in open-market transactions with respect to that Dupilumab/REGN3500 Eligible Investment Statement.
|
iii.
|
If, on the Dupilumab/REGN3500 Eligible Investment Decision Date, Regeneron either (A) declines in writing to purchase the Full Number
|
iv.
|
If, on the Dupilumab/REGN3500 Eligible Investment Decision Date, Regeneron does not attempt to contact any of the Purchaser Parties and none of the Purchaser Parties attempts to contact Regeneron, in each case, prior to 4:00 p.m. Eastern Time, then the Purchaser Parties may sell in open-market transactions Open-Market Dupilumab/REGN3500 Eligible Investment Shares in an amount not to exceed the Full Number of Dupilumab/REGN3500 Eligible Investment Shares, subject to the provisions of Sections 7(d) and 9 of this Letter Agreement.
|
v.
|
For the avoidance of doubt, any purchase of the Dupilumab/REGN3500 Eligible Investment Shares by Regeneron does not impact the amounts owed by the parties to the Antibody LCA to one another, which shall be settled and paid in accordance with the terms of the Antibody LCA.
|
d.
|
Any sale of the Open-Market Dupilumab/REGN3500 Eligible Investment Shares for a given Dupilumab/REGN3500 Eligible Investment Covered Period shall be effected on or before the six (6) month anniversary of the date of the Dupilumab/REGN3500 Eligible Investment Statement for that Dupilumab/REGN3500 Eligible Investment Covered Period (the “
Dupilumab/REGN3500 Eligible Investment Sale Period
”);
provided
that if the Purchaser Parties are restricted by applicable Law from effecting any such open-market transaction for a period of time during the Dupilumab/REGN3500 Eligible Investment Sale Period (the “
Dupilumab/REGN3500 Eligible Investment Restricted Period
”), the Dupilumab/REGN3500 Eligible Investment Sale Period shall be extended by the length of the applicable Dupilumab/REGN3500 Eligible Investment Restricted Period, except that in no event shall such extension of any Dupilumab/REGN3500 Eligible Investment Sale Period exceed two (2) months.
|
a.
|
The parties to this Letter Agreement acknowledge and agree that the JSC has approved a budget for the Development of Dupilumab and REGN3500, as
|
b.
|
The parties to this Letter Agreement further agree to allocate the amount set forth in Part B of the Side Letter to the Dupilumab Currently Defined Eligible LCM Studies and to spend such amount on these studies, or such other activities as the parties to the Antibody LCA may mutually agree, prior to the end of 2023. The design of the clinical studies and other activities that comprise the Dupilumab Currently Defined Eligible LCM Studies will be reviewed, approved and overseen by the JSC pursuant to Article III of the Antibody LCA;
provided
,
however
, that notwithstanding anything to the contrary in the Antibody LCA (including Section 3.11 thereof), the parties to this Letter Agreement will spend this amount on the Development of Dupilumab and/or REGN3500 and/or certain activities relating to Non-Approval Trials of Dupilumab.
|
c.
|
The parties to this Letter Agreement acknowledge and agree that the budget for the Dupilumab Further Eligible LCM Studies set forth in Part B of the Side Letter has been agreed upon by the parties to this Letter Agreement. The design of the clinical studies and other activities that comprise the Dupilumab Further Eligible LCM Studies will be reviewed, approved and overseen by the JSC pursuant to Article III of the Antibody LCA;
provided
,
however
, that notwithstanding anything to the contrary in the Antibody LCA (including Section 3.11 thereof), any change to the budget for such activities must be approved by the parties to this Letter Agreement.
|
d.
|
The parties to this Letter Agreement further agree to allocate the amount set forth in Part B of the Side Letter to the REGN3500 Eligible Studies and to spend such amount on these studies, or such other activities as the parties to the Antibody LCA may mutually agree, prior to the end of 2023. The design of the clinical studies and other activities that comprise the REGN3500 Eligible Studies will be reviewed, approved and overseen by the JSC pursuant to Article III of the Antibody LCA;
provided
,
however
, that notwithstanding anything to the contrary in the Antibody LCA (including Section 3.11 thereof), the parties to this Letter Agreement will spend this amount on the Development of Dupilumab and/or REGN3500 and/or certain activities relating to Non-Approval Trials of Dupilumab.
|
e.
|
For the avoidance of doubt, the parties to this Letter Agreement acknowledge and agree that (i) the Development and Commercialization of Dupilumab and REGN3500 under the Antibody LCA may require studies and activities other than the Dupilumab/REGN3500 Dedicated Investments and expenditures by the parties to the Antibody LCA in addition to the amounts referenced above; (ii) amounts allocated to, and spent on, the Development and Commercialization of Dupilumab and REGN3500 pursuant to this Section 8 are in addition to, and not in lieu of, other amounts the parties to the Antibody LCA may spend on Development and Commercialization activities for Dupilumab and REGN3500 pursuant to the terms of the
|
(9)
|
Open-Market Sale Limitations for Open-Market REGN2810 Shares and Open-Market Dupilumab/REGN3500 Eligible Investment Shares
. Notwithstanding anything in this Letter Agreement to the contrary, the Purchaser Parties shall not be permitted to, and agree not to, sell any Open-Market REGN2810 Shares or any Open-Market Dupilumab/REGN3500 Eligible Investment Shares (i) on any one (1) Trading Day if the aggregate volume of such sales on such Trading Day would exceed ten percent (10%) of the daily average trading volume of Common Stock on the NASDAQ over the 20 Trading Days immediately preceding such Trading Day, as published by Thomson Reuters, and (ii) in any one (1) calendar quarter if the aggregate volume of such sales in such calendar quarter would exceed three hundred thousand (300,000) shares of Common Stock (subject to adjustment to account for any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization by Regeneron).
|
(10)
|
Limited Waiver of Investor Agreement Lock-up
. Regeneron hereby agrees to waive, on the terms and subject to the conditions set forth in this Letter Agreement, the Purchaser Parties’ lock-up obligations under Section 5.1 of the Investor Agreement for the duration of the Amendment Term (as defined below), solely to the extent necessary for the Purchaser Parties to sell Regeneron Shares to offset:
|
a.
|
REGN2810 Development Cost True-Up Amounts, up to an aggregate number of 800,000 Regeneron Shares (subject to adjustment to account for any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization by Regeneron) for all of the REGN2810 Covered Periods (the “
REGN2810 Share Sale Cap
”, and the Regeneron Shares actually sold in accordance with this Section 10(a), the “
REGN2810 Shares
”); and
|
b.
|
Dupilumab/REGN3500 Eligible Investment Amounts, up to an aggregate number of 600,000 Regeneron Shares (subject to adjustment to account for any stock split, stock dividend, share exchange, merger, consolidation or similar recapitalization by Regeneron) for all of the Dupilumab/REGN3500 Eligible Investment Covered Periods (the “
Dupilumab/REGN3500 Eligible Investment Share Sale Cap
”, and the Regeneron Shares actually sold in accordance with this Section 10(b), the “
Dupilumab/REGN3500 Eligible Investment Shares
”),
|
(11)
|
Limited Waiver of Obligation to Maintain “Highest Percentage Threshold”
. Regeneron agrees that the Purchaser Parties will not be required to maintain the Highest Percentage Threshold (as defined in the Investor Agreement immediately prior to the date of this Letter Agreement) from August 26, 2017 until the Termination Date.
|
(12)
|
Amendment of Definition of “Highest Percentage Threshold”.
Effective as of the Termination Date, the first sentence of Section 1(y) of the Investor Agreement is hereby amended and restated in its entirety to read as follows:
|
(13)
|
Determination of First Cure Period Following Termination Date
. Notwithstanding Section 3.1(f) of the Investor Agreement, the first Cure Period for the Purchaser Parties after the Termination Date shall be until the later of (x) the date determined pursuant to Section 3.1(f) of the Investor Agreement or (y) the day that is eight (8) months after the last sale of Regeneron Shares by the Purchaser Parties during the Amendment Term; for the avoidance of doubt, thereafter, the Cure Period shall be determined pursuant to Section 3.1(f) of the Investor Agreement.
|
(14)
|
Amendment Term
. The duration of the waivers set forth in Sections 10 and 11 of this Letter Agreement shall be limited to the period (the “
Amendment Term
”) between the date of this Letter Agreement and the date (such date, the “
Termination Date
”) that is the later of the last day of the REGN2810 Amendment Term and the last day of the Dupilumab/REGN3500 Eligible Investment Amendment Term.
|
a.
|
“
REGN2810 Amendment Term
” shall mean the period between the date of this Letter Agreement and the date when the earliest of the following shall occur: (i) the aggregate number of REGN2810 Shares sold pursuant to this Letter Agreement (including both REGN2810 Shares to be Purchased and Open-Market REGN2810 Shares) equals the REGN2810 Share Sale Cap; (ii) if a Purchaser Party does not submit a REGN2810 Sale Notice in respect of the invoice for the last REGN2810 Covered Period, the later of (x) the due date of such invoice and (y) the last day of any then-existing REGN2810 Sale Period; (iii) the end of the REGN2810 Sale Period relating to the last
|
b.
|
“
Dupilumab/REGN3500 Eligible Investment Amendment Term
” shall mean the period between the date of this Letter Agreement and the date when the earliest of the following shall occur: (i) the aggregate number of Dupilumab/REGN3500 Eligible Investment Shares sold pursuant to this Letter Agreement (including both Dupilumab/REGN3500 Eligible Investment Shares to be Purchased and Open-Market Dupilumab/REGN3500 Eligible Investment Shares) equals the Dupilumab/REGN3500 Eligible Investment Share Sale Cap; (ii) if a Purchaser Party does not submit a Dupilumab/REGN3500 Eligible Investment Sale Notice in respect of the Dupilumab/REGN3500 Eligible Investment Statement for the last Dupilumab/REGN3500 Eligible Investment Covered Period, the last day of any then-existing Dupilumab/REGN3500 Eligible Investment Sale Period; (iii) the end of the Dupilumab/REGN3500 Eligible Investment Sale Period relating to the last Dupilumab/REGN3500 Eligible Investment Covered Period in respect of which a Purchaser Party submits a Dupilumab/REGN3500 Eligible Investment Sale Notice; and (iv) the effective date of termination of the Antibody LCA pursuant to its terms (including Section 19.7 of the Antibody LCA).
|
(15)
|
Purchaser Parties’ Representations.
Each of the Purchaser Parties hereby agrees, represents and warrants as follows:
|
a.
|
Such Purchaser Party has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its sales, if any, of Regeneron Shares and is capable of bearing the economic risks of such sales.
|
b.
|
Such Purchaser Party has been provided a reasonable opportunity to undertake, and has undertaken, such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed decision with respect to the sales, if any, of the Regeneron Shares. Such Purchaser Party is aware that Regeneron may have material, non-public information that may affect the value of the Regeneron Shares, and hereby acknowledges that neither it nor the other Purchaser Parties are privy to any such information, if there is any such information.
|
c.
|
Such Purchaser Party is not relying on its own knowledge of any such information or on any of Regeneron’s disclosures or non-disclosures of any such information, if there is any such information. Such Purchaser Party is further not relying on any representations, warranties, information or disclosure by Regeneron not expressly set forth in this Letter Agreement, and hereby waives any and all claims whatsoever against Regeneron arising
|
d.
|
Such Purchaser Party realizes the effect of this waiver and elects to proceed with the transactions in this Letter Agreement, including any sales by it (whether to Regeneron or in open-market transactions) of any Regeneron Shares, or any purchases by Regeneron of any Regeneron Shares, during the Amendment Term.
|
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:
|
May 3, 2018
|
/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:
|
May 3, 2018
|
/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)
|
May 3, 2018
|
|
/s/ Robert E. Landry
|
Robert E. Landry
|
Senior Vice President, Finance and Chief Financial Officer
|
(Principal Financial Officer)
|
May 3, 2018
|