SEC Filing | Regeneron Pharmaceuticals Inc.

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regn-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, 2023
			OR
☐			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: 000-19034

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

☒

☐

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

☒

☐


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

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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.

☐

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

Yes

☐

☒

The number of shares outstanding of each of the registrant's classes of common stock as of October 26, 2023:


Class of Common Stock						Number of Shares
Class A Stock, $.001 par value						1,818,146
Common Stock, $.001 par value						107,128,838

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 September 30, 2023 and December 31, 2022

Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022

Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022

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, Use of Proceeds, and Issuer Purchases of Equity Securities


"Altibodies™," "ARCALYST®," "Evkeeza®," "EYLEA®," "EYLEA® HD," "Inmazeb®," "Libtayo®," "Praluent®" (in the United States), "REGEN-COV®," "Regeneron®," "Regeneron Genetics Center®," "RGC®," "Veloci-Bi®," "VelociGene®," "VelociHum®," "VelociMab®," "VelocImmune®," "VelociMouse®," "VelociSuite®," "VelociT®," "Veopoz™," 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. This report refers to products of Regeneron Pharmaceuticals, Inc., its collaborators, and other parties. Consult the product label in each territory for specific information about such products.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except per share data)


	September 30,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	2,152.3	$	3,105.9
Marketable securities	7,761.3		4,636.4
Accounts receivable, net	5,584.5		5,328.7
Inventories	2,562.0		2,401.9
Prepaid expenses and other current assets	574.7		411.2
Total current assets	18,634.8		15,884.1

Marketable securities	5,778.5		6,591.8
Property, plant, and equipment, net	4,006.1		3,763.0
Intangible assets, net	1,017.2		915.5
Deferred tax assets	2,316.8		1,723.7
Other noncurrent assets	409.9		336.4
Total assets	$	32,163.3	$	29,214.5

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	536.6	$	589.2
Accrued expenses and other current liabilities	2,644.7		2,074.2
Deferred revenue	417.3		477.9
Total current liabilities	3,598.6		3,141.3

Long-term debt	1,982.6		1,981.4
Finance lease liabilities	720.0		720.0
Deferred revenue	125.3		69.8
Other noncurrent liabilities	832.4		638.0
Total liabilities	7,258.9		6,550.5

Stockholders' equity:
Preferred Stock, par value $.01 per share; 30.0 shares authorized; issued and outstanding - none	—		—
Class A Stock, convertible, par value $.001 per share; 40.0 shares authorized; shares issued and outstanding - 1.8 in 2023 and 2022	—		—
Common Stock, par value $.001 per share; 320.0 shares authorized; shares issued - 132.1 in 2023 and 130.4 in 2022	0.1		0.1
Additional paid-in capital	11,251.5		9,949.3
Retained earnings	26,100.7		23,306.7
Accumulated other comprehensive loss	(176.8)		(238.8)
Treasury Stock, at cost; 25.1 shares in 2023 and 22.6 shares in 2022	(12,271.1)		(10,353.3)
Total stockholders' equity	24,904.4		22,664.0
Total liabilities and stockholders' equity	$	32,163.3	$	29,214.5

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Statements of Operations
Revenues:
Net product sales	$	1,786.1	$	1,801.4	$	5,226.2	$	5,194.4
Collaboration revenue	1,438.3		1,050.6		4,133.1		3,326.7
Other revenue	138.3		84.2		323.6		237.4
	3,362.7		2,936.2		9,682.9		8,758.5

Expenses:
Research and development	1,075.3		911.3		3,261.8		2,549.4
Acquired in-process research and development	100.0		—		156.1		225.1
Selling, general, and administrative	640.5		529.1		1,893.6		1,455.4
Cost of goods sold	224.5		141.3		625.3		497.8
Cost of collaboration and contract manufacturing	211.9		176.5		673.5		522.0
Other operating (income) expense, net	(0.5)		(45.7)		(1.6)		(83.3)
	2,251.7		1,712.5		6,608.7		5,166.4

Income from operations	1,111.0		1,223.7		3,074.2		3,592.1

Other income (expense):
Other income (expense), net	17.6		301.4		32.2		(16.0)
Interest expense	(17.8)		(15.3)		(54.7)		(42.0)
	(0.2)		286.1		(22.5)		(58.0)

Income before income taxes	1,110.8		1,509.8		3,051.7		3,534.1

Income tax expense	103.0		194.1		257.7		392.8

Net income	$	1,007.8	$	1,315.7	$	2,794.0	$	3,141.3

Net income per share - basic	$	9.48	$	12.31	$	26.16	$	29.30
Net income per share - diluted	$	8.89	$	11.66	$	24.57	$	27.73

Weighted average shares outstanding - basic	106.3		106.9		106.8		107.2
Weighted average shares outstanding - diluted	113.4		112.8		113.7		113.3

Statements of Comprehensive Income
Net income	$	1,007.8	$	1,315.7	$	2,794.0	$	3,141.3
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on debt securities	21.3		(51.3)		62.8		(249.9)
Loss on foreign currency translation	(0.4)		—		(0.8)		—
Unrealized gain on cash flow hedges	—		—		—		1.0
Comprehensive income	$	1,028.7	$	1,264.4	$	2,856.0	$	2,892.4

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, 2022	1.8	$	—	130.4	$	0.1	$	9,949.3	$	23,306.7	$	(238.8)	(22.6)	$	(10,353.3)	$	22,664.0
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—		1.1	—		491.3		—		—		—	—		491.3
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—		(0.1)	—		(99.2)		—		—		—	—		(99.2)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—		—	—		18.9		—		—		—	1.7		20.6
Repurchases of Common Stock	—	—		—	—		—		—		—		(0.9)	(693.9)		(693.9)
Stock-based compensation charges	—	—		—	—		237.4		—		—		—	—		237.4
Net income	—	—		—	—		—		817.8		—		—	—		817.8
Other comprehensive income, net of tax	—	—		—	—		—		—		57.2		—	—		57.2
Balance, March 31, 2023	1.8	—		131.4	0.1		10,597.7		24,124.5		(181.6)		(23.5)	(11,045.5)		23,495.2
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—		0.2	—		80.7		—		—		—	—		80.7
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—		—	—		(14.0)		—		—		—	—		(14.0)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—		—	—		16.1		—		—		—	2.4		18.5
Repurchases of Common Stock	—	—		—	—		—		—		—		(1.0)	(722.8)		(722.8)
Stock-based compensation charges	—	—		—	—		208.0		—		—		—	—		208.0
Net income	—	—		—	—		—		968.4		—		—	—		968.4
Other comprehensive loss, net of tax	—	—		—	—		—		—		(16.1)		—	—		(16.1)
Balance, June 30, 2023	1.8	—		131.6	0.1		10,888.5		25,092.9		(197.7)		(24.5)	(11,765.9)		24,017.9
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—		0.7	—		268.9		—		—		—	—		268.9
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—		(0.2)	—		(129.4)		—		—		—	—		(129.4)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—		—	—		16.1		—		—		—	1.9		18.0
Repurchases of Common Stock	—	—		—	—		—		—		—		(0.6)	(507.1)		(507.1)
Stock-based compensation charges	—	—		—	—		207.4		—		—		—	—		207.4
Net income	—	—		—	—		—		1,007.8		—		—	—		1,007.8
Other comprehensive income, net of tax	—	—		—	—		—		—		20.9		—	—		20.9
Balance, September 30, 2023	1.8	$	—	132.1	$	0.1	$	11,251.5	$	26,100.7	$	(176.8)	(25.1)	$	(12,271.1)	$	24,904.4

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, 2021	1.8	$	—	126.2	$	0.1	$	8,087.5	$	18,968.3	$	(26.2)	(19.4)	$	(8,260.9)	$	18,768.8
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—		1.6	—		593.7		—		—		—	—		593.7
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—		(0.2)	—		(105.8)		—		—		—	—		(105.8)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—		—	—		12.8		—		—		—	1.7		14.5
Repurchases of Common Stock	—	—		—	—		—		—		—		(0.5)	(352.0)		(352.0)
Stock-based compensation charges	—	—		—	—		165.9		—		—		—	—		165.9
Net income	—	—		—	—		—		973.5		—		—	—		973.5
Other comprehensive loss, net of tax	—	—		—	—		—		—		(143.9)		—	—		(143.9)
Balance, March 31, 2022	1.8	—		127.6	0.1		8,754.1		19,941.8		(170.1)		(19.9)	(8,611.2)		19,914.7
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—		0.8	—		228.0		—		—		—	—		228.0
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—		(0.1)	—		(41.9)		—		—		—	—		(41.9)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—		—	—		14.0		—		—		—	2.2		16.2
Repurchases of Common Stock	—	—		—	—		—		—		—		(0.7)	(393.6)		(393.6)
Stock-based compensation charges	—	—		—	—		166.0		—		—		—	—		166.0
Net income	—	—		—	—		—		852.1		—		—	—		852.1
Other comprehensive loss, net of tax	—	—		—	—		—		—		(53.7)		—	—		(53.7)
Balance, June 30, 2022	1.8	—		128.3	0.1		9,120.2		20,793.9		(223.8)		(20.6)	(9,002.6)		20,687.8
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—		0.9	—		322.9		—		—		—	—		322.9
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—		(0.2)	—		(108.9)		—		—		—	—		(108.9)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—		—	—		12.9		—		—		—	1.6		14.5
Repurchases of Common Stock	—	—		—	—		—		—		—		(1.4)	(913.0)		(913.0)
Stock-based compensation charges	—	—		—	—		171.1		—		—		—	—		171.1
Net income	—	—		—	—		—		1,315.7		—		—	—		1,315.7
Other comprehensive loss, net of tax	—	—		—	—		—		—		(51.3)		—	—		(51.3)
Balance, September 30, 2022	1.8	$	—	129.0	$	0.1	$	9,518.2	$	22,109.6	$	(275.1)	(22.0)	$	(9,914.0)	$	21,438.8

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

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REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income	$	2,794.0	$	3,141.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	308.0		241.3
Stock-based compensation expense	644.6		493.0
Losses on marketable and other securities, net	324.5		117.4
Other non-cash items, net	17.4		199.0
Deferred income taxes	(551.5)		(466.7)
Acquired in-process research and development in connection with asset acquisition	—		195.0
Changes in assets and liabilities:
(Increase) decrease in accounts receivable	(256.1)		488.2
Increase in inventories	(224.4)		(552.2)
Increase in prepaid expenses and other assets	(284.4)		(167.3)
(Decrease) increase in deferred revenue	(5.1)		92.0
Increase (decrease) in accounts payable, accrued expenses, and other liabilities	737.3		(486.0)
Total adjustments	710.3		153.7
Net cash provided by operating activities	3,504.3		3,295.0

Cash flows from investing activities:
Purchases of marketable and other securities	(9,514.2)		(4,345.0)
Sales or maturities of marketable and other securities	7,059.3		4,013.1
Capital expenditures	(467.2)		(437.9)
Payments for Libtayo intangible asset	(145.7)		(926.8)
Acquisitions, net of cash acquired	(51.1)		(230.3)
Net cash used in investing activities	(3,118.9)		(1,926.9)

Cash flows from financing activities:
Proceeds from issuance of Common Stock	844.5		1,146.9
Payments in connection with Common Stock tendered for employee tax obligations	(242.5)		(256.6)
Repurchases of Common Stock	(1,946.0)		(1,651.7)
Net cash used in financing activities	(1,344.0)		(761.4)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(0.6)		—

Net (decrease) increase in cash, cash equivalents, and restricted cash	(959.2)		606.7

Cash, cash equivalents, and restricted cash at beginning of period	3,119.4		2,898.1

Cash, cash equivalents, and restricted cash at end of period	$	2,160.2	$	3,504.8

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

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REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Interim Financial Statements

Basis of Presentation

The interim Condensed Consolidated Financial Statements of Regeneron Pharmaceuticals, Inc. and its subsidiaries ("Regeneron," "Company," "we," "us," and "our") have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company's financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, these financial statements reflect all normal recurring adjustments and accruals necessary for a fair statement of the Company's condensed consolidated financial statements for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. The December 31, 2022 Condensed Consolidated Balance Sheet data were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Certain reclassifications have been made to prior period amounts to conform with the current period's presentation.

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2. Product Sales

Net product sales consist of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)		2023		2022		2023		2022
EYLEA®	U.S.	$	1,448.2	$	1,629.4	$	4,382.1	$	4,768.2
EYLEA HD	U.S.	42.7		—		42.7		—
Libtayo®(a)	U.S.	144.1		94.7		384.0		264.5
Libtayo(a)	ROW(b)	88.3		31.0		235.3		31.0
Praluent®	U.S.	40.4		29.7		121.1		94.5
Evkeeza®	U.S.	19.1		13.6		53.3		33.2
Inmazeb®	U.S.	3.3		3.0		7.7		3.0
		$	1,786.1	$	1,801.4	$	5,226.2	$	5,194.4

(a) Prior to July 1, 2022, Regeneron recorded net product sales of Libtayo in the United States and Sanofi recorded net product sales of Libtayo outside the United States. Effective July 1, 2022, the Company records global net product sales of Libtayo. See Note 3 for further details.
(b) Rest of world ("ROW")

As of September 30, 2023 and December 31, 2022, the Company had $3.792 billion and $3.586 billion, respectively, of trade accounts receivable that were recorded within Accounts receivable, net.

The Company had product sales to certain customers that accounted for more than 10% of total gross product revenue for the three and nine months ended September 30, 2023 and 2022. Sales to each of these customers as a percentage of the Company's total gross product revenue are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Besse Medical, a subsidiary of Cencora, Inc.	53	%	56	%	52	%	56	%
McKesson Corporation	24	%	28	%	25	%	29	%

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3. Collaboration, License, and Other Agreements

a. Sanofi

Amounts recognized in our Statements of Operations in connection with our collaborations with Sanofi are detailed below:


	Statement of Operations Classification	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions)		2023		2022			2023		2022
Antibody:
Regeneron's share of profits in connection with commercialization of antibodies	Collaboration revenue	$	863.0	$	551.1	*	$	2,250.6	$	1,463.0	*
Sales-based milestones earned	Collaboration revenue	$	50.0	$	—		$	50.0	$	50.0
Reimbursement for manufacturing of commercial supplies	Collaboration revenue	$	151.5	$	160.5		$	506.0	$	466.8
Other	Collaboration revenue	$	—	$	(0.2)		$	—	$	28.7
Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursement of R&D expenses	(R&D expense)/Reduction of R&D expense	$	(25.8)	$	(4.3)		$	(66.7)	$	59.6
Reimbursement of commercialization-related expenses	Reduction of SG&A expense	$	135.5	$	108.6		$	384.0	$	311.1

Immuno-oncology(a):
Regeneron's share of profits in connection with commercialization of Libtayo outside the United States	Collaboration revenue	$	—	$	—		$	—	$	6.7
Reimbursement for manufacturing of ex-U.S. commercial supplies	Collaboration revenue	$	—	$	—		$	—	$	4.6
Reimbursement of R&D expenses	Reduction of R&D expense	$	—	$	—		$	—	$	42.7
Reimbursement of commercialization-related expenses	Reduction of SG&A expense	$	—	$	—		$	—	$	41.4
Regeneron's obligation for its share of Sanofi commercial expenses	SG&A expense	$	—	$	—		$	—	$	(19.9)
Regeneron's obligation for Sanofi's share of Libtayo U.S. gross profits	Cost of goods sold	$	—	$	—		$	—	$	(70.1)
Amounts recognized in connection with up-front payments received	Other operating income	$	—	$	—		$	—	$	35.1

* Net of one-time payment of $56.9 million to Sanofi in connection with the amendment to the Antibody License and Collaboration Agreement described below
(a) As described within the "Immuno-Oncology" section below, effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide.

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Antibody

The Company is party to a global, strategic collaboration with Sanofi to research, develop, and commercialize fully human monoclonal antibodies (the "Antibody Collaboration"), which currently consists of Dupixent® (dupilumab), Kevzara® (sarilumab), and itepekimab.

Under the terms of the Antibody License and Collaboration Agreement (the "LCA"), Sanofi is generally responsible for funding 80% to 100% of agreed-upon development costs. The Company is obligated to reimburse Sanofi for 30% to 50% of worldwide development expenses that were funded by Sanofi based on the Company's share of collaboration profits from commercialization of collaboration products. Under the terms of the LCA, the Company was required to apply 10% of its share of the profits from the Antibody Collaboration in any calendar quarter to reimburse Sanofi for these development costs. On July 1, 2022, an amendment to the LCA became effective, pursuant to which the percentage of the Company's share of profits used to reimburse Sanofi for such development costs increased from 10% to 20%. A portion of the value associated with the increase in reimbursement percentage was deemed to be contingent consideration attributable to the Company's acquisition of the Libtayo (cemiplimab) rights described within the "Immuno-Oncology" section below; this portion will be recorded as an increase to the Libtayo intangible asset over time as the Company repays such development costs to Sanofi.

Sanofi leads commercialization activities for products under the Antibody Collaboration, subject to the Company's right to co-commercialize such products. In addition to profit and loss sharing, the Company was entitled to receive sales milestone payments from Sanofi. During the three months ended September 30, 2023, the Company earned the final $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $3.0 billion on a rolling twelve-month basis. During the three months ended March 31, 2022, the Company earned a $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $2.0 billion on a rolling twelve-month basis.

The following table summarizes contract balances in connection with the Company's Antibody Collaboration with Sanofi:


	September 30,		December 31,
(In millions)	2023		2022
Accounts receivable, net	$	1,128.2	$	692.3
Deferred revenue	$	417.3	$	415.8

Immuno-Oncology

The Company was previously a party to a collaboration with Sanofi for antibody-based cancer treatments in the field of immuno-oncology (the "IO Collaboration"). Under the terms of the Immuno-oncology License and Collaboration Agreement, the parties were co-developing and co-commercializing Libtayo. The parties shared equally, on an ongoing basis, development and commercialization expenses for Libtayo. The Company had principal control over the development of Libtayo and led commercialization activities in the United States, while Sanofi led commercialization activities outside of the United States. The parties shared equally in profits and losses in connection with the commercialization of Libtayo.

Effective July 1, 2022, the Company obtained the exclusive right to develop, commercialize, and manufacture Libtayo worldwide under an Amended and Restated Immuno-oncology License and Collaboration Agreement with Sanofi (the "A&R IO LCA"). In connection with the A&R IO LCA, in 2022, the Company made a $900.0 million up-front payment to Sanofi, as well as a $100.0 million regulatory milestone payment. In addition, Sanofi was eligible to earn an aggregate of $100.0 million in Libtayo sales-based milestones under the terms of the A&R IO LCA, of which they earned $65.0 million in 2022 and $35.0 million in 2023. The Company also pays Sanofi an 11% royalty on net product sales of Libtayo through March 31, 2034. The transaction was accounted for as an asset acquisition and amounts paid to Sanofi in connection with obtaining the worldwide rights to Libtayo, including the up-front payment and any contingent consideration, are recorded as an intangible asset.

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b. Bayer

The Company is party to a license and collaboration agreement with Bayer for the global development and commercialization of EYLEA (aflibercept) and aflibercept 8 mg outside the United States. Agreed-upon development expenses incurred by the Company and Bayer are generally shared equally. Bayer is responsible for commercialization activities outside the United States, and the companies share equally in profits and losses from such sales.

Amounts recognized in the Company's Statements of Operations in connection with its Bayer collaboration are as follows:


	Statement of Operations Classification	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)		2023		2022		2023		2022
Regeneron's share of profits in connection with commercialization of EYLEA outside the United States	Collaboration revenue	$	349.9	$	315.3	$	1,031.0	$	993.4
Reimbursement for manufacturing of ex-U.S. commercial supplies	Collaboration revenue	$	27.2	$	17.5	$	79.7	$	60.3
One-time payment in connection with change in Japan arrangement	Collaboration revenue	$	—	$	—	$	—	$	21.9
Regeneron's obligation for its share of Bayer R&D expenses, net of reimbursement of R&D expenses	(R&D expense)/Reduction of R&D expense	$	(9.7)	$	7.1	$	(35.1)	$	10.3

The following table summarizes contract balances in connection with the Company's Bayer collaboration:


	September 30,		December 31,
(In millions)	2023		2022
Accounts receivable, net	$	361.7	$	348.2
Deferred revenue	$	125.3	$	131.9

c. Roche

The Company is a party to a collaboration agreement with Roche to develop, manufacture, and distribute the casirivimab and imdevimab antibody cocktail (known as REGEN-COV® in the United States and Ronapreve™ in other countries). Under the terms of the collaboration agreement, the parties jointly fund certain studies, and the Company has the right to distribute the product in the United States while Roche has the right to distribute the product outside of the United States. The parties share gross profits from worldwide sales based on a pre-specified formula, depending on the amount of manufactured product supplied by each party to the market.

Amounts recognized in the Company's Statements of Operations in connection with its Roche collaboration are as follows:


	Statement of Operations Classification	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)		2023		2022		2023		2022
Global gross profit payment from Roche in connection with sales of Ronapreve	Collaboration revenue	$	—	$	6.4	$	222.2	$	230.9
Other	Collaboration revenue	$	(5.7)	$	—	$	(9.5)	$	—

Reimbursement of research and development expenses from Roche was not material for the three and nine months ended September 30, 2023 and 2022.

The following table summarizes contract balances in connection with the Company's Roche collaboration:


	September 30,		December 31,
(In millions)	2023		2022
Accounts receivable, net	$	—	$	396.6

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d. Alnylam

In 2019, the Company and Alnylam Pharmaceuticals, Inc. entered into a global, strategic collaboration to discover, develop, and commercialize RNA interference ("RNAi") therapeutics for a broad range of diseases by addressing therapeutic disease targets expressed in the eye and central nervous system ("CNS"), in addition to a select number of targets expressed in the liver. In connection with entering into the collaboration, the Company made an up-front payment of $400.0 million to Alnylam, and also purchased shares of Alnylam common stock for $400.0 million. For each program, the Company provides Alnylam with a specified amount of funding at program initiation and at lead candidate designation. Under the terms of the collaboration, the parties perform discovery research until designation of lead candidates. Following designation of a lead candidate, the parties may further advance such lead candidate under either a co-development/co-commercialization collaboration agreement ("Co-Co Collaboration Agreement") (under which the parties are advancing ALN-APP and ALN-PNP, which are currently in clinical development) or license agreement.

During the three months ended September 30, 2023, the Company became obligated to pay Alnylam a $100.0 million development milestone, which was recorded to Acquired in-process research and development expense, upon the achievement of specified proof-of-principle criteria for the ALN-APP program. Alnylam is eligible to receive an additional $100.0 million clinical proof-of-principle milestone in connection with an eye program.

Amounts recognized in the Company's Statements of Operations in connection with its Alnylam collaboration are as follows:


	Statement of Operations Classification	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)		2023		2022		2023		2022
Regeneron's obligation for its share of Alnylam R&D expenses, net of reimbursement of R&D expenses	(R&D expense)	$	(13.5)	$	(10.6)	$	(52.1)	$	(36.1)
Development milestone	Acquired in-process research and development	$	(100.0)	$	—	$	(100.0)	$	—

The following table summarizes contract balances in connection with the Company's Alnylam collaboration:


	September 30,		December 31,
(In millions)	2023		2022
Accrued expenses and other current liabilities	$	111.5	$	7.4

e. Sonoma

In March 2023, the Company and Sonoma Biotherapeutics, Inc. entered into a license and collaboration agreement to bring together the Company's VelociSuite® technologies with Sonoma's technology platform for the discovery, development, and commercialization of novel regulatory T cell ("Treg") therapies for autoimmune diseases. In connection with the agreement, the Company made a $45.0 million up-front payment (which was recorded to Acquired in-process research and development expense in the first quarter of 2023) and, in April 2023, the Company purchased an aggregate of $30.0 million of Sonoma preferred stock. Sonoma is also eligible to receive a $45.0 million development milestone payment. The Company and Sonoma will co-fund research and development activities and share equally any future commercial expenses and profits. The Company will have the option to lead late-stage development and commercialization on all products globally, with Sonoma retaining rights to co-promote all such products in the United States.

f. Biomedical Advanced Research and Development Authority ("BARDA")

In August 2023, the Company expanded its Other Transaction Agreement ("OTA") with BARDA, pursuant to which the U.S. Department of Health and Human Services ("HHS") is obligated to fund up to 70% of the Company's costs incurred for certain development activities related to a next-generation COVID-19 monoclonal antibody therapy for the prevention of SARS-CoV-2 infection. The agreement could result in payments to the Company of up to approximately $326 million in the aggregate to support clinical development, clinical manufacturing, and the regulatory licensure process.

Amounts recognized within Other revenue in the Company's Statements of Operations in connection with this BARDA agreement were $34.2 million for the three months ended September 30, 2023.

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The following table summarizes the Company's contract balances in connection with this BARDA agreement:


	September 30,
(In millions)	2023
Accounts receivable, net	$	34.2

g. Decibel

In 2017, the Company entered into an agreement with Decibel Therapeutics, Inc. to discover and develop new potential therapeutics to protect, repair and restore hearing (including DB-OTO, which is currently in clinical development, and preclinical programs for GJB2-related and stereocilin-related hearing loss). In connection with the agreement, the Company also purchased shares of Decibel stock.

In August 2023, the Company entered into an Agreement and Plan of Merger to acquire Decibel, and in September 2023, the Company completed its acquisition of Decibel. The Company paid $101.3 million in cash (or $4.00 per share of Decibel common stock), of which $6.6 million was attributed to post-combination services to be rendered by Decibel equity award holders, and as a result, was excluded from the amount of consideration transferred for purchase accounting. In addition, Decibel shareholders received one non-tradeable contingent value right ("CVR") per share of Decibel common stock, which entitles the holder to receive up to $3.50 per share in cash upon achievement of certain clinical development and regulatory milestones for DB-OTO within specified time periods. At closing, the Company recorded a liability related to the fair value of the CVRs of $43.7 million (see Note 6). The maximum aggregate amount that holders of the CVRs may be entitled to receive if all the milestones contemplated by the CVRs are achieved is approximately $97 million.

The fair value of the Company's investment in Decibel stock immediately before the acquisition date was $10.3 million.

The Decibel acquisition was accounted for as a business combination. In a business combination, the acquisition method of accounting generally requires that the assets acquired and liabilities assumed be recorded as of the date of the acquisition at their respective fair values. Amounts allocated to acquired in-process research and development are capitalized and accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the associated research and development efforts. Any excess of the purchase price (consideration transferred) over the fair values of net assets acquired is recorded as goodwill. Transaction costs in connection with a business combination are expensed as incurred.

The following table summarizes the amounts recognized for assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date:


	September 25,
(In millions)	2023
Cash and cash equivalents	$	42.2
Marketable securities	12.1
Deferred tax assets, net	58.1
Indefinite-lived intangible asset related to in-process research and development	42.5
Goodwill	5.2
Other assets and liabilities, net	(11.4)
	$	148.7

The final determination of fair values of assets acquired, liabilities assumed, and tax-related items will be completed no later than one year from the acquisition date.

h. Checkmate

In May 2022, the Company completed its acquisition of Checkmate Pharmaceuticals, Inc. for a total equity value of approximately $250 million. As a result of the transaction, which was accounted for as an asset acquisition, the Company recorded, during the three months ended June 30, 2022, (i) a charge of $195.0 million to Acquired in-process research and development and (ii) net assets of $61.7 million, including $26.4 million of cash and cash equivalents acquired, related to the assets acquired (including deferred tax assets and investments) and liabilities assumed.

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4. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted average number of shares of Common Stock and Class A Stock outstanding. Net income per share is presented on a combined basis, inclusive of Common Stock and Class A Stock outstanding, as each class of stock has equivalent economic rights. Diluted net income per share includes the potential dilutive effect of other securities as if such securities were converted or exercised during the period, when the effect is dilutive. The calculations of basic and diluted net income per share are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2023		2022		2023		2022
Net income - basic and diluted	$	1,007.8	$	1,315.7	$	2,794.0	$	3,141.3

Weighted average shares - basic	106.3		106.9		106.8		107.2
Effect of dilutive securities:
Stock options	4.8		4.3		4.9		4.7
Restricted stock awards and restricted stock units	2.3		1.6		2.0		1.4
Weighted average shares - diluted	113.4		112.8		113.7		113.3

Net income per share - basic	$	9.48	$	12.31	$	26.16	$	29.30
Net income per share - diluted	$	8.89	$