SEC Filing | Regeneron Pharmaceuticals Inc.

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regn-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 0-19034

REGENERON PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


New York						13-3444607
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

777 Old Saw Mill River Road, Tarrytown, New York 10591-6707

(Address of principal executive offices, including zip code)

(914) 847-7000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock - par value $.001 per share	REGN	NASDAQ Global Select Market

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.

Yes

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes

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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.

Large accelerated filer

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Accelerated filer

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Non-accelerated filer

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Smaller reporting company

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Emerging growth 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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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

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The number of shares outstanding of each of the registrant's classes of common stock as of July 23, 2020:


Class of Common Stock						Number of Shares
Class A Stock, $.001 par value						1,848,970
Common Stock, $.001 par value						104,543,424

REGENERON PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

Page Numbers

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019

Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2020 and 2019

Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2020 and 2019

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

SIGNATURE PAGE


"ARCALYST^®," "EYLEA^®," "Libtayo^®" (in the United States), "Praluent^®" (in the United States), "Regeneron^®," "Regeneron Genetics Center^®," "Veloci-Bi^®," "VelociGene^®," "VelociMab^®," "VelocImmune^®," "VelociMouse^®," "VelociSuite^®," "VelociT™," and "ZALTRAP^®" 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.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except share data)


	June 30,		December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	1,992.2	$	1,617.8
Marketable securities	1,152.0		1,596.5
Accounts receivable - trade, net	1,991.0		2,100.0
Accounts receivable - Sanofi	389.2		260.6
Accounts receivable - other	431.1		425.0
Inventories	1,640.9		1,415.5
Prepaid expenses and other current assets	263.8		273.7
Total current assets	7,860.2		7,689.1

Marketable securities	2,587.6		3,256.8
Property, plant, and equipment, net	3,031.4		2,890.4
Deferred tax assets	774.0		824.2
Other noncurrent assets	175.5		144.7
Total assets	$	14,428.7	$	14,805.2

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	380.1	$	418.1
Accrued expenses and other current liabilities	1,257.0		1,211.4
Debt	1,500.0		—
Deferred revenue - Sanofi	380.2		310.5
Deferred revenue - other	81.3		71.6
Other liabilities - Sanofi	103.8		85.0
Total current liabilities	3,702.4		2,096.6

Finance lease liabilities	715.9		713.9
Deferred revenue - Sanofi	37.8		27.7
Deferred revenue - other	67.0		77.6
Other liabilities - Sanofi	390.3		482.0
Other noncurrent liabilities	457.9		317.7
Total liabilities	5,371.3		3,715.5

Stockholders' equity:
Preferred Stock, $.01 par value; 30,000,000 shares authorized; issued and outstanding - none	—		—
Class A Stock, convertible, $.001 par value; 40,000,000 shares authorized; shares issued and outstanding - 1,848,970 in 2020 and 2019	—		—
Common Stock, $.001 par value; 320,000,000 shares authorized; shares issued - 119,757,931 in 2020 and 113,288,103 in 2019	0.1		0.1
Additional paid-in capital	6,263.0		4,428.6
Retained earnings	8,901.7		7,379.8
Accumulated other comprehensive income	35.5		21.1
Treasury Stock, at cost; 15,578,240 shares in 2020 and 4,860,123 shares in 2019	(6,142.9)		(739.9)
Total stockholders' equity	9,057.4		11,089.7
Total liabilities and stockholders' equity	$	14,428.7	$	14,805.2

The accompanying notes are an integral part of the financial statements.

Table of Contents

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

(In millions, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Statements of Operations
Revenues:
Net product sales	$	1,226.9	$	1,205.3	$	2,463.6	$	2,309.7
Sanofi collaboration revenue	269.1		75.8		516.0		57.8
Bayer collaboration revenue	244.2		277.2		525.6		541.2
Other revenue	211.8		19.5		275.0		41.7
	1,952.0		1,577.8		3,780.2		2,950.4

Expenses:
Research and development	722.0		885.5		1,305.9		1,371.6
Selling, general, and administrative	348.3		294.6		715.6		585.7
Cost of goods sold	102.5		67.0		181.3		137.9
Cost of collaboration and contract manufacturing	173.0		78.8		311.5		180.0
Other operating (income) expense, net	(50.2)		(63.7)		(90.6)		(120.4)
	1,295.6		1,262.2		2,423.7		2,154.8

Income from operations	656.4		315.6		1,356.5		795.6

Other income (expense):
Other income (expense), net	272.2		(82.9)		246.8		(9.1)
Interest expense	(9.7)		(8.0)		(15.8)		(15.7)
	262.5		(90.9)		231.0		(24.8)

Income before income taxes	918.9		224.7		1,587.5		770.8

Income tax expense	21.6		31.6		65.6		116.6

Net income	$	897.3	$	193.1	$	1,521.9	$	654.2

Net income per share - basic	$	8.19	$	1.77	$	13.87	$	6.00
Net income per share - diluted	$	7.61	$	1.68	$	13.03	$	5.69

Weighted average shares outstanding - basic	109.6		109.2		109.7		109.1
Weighted average shares outstanding - diluted	117.9		114.6		116.8		115.0

Statements of Comprehensive Income
Net income	$	897.3	$	193.1	$	1,521.9	$	654.2
Other comprehensive income (loss), net of tax:
Unrealized gain on debt securities	44.6		14.4		15.8		30.5
Unrealized loss on cash flow hedges	—		(1.4)		(1.4)		(2.4)
Comprehensive income	$	941.9	$	206.1	$	1,536.3	$	682.3

The accompanying notes are an integral part of the financial statements.

Table of Contents

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(In millions)


	Class A Stock			Common Stock						Additional Paid-in Capital		Retained Earnings	Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders' Equity
	Shares	Amount	Shares	Amount											Shares			Amount
Balance, December 31, 2019	1.8	—	113.3	$	0.1	$	4,428.6	$	7,379.8	$	21.1	(4.9)	$	(739.9)		$	11,089.7
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	3.1	—		817.4		—		—		—	—			817.4
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	(0.4)	—		(155.1)		—		—		—	—			(155.1)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		12.5		—		—		—	2.1			14.6
Repurchases of Common Stock	—	—	—	—		—		—		—		(0.8)	(336.0)			(336.0)
Stock-based compensation charges	—	—	—	—		108.0		—		—		—	—			108.0
Net income	—	—	—	—		—		624.6		—		—	—			624.6
Other comprehensive loss, net of tax	—	—	—	—		—		—		(30.2)		—	—			(30.2)
Balance, March 31, 2020	1.8	—	116.0	0.1		5,211.4		8,004.4		(9.1)		(5.7)	(1,073.8)			12,133.0
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	4.4	—		1,355.5		—		—		—	—			1,355.5
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	(0.6)	—		(416.5)		—		—		—	—			(416.5)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		7.4		—		—		—	2.7			10.1
Repurchases of Common Stock	—	—	—	—		—		—		—		(9.9)	(5,071.8)			(5,071.8)
Stock-based compensation charges	—	—	—	—		105.2		—		—		—	—			105.2
Net income	—	—	—	—		—		897.3		—		—	—			897.3
Other comprehensive income, net of tax	—	—	—	—		—		—		44.6		—	—			44.6
Balance, June 30, 2020	1.8	—	119.8	$	0.1	$	6,263.0	$	8,901.7	$	35.5	(15.6)	$	(6,142.9)		$	9,057.4

Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (continued)
	Class A Stock			Common Stock						Additional Paid-in Capital		Retained Earnings	Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders' Equity
	Shares	Amount	Shares	Amount											Shares			Amount
Balance, December 31, 2018	1.9	—	111.1	$	0.1	$	3,911.6	$	5,254.3	$	(12.3)	(4.0)	$	(396.4)		$	8,757.3
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	0.6	—		140.9		—		—		—	—			140.9
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	—	—		(10.7)		—		—		—	—			(10.7)
Issuance of Common Stock for 401(k) Savings Plan	—	—	—	—		4.3		—		—		0.1	6.2			10.5
Repurchases of Common Stock	—	—	—	—		—		—		—		(0.1)	(54.0)			(54.0)
Stock-based compensation charges	—	—	—	—		114.8		—		—		—	—			114.8
Adjustment upon adoption of new accounting standard	—	—	—	—		—		9.7		—		—	—			9.7
Net income	—	—	—	—		—		461.1		—		—	—			461.1
Other comprehensive income, net of tax	—	—	—	—		—		—		15.1		—	—			15.1
Balance, March 31, 2019	1.9	—	111.7	0.1		4,160.9		5,725.1		2.8		(4.0)	(444.2)			9,444.7
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	0.3	—		13.9		—		—		—	—			13.9
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	(0.1)	—		(29.7)		—		—		—	—			(29.7)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		9.3		—		—		—	2.4			11.7
Stock-based compensation charges	—	—	—	—		109.2		—		—		—	—			109.2
Net income	—	—	—	—		—		193.1		—		—	—			193.1
Other comprehensive income, net of tax	—	—	—	—		—		—		13.0		—	—			13.0
Balance, June 30, 2019	1.9	—	111.9	$	0.1	$	4,263.6	$	5,918.2	$	15.8	(4.0)	$	(441.8)		$	9,755.9

The accompanying notes are an integral part of the financial statements.

Table of Contents

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)


	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net income	$	1,521.9