(d) The Company is solely responsible for the treatment of neovascular age-related macular degeneration (wet AMD), diabetic macular edema (DME), macular edema following retinal vein occlusion (RVO), which includes macular edema following central retinal vein occlusion (CRVO) and macular edema following branch retinal vein occlusion (BRVO). EYLEA is also available in the EU, Japan, and certain other countries outside the United States for the treatment of myopic choroidal neovascularization (mCNV) and in the United States for the treatment of diabetic retinopathy in patients with DME. Bayer has additional regulatory applications for EYLEA for various indications pending in other countries, including EYLEA for the treatment of wet AMD and DME in China. We are collaborating with Bayer on the global development and commercialization of EYLEA outside the United States. Bayer markets, and records revenue from sales of EYLEA outside the United States, where, for countries other than Japan, the companies share equally the profits and losses from sales of EYLEA. In Japan, we are entitled to receive a percentage of the sales of EYLEA. We maintain exclusive rights to EYLEA in the United States and are entitled to all profits from such sales.
| | • | Dupixent(dupilumab) Injection. On March 28, 2017, the the U.S. Food and Drug Administration (FDA) approved Dupixent for the treatment of adult patients with moderate-to-severe atopic dermatitis whose disease is not adequately controlled with topical prescription therapies or when those therapies are not advisable. The launch of Dupixent commenced in March following the FDA approval. Sanofi records product sales for Dupixent, and we and Sanofi share profits and losses from sales of Dupixent. We have exercised our option to co-promote Dupixent in the United States and thus far have not exercised our option to co-promote Dupixent outside the United States.
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In September 2017, the European Commission granted marketing authorization for Dupixent for use in adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy. In addition, in the first quarter of 2017, an application for marketing approval for Dupixent was submitted in Japan. Sanofi has additional regulatory applications for Dupixent for use in adult patients with atopic dermatitis pending in other countries.
Praluent (alirocumab) Injection is available in the United States where it is indicated as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia (HeFH) or clinical atherosclerotic cardiovascular disease (ASCVD), who require additional lowering of LDL cholesterol. Praluent is also available in certain European countries and in Japan. In April 2017, the FDA approved the supplemental Biologics License Application (sBLA) for a once-monthly (every four weeks), 300 mg dose of Praluent. In July 2017, the FDA approved the sBLA for Praluent's time out of refrigeration, which was increased from 24 hours to 30 days. The effect of Praluent on cardiovascular morbidity and mortality has not been determined. We are collaborating with Sanofi on the global development and commercialization of Praluent. See Part II, Item 1. "Legal Proceedings" for information regarding the patent infringement proceedings relating to Praluent, which may impact Praluent's commercial availability in certain jurisdictions.
Sanofi records product sales for Praluent, and we and Sanofi share profits and losses from sales of Praluent. We have exercised our option to co-promote Praluent in the United States, and thus far have not exercised our option to co-promote Praluent outside the United States. Sanofi has additional regulatory applications for Praluent pending in other countries.
| | • | Kevzara(sarilumab) Solution for Subcutaneous Injection. In January 2017, Health Canada approved Kevzara for the treatment of adult patients with moderately to severely active rheumatoid arthritis (RA) who have an inadequate response to or intolerance to one or more biologic or non-biologic disease modifying anti-rheumatic drugs (DMARDs). This was the first approval of Kevzara worldwide. On May 22, 2017, the FDA approved Kevzara for the treatment of adult patients with moderately to severely active rheumatoid arthritis who have an inadequate response or intolerance to one or more DMARDs. In June 2017, the European Commission granted marketing authorization for Kevzara in combination with methotrexate (MTX) for the treatment of moderately to severely active rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to one or more DMARDs; Kevzara may be used as monotherapy in case of intolerance to MTX or when treatment with MTX is inappropriate. In September 2017, the Pharmaceuticals and Medical Devices Agency (PMDA) in Japan approved Kevzara for the treatment of adult patients with rheumatoid arthritis who have had an inadequate response to conventional treatments.
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Sanofi records product sales for Kevzara, and we and Sanofi share profits and losses from sales of Kevzara. We have exercised our option to co-promote Kevzara in the United States and thus far have not exercised our option to co-promote Kevzara outside the United States. Sanofi has additional regulatory applications for Kevzara for RA pending in other countries.
| | • | ARCALYST® (rilonacept) Injection for Subcutaneous Use is available in the United States for the treatment of Cryopyrin-Associated Periodic Syndromes (CAPS), including Familial Cold Auto-inflammatory Syndrome (FCAS) and Muckle-Wells Syndrome (MWS), in adults and children 12 years and older. CAPS are a group of rare, inherited, auto-inflammatory conditions characterized by life-long, recurrent symptoms of rash, fever/chills, joint pain, eye redness/pain, and fatigue. Intermittent, disruptive exacerbations or flares can be triggered at any time by exposure to cooling temperatures, stress, exercise, or other unknown stimuli.
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| | • | ZALTRAP® (ziv-aflibercept) Injection for Intravenous Infusion, known in the scientific literature as VEGF Trap, is available in the United States, EU, and certain other countries for treatment, in combination with 5-fluorouracil, leucovorin, irinotecan (FOLFIRI), of patients with metastatic colorectal cancer (mCRC) that is resistant to or has progressed following an oxaliplatin-containing regimen. Pursuant to a 2015 amended and restated ZALTRAP agreement, Sanofi is solely responsible for the development and commercialization of ZALTRAP,Praluent outside of the United States.
| | | (e) Rest of world ("ROW"). A checkmark in this column indicates that the product has received marketing approval in at least one country outside of the United States, European Union ("EU"), or Japan. | | | (f) Known as REGEN-COV in the United States and Ronapreve™ in other countries. | | | (g) The Company is solely responsible for the development and commercialization of Evkeeza in the United States and Ultragenyx is responsible for the development and commercialization of Evkeeza outside of the United States. | | | (h)Kiniksa is solely responsible for the development and commercialization of ARCALYST. | | | (i)Sanofi pays us a percentage of aggregate net salesis solely responsible for the development and commercialization of ZALTRAP. | | |
Marketed ProductsNet product sales of Regeneron-discovered products consist of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | | | | 2023 | | 2022 | | % Change | | (In millions) | | U.S. | | ROW | | Total | | U.S. | | ROW | | Total | | (Total Sales) | EYLEA(a) | | $ | 1,433.8 | | | $ | 847.1 | | | $ | 2,280.9 | | | $ | 1,517.6 | | | $ | 868.5 | | | $ | 2,386.1 | | | (4 | %) | Dupixent(b) | | $ | 1,898.1 | | | $ | 586.9 | | | $ | 2,485.0 | | | $ | 1,325.6 | | | $ | 484.8 | | | $ | 1,810.4 | | | 37 | % | Libtayo(c) | | $ | 109.7 | | | $ | 72.9 | | | $ | 182.6 | | | $ | 78.9 | | | $ | 45.8 | | | $ | 124.7 | | | 46 | % | Praluent(d) | | $ | 40.2 | | | $ | 105.7 | | | $ | 145.9 | | | $ | 33.6 | | | $ | 77.8 | | | $ | 111.4 | | | 31 | % | REGEN-COV(e) | | $ | — | | | $ | 613.2 | | | $ | 613.2 | | | $ | — | | | $ | 635.6 | | | $ | 635.6 | | | (4 | %) | Kevzara(b) | | $ | 39.2 | | | $ | 39.3 | | | $ | 78.5 | | | $ | 57.0 | | | $ | 49.4 | | | $ | 106.4 | | | (26 | %) | Other products(f) | | $ | 18.1 | | | $ | 16.5 | | | $ | 34.6 | | | $ | 9.9 | | | $ | 20.4 | | | $ | 30.3 | | | 14 | % | | | | | | | | | | | | | | | | (a) Regeneron records net product sales of EYLEA in the United States. Bayer records net product sales of EYLEA outside the United States. The Company records its share of profits/losses in connection with sales of EYLEA outside the United States. | (b) Sanofi records global net product sales of Dupixent and Kevzara. The Company records its share of profits/losses in connection with global sales of Dupixent and Kevzara. | (c) 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. The parties equally shared profits/losses in connection with global sales of Libtayo. Effective July 1, 2022, the Company began recording net product sales of Libtayo outside the United States and pays Sanofi a royalty on global sales. Refer to "Collaboration, License, and Other Agreements" section below for further details. Included in this line item is approximately $6 million of net product sales recorded by Sanofi in the first quarter of 2023 in connection with sales in certain markets outside the United States (Sanofi records net product sales in such markets during a transition period until inventory on hand as of July 1, 2022 is sold through to the end customers). | (d) Regeneron records net product sales of Praluent in the United States. Sanofi records net product sales of Praluent outside the United States and pays the Company a royalty on such sales. | (e) Regeneron records net product sales of REGEN-COV in the United States and Roche records net product sales of Ronapreve outside the United States. The parties share gross profits from global sales of REGEN-COV and Ronapreve based on a pre-specified formula. | (f) Included in this line item are products which are sold by the Company and others. Refer to "Results of Operations - Revenues" below for a complete listing of net product sales recorded by the Company. Not included in this line item are net product sales of ARCALYST, which are recorded by Kiniksa; net product sales of ARCALYST were $40 million for the fourth quarter of 2022. |
| | | | | | | | | | | | | | | | | | Net Product Sales of Regeneron-Discovered Products(1) | | Three Months Ended September 30, | | Nine Months Ended September 30, | | (In millions) | | 2017 | | 2016 | | 2017 | | 2016 | | EYLEA in the United States | | $ | 953.3 |
| | $ | 853.6 |
| | $ | 2,727.1 |
| | $ | 2,465.4 |
| | ARCALYST | | 4.1 |
| | 3.9 |
| | 12.6 |
| | 10.5 |
| | Net product sales recorded by Regeneron | | $ | 957.4 |
| | $ | 857.5 |
| | $ | 2,739.7 |
| | $ | 2,475.9 |
| | | | | | | | | | | EYLEA outside of the United States(1) | | $ | 563.7 |
| | $ | 470.8 |
| | $ | 1,590.0 |
| | $ | 1,375.9 |
| | EYLEA global | | $ | 1,517.0 |
| | $ | 1,324.4 |
| | $ | 4,317.1 |
| | $ | 3,841.3 |
| | | | | | | | | | | Global net product sales recorded by Sanofi(1): | | | | | | | | | | Praluent in the United States | | $ | 31.8 |
| | $ | 31.6 |
| | $ | 89.8 |
| | $ | 61.9 |
| | Praluent outside of the United States | | 17.6 |
| | 6.6 |
| | 41.6 |
| | 13.8 |
| | Praluent global | | 49.4 |
| | 38.2 |
| | 131.4 |
| | 75.7 |
| | Dupixent | | 88.9 |
| | — |
| | 117.6 |
| | — |
| | Kevzara | | 3.0 |
| | — |
| | 3.8 |
| | — |
| | ZALTRAP | | 21.7 |
| | 18.0 |
| | 58.6 |
| | 56.0 |
| | Net product sales recorded by Sanofi | | $ | 163.0 |
| | $ | 56.2 |
| | $ | 311.4 |
| | $ | 131.7 |
| | | | | | | | | | | (1) As described in the "Overview" section above, Bayer records net product sales of EYLEA outside the United States and Sanofi records global net product sales of Praluent, Dupixent, Kevzara, and ZALTRAP. |
Programs in Clinical Development We have 16 productProduct candidates in clinical development, all of which were discovered inare being developed by us and/or our research laboratories. These consist of a Trap-based clinical program and fully human monoclonal antibody product candidates, ascollaborators, are summarized below. In addition to the product candidates in clinical development described below, we have ongoing studies for our marketed products. Each of the antibodies in the table below was generated using our VelocImmune® technology. below.
There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development (including any post-approval studies), uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes to drug pricing and reimbursement regulations and requirements, and changes in the competitive landscape affecting a product candidate. The planning, execution, and results of our clinical programs are significant factors that can affect our operating and financial results. Refer to Part II, Item 1A,1A. "Risk Factors" for a description of these and other risks and uncertainties that may affect our clinical programs. Any of such risks and uncertainties may, among other matters, negatively impact the development timelines set forth in the table below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trap-based Clinical Program | EYLEA | In Phase 1 | | Phase 2 | | Phase 3 clinical development for the treatment of non-proliferative diabetic retinopathy (NPDR) in patients without DME (we are developing independently). As described below, aflibercept is also being studied in combination with nesvacumab, an antibody | | Regulatory Review(h) | | 2023 Events to angiopoietin-2 (Ang2) (in collaboration with Bayer).Date |
| Select Upcoming Milestones | | | | | | | | | | | | | | Antibody-based Clinical Programs in Collaboration with SanofiOphthalmology | Dupixent (dupilumab) | | | | | | | | | | | | | EYLEA (aflibercept)(a) | | | | | |
| | | | –Approved by U.S. Food and Drug Administration ("FDA") for ROP | |
| Aflibercept 8 mg(a) | | | | | | –Wet AMD
–DME | | –Wet AMD and DME (U.S., EU, and Japan)
–DR (U.S.) | |
| | –FDA decision on BLA for wet AMD, DME, and DR (target action date of June 27, 2023)
–European Commission ("EC") and Ministry of Health, Labour and Welfare ("MHLW") decision on regulatory submissions for wet AMD and DME (first half 2024)
–Report two-year data from Phase 3 studies in wet AMD and DME (third quarter 2023) | | | | | | | | | | | | | | | Immunology & Inflammation | | | | | | | | | | | | | | Dupixent (dupilumab)(b) Antibody to the interleukin-4 receptor (IL-4R)IL-4R alpha subunit. In clinical development subunit | | | | –Ulcerative colitis
–Eosinophilic gastroenteritis (Phase 2/3)
| | –EoEin atopicpediatrics(c)
–Chronic obstructive pulmonary disease ("COPD")
–Bullous pemphigoid(c)
–Chronic spontaneous urticaria ("CSU")
–Chronic pruritus of unknown origin | | –Atopic dermatitis in pediatric patients ages 6 to 11 (Phase 2), asthmapediatrics and adolescents (6 months–14 years of age) (Japan)
–Prurigo nodularis (Japan)
–CSU in adults and adolescents (Phase 3),(U.S. and Japan) | | –Approved by EC for atopic dermatitis in pediatrics (6 months–5 years of age)
–Approved by EC for EoE in adults and adolescents
–Reported that Phase 3 trial in COPD with evidence of type 2 inflammation met its primary and all key secondary endpoints
–Phase 3 trial in chronic cold induced urticaria did not meet its required efficacy endpoints | | –MHLW decision on regulatory submission for atopic dermatitis in pediatrics and adolescents (6 months–14 years of age) in Japan (second half 2023)
–Submit sBLA for EoE in pediatrics (mid-2023)
–Report results from replicate Phase 3 trial in COPD (mid-2024)
–FDA decision on sBLA (target action date of October 22, 2023) and MHLW decision on regulatory submission (first half 2024) for CSU in adults and adolescents |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Clinical Program (continued) | | Phase 1 | | Phase 2 | | Phase 3 | | Regulatory Review(h) | | 2023 Events to Date | | Select Upcoming Milestones | Dupixent (dupilumab)(b) (continued) | | | | | | | | | | –Discontinued further clinical development in allergic fungal rhinosinusitis and chronic rhinosinusitis without nasal polyps (Phase 3),polyposis | | | Kevzara (sarilumab)(b) Antibody to IL-6R | | | | –Polyarticular-course juvenile idiopathic arthritis ("pcJIA") (pivotal study)
–Systemic juvenile idiopathic arthritis ("sJIA") (pivotal study) | | | | | | –Approved by FDA for PMR | | –Submit sBLA and eosinophilic esophagitis (EoE) (Phase 2).regulatory application in the EU for pcJIA (second half 2023) | Itepekimab(b) (REGN3500) Antibody to IL-33 | | | | | | –COPD(e) | | | | | | –Report results from Phase 3 study in atopic dermatitis in adolescents (12-17 years of age) initiated in the first quarter of 2017. Phase 3 study in asthma in pediatrics (6-11 years of age) initiated in the second quarter of 2017. In the third quarter of 2017, the FDA granted orphan drug designation for the treatment of EoE. | Praluent | Antibody to PCSK9. In Phase 3 clinical development for LDL cholesterol reduction and for the prevention of cardiovascular events. In the second quarter of 2017, the FDA granted orphan drug designation for the treatment of homozygous familial hypercholesterolemia (HoFH). Phase 3 study in HoFH initiated in the fourth quarter of 2017. | Kevzara (sarilumab) | Antibody to the interleukin-6 receptor (IL-6R). In clinical development in Polyarticular-course Juvenile Idiopathic Arthritis (pcJIA) (Phase 2). | Cemiplimab (REGN2810) | Antibody to programmed cell death protein 1 (PD-1). In clinical development in solid tumors and advanced hematologic malignancies (Phase 1) and metastatic or locally advanced and unresectable cutaneous squamous cell carcinoma (CSCC) (pivotal Phase 2). Phase 3 study in first-line treatment for non-small cell lung cancer (NSCLC) and potentially pivotal Phase 2 study in basal cell carcinoma (BCC) initiated in the second quarter of 2017. Phase 3 study in cervical cancer initiated in the third quarter of 2017. Cemiplimab is also being studied in combination with other antibodies and treatments. In the third quarter of 2017, the FDA granted Breakthrough Therapy designation for the treatment of adults with metastatic CSCC and adults with locally advanced and unresectable CSCC. | REGN3500 | Antibody to interleukin-33 (IL-33) being developed for inflammatory diseases. Phase 1 studies in patients with asthma initiated in the first half of 2017. | REGN3767 | Antibody to Lymphocyte Activation Gene 3 (LAG-3) protein. In Phase 1 clinical development (administered alone or in combination with cemiplimab) in advanced malignancies. | Antibody-based Clinical Program in Collaboration with BayerCOPD (2025) | Nesvacumab/aflibercept (REGN910-3)**REGN5713-5714-5715
| Combination product comprised of an antibody to Ang2 co-formulated with aflibercept for intravitreal injection for use in ophthalmology. In Phase 2 clinical development for the treatment of wet AMD and DME. Fast Track designation received from the FDA for the treatment of patients with wet AMD, DME, and diabetic retinopathy. | Antibody-based Clinical Program in Collaboration with Teva and Mitsubishi Tanabe Pharma | Fasinumab (REGN475)*
| Antibody to Nerve Growth Factor (NGF). In Phase 3 clinical development in osteoarthritis of knee and hip. Phase 3 efficacy studies in osteoarthritis of the knee or hip initiated in the second and third quarters of 2017. Phase 2b study for chronic low back pain initiated in the first quarter of 2016, and placed on clinical hold by the FDA in October 2016. | Antibody-based Clinical Programs Developing Independently | Evinacumab (REGN1500)*
| Antibody to Angptl-3. In Phase 2 clinical development for the treatment of HoFH and severe forms of hyperlipidemia. FDA granted orphan drug designation for the treatment of HoFH. In the first quarter of 2017, the FDA granted Breakthrough Therapy designation for the treatment of hypercholesterolemia in patients with HoFH. | Trevogrumab (REGN1033)*
| Antibody to myostatin (GDF8). In Phase 1 in combination with REGN2477 for muscle-wasting diseases. | REGN1908-1909*
| Antibody to Feld1. In Phase 1 clinical development for the treatment of an allergic disease. | REGN1979 | Bispecific antibody against CD20 and CD3. In Phase 1 clinical development as monotherapy and in combination with cemiplimab in certain B-cell malignancies. In the second quarter of 2017, the FDA granted orphan drug designation in diffuse large B-cell lymphoma. | REGN3470-3471-3479***
| Multi-antibody therapy to Ebola virus. In PhaseBet v 1 clinical development. FDA granted orphan drug designation for the treatment of Ebola virus infection. | | |
| | | Antibody-based Clinical Programs Developing Independently (continued)
| REGN2477*
| Antibody to Activin A being developed for Fibrodysplasia Ossificans Progressiva (FOP). FDA granted orphan drug designation for the treatment of FOP. In addition, in Phase 1 clinical development in combination with trevogrumab for muscle-wasting diseases. In the second quarter of 2017, the FDA granted Fast Track designation for the prevention and treatment of heterotopic ossification in patients with FOP. | REGN3918*
–Birch allergy | Antibody to complement 5 (C5) being developed for paroxysmal nocturnal hemoglobinuria (PNH). Phase 1 study in healthy volunteers initiated in the second quarter of 2017. |
| | | | | | | | | | | | | | | | | | | Solid Organ Oncology | | | | | | | | | | | | | | *Libtayo (cemiplimab)(g)
Antibody to PD-1 | | –First-line NSCLC, BNT116 combination | | –Neoadjuvant CSCC
–Second-line cervical cancer, ISA101b combination | | –Adjuvant CSCC | |
| | –Approved by EC for first-line NSCLC, chemotherapy combination | |
| Fianlimab(f) (REGN3767) Antibody to LAG-3 | | –Solid tumors and advanced hematologic malignancies | | –First-line advanced NSCLC (Phase 2/3) (pivotal study) | | –First-line metastatic melanoma
–First-line adjuvant melanoma | | | |
| | –Initiate Phase 3 study (in combination with Libtayo) in perioperative melanoma (second half 2023)
–Initiate Phase 2 study (in combination with Libtayo) in perioperative NSCLC (second half 2023) | Vidutolimod Immune activator targeting TLR9 | | | | –Solid tumors | | | | | | | | –Initiate Phase 2 study in melanoma | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Clinical Program (continued) | | Phase 1 | | Phase 2 | | Phase 3 | | Regulatory Review(h) | | 2023 Events to Date | | Select Upcoming Milestones | Ubamatamab(f) (REGN4018) Bispecific antibody targeting MUC16 and CD3 | | | | –Platinum-resistant ovarian cancer | | | | | |
| | –Report results from Phase 1/2 study (in combination with Libtayo) in platinum-resistant ovarian cancer (second half 2023) | REGN5668(n) Bispecific antibody targeting MUC16 and CD28 | | –Platinum-resistant ovarian cancer | | | | | | | | | | | REGN5678 Bispecific antibody targeting PSMA and CD28 | | –Prostate cancer | | | | | | | |
| | –Report additional results from Phase 1/2 study (in combination with Libtayo) in prostate cancer (second half 2023/first half 2024) | REGN4336 Bispecific antibody targeting PSMA and CD3 | | –Prostate cancer | | | | | | | | | | | REGN5093 Bispecific antibody targeting two distinct MET epitopes | | –MET-altered advanced NSCLC | | | | | | | |
| | | REGN5093-M114 Bispecific antibody-drug conjugate targeting two distinct MET epitopes | | –MET overexpressing advanced cancer | | | | | | | | | | | REGN6569 Antibody to GITR | | –Solid tumors | | | | | | | | | | | REGN7075 Bispecific antibody targeting EGFR and CD28 | | –Solid tumors | | | | | | | | | | | | | | | | | | | | | | | | | Hematology | | | | | | | | | | | | | | Odronextamab(i) (REGN1979) Bispecific antibody targeting CD20 and CD3 | | –Certain B-cell malignancies(c)(m) | | –B-cell non-Hodgkin lymphoma ("B-NHL")(m) (pivotal study) | | | | | |
| | –Initiate Phase 3 studies in follicular lymphoma ("FL") and diffuse large B-cell lymphoma ("DLBCL"), including earlier lines of therapy (second quarter 2023) | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Clinical Program (continued) | | Phase 1 | | Phase 2 | | Phase 3 | | Regulatory Review(h) | | 2023 Events to Date | | Select Upcoming Milestones | Odronextamab(i) (REGN1979) (continued) | | | | | | | | | | | | –Submit BLA and Marketing Authorization Application ("MAA") for relapsed/refractory FL and DLBCL (second half 2023) | REGN5837(p) Bispecific antibody targeting CD22 and CD28 | | –B-NHL | | | | | | | | | | | Linvoseltamab(f) (REGN5458) Bispecific antibody targeting BCMA and CD3 | | –Multiple myeloma(c)(e) | | –Multiple myeloma (pivotal study)(c)(e) | | | | | | | | –Initiate Phase 3 study in multiple myeloma, including earlier lines of therapy (mid-2023)
–Submit BLA for relapsed/refractory multiple myeloma (second half 2023) | REGN5459(f) Bispecific antibody targeting BCMA and CD3 | | –Transplant desensitization in patients with chronic kidney disease | | | | | | | | | | | Pozelimab(f) (REGN3918) Antibody to C5; studied as monotherapy and in combination with cemdisiran | | | | –CD55-deficient protein-losing enteropathy ("CHAPLE"), monotherapy(c)(e) (potentially pivotal study) | | –Myasthenia gravis, cemdisiran combination(k)
–Paroxysmal nocturnal hemoglobinuria ("PNH"), cemdisiran combination(c)(k) | | –CHAPLE, monotherapy (adults and children aged 1 year and older) (U.S.) | | | | –FDA decision on BLA for CHAPLE, monotherapy (target action date of August 20, 2023) | REGN7257 Antibody to IL2Rg | | –Aplastic anemia | | | | | | | | | | | NTLA-2001(j) TTR gene knockout using CRISPR/Cas9 | | –Transthyretin ("ATTR") amyloidosis(c) | | | | | | | |
| | | REGN9933 Antibody to Factor XI | | –Thrombosis
| | | | | | | | | | | REGN7508 Antibody to Factor XI | | –Thrombosis | | | | | | | | | | | REGN7999 Antibody to TMPRSS6 | | –Transfusion dependent iron overload | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Clinical Program (continued) | | Phase 1 | | Phase 2 | | Phase 3 | | Regulatory Review(h) | | 2023 Events to Date | | Select Upcoming Milestones | | | | | | | | | | | | | | | General Medicine | | | | | | | | | | | | | | "Next Generation" Covid Antibodies Antibodies to SARS-CoV-2 variants | | | | | | | | | | | | –Initiate clinical development of "next generation" antibody (mid-2023) | Praluent (alirocumab) Antibody to PCSK9 | | | | | | –HeFH in pediatrics | | | | | | –Submit sBLA for HeFH in pediatrics (mid-2023) | Evkeeza(evinacumab)(f)(l) Antibody to ANGPTL3 | | | | | | | | | | –Approved by FDA for HoFH in pediatrics (5–11 years of age) | | | Garetosmab(f) (REGN2477) Antibody to Activin A | | | | | | –Fibrodysplasia ossificans progressiva ("FOP")(c)(d)(e) | | | | | | | Mibavademab(f) (REGN4461) Agonist antibody to leptin receptor ("LEPR") | | | | –Generalized lipodystrophy(e)
–Partial lipodystrophy | | | | | | | | | REGN5381/REGN9035 Agonist antibody to NPR1/reversal agent to REGN5381 | | –Reversal agent in healthy volunteers | | –Heart failure | | | | | | | | –Report initial data in healthy volunteers (2023) | ALN-HSD(o) RNAi therapeutic targeting HSD17B13 | | –Nonalcoholic steatohepatitis
("NASH") | | –NASH | | | | | |
| | | ALN-PNP(k) RNAi therapeutic targeting PNPLA3 | | –NASH | | | | | | | | | | | ALN-APP(k) RNAi therapeutic targeting APP | | –Early-onset Alzheimer’s disease(q) | | | | | | | | –Reported positive interim data from single dose part of Phase 1 trial in early-onset Alzheimer’s disease | | |
| | | | | | | | | | | | | | | | Note: For purposes of the table above, a program is classified in Phase 1, 2, or 3 clinical development after recruitment for the corresponding study or studies has commenced. | (a) In collaboration with Bayer outside the United States | (b) In collaboration with Sanofi | (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.if any. | ** Antibodies targeting the Ang2 receptor(g)Studied as monotherapy and ligand in ophthalmology were previously included in our antibody collaborationcombination with Sanofi. Under the terms of our agreement, Sanofi is entitled to receive royalties on any future global sales of the product candidateother antibodies and a potential development milestone.treatments
| *** Sanofi did not opt-in(h) Information in this column relates to U.S., EU, and Japan regulatory submissions only
| (i) In collaboration with Zai Lab in mainland China, Hong Kong, Taiwan, and Macau | (j) In collaboration with Intellia | (k) In collaboration with Alnylam | (l) In collaboration with Ultragenyx outside the United States | (m) FDA granted Fast Track designation for follicular lymphoma and diffuse large B-cell lymphoma | (n)Studied in combination with ubamatamab | (o) Alnylam elected to opt-out of the product candidate. Under the terms of our agreement, SanofiAlnylam is entitled to receive royalties on any future sales of the product, candidate. We and the Biomedical Advanced Research Development Authority (BARDA)if any. | (p)Studied in combination with odronextamab | (q)Part B of the study (multi-dose regimen) has been placed on partial clinical hold in the U.S. Department of Health and Human Services (HHS) are partiesby the FDA due to agreements (including an agreement executedfindings observed in September 2017 - see "Other Programs" below for further information) whereby HHS provides certain funding to support research, development, and manufacturing of a monoclonal antibody therapy for the treatment of Ebola virus infection.prior non-clinical chronic toxicology studies. |
In the third quarter of 2017, we reported that a Phase 3 study evaluating suptavumab (REGN2222), an antibody to the Respiratory Syncytial Virus-F (RSV-F) protein, did not meet its primary endpoint of preventing medically-attended RSV infections in infants. Suptavumab did show signs of efficacy in a subgroup of patients. Adverse events were generally balanced between suptavumab and placebo. Further clinical development of suptavumab has been discontinued.31 Our core business strategy is to maintain a strong foundation in basic scientific research and discovery-enabling technologies, and to combine that foundation with our clinical development, manufacturing, and commercial capabilities. Our objective is to continue to be an integrated, multi-product biopharmaceutical company that provides patients and medical professionals with innovative options for preventing and treating human diseases.
We believe that our ability to develop product candidates is enhanced by the application of our VelociSuite® technology platforms. Our discovery platforms are designed to identify specific proteins of therapeutic interest for a particular disease or cell type and validate these targets through high-throughput production of genetically modified mice using our VelociGene® technology to understand the role of these proteins in normal physiology, as well as in models of disease. Our human monoclonal antibody technology (VelocImmune) and cell line expression technologies (VelociMab®) may then be utilized to discover and produce new product candidates directed against the disease target. Our antibody product candidates currently in clinical trials were developed using VelocImmune. We continue to invest in the development of enabling technologies to assist in our efforts to identify, develop, manufacture, and commercialize new product candidates.
Clinical Programs - Ophthalmologic Diseases
EYLEA - Ophthalmologic Diseases
Overview
Vascular Endothelial Growth Factor (VEGF) is a naturally occurring protein in the body. Its normal role in a healthy organism is to trigger formation of new blood vessels (angiogenesis) supporting the growth of the body's tissues and organs. However, in certain diseases, such as wet AMD, it is also associated with the growth of abnormal new blood vessels in the eye, which exhibit abnormal increased permeability that leads to edema. Scarring and loss of fine-resolution central vision often results. Wet AMD, diabetic retinopathy (which includes DME), and RVO are three of the leading causes of adult blindness in the developed world. In these conditions, severe visual loss is caused by neovascular proliferation and/or retinal edema.
EYLEA is a recombinant fusion protein, consisting of portions of human VEGF receptors 1 and 2 extracellular domains fused to the Fc portion of human IgG1 and formulated as an iso-osmotic solution for intravitreal administration. EYLEA acts as a soluble decoy receptor that binds VEGF-A and placental growth factor (PlGF) and thereby can inhibit the binding and activation of these cognate VEGF receptors. EYLEA is specially purified and contains iso-osmotic buffer concentrations, allowing for injection into the eye.
Additional Information - Clinical Development Programs
Diabetic Retinopathy
Diabetic retinopathy is a complication of diabetes mellitus characterized by microvascular damage to the blood vessels in the retina. It can progress to proliferative diabetic retinopathy (PDR), where new, abnormal vessels that are susceptible to hemorrhage grow initially from the retina and/or optic disc and extend beyond the internal limiting membrane. PDR can subsequently lead to various vision-threatening complications such as vitreous hemorrhage, traction macular detachment, and Neovascular Glaucoma (NVG). There is currently no standard treatment for non-proliferative diabetic retinopathy in the absence of DME and patients are often observed until disease progresses sufficiently to warrant intraocular surgery (vitrectomy) or, more commonly, extensive laser treatment (panretinal photocoagulation (PRP)). PRP is utilized with the intent of preserving function of the central retina, but is inherently destructive to the peripheral retina and may result in a considerable loss of peripheral visual field. Dupixent
In 2016, a Phase 3 trial (PANORAMA) was initiated to assessMarch 2023, the efficacy and safety of intravitreal aflibercept in patients with moderately severe to severe NPDR without DME. Neovascular Glaucoma
NVG is a secondary glaucoma triggered by the formation of new blood vessels (neovascularization) on the iris and the anterior chamber angle. Neovascularization restricts aqueous outflow and consequently elevates intraocular pressure (IOP). NVG is a serious condition that may lead to permanent loss of vision, a persistently painful eye, and, especially in the advanced stages, is unlikely to respond to treatment. NVG is caused by eye diseases leading to retinal ischemia, mainly CRVO, PDR, and ocular ischemic syndrome (OIS). NVG meets the criteria for an orphan indication in Japan where the estimated number of NVG patients is 30,000 to 40,000. A Phase 3 study for the treatment of NVG (in Japan) was completed in 2016 (in collaboration with Bayer).
Combination Product with Nesvacumab (REGN910-3)
In 2016, two Phase 2 studies, RUBY (for the treatment of DME) and ONYX (for the treatment of wet AMD), were initiated. Both studies are investigating nesvacumab, an antibody to Ang2 co-formulated with aflibercept, as a single, intravitreal injection. Efficacy and safety data from both the RUBY and ONYX studies will be analyzed through week 36.
Late-Stage Antibody-based Clinical Programs
Dupixent (dupilumab; IL-4R Antibody) for allergic and inflammatory conditions
Overview
IL-4R is required for signaling by the cytokines IL-4 and IL-13. Both of these cytokines are critical mediators of immune response, which, in turn, drives the formation of Immunoglobulin E (IgE) antibodies and the development of allergic responses, as well as the atopic state that underlies atopic (allergic) dermatitis, asthma, nasal polyps, and eosinophilic esophagitis. Dupilumab is a fully human monoclonal antibody generated using our VelocImmune technology that is designed to bind to IL-4R alpha subunit and block signaling from both IL-4 and IL-13.
Atopic Dermatitis
Phase 3 Program. The LIBERTY AD Phase 3 clinical program consisted of five trials of patients with moderate-to-severe atopic dermatitis at sites worldwide. Patients from the LIBERTY AD CHRONOS, LIBERTY AD SOLO 1, and LIBERTY AD SOLO 2 studies were transitioned to either the LIBERTY CONTINUE or LIBERTY AD open label extension trials.
In 2016, the Phase 3 LIBERTY AD CAFÉ study of Dupixent was initiated, investigating two dose regimens of Dupixent (300 mg weekly and 300 mg every two weeks) with concomitant topical corticosteroids in adult patients with moderate-to-severe atopic dermatitis who are inadequately controlled with or are intolerant to the broad immunosuppressant drug cyclosporine A (CSA), or when this treatment is medically inadvisable. The primary endpoint of this study was the proportion of patients with a 75% or greater improvement from baseline in their Eczema Area and Severity Index (EASI-75) score at 16 weeks. In April 2017, weCompany and Sanofi announced that the resultsprimary and all key secondary endpoints were met in the BOREAS trial (the first of the LIBERTY AD CAFÉ study were positive and demonstrated an acceptable safety profile. These results were submitted to the EMA and in September 2017, we and Sanofi presented the results at the annual European Academy of Dermatology and Venereology (EADV) Congress.
In March 2017, at the Annual Meeting of the American Academy of Dermatology, we and Sanofi presented additional detailed results from thetwo Phase 3 LIBERTY AD CHRONOS study. This study met its primarytrials) in adults currently on maximal standard-of-care inhaled therapy (triple therapy) with uncontrolled COPD and secondary endpoints, withevidence of type 2 inflammation. In this trial, patients receiving Dupixent with topical corticosteroids (TCS) achieving significantly improved measuresexperienced a 30% reduction in moderate or severe acute COPD exacerbations (rapid and acute worsening of overall disease severity at 16 andrespiratory symptoms) over 52 weeks, compared to TCS alone in adults with uncontrolled moderate-to-severe atopic dermatitis.
Phase 3 Study in Adolescent Patients. In the first quarter of 2017, a Phase 3 study in adolescent patients (12-17 years of age) with moderate-to-severe atopic dermatitis was initiated.
In 2016, the FDA granted Breakthrough Therapy designation for dupilumab for the treatment of moderate to severe (12 to less than 18 years of age) and severe (6 months to less than 12 years of age) atopic dermatitis in patients who are not adequately controlled with, or who are intolerant to, topical medication.
Asthma
Phase 3 Study. LIBERTY ASTHMA QUEST is a Phase 3 trial that evaluated dupilumab in adult and adolescent patients with uncontrolled persistent asthma. It is a global, placebo-controlled Phase 3 study that enrolled more than 1,900 patients with uncontrolled persistent asthma. This study included four study groups with patients treated with 200 mg every other week with a loading dose of 400 mg, 300 mg every other week with a loading dose of 600 mg, and two separate placebo groups. Patients were randomized in a 2:1 fashion to active drug versus placebo. The two primary endpoints of the study were the annualized rate of severe exacerbation events at 52 weeks and the absolute change from baseline in a standard measure of lung function known as pre-bronchodilator forced expiratory volume over one second (FEV1) at 12 weeks (changes of 100 to 200 mL are considered clinically relevant). The pre-specified primary analysis included hierarchical evaluation of these endpoints in the overall population, in patients with 150 eosinophilic cells/microliter or greater, and in patients with 300 eosinophilic cells/microliter or greater. In the study, approximately 50% of patients had 300 eosinophilic cells/microliter or greater and approximately 70% of patients had 150 eosinophilic cells/microliter or greater. Higher eosinophil counts are generally thought to be associated with poorer asthma control and higher rates of exacerbations, as was observed in the placebo patients in this study.
In the third quarter of 2017, we and Sanofi announced that the Phase 3 LIBERTY ASTHMA QUEST study of dupilumab in a broad population of patients with uncontrolled, persistent asthma met its two primary endpoints. Dupilumab, when added to standard therapies, reduced severe asthma attacks (exacerbations) and improved lung function. At 52 weeks, in the 300 mg dose group, dupilumab reduced severe asthma attacks by 46% in the overall population, 60% in patients with 150 eosinophilic cells/microliter or greater, and 67% in patients with 300 eosinophilic cells/microliter or greater (p<0.001 for all groups). At 12 weeks, in the 300 mg dupilumab dose group, mean improvementwhile also demonstrating significant improvements in lung function, over placebo as assessed by FEV1 was 130 mL (9%) in the overall population, 150 mL (11%) in patients with 150 eosinophilic cells/microliter or greater, and 240 mL (18%) in patients with 300 eosinophilic cells/microliter or greater (p<0.001 for all groups).
In the LIBERTY ASTHMA QUEST study, the results for the 200 mg and 300 mg dupilumab dose groups were generally comparable on both exacerbations and FEV1. The extent of patient response correlated with allergic or atopic status as reflected by blood eosinophils and other markers. Less activity was observed in patients with less than 150 eosinophilic cells/microliter. The overall rates of adverse events, deaths, infections, conjunctivitis, herpes, and discontinuations were comparable between the dupilumab and placebo groups. Injection site reactions were more common in the dupilumab groups occurring in 17% of dupilumab patients compared to 8% of placebo patients. All patients continued on a medium or high dose inhaled corticosteroid (ICS) and up to two additional controller medicines throughout the study. Eosinophil subgroups were classified based on baseline levels. Detailed results from this study will be submitted for presentation at a future medical congress.
In the fourth quarter of 2017, we and Sanofi announced that LIBERTY ASTHMA VENTURE, a randomized Phase 3 study examining the ability of dupilumab to reduce oral corticosteroid use in adults and adolescents with severe steroid-dependent asthma, met its primary endpoint and key secondary endpoints. The VENTURE study enrolled 210 patients (103 in the dupilumab group and 107 in the placebo group) with severe asthma and regular use of maintenance oral corticosteroids (OCS) in the six months prior to enrollment in the study. This Phase 3 study enrolled severe steroid-dependent asthma patients regardless of eosinophil levels or other biomarkers at baseline, and the results showed improvements compared to placebo on lung function and exacerbations across patient subgroups - those with baseline eosinophil counts above 300 cells/microliter, above 150 cells/microliter, and below 150 cells/microliter.
For the primary endpoint, at 24 weeks in the overall population, dupilumab added to standard therapies significantly reduced the use of maintenance OCS by 70% on average (median reduction of 100%) compared to 42% with placebo (median reduction of 50%) (p<0.0001). In prespecified analyses of patients with baseline eosinophil counts greater than or equal to 300 cells/microliter, adding dupilumab significantly reduced OCS use by 80% on average (median reduction of 100%) compared to 43% for placebo (median reduction of 50%) (nominal p=0.0001). At 24 weeks, despite the reduced use of OCS, patients treated with dupilumab had 59% fewer attacks (exacerbations) in the overall population (p<0.0001) and 71% fewer attacks in patients with eosinophil counts greater than or equal to 300 cells/microliter. Also at 24 weeks, compared to placebo, dupilumab improved lung function, as assessed by FEV1 by 220 mL (15%) in the overall population (p=0.0007) and by 320 mL (25%) in patients with eosinophil counts greater than or equal to 300 cells/microliter (nominal p=0.0049).
The safety and tolerability profile of dupilumab in the LIBERTY ASTHMA VENTURE study was consistent with previous studies. There were more dupilumab-treated patients with injection site reactions (9% dupilumab vs. 4% placebo). There were more dupilumab-treated patients with an increase in eosinophil counts (14% dupilumab vs. 1% placebo), most of which were mild and the vast majority of which resolved. The overall rates of adverse events, including infections, conjunctivitis, and herpes, were comparable between the dupilumab and placebo groups. Patients with severe chronic asthma live with a profound decrease in their
lung function, approximately 52% of predicted normal for those in this study at baseline, which impacts their ability to breathe normally, and may lead to frequent exacerbations that require acute treatment and hospitalization. These problems occur even in patients who are treated with chronic OCS to manage their symptoms.
LIBERTY ASTHMA QUEST will serve as the second required pivotal efficacy study for the sBLA for asthma, since, based on discussions with the FDA, the Phase 2b study will also be considered a pivotal efficacy study. The results from the LIBERTY ASTHMA VENTURE study will also be included in the sBLA for asthma.
The TRAVERSE trial, a long-term safety extension study, is also included in the LIBERTY ASTHMA clinical development program.
Phase 3 Study in Pediatric Patients. In the second quarter of 2017, a Phase 3 study in pediatric patients (6-11 years of age) with uncontrolled persistent asthma was initiated.
Nasal Polyps
Phase 3 Study. A Phase 3 study, LIBERTY NP SINUS, in adult patients with bilateral nasal polyps on a background therapy with intranasal corticosteroids was initiated in 2016.
Eosinophilic Esophagitis
Phase 2 Study. EoE is a chronic allergic inflammatory disease that is considered a major cause of gastrointestinal illness. Eosinophils are a type of white blood cell that, due to allergens, can accumulate in the esophagus, causing inflammation and tissue injuries that create difficulty swallowing. People with eosinophilic esophagitis may also have allergies, asthma, atopic dermatitis, or chronic respiratory disease.
In the second quarter of 2017, we and Sanofi announced that a positive primary analysis from a Phase 2 proof-of-concept study of dupilumab in patients with active, moderate-to-severe EoE was completed. In the fourth quarter of 2017, we and Sanofi presented the results from this study at the World Congress of Gastroenterology. The study showed that patients who received dupilumab weekly reported a significant improvement in the ability to swallow versus placebo. The primary endpoint of the study was the change from baseline to week 10 in the Straumann Dysphagia Instrument (SDI) score, a patient-reported measure of swallowing difficulty on a 0-9 point scale, with 9 indicating more severe symptoms. A total of 47 patients were randomized into two treatment groups in this 12-week treatment study, and both groups had a mean baseline SDI score of 6.4. Patients received either dupilumab 300 mg weekly following a 600 mg loading dose or placebo. At week 10, patients who received dupilumab 300 mg weekly reported a significant improvement in the ability to swallow with a three point reduction in their SDI score (45% improvement) compared to 1.3 points (19% improvement) for those patients who received placebo (p=0.0304).
Secondary endpoints of the study included measures of the impact of dupilumab on endoscopic and histopathologic measures of disease severity, as well as symptoms. The results include:
The mean change in the Eosinophilic Esophagitis Endoscopic Reference Score (EoE-EREFS) was significantly reduced by 1.9 points from baseline (48% improvement) in patients who received dupilumab weekly compared to 0.3 points (7% improvement) for those who received placebo at 12 weeks (p=0.0006). EoE-EREFS is a visual measure of disease severity (inflammation and fibrosis in the esophagus) on a 0-8 point scale, with 8 indicating more severe disease. The mean baseline score for the dupilumab group was 3.9 and for the placebo group was 4.3.
The mean percent change in overall peak intraepithelial eosinophil count from baseline to 12 weeks was significantly reduced by 93% from baseline in patients who received dupilumab weekly compared to an increase of 14% in those who received placebo (p<0.0001).
The mean percent change in a composite measure of symptoms and quality of life, as measured by Eosinophilic Esophagitis Symptom Activity Index (EEsAI), was numerically improved (although not statistically significant) by 35% in patients who received dupilumab weekly compared to an 11% improvement for those who received placebo at 10 weeks (p=0.085).
There were no new significant safety concerns in this trial. Higher rates of injection site reactions were observed on dupilumab versus placebo.
In the third quarter of 2017, the FDA granted orphan drug designation for the treatment of EoE.
Praluent for LDL cholesterol reduction
Overview
Elevated LDL cholesterol ("bad cholesterol") level is a validated risk factor leading to cardiovascular disease. Statins are a class of drugs that lower LDL cholesterol (LDL-C) through inhibition of HMG-CoA, an enzyme regulating the early and rate-limiting step in cholesterol biosynthesis that ultimately results in an increase in LDL receptors to increase the uptake of plasma LDL lipoproteins. Similar to statins, PCSK9 impacts the number of available LDL receptors and therefore plays a key role in modulating LDL-C levels in the body. PCSK9 is a secreted protein that binds to and induces the destruction of the LDL receptor, thereby interfering with cellular uptake and increasing circulating levels of LDL cholesterol. In a landmark study published in COPD respiratory symptoms. TheNew England Journal of Medicine in March 2006, patients with lower than normal PCSK9 levels due to a genetic abnormality not only had significantly lower levels of LDL-C, but also a significant reduction in the risk of coronary heart disease (CHD). We used our VelocImmune technology to generate a fully human monoclonal antibody inhibitor of PCSK9, called Praluent, which is intended to lower LDL cholesterol.
Clinical Program
Phase 3 ODYSSEY Program. The potential of Praluent to demonstrate cardiovascular benefit is being prospectively assessed in the ongoing 18,000-patient ODYSSEY OUTCOMES trial, which is fully enrolled and is expected to be completed in 2017 (with data expected in early 2018). All patients who entered the ODYSSEY OUTCOMES trial had experienced a heart attack or unstable angina requiring hospitalization within the previous year before entering the trial, and experienced inadequately controlled LDL cholesterol despite receiving maximally-tolerated statins and potentially other lipid-lowering therapies. In 2016, an independent Data Monitoring Committee (DMC) of the ODYSSEY OUTCOMES study completed the first and second interim analyses. Based on the recommendation of the independent DMC, the ODYSSEY OUTCOMES trial continues as planned. Regeneron remains blinded to the actual results of the first and second interim analyses, and the DMC will continue to monitor the ongoing safety and efficacy of Praluent as planned.
In 2016, as a post-marketing commitment to the FDA, a Phase 4 randomized, placebo-controlled, long-term trial that prospectively evaluates the effect of Praluent on neurocognitive function was initiated.
In the second quarter of 2017, we and Sanofi presented positive results from two Phase 3b/4 studies (ODYSSEY-INSULIN and ODYSSEY-DYSLIPIDEMIA) which evaluated Praluent in patients with diabetes. Both studies found that a majority of patients reached their lipid goals with Praluent 75 mg administered every two weeks, with an overall safety profile comparable to the ODYSSEY Phase 3 program.
In the fourth quarter of 2017, a Phase 3 study in HoFH was initiated.
Kevzara (sarilumab; IL-6R Antibody) for inflammatory diseases
Overview
IL-6 is a key cytokine involved in the pathogenesis of RA, causing inflammation and joint destruction. Sarilumab is a fully human monoclonal antibody to IL-6R generated using our VelocImmune technology.
Non-infectious Uveitis
Phase 2 SARIL-NIU-SATURN Study. SARIL-NIU-SATURN was a small Phase 2, randomized double-masked, placebo-controlled study (n=58) conducted to assess the effect of sarilumab on non-infectious uveitis of the posterior ocular segment. Based on the results of this study, no further development is currently planned in this indication.
Polyarticular-course Juvenile Idiopathic Arthritis (pcJIA)
Phase 2 pcJIA Study.A Phase 2 study of sarilumab in pcJIA was initiated in 2016.
Cemiplimab (REGN2810; PD-1 Antibody) for cancer
Overview
The PD-1/PD-L1 pathway has emerged as a critical regulator of effective immune responses to a variety of cancers, and a number of agents blocking either PD-1 or PD-L1 have been approved. Cemiplimab is a high-affinity anti-PD-1 human antibody that was generated using the Velocimmune platform. Cemiplimab is being developed to provide a foundational component for a planned, diverse immuno-oncology portfolio. Initial efforts for approval are expected to be as monotherapy in selected indications, and subsequent development is expected to be focused on combinations with other anti-cancer agents.
Clinical Program
Cemiplimab is in Phase 1 clinical development in a variety of malignancies as monotherapy or in combination with other antibodies or treatments. A pivotal Phase 2 study for the treatment of metastatic or locally advanced and unresectable CSCC was initiated in 2016. A Phase 3 study in first-line treatment for non-small cell lung cancer and a potentially pivotal Phase 2 study in BCC were initiated in the second quarter of 2017. A Phase 3 study in cervical cancer was initiated in the third quarter of 2017.
In June 2017, we and Sanofi announced positive preliminary results in patients with advanced CSCC. The data, pooled from two expansion cohorts of the cemiplimab Phase 1 trial, were presented at the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting. Treatment with cemiplimab led to an investigator-assessed overall response rate (ORR) of 46.2% and a disease control rate (DCR) of 69.2%. The median progression-free survival and overall survival were not reached at the data cutoff date with a median follow up of 6.9 months (range: 1.1 to 13.8 months; ongoing). One patient experienced progressive disease during treatment with cemiplimab after the initial response, and two patients were not evaluable due to death, which was considered unrelated to cemiplimab. The most common treatment-related adverse event of any grade was fatigue (23.1%). All grade 3 or higher adverse events occurred once and included arthralgia (3.8%), maculopapular rash (3.8%), asthenia (3.8%), aspartate aminotransferase (AST) elevation (3.8%), and alanine aminotransferase (ALT) elevation (3.8%). No apparent association between the objective response and level of PD-L1 (programmed death ligand 1) expression was found. These results are from 10 patients with distantly metastatic CSCC who were enrolled in one expansion cohort and 16 patients with inoperable (unresectable) locally or regionally advanced CSCC who were enrolled in a second expansion cohort.
In the third quarter of 2017, the FDA granted Breakthrough Therapy designation for the treatment of adults with metastatic CSCC and adults with locally advanced and unresectable CSCC.
In the second quarter of 2017, we and Inovio Pharmaceuticals, Inc. entered into a clinical and supply agreement for a Phase 1b/2a immuno-oncology trial. The study will be conducted by Inovio in patients with newly-diagnosed glioblastoma multiforme (GBM) and will evaluate cemiplimab in combination with Inovio's INO-5401 T cell activating immunotherapy encoding multiple antigens and INO-9012, an immune activator encoding IL-12. Also in the second quarter of 2017, we and SillaJen, Inc. entered into a clinical and supply agreement for a Phase 1b dose-escalation study in renal cell carcinoma (RCC), or kidney cancer. The study will evaluate cemiplimab in combination with SillaJen's oncolytic vaccinia virus, Pexa-Vec, in patients with previously treated metastatic or unresectable renal cell carcinoma.
Fasinumab (REGN475; NGF Antibody) for pain due to osteoarthritis and chronic low back pain
Overview
Pain is a frequent reason for physician visits, a common reason for taking prescription medications (including opioids), and a major cause of work disability and impaired quality of life. Targeting NGF is a potential non-opioid advance in pain management. NGF expression is elevated in many acute and chronic painful conditions and NGF blockade has demonstrated efficacy in clinical trials. Fasinumab is a fully human monoclonal antibody to NGF, generated using our VelocImmune technology.
The fasinumab clinical development program is expected to consist of approximately 10,000 patients treated with fasinumab.
Osteoarthritis
Phase 2/3 Study. In the second quarter of 2016, we announced positive, 16-week top-line data from a Phase 2/3 study in patients with moderate-to-severe osteoarthritis pain of the hip or knee who have a history of inadequate pain relief or intolerance to current analgesic therapies. In the fourth quarter of 2016, we and Teva announced that at the 36-week analysis of the Phase 2/3 clinical study in patients with moderate-to-severe osteoarthritis pain of the hip or knee, the incidence of adjudicated arthropathies was found to be potentially dose-dependent, with a higher rate of patients experiencing arthropathies in the higher dose groups (12% (9mg), 7% (6mg), 5% (3mg), 2% (1mg), and 1% (placebo)). In the ongoing fasinumab osteoarthritis pivotal Phase 3 program (further described below), we and our collaborators are planning to advance only the lower doses from the Phase 2/3 study.
Phase 3 Study. A Phase 3 long-term safety study in patients with pain due to osteoarthritis of the knee or hip was initiated in 2016. A Phase 3 efficacy study in patients with pain due to osteoarthritis of the knee or hip was initiated in the second quarter of 2017. A Phase 3 efficacy study of fasinumab compared to placebo or naproxen in patients with pain due to osteoarthritis of the knee or hip was initiated in the third quarter of 2017.
Chronic Low Back Pain
A Phase 2b study in chronic low back pain was initiated in 2016. In October 2016, the FDA placed the Phase 2b study in chronic low back pain on clinical hold and requested an amendment of the study protocol; this was based on the FDA's recommendation that patients with advanced osteoarthritis at baseline not receive higher doses of fasinumab. Following this development, we completed an unplanned interim review of results and stopped dosing in the study. The unplanned analysis showed clear evidence of efficacy with improvement in pain scores in all fasinumab groups compared to placebo at the 8- and 12-week time points (nominal p<0.01). Preliminary safety results arewere generally consistent with what has been previously reported with the class. The Phase 2b chronic low back pain study enrolled approximately 70%known safety profile of the targeted 800 patientsDupixent in four dose groups: placebo, 6mg subcutaneously monthly, 9mg subcutaneously monthly,its approved indications.
Collaboration, License, and 9mg intravenously every two months.Other Agreements Sanofi Antibody We are collaborating with Sanofi on the global development and Teva plan to initiate a pivotal Phase 3 program in chronic low back pain. Other Programs
Our preclinical research programs include the areascommercialization of oncology/immuno-oncology, angiogenesis, ophthalmology, metabolicDupixent, Kevzara, and related diseases, muscle diseases and disorders, inflammation and immune diseases, bone and cartilage, pain and neurobiology, cardiovascular diseases, and infectious diseases.
In 2015, we and BARDA of the HHS entered into an agreement to develop, test, and manufacture a monoclonal antibody therapy (REGN3470-3471-3479) for the treatment of Ebola virus infection.itepekimab (the "Antibody Collaboration"). Under the terms of the agreement, HHS provides funding to support our preclinical development, antibody manufacturing, and for a Phase 1 study in healthy volunteers, and has the option to provide additional funding for further manufacturing and development studies. In September 2017, we and BARDA entered into an additional agreement whereby HHS provides additional funding for the continued development of REGN3470-3471-3479, a potential BLA filing, and initial procurement of the therapy for national security preparedness. In addition, in 2016, we and BARDA entered into an agreement whereby HHS will provide certain funding to manufacture and study two antibody therapies for the potential treatment of Middle East Respiratory Syndrome (MERS).
In September 2017, we and BARDA also entered into an agreement to discover, research, develop, and manufacture a portfolio of antibodies targeting up to 10 pathogens that pose significant risk to public health, starting with Influenza virus. The emerging pathogens treatment portfolio will be pursued using an Other Transaction Agreement (OTA), which provides a funding and collaboration vehicle for HHS to promote innovation in technology for advanced research and development. Under the OTA, which has a term of 10 years, HHS will fund 80% of our costs for research, development, and manufacturing activities for antibodies that are selected to move forward.
In the first quarter of 2017, the Regeneron Genetics Center (RGC) entered into an agreement with U.K. Biobank and GlaxoSmithKline (GSK) to generate genetic sequence data from the volunteer participants in the U.K. Biobank resource. RGC ultimately plans to generate genetic sequence data from the 500,000 volunteer participants in the U.K. Biobank resource, and RGC and GSK have committed an initial investment to enable the sequencing of 50,000 samples. The sequencing of U.K. Biobank's samples will be performed at the RGC facility. These sequence data will be incorporated back into U.K. Biobank's resource following a standard exclusivity period for GSK and Regeneron and made openly available to the broader scientific community.
License Agreements
In September 2017, we entered into a license agreement with a third party, which grants the third party the right to develop and commercialize new indications for ARCALYST in certain jurisdictions, including the United States. We currently maintain exclusive rights to ARCALYST in the United States for existing indications, and are entitled to all profits from such sales. Commencing with the receipt of marketing approval by the third party for the first new indication in the United States, we will grant commercial rights to ARCALYST for our existing indications to the third party.
Collaboration Agreements
Collaborations with Sanofi
Antibodies. Since November 2007, we and Sanofi have been parties to a global, strategic collaboration to discover, develop, and commercialize fully human monoclonal antibodies. The collaboration is governed by a Discovery and Preclinical Development Agreement (Antibody Discovery Agreement) and aAntibody License and Collaboration Agreement (each as amended)(the "LCA"), collectively referred to as the Antibody Collaboration. Pursuant to the Antibody Discovery Agreement, as amended, Sanofi is generally responsible for funding up80% to $130.0 million100% of our antibody discovery activities in 2017agreed-upon development costs. We are obligated to identify and validate potential drug discovery targets and develop fully human monoclonal antibodies against these targets. We lead the design and conductreimburse Sanofi for 30% to 50% of research activities under the Antibody Discovery Agreement, including target identification and validation, antibodyworldwide development research and preclinical activities through filing of an Investigational New Drug application (IND) or its equivalent, toxicology studies, and manufacture
of preclinical and clinical supplies. Our Antibody Discovery Agreement with Sanofi will end on December 31, 2017 without any extension. Praluent (anti-PCSK9), Dupixent (anti-IL-4R), Kevzara (anti-IL-6R), cemiplimab (anti-PD-1), REGN3500 (anti-IL-33), and REGN3767 (anti-LAG-3)expenses that were discovered and initially developed under the Antibody Discovery Agreement. Praluent, Dupixent, Kevzara, and REGN3500 will continue to be developed, and commercialized as applicable, with Sanofi under the Antibody License and Collaboration Agreement. Cemiplimab and REGN3767 will continue to be developed with Sanofi under the immuno-oncology collaboration. Upon expiration of the Antibody Discovery Agreement, we have the right to develop or continue to develop other product candidates discovered under this agreement independently or with other collaborators.
For each drug candidate identified through discovery research under the Antibody Discovery Agreement, Sanofi has the option to license rights to the candidate under the License and Collaboration Agreement. If it elects to do so, Sanofi will co-develop the drug candidate with us through product approval. Development costs for the drug candidate are shared between the companies, with Sanofi generally funding these costs as they are incurred by us, except that following receipt of the first positive Phase 3 trial results for a co-developed drug candidate, subsequent Phase 3 trial-related costs for that drug candidate are shared 80%funded by Sanofi and 20% by us. We are generally responsible for reimbursing Sanofi for half of the total development costs for all collaboration antibody products frombased on our share of collaboration profits from commercialization of collaboration productsproducts; as of December 31, 2022, the total amount of our contingent reimbursement obligation to Sanofi in connection with such development expenses was approximately $2.9 billion. Under the terms of the LCA, we were required to apply 10% of our 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 extent they are sufficientLCA became effective, pursuant to which the percentage of Regeneron’s share of profits used to reimburse Sanofi for this purpose. We are obligatedsuch development costs increased from 10% to use commercially reasonable efforts to supply clinical requirements of each drug candidate under the collaboration until commercial supplies of that drug candidate are being manufactured.20%.
Under our collaboration agreement, Sanofi records product sales for commercialized products, and Regeneron has the right to co-promoteco-commercialize such products on a country-by-country basis. We have exercised our option to co-promoteco-commercialize Dupixent Praluent,in the United States and Kevzara in certain countries outside the United States. We have not exercised any of our optionssupply certain commercial bulk product to co-promote these antibodies outside the United States; however, we retain the right to do so at a future date subject to the terms of the collaboration agreement.Sanofi. We and Sanofi will equally share profits and losses from sales within the United States. We and Sanofi share profits outside the United States on a sliding scale based on sales starting at 65% (Sanofi)/35% (us) and ending at 55% (Sanofi)/45% (us), and share losses outside the United States at 55% (Sanofi)/45% (us). In addition to profit sharing,each of 2020 and 2021, we earned a $50.0 million sales-based milestone from Sanofi, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $1.0 billion and $1.5 billion, respectively, on a rolling twelve-month basis. In 2022, we earned two additional $50.0 million sales-based milestones, upon aggregate annual sales of antibodies outside the United States (including Praluent) exceeding $2.0 billion and $2.5 billion, respectively, on a rolling twelve-month basis. We are entitled to receive up to $250.0 million inthe final sales milestone payments, with milestone payments commencing after aggregate annualpayment of $50.0 million when such sales outside the United States exceed $1.0$3.0 billion on a rolling 12-monthtwelve-month basis. Immuno-Oncology. In July 2015, we andImmuno-Oncology
We previously collaborated with Sanofi entered into a global strategic collaboration to discover, develop, and commercializefor antibody-based cancer treatments in the field of immuno-oncology (the IO Collaboration)"IO Collaboration"). The IO Collaboration is governed by an Immuno-oncology Discovery and Development Agreement (IO Discovery Agreement), and anUnder the terms of the Immuno-oncology License and Collaboration Agreement, (IO Licensethe parties were co-developing and Collaboration Agreement). In connection with the IO Discovery Agreement, Sanofi made a $265.0 million non-refundable up-front payment to us. Pursuant to the IO Discovery Agreement, we will spend up to $1,090.0 million (IO Discovery Budget) to identify and validate potential immuno-oncology targets and develop therapeutic antibodies against such targets through clinical proof-of-concept. Sanofi will reimburse us for up to $825.0 million (IO Discovery Funding) of these costs, subject to certain annual limits (up to $200.0 million for 2017).co-commercializing Libtayo. The term of the IO Discovery Agreement will continue through the later of five years from the effective date of the IO Collaboration or the date the IO Discovery Budget is exhausted, subject to Sanofi's option to extend it for up to an additional three years for the continued development (and funding) of selected ongoing programs. Pursuant to the IO Discovery Agreement, we will be primarily responsible for the design and conduct of all research activities, including target identification and validation, antibody development, preclinical activities, toxicology studies, manufacture of preclinical and clinical supplies, filing of IND Applications, and clinical development through proof-of-concept. We will reimburse Sanofi for half of the development costs they funded that are attributable to clinical development of antibody product candidates under the IO Discovery Agreement from our share of future profits, if any, from commercialized IO Collaboration products to the extent they are sufficient for this purpose. With regard to product candidates for which proof-of-concept is established, Sanofi will have the option to license rights to the product candidate pursuant to the IO License and Collaboration Agreement (as further described below). In connection with the IO License and Collaboration Agreement, Sanofi made a $375.0 million non-refundable up-front payment to us. If Sanofi exercises its option to license rights to a product candidate thereunder, it will co-develop the drug candidate with us through product approval. Principal control of development of each product candidate that enters development under the IO License and Collaboration Agreement will alternate between us and Sanofi on a candidate-by-candidate basis. Sanofi will fund drug candidate development costs up front for the candidates for which it is the principal controlling party and we will reimburse half of the total development costs for all such candidates from our share of future IO Collaboration profits to the extent they are sufficient for this purpose. In addition, we and Sanofi will shareparties shared equally, on an ongoing basis, the development costsand commercialization expenses for the drug candidates for which we are the principal controlling party. The party havingLibtayo. We had principal control over the development of a product candidate will also lead theLibtayo and led commercialization activities for such product candidate in the United States. We are obligated to use commercially reasonable efforts to supply clinical requirements of each drug candidate under the IO License and Collaboration Agreement until commercial supplies of that IO drug candidate are being manufactured. For all products commercialized under the IO License and Collaboration Agreement,States, while Sanofi will leadled commercialization activities outside of the United States. Each
party will have the right to co-promote licensed products in countries where it is not the lead commercialization party. The parties will shareshared equally in profits and losses in connection with the commercialization of collaboration products.Libtayo.
UnderEffective July 1, 2022, the terms ofCompany obtained the IOexclusive 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 earned a $65.0 million sales-based milestone upon the achievement of a specified amount of worldwide net product sales of Libtayo in 2022 and is eligible to receive an additional $35.0 million sales-based milestone upon the achievement of a specified amount of worldwide net product sales of Libtayo in 2023. We also pay Sanofi an 11% royalty on net product sales of Libtayo through March 31, 2034. The parties have also entered into a transition services agreement, a transitional distribution agreement, and a manufacturing services agreement, pursuant to which, during certain transitional periods, Sanofi will also co-develop our antibody product candidate targeting PD-1 (cemiplimab). We have principal control overperform for Regeneron certain transition, distribution, and manufacturing services, respectively.
Under the Amended and Restated Immuno-oncology Discovery and Development Agreement, we were obligated to reimburse Sanofi for half of the development costs it funded that were attributable to clinical development of cemiplimab, and the partiesproduct candidates from our share equally, on an ongoing basis, development expenses for cemiplimab up to a total of $650.0 million. We will lead commercialization activities in the United States, while Sanofi will lead commercialization activities outside of the United States and the parties will equally share profits from worldwide sales. Sanofi has exercised its option to co-promote cemiplimab incommercialized IO Collaboration products. Under the United States. We will be entitled to a milestone paymentA&R IO LCA, the amount of $375.0 million in the event that sales of all licensed products targeting PD-1 (including cemiplimab), together with sales of any other products licenseddevelopment costs incurred under the IO LicenseCollaboration for which we are obligated to reimburse Sanofi was $35.0 million as of the effective date of the A&R IO LCA, and Collaboration Agreement and sold for use in combination withwe pay Sanofi a licensed0.5% royalty on net product targeting PD-1, equal or exceed $2.0 billion in any consecutive twelve-month period.sales of Libtayo until all such development costs have been reimbursed by us. Collaborations with Bayer
EYLEA outside the United States. Since October 2006, weWe and Bayer have beenare parties to a license and collaboration agreement for the global development and commercialization of EYLEA and aflibercept 8 mg outside the United States of EYLEA. UnderStates. Agreed-upon development expenses incurred by the agreement, weCompany and Bayer collaborate on, and share the costs of, the development of EYLEA.are generally shared equally. Bayer markets EYLEA outside the United States, where, for countries other than Japan,and the companies share equally in profits and losses from sales of EYLEA. In Japan, wesuch sales.
We are entitled to receive a tiered percentage of between 33.5% and 40.0% of EYLEA net sales. Commencing with the first commercial sale of EYLEA in a major market country outside the United States, we became obligated to reimburse Bayer for 50% of the development costs that it has incurred under the agreement from our share of the collaboration profits (including payments to us based on sales in Japan).profits. The reimbursement payment in any quarter will equal 5% of the then outstanding repayment obligation, but never more than our share of the collaboration profits in the quarter unless we elect to reimburse Bayer at a faster rate. As a result, we expect that a portion of our share of EYLEA profits outside the United States will be used to reimburse Bayer for this repayment obligation.
Within the United States, we retain exclusive commercialization rights to EYLEA and are entitled to all profits from any such sales. Ang2 antibody outside the United States. Alnylam
In March 2016,2018, we and Alnylam Pharmaceuticals, Inc. entered into ana collaboration to discover RNA interference ("RNAi") therapeutics for NASH and potentially other related diseases, as well as to research, co-develop and commercialize any therapeutic product candidates that emerge from these discovery efforts (including ALN-HSD, which is currently in clinical development). Under the terms of the collaboration agreement, with Bayer governing the jointparties share development costs equally. During the fourth quarter of 2022, Alnylam elected to opt-out of further development activities related to ALN-HSD; as a result, we retain the exclusive right to develop and commercialization outsidecommercialize such product and Alnylam will receive a royalty on sales, if any. In 2019, we and Alnylam entered into a global, strategic collaboration to discover, develop, and commercialize RNAi therapeutics for a broad range of diseases by addressing therapeutic disease targets expressed in the United Stateseye and central nervous system ("CNS"), in addition to a select number of nesvacumab, an antibody product candidate to Ang2, including REGN910-3 (nesvacumabtargets expressed in combination with aflibercept), for the treatment of ocular diseases or disorders. Nesvacumab/aflibercept, a combination product candidate comprised of an antibody to Ang2 co-formulated with aflibercept, is being developed under the agreement.liver. In connection with the agreement, Bayercollaboration, the Company made a $50.0 million non-refundablean up-front payment of $400.0 million to usAlnylam, and also purchased shares of Alnylam common stock for $400.0 million. For each program, we provide Alnylam with a specified amount of funding at program initiation and at lead candidate designation, and Alnylam is obligated to pay 25% of global development costs and 50% of development costs exclusively for the territory outside the United States. We are also entitledeligible to receive up to antwo $100.0 million clinical proof-of-principle milestones for each of the eye and CNS programs (an aggregate of $80.0$200.0 million in development milestone payments from Bayer. Bayermilestones). Under the terms of the collaboration, the parties plan to 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 a license agreement ("License Agreement") structure. The initial target nomination and discovery period is five years (which may under certain situations automatically be extended for up to seven years in the aggregate) (the "Research Term"). In addition, we have an option to extend the Research Term for an additional five-year period for a research extension fee of $300.0 million. At the stage of designation of a lead candidate for CNS programs and liver programs, the parties have alternating rights to be a lead party for collaboration products. At the stage of designation of a lead candidate for eye programs, we have the sole right to take the product forward as a licensee. The lead party is required to take the program forward under the License Agreement structure unless the other party exercises its rights to opt-in to a Co-Co Collaboration Agreement as a participating party, in which case the lead party is required to take the program forward under the Co-Co Collaboration Agreement structure. Alnylam does not have rights to opt-in to a Co-Co Collaboration Agreement for eye programs. Under a License Agreement, the lead party is designated as the licensee and has the right to develop and commercialize the collaboration product under such program. The licensee will share profits and losses from sales outside the United States equally with us, and isbe responsible for certain royalties payable to Sanofi on sales of the product outside of the United States. Within the United States, we have exclusive commercialization rightsits own costs and will retain all of the profits from sales. Collaboration with Mitsubishi Tanabe Pharma
Fasinumab. In September 2015, we entered into a collaboration agreement with Mitsubishi Tanabe Pharma Corporation (MTPC) providing MTPC with development and commercial rights to fasinumabexpenses incurred in Japan, South Korea, Taiwan, Indonesia, Thailand, the Philippines, Malaysia, Singapore, Vietnam, Myanmar, and Sri Lanka (the MTPC Territories). In connection with the agreement, MTPC made a $10.0 million non-refundable up-front payment in 2015,development and in 2016, MTPC made additionalcommercialization of the collaboration products under the License Agreement. The licensee will pay to the licensor certain development and/or commercialization milestone payments, totaling $60.0 millionas well as certain tiered royalty payments to us. In the second quarter of 2017, we earned a $30.0 million development milestone from MTPC, and we are entitled to receive up to anlicensor based on the aggregate of $125.0 million in additional development milestone and other contingent payments.
Under the agreement, we are obligated to manufacture and supply MTPC with clinical and commercial supplies of fasinumab. If fasinumab is commercialized in the MTPC Territories, we will supply the product to MTPC at a tiered purchase price, which ranges from 30% to 50% ofannual net sales of the product (subject to adjustment in certain circumstances),collaboration product.
For CNS programs and are eligible for additional payments up to an aggregate of $100.0 million uponliver programs, under a Co-Co Collaboration Agreement, the achievement of specified annual net sales amounts starting at $200.0 million.
Collaboration with Teva
Fasinumab. In September 2016, we entered into a collaboration agreement with Teva to develop and commercialize fasinumab globally, excluding certain Asian countries that are subject to our collaboration agreement with MTPC (as described above). In connection withparty designated as the agreement, Teva made a $250.0 million non-refundable up-front payment in 2016. Welead party will lead global development activities,and commercialization of the program and the parties will split profits and share costs equally, subject to certain co-funding opt-outs at specified clinical trial phases or under other conditions. If a party exercises its co-funding opt-out right,
the lead party will be required to make certain tiered royalty payments to the other party based on an ongoing basis, development costs under a global development plan. In the second quarter of 2017, we earned a $25.0 million development milestone from Teva, and we are entitled to receive up to an aggregate of $435.0 million in additional development milestones and up to an aggregate of $1,890.0 million in contingent payments upon achievement of specified annual net sales amounts. Weof the collaboration product and the timing of the exercise of the co-funding opt-out right. Under the terms of the collaboration, when we are the licensee under a License Agreement or the lead party under a Co-Co Collaboration Agreement, Alnylam will be responsible for the manufacture and supply of fasinumab globally.the product to us for Phase 1 and Phase 2 clinical trials. WithinIn addition, during 2019, the United States,parties entered into a Co-Co Collaboration Agreement for cemdisiran, a small interfering RNA ("siRNA") therapeutic targeting the C5 component of the human complement pathway being developed by Alnylam, with Alnylam as the lead party, and a License Agreement for a combination consisting of cemdisiran and pozelimab, with us as the licensee. Under the C5 siRNA Co-Co Collaboration Agreement, the parties shared costs equally, and under the License Agreement, we as the licensee are responsible for our own costs and expenses. The C5 siRNA License Agreement contains a flat low double-digit royalty payable to Alnylam on potential future net sales of the combination only subject to customary reductions, as well as up to $325.0 million in sales milestones.
During the fourth quarter of 2022, we elected to opt-out of further development activities pursuant to the Co-Co Collaboration Agreement for cemdisiran as a monotherapy; as a result, Alnylam retains the right to develop and commercialize such product and we will receive a royalty on sales (if any). Intellia In 2016, we entered into a license and collaboration agreement with Intellia Therapeutics, Inc. to advance CRISPR/Cas9 gene-editing technology for in vivo therapeutic development. NTLA-2001, which is in clinical development, is subject to a co-development and co-commercialization arrangement pursuant to which Intellia will lead development and commercialization activities and the parties will share equallyan agreed-upon percentage of development expenses and profits (if commercialized). In 2020, we expanded our existing collaboration with Intellia to provide us with rights to develop products for additional in any profits or losses invivo CRISPR/Cas9-based therapeutic targets and for the companies to jointly develop potential products for the treatment of hemophilia A and B, with Regeneron leading development and commercialization activities. In addition, we also received non-exclusive rights to independently develop and commercialize ex vivo gene edited products. In connection with commercialization of fasinumab. In the territory outside of the United States, Teva will lead commercialization activities and2020 agreement, we will supply productmade a $70.0 million up-front payment to Teva at a tiered purchase price, which is calculated as a percentage of net sales of the product (subject to adjustment in certain circumstances). General Developing and commercializing new medicines entails significant risk and expense. Before significant revenues from the commercialization of our antibody candidates or new indications for our marketed products can be realized, we (or our collaborators) must overcome a number of hurdles which include successfully completing research and development and obtaining regulatory approval from the FDA and regulatory authorities in other countries. In addition, the biotechnology and pharmaceutical industries are rapidly evolving and highly competitive, and new developments may render our products and technologies uncompetitive or obsolete.
Our ability to continue to generate profits and to generate positive cash flow from operations over the next several years depends significantly on ourthe continued success in commercializing EYLEA.EYLEA and Dupixent, as well as on whether we are able to obtain regulatory approval for aflibercept 8 mg and are successful in commercializing it. We expect to continue to incur substantial expenses related to our research and development activities, a significant portion of which we expect to be reimbursed by our collaborators. Also,In addition, our research and development activities outside our collaborations, theand related costs of which are not reimbursed are expected to expand and require additional resources. We also expect to incur substantial costs related to the commercialization of Dupixent, Praluent, and Kevzara, as well as preparation for potential commercialization of other indications of dupilumab.our marketed products. Our financial results may fluctuate from quarter to quarter and will depend on, among other factors, the net sales of our marketed products,products; the scope and progress of our research and development efforts,efforts; the timing of certain expenses,expenses; the continuation of our collaborations, in particular with Sanofi and Bayer, including our share of collaboration profits or losses from sales of commercialized products and the amount of reimbursement of our research and development expenses that we receive from collaborators,collaborators; and the amount of income tax expense we incur, which is partly dependent on the profits or losses we earn in each of the countries in which we operate. We cannot predict whether or when new products or new indications for marketed products will receive regulatory approval or, if any such approval is received, whether we will be able to successfully commercialize such product(s) and whether or when they may become profitable.
The planning, execution, and results of our clinical programs are significant factors that can affect our operating and financial results. In our clinical programs, key events in 2017 to date were, and plans for the next twelve months are, as follows:
| | | | | | Trap-based Clinical Program: | | | | | | | 2017 Events to Date | | 2017-2018 Plans (next 12 months) | EYLEA | Ÿ | Bayer received regulatory approval for EYLEA for various indications and continued to pursue regulatory applications for marketing approval in additional countries | Ÿ | Bayer to submit for additional regulatory approvals outside the United States for various indications | | | Ÿ | Regulatory agency decisions on applications outside the United States for various indications | | Ÿ | Completed patient enrollment in Phase 3 study for the treatment of NPDR in patients without DME | Ÿ | File sBLA with FDA for every 12-week dosing interval in wet AMD | | | | Ÿ | Report data from Phase 3 study for the treatment of NPDR in patients without DME | | | | Ÿ | Submit sBLA for NPDR in patients without DME | | | | Ÿ | Report results from Phase 2 co-formulation studies of nesvacumab/aflibercept |
| | | | | | Antibody-based Clinical Programs: | | | | | | 2017 Events to Date | | 2017-2018 Plans (next 12 months) | Dupixent (dupilumab; IL-4R Antibody) | Ÿ | Presented detailed results from one-year Phase 3 CHRONOS study at the Annual Meeting of the American Academy of Dermatology | Ÿ | Submit for additional regulatory approvals in atopic dermatitis outside the United States | | | Ÿ | Regulatory agency decisions on atopic dermatitis applications outside the United States | | Ÿ | FDA approved Dupixent for the treatment of adults with moderate-to-severe atopic dermatitis | Ÿ | Initiate Phase 3 studies in younger pediatric patients in atopic dermatitis | | Ÿ | Initiated Phase 3 study in adolescent patients (12-17 years of age) with atopic dermatitis | Ÿ | Submit sBLA for asthma in adult/adolescent patients | | Ÿ | Regulatory applications submitted for atopic dermatitis in Japan and various other jurisdictions outside the United States | Ÿ | Submit for EU regulatory approval in asthma in adult/adolescent patients | | | Ÿ | Initiate Phase 3 study in EoE | | Ÿ | Reported positive results from the LIBERTY AD CAFÉ study in atopic dermatitis | Ÿ | Initiate Phase 2 study in peanut allergy | | Ÿ | European Commission granted marketing approval for Dupixent for the treatment of adults with moderate-to-severe atopic dermatitis | | | | Ÿ | Initiated Phase 3 study in pediatric patients (6-11 years of age) with asthma | | | | Ÿ | Reported positive top-line results from Phase 3 LIBERTY ASTHMA QUEST trial | | | | Ÿ | Reported positive top-line results from Phase 3 LIBERTY ASTHMA VENTURE study | | | | Ÿ | Reported positive results from Phase 2 study in EoE | | | | Ÿ | FDA granted orphan drug designation for the treatment of EoE | | | | Ÿ | Completed patient enrollment in Phase 3 study in nasal polyps | | | Praluent (PCSK9 Antibody) | Ÿ | Permanent injunction barring commercialization of Praluent in the United States suspended on February 8, 2017 and vacated on October 5, 2017 | Ÿ | Complete and report results from ODYSSEY OUTCOMES study | | | Ÿ | Submit for additional regulatory approvals outside the United States | | Ÿ | FDA approved sBLA for monthly dosing regimen | Ÿ | Regulatory agency decisions on applications outside the United States | | Ÿ | FDA granted orphan drug designation for treatment of HoFH | Ÿ | File sBLA with FDA for use with apheresis | | Ÿ | Reported positive results from two Phase 3b/4 trials in patients with diabetes | Ÿ | Initiate Phase 3 pediatric studies in HoFH and HeFH | | Ÿ | ODYSSEY study data presented at the European Society of Cardiology (ESC) Congress | | | | Ÿ | Initiated Phase 3 study in HoFH | | | | | | | |
| | | | | | Antibody-based Clinical Programs (continued): | | | | | 2017 Events to Date | | 2017-2018 Plans (next 12 months) | Kevzara (sarilumab; IL-6R Antibody) | Ÿ | Regulatory applications submitted in various jurisdictions outside the United States | Ÿ | Submit for additional regulatory approvals outside of the United States | | Ÿ | Health Canada approved Kevzara for the treatment of adult patients with RA | Ÿ | Regulatory agency decisions on applications outside the United States | | Ÿ | Resubmitted BLA and FDA accepted for review | Ÿ | Continue patient enrollment in Phase 2 study in pcJIA | | Ÿ | FDA approved Kevzara for the treatment of adult patients with RA | | | | Ÿ | European Commission granted marketing authorization for Kevzara for the treatment of adult patients with RA | | | Suptavumab (RSV-F Antibody) | Ÿ | Completed patient enrollment in Phase 3 study | | | | Ÿ | Reported results from Phase 3 study, and discontinued further clinical development | | | Cemiplimab (REGN2810; PD-1 Antibody) | Ÿ | Continued patient enrollment in Phase 1 and Phase 2 studies | Ÿ | Report interim data from pivotal Phase 2 CSCC study | | Ÿ | Reported positive preliminary results from Phase 1 trial in patients with advanced CSCC | Ÿ | Submit BLA for CSCC | | Ÿ | FDA granted Breakthrough Therapy designation for the treatment of adults with metastatic CSCC and adults with locally advanced and unresectable CSCC | Ÿ | Submit for regulatory approval in CSCC in the EU | | | Ÿ | Initiate additional studies in non-small cell lung cancer | | Ÿ | Initiated Phase 3 study in first-line treatment for non-small cell lung cancer | Ÿ | Continue patient enrollment in various studies | | Ÿ | Initiated potentially pivotal Phase 2 study in BCC | | | | Ÿ | Initiated Phase 3 study in cervical cancer | | | Fasinumab (NGF Antibody) | Ÿ | Continued patient enrollment in Phase 3 long-term safety study in osteoarthritis | Ÿ | Continue patient enrollment in Phase 3 studies in osteoarthritis | | Ÿ | Initiated Phase 3 efficacy study in osteoarthritis | Ÿ | Initiate additional Phase 3 studies in osteoarthritis | | | | Ÿ | Initiate Phase 3 program in chronic low back pain | Evinacumab (Angptl-3 Antibody) | Ÿ | FDA granted Breakthrough Therapy designation for the treatment of hypercholesterolemia in patients with HoFH | Ÿ | Initiate Phase 3 study in HoFH | | | Ÿ | Initiate Phase 2 study in severe hypertriglyceridemia | | Ÿ | Reported positive Phase 2 results at medical conferences | Ÿ | Initiate Phase 2 study in refractory hypercholesterolemia (both HeFH and non-FH) | | Ÿ | Data and analysis from genetics, preclinical, and clinical study published in the New England Journal of Medicine
| | | Nesvacumab/aflibercept (Ang2 Antibody co-formulated with aflibercept) | Ÿ | Completed patient enrollment in Phase 2 ONYX study in wet AMD | Ÿ | Report results from ONYX and RUBY Phase 2 studies | Trevogrumab (GDF8 Antibody) | Ÿ | Initiated Phase 1 combination therapy study with REGN2477 | Ÿ | Complete Phase 1 combination study | | Ÿ | Completed patient enrollment in Phase 1 combination therapy study | | | | | | | | | | | | |
| | | | | | Antibody-based Clinical Programs (continued): | | | | | 2017 Events to Date | | 2017-2018 Plans (next 12 months) | REGN1908-1909 (Feld1 Antibody) | | | Ÿ | Continue early stage development | REGN1979 (CD20 and CD3 Antibody) | Ÿ | Continued patient enrollment in Phase 1 study | Ÿ | Continue patient enrollment in Phase 1 study | | Ÿ | FDA granted orphan drug designation in diffuse large B-cell lymphoma | | | REGN3470-3471-3479 (Multi-antibody therapy to Ebola virus) | Ÿ | Completed Phase 1 study in healthy volunteers | Ÿ | Initiate additional healthy volunteer study | REGN2477 (Activin A Antibody) | Ÿ | FDA granted orphan drug designation for the treatment of FOP | Ÿ | Initiate Phase 2 study in patients with FOP | | Ÿ | FDA granted Fast Track designation for the prevention and treatment of heterotopic ossification in patients with FOP | | | REGN3500 (IL-33 Antibody) | Ÿ | Initiated Phase 1 studies in patients with asthma | Ÿ | Initiate Phase 2 study | | Ÿ | Completed Phase 1 study in healthy volunteers | | | REGN3767 (LAG-3 Antibody) | Ÿ | Continued patient enrollment in Phase 1 study | Ÿ | Continue patient enrollment in Phase 1 study | REGN3918 (C5 Antibody) | Ÿ | Initiated Phase 1 study in healthy volunteers | Ÿ | Complete Phase 1 study in healthy volunteers |
Corporate Information We were incorporated in the State of New York in 1988 and publicly listed in 1991. Our principal executive offices are located at 777 Old Saw Mill River Road, Tarrytown, New York 10591, and our telephone number at that address is (914) 847-7000. We make available free of charge on or through our Internet website (http://www.regeneron.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC)("SEC").
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Results of Operations Three Months Ended March 31, 2023 and 2022 Net Income | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions, except per share data) | | 2023 | | 2022 | | Revenues | | $ | 3,162.1 | | | $ | 2,965.1 | | | Operating expenses | | 2,215.4 | | | 1,706.6 | | | Income from operations | | 946.7 | | | 1,258.5 | | | Other income (expense) | | (88.7) | | | (197.4) | | | Income before income taxes | | 858.0 | | | 1,061.1 | | | Income tax expense | | 40.2 | | | 87.6 | | | Net income | | $ | 817.8 | | | $ | 973.5 | | | | | | | | Net income per share - diluted | | $ | 7.17 | | | $ | 8.61 | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | | | (In millions) | | 2023 | | 2022 | | $ Change | | Net product sales: | | | | | | | | EYLEA - U.S. | | $ | 1,433.8 | | | $ | 1,517.6 | | | $ | (83.8) | | | Libtayo - U.S. | | 109.7 | | | 78.9 | | | 30.8 | | | Libtayo - ROW | | 67.2 | | | — | | | * | | Praluent - U.S. | | 40.2 | | | 33.6 | | | 6.6 | | | Evkeeza - U.S. | | 14.9 | | | 8.5 | | | 6.4 | | | Inmazeb - U.S. | | 2.2 | | | — | | | 2.2 | | | Total net product sales | | $ | 1,668.0 | | | $ | 1,638.6 | | | $ | 29.4 | | | | | | | | | | Collaboration revenue: | | | | | | | | Sanofi | | 798.4 | | | 630.9 | | | 167.5 | | | Bayer | | 356.9 | | | 385.3 | | | (28.4) | | | Roche | | 222.2 | | | 216.3 | | | 5.9 | | | Other | | 0.6 | | | — | | | 0.6 | | | Other revenue | | 116.0 | | | 94.0 | | | 22.0 | | | Total revenues | | $ | 3,162.1 | | | $ | 2,965.1 | | | $ | 197.0 | | | | | | | | | * Not meaningful |
Results of Operations
Three and Nine Months Ended September 30, 2017 and 2016
Net Income
| | | | | | | | | | | | | | | | | | | | | | | | | | Net Income | Three Months Ended
September 30, | | Increase (Decrease) | | Nine Months Ended
September 30, | | Increase (Decrease) | | (In millions) | 2017 | | 2016 | | | 2017 | | 2016 | | | Revenues | $ | 1,500.7 |
| | $ | 1,220.1 |
| | $ | 280.6 |
| | $ | 4,289.8 |
| | $ | 3,633.6 |
| | $ | 656.2 |
| | Operating expenses | (940.7 | ) | | (857.3 | ) | | (83.4 | ) | | (2,749.0 | ) | | (2,649.9 | ) | | (99.1 | ) | | Other (expense) income, net | 5.7 |
| | 3.1 |
| | 2.6 |
| | (17.0 | ) | | 4.6 |
| | (21.6 | ) | | Income before income taxes | 565.7 |
| | 365.9 |
| | 199.8 |
| | 1,523.8 |
| | 988.3 |
| | 535.5 |
| | Income tax expense | (177.3 | ) | | (101.1 | ) | | (76.2 | ) | | (498.8 | ) | | (345.9 | ) | | (152.9 | ) | | Net income | $ | 388.4 |
| | $ | 264.8 |
| | $ | 123.6 |
| | $ | 1,025.0 |
| | $ | 642.4 |
| | $ | 382.6 |
| | | | | | | | | | | | | | | Net income per share - diluted | $ | 3.32 |
| | $ | 2.27 |
| | $ | 1.05 |
| | $ | 8.84 |
| | $ | 5.51 |
| | $ | 3.33 |
|
Revenues
| | | | | | | | | | | | | | | | | | | | | | | | | | Revenues | Three Months Ended
September 30, | | Increase (Decrease) | | Nine Months Ended
September 30, | | Increase (Decrease) | | (In millions) | 2017 | | 2016 | | | 2017 | | 2016 | | | Net product sales in the United States: | | | | | | | | | | | | | EYLEA | $ | 953.3 |
| | $ | 853.6 |
| | $ | 99.7 |
| | $ | 2,727.1 |
| | $ | 2,465.4 |
| | $ | 261.7 |
| | ARCALYST | 4.1 |
| | 3.9 |
| | 0.2 |
| | 12.6 |
| | 10.5 |
| | 2.1 |
| | Sanofi and Bayer collaboration revenue: | | | | | | | | | | | | | Sanofi | 245.2 |
| | 144.4 |
| | 100.8 |
| | 677.7 |
| | 527.5 |
| | 150.2 |
| | Bayer | 236.6 |
| | 191.3 |
| | 45.3 |
| | 640.9 |
| | 562.8 |
| | 78.1 |
| | Other revenue | 61.5 |
| | 26.9 |
| | 34.6 |
| | 231.5 |
| | 67.4 |
| | 164.1 |
| | Total revenues | $ | 1,500.7 |
| | $ | 1,220.1 |
| | $ | 280.6 |
| | $ | 4,289.8 |
| | $ | 3,633.6 |
| | $ | 656.2 |
|
Net Product Sales Net product sales of EYLEA in the United States increaseddecreased for the three and nine months ended September 30, 2017,March 31, 2023, compared to the same periodsperiod in 2016, due to higher sales volume, partly offset by an increase in sales-related deductions primarily due to payer sales mix and new rebate programs. Revenue from product sales is recorded net of applicable provisions for rebates and chargebacks, distribution-related fees, and other sales-related deductions. The following table summarizes the provisions and credits/payments for sales-related deductions.
| | | | | | | | | | | | | | | | | | (In millions) | Rebates & Chargebacks | | Distribution- Related Fees | | Other Sales- Related Deductions | | Total | | 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 |
| | Provisions | 39.4 |
| | 48.8 |
| | 11.1 |
| | 99.3 |
| | Credits/payments | (39.4 | ) | | (48.2 | ) | | (12.7 | ) | | (100.3 | ) | | Balance as of June 30, 2017 | 23.1 |
| | 29.0 |
| | 2.9 |
| | 55.0 |
| | Provisions | 43.3 |
| | 50.9 |
| | 12.9 |
| | 107.1 |
| | Credits/payments | (40.9 | ) | | (45.8 | ) | | (0.1 | ) | | (86.8 | ) | | Balance as of September 30, 2017 | $ | 25.5 |
| | $ | 34.1 |
| | $ | 15.7 |
| | $ | 75.3 |
| | | | | | | | | | | Balance as of December 31, 2015 | $ | 6.4 |
| | $ | 48.3 |
| | $ | 0.5 |
| | $ | 55.2 |
| | Provisions | 18.9 |
| | 35.8 |
| | 2.9 |
| | 57.6 |
| | Credits/payments | (17.5 | ) | | (50.4 | ) | | (2.5 | ) | | (70.4 | ) | | Balance as of March 31, 2016 | 7.8 |
| | 33.7 |
| | 0.9 |
| | 42.4 |
| | Provisions | 22.4 |
| | 38.5 |
| | 9.4 |
| | 70.3 |
| | Credits/payments | (18.6 | ) | | (44.1 | ) | | (9.2 | ) | | (71.9 | ) | | Balance as of June 30, 2016 | 11.6 |
| | 28.1 |
| | 1.1 |
| | 40.8 |
| | Provisions | 22.2 |
| | 39.5 |
| | 10.5 |
| | 72.2 |
| | Credits/payments | (26.4 | ) | | (41.0 | ) | | (7.8 | ) | | (75.2 | ) | | Balance as of September 30, 2016 | $ | 7.4 |
| | $ | 26.6 |
| | $ | 3.8 |
| | $ | 37.8 |
|
Sanofi Collaboration Revenue
| | | | | | | | | | | | | | | | | | | Sanofi Collaboration Revenue | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | (In millions) | | 2017 | | 2016 | | 2017 | | 2016 | | Antibody: | | | | | | | | | | Reimbursement of Regeneron research and development expenses - Discovery Agreement | | $ | 37.9 |
| | $ | 24.4 |
| | $ | 130.0 |
| | $ | 130.0 |
| | Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement | | 90.6 |
| | 107.0 |
| | 291.1 |
| | 339.2 |
| | Reimbursement of Regeneron commercialization-related expenses | | 90.3 |
| | 64.4 |
| | 251.0 |
| | 214.0 |
| | Regeneron's share of losses in connection with commercialization of antibodies | | (98.3 | ) | | (112.0 | ) | | (329.0 | ) | | (333.5 | ) | | Other | | 41.9 |
| | 4.4 |
| | 84.3 |
| | 19.9 |
| | Total Antibody | | 162.4 |
| | 88.2 |
| | 427.4 |
| | 369.6 |
| | Immuno-oncology: | | | | | | | | | | Reimbursement of Regeneron research and development expenses - Discovery Agreement | | 33.9 |
| | 20.6 |
| | 111.1 |
| | 63.3 |
| | Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement | | 27.8 |
| | 15.6 |
| | 77.3 |
| | 34.6 |
| | Other | | 21.1 |
| | 20.0 |
| | 61.9 |
| | 60.0 |
| | Total Immuno-oncology | | 82.8 |
| | 56.2 |
| | 250.3 |
| | 157.9 |
| | Total Sanofi collaboration revenue | | $ | 245.2 |
| | $ | 144.4 |
| | $ | 677.7 |
| | $ | 527.5 |
|
The lower reimbursement of antibody research and development costs under our License and Collaboration Agreement during the three and nine months ended September 30, 2017, compared to the same periods in 2016, was primarily due to decreased reimbursement levels for Dupixent (dupilumab) subsequent to the receipt of the first positive Phase 3 trial results, and U.S. regulatory approval, in accordance with the terms of our collaboration agreement.
Reimbursement of Regeneron commercialization-related expenses represents reimbursement of internal and external costs in connection with commercializing, as applicable, Praluent, Kevzara, and Dupixent.
During the three and nine months ended September 30, 2017 and 2016, we and Sanofi shared commercial expenses related to Praluent, Kevzara, and Dupixent in accordance with the companies' License and Collaboration Agreement. As such, during the same periods in which we recorded reimbursements from Sanofi related to our commercialization expenses, we also recorded our share of losses in connection with the companies commercializing Praluent, Kevzara, and Dupixent within Sanofi collaboration revenue. During the three and nine months ended September 30, 2017, compared to the same periods in 2016, Sanofi antibody collaboration revenues were positively impacted by higher sales of collaboration antibody products (see table below) and a decrease in the collaborations' Praluent commercialization expenses, which were partially offset by an increase in the collaborations' Dupixent and Kevzara commercialization expenses. Sanofi provides us with an estimate of our share of the losses from commercialization of antibodies for the most recent fiscal quarter; these estimates are reconciled to actual results in the subsequent fiscal quarter, and our portion of the profit or loss is adjusted accordingly, as necessary. Sanofi records product sales for commercialized products.
The following table summarizes global net product sales recorded by Sanofi:
| | | | | | | | | | | | | | | | | | | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | (In millions) | | 2017 | | 2016 | | 2017 | | 2016 | | Praluent in the United States | | $ | 31.8 |
| | $ | 31.6 |
| | $ | 89.8 |
| | $ | 61.9 |
| | Praluent outside of the United States | | 17.6 |
| | 6.6 |
| | 41.6 |
| | 13.8 |
| | Praluent global | | 49.4 |
| | 38.2 |
| | 131.4 |
| | 75.7 |
| | Dupixent | | 88.9 |
| | — |
| | 117.6 |
| | — |
| | Kevzara | | 3.0 |
| | — |
| | 3.8 |
| | — |
|
In March 2017, the FDA approved Dupixent for the treatment of adult patients with moderate-to-severe atopic dermatitis, and in September 2017, the European Commission granted marketing authorization for Dupixent for use in adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy. In May 2017, the FDA approved Kevzara for the treatment of rheumatoid arthritis in adult patients, and in June 2017, the European Commission granted marketing authorization for Kevzara for the treatment of rheumatoid arthritis in adult patients.
During the three and nine months ended September 30, 2017, other Sanofi antibody revenue included (i) reimbursements by Sanofi in connection with validating our Limerick commercial manufacturing facilities as required under the terms of our collaboration agreement and (ii) an acceleration of the recognition of deferred revenue from an $85.0 million up-front payment and other payments in connection with Sanofi's decision to end our Antibody Discovery Agreement on December 31, 2017 without any extension.
Sanofi's reimbursement of immuno-oncology research and development costs under our IO Discovery Agreement increased in the third quarter and first nine months of 2017, compared to the same periods in 2016,2022, primarily due to an increase in pre-clinicalsales-related deductions, partly offset by higher sales volume.
As described in "Collaboration, License, and Other Agreements - Sanofi - Immuno-Oncology" above, effective July 1, 2022, the Company became solely responsible for the research, activitiesdevelopment, and commercialization of Libtayo worldwide and began recording net product sales of Libtayo outside the United States. Collaboration Revenue Sanofi Collaboration Revenue | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions) | | 2023 | | 2022 | | Antibody: | | | | | | Regeneron's share of profits in connection with commercialization of antibodies | | $ | 636.5 | | | $ | 415.3 | | | Sales-based milestones earned | | — | | | 50.0 | | Reimbursement for manufacturing of commercial supplies(a) | | 161.9 | | | 160.8 | | | Total Antibody | | 798.4 | | | 626.1 | | | | | | | | Total Immuno-oncology | | — | | | 4.8 | | | Total Sanofi collaboration revenue | | $ | 798.4 | | | $ | 630.9 | | | | | | | (a) Corresponding costs incurred by the Company in connection with such production is recorded within Cost of collaboration and contract manufacturing. |
Global net product sales of Dupixent and Kevzara are recorded by Sanofi in connection with the Antibody Collaboration. As described above under "Collaboration, License, and Other Agreements - Sanofi - Antibody", on July 1, 2022, an amendment to the LCA became effective, pursuant to which the percentage of Regeneron's share of profits in any calendar quarter used to reimburse Sanofi for additional product candidates. Sanofi's reimbursement of immuno-oncology research and development costs underwhich were funded by Sanofi increased from 10% to 20%. The increase in our IO License and Collaboration Agreement increasedshare of profits in connection with commercialization of antibodies during the third quarter and first ninethree months of 2017,ended March 31, 2023, compared to the same periodsperiod in 2016, as we advanced2022, was driven by profits associated with higher Dupixent sales, partly offset by the cemiplimab clinical program into late-stage clinical development.impact of the amendment to the LCA. Other Sanofi immuno-oncology revenue includes recognitionRegeneron's share of deferred revenue from $640.0 million of up-front payments received in 2015profits in connection with the executioncommercialization of Dupixent and Kevzara is summarized below:
| | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions) | | 2023 | | 2022 | | Dupixent and Kevzara net product sales | | $ | 2,563.5 | | $ | 1,916.8 | | Regeneron's share of collaboration profits | | $ | 711.4 | | $ | 462.2 | | Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation | | (74.9) | | (46.9) | | Regeneron's share of profits in connection with commercialization of antibodies | | $ | 636.5 | | $ | 415.3 | | | | | | | Regeneron's share of collaboration profits as a percentage of Dupixent and Kevzara net product sales | | 25% | | 22% |
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. As the A&R IO LCA became effective July 1, 2022, the three months ended June 30, 2022 was the last period in which Sanofi collaboration revenue was recognized in connection with the IO Collaboration agreements.Collaboration.
Bayer Collaboration Revenue | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions) | | 2023 | | 2022 | | Regeneron's share of profits in connection with commercialization of EYLEA outside the United States | | $ | 331.6 | | | $ | 338.4 | | Reimbursement for manufacturing of ex-U.S. commercial supplies(a) | | 25.3 | | | 25.0 | | One-time payment in connection with change in Japan arrangement(b) | | — | | | 21.9 | | | Total Bayer collaboration revenue | | $ | 356.9 | | | $ | 385.3 | | | | | | | (a) Corresponding costs incurred by the Company in connection with such production is recorded within Cost of collaboration and contract manufacturing. | (b) Effective January 1, 2022, the Company and Bayer commenced sharing equally in profits and losses based on sales from Bayer to its distributor in Japan. Previously, the Company received from Bayer a tiered percentage of sales based on sales by Bayer's distributor in Japan. |
| | | | | | | | | | | | | | | | | | | Bayer Collaboration Revenue | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | (In millions) | | 2017 | | 2016 | | 2017 | | 2016 | | EYLEA: | | | | | | | | | | Regeneron's net profit in connection with commercialization of EYLEA outside the United States | | $ | 205.4 |
| | $ | 170.9 |
| | $ | 571.1 |
| | $ | 484.2 |
| | Reimbursement of Regeneron EYLEA development expenses | | 6.1 |
| | 2.2 |
| | 10.8 |
| | 7.2 |
| | Other | | 15.7 |
| | 6.1 |
| | 36.9 |
| | 45.9 |
| | Total EYLEA | | 227.2 |
| | 179.2 |
| | 618.8 |
| | 537.3 |
| | Ang2 antibody and PDGFR-beta antibody: | | | | | | | | | | Reimbursement of development expenses | | 7.3 |
| | 7.4 |
| | 15.6 |
| | 14.2 |
| | Other | | 2.1 |
| | 4.7 |
| | 6.5 |
| | 11.3 |
| | Total Ang2 antibody and PDGFR-beta antibody | | 9.4 |
| | 12.1 |
| | 22.1 |
| | 25.5 |
| | Total Bayer collaboration revenue | | $ | 236.6 |
| | $ | 191.3 |
| | $ | 640.9 |
| | $ | 562.8 |
|
Bayer records net product sales of EYLEA outside the United States. Regeneron's net profitshare of profits in connection with commercialization of EYLEA outside the United States is summarized below.below: | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions) | | 2023 | | 2022 | | EYLEA net product sales outside the United States | | $ | 847.1 | | $ | 868.5 | | Regeneron's share of collaboration profit from sales outside the United States | | $ | 346.9 | | $ | 353.4 | | Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation | | (15.3) | | (15.0) | | Regeneron's share of profits in connection with commercialization of EYLEA outside the United States | | $ | 331.6 | | $ | 338.4 | | | | | | | Regeneron's share of profits as a percentage of EYLEA net product sales outside the United States | | 39% | | 39% |
42Roche Collaboration Revenue
Table of Contents | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions) | | 2023 | | 2022 | | Global gross profit payment from Roche in connection with sales of Ronapreve | | $ | 222.2 | | | $ | 216.3 | |
| | | | | | | | | | | | | | | | | | | Regeneron's Net Profit from EYLEA Sales Outside the United States | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | (In millions) | | 2017 | | 2016 | | 2017 | | 2016 | | Net product sales outside the United States | | $ | 563.7 |
| | $ | 470.8 |
| | $ | 1,590.0 |
| | $ | 1,375.9 |
| | Regeneron's share of collaboration profit from sales outside the United States | | 218.5 |
| | 184.4 |
| | 611.7 |
| | 524.8 |
| | Reimbursement of EYLEA development expenses incurred by Bayer in accordance with Regeneron's payment obligation | | (13.1 | ) | | (13.5 | ) | | (40.6 | ) | | (40.6 | ) | | Regeneron's net profit in connection with commercialization of EYLEA outside the United States | | $ | 205.4 |
| | $ | 170.9 |
| | $ | 571.1 |
| | $ | 484.2 |
|
BayerRoche distributes and records revenue fromnet product sales of EYLEA outside the United States. Bayer provides us with an estimate of our share of the profit, including the percentage of sales in Japan that we earned, from commercialization of EYLEARonapreve outside the United States, forand the most recent fiscal quarter; these estimates are reconciled to actual results in the subsequent fiscal quarter, and our portion of the profit or loss is adjusted accordingly, as necessary.
We discontinued clinical development of rinucumab/aflibercept in the first quarter of 2017. In March 2016, we entered into an agreement with Bayer governing the joint development and commercialization outside the United States of nesvacumab, an antibody product candidate to Ang2, including in combination with aflibercept, for the treatment of ocular diseases or disorders. In connection with the agreement, Bayer made a $50.0 million non-refundable up-front payment to us, which was recorded as deferred revenue and is being recognized as revenue over the related performance period. Bayer is also obligated to pay 25% of global development costs and 50% of development costs exclusively for the territory outside the United States.
Other Revenueparties share gross profits from worldwide sales.
37 | | | | | | | | | | | | | | | | | | | Other Revenue | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | (In millions) | | 2017 | | 2016 | | 2017 | | 2016 | | Teva collaboration revenue: | | | | | | | | | | Reimbursement of Regeneron research and development expenses | | $ | 28.5 |
| | $ | 3.1 |
| | $ | 82.1 |
| | $ | 3.1 |
| | Substantive development milestone | | — |
| | — |
| | 25.0 |
| | — |
| | Other | | 11.7 |
| | 2.1 |
| | 33.9 |
| | 2.1 |
| | Total Teva collaboration revenue | | 40.2 |
| | 5.2 |
| | 141.0 |
| | 5.2 |
| | Other revenue | | 21.3 |
| | $ | 21.7 |
| | 90.5 |
| | 62.2 |
| | Total other revenue | | $ | 61.5 |
| | $ | 26.9 |
| | $ | 231.5 |
| | $ | 67.4 |
|
In September 2016, we and Teva entered into a collaboration agreement to develop and commercialize fasinumab. Other Teva collaboration revenue includes recognition of a portion of deferred revenue from a $250.0 million up-front payment. In the second quarter of 2017, we earned, and recognized as revenue, development milestones of $25.0 million and $30.0 million from Teva and MTPC, respectively. The revenue recognized in connection with the MTPC milestone is included in Other revenue in the table above.
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended
September 30, | | Increase | | Nine Months Ended
September 30, | | Increase | | (In millions) | | 2017 | | 2016 | | (Decrease) | | 2017 | | 2016 | | (Decrease) | | Research and development | | $ | 529.7 |
| | $ | 543.0 |
| | $ | (13.3 | ) | | $ | 1,547.2 |
| | $ | 1,573.1 |
| | $ | (25.9 | ) | | Selling, general, and administrative | | 306.8 |
| | 270.0 |
| | 36.8 |
| | 910.5 |
| | 851.8 |
| | 58.7 |
| | Cost of goods sold | | 46.4 |
| | 30.0 |
| | 16.4 |
| | 149.8 |
| | 150.1 |
| | (0.3 | ) | | Cost of collaboration and contract manufacturing | | 57.8 |
| | 14.3 |
| | 43.5 |
| | 141.5 |
| | 74.9 |
| | 66.6 |
| | Total operating expenses | | $ | 940.7 |
| | $ | 857.3 |
| | $ | 83.4 |
| | $ | 2,749.0 |
| | $ | 2,649.9 |
| | $ | 99.1 |
| | | | | | | | | | | | | | | | Average headcount | | 5,875 |
| | 5,127 |
| | 748 |
| | 5,653 |
| | 4,786 |
| | 867 |
|
Our average headcount in 2017 increased compared to 2016 principally in connection with expanding our manufacturing activities. | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | | | (In millions, except headcount data) | | 2023 | | 2022 | | Change | Research and development(a) | | $ | 1,101.2 | | | $ | 843.8 | | | $ | 257.4 | | | Acquired in-process research and development | | 56.1 | | | 28.1 | | | 28.0 | | Selling, general, and administrative(a) | | 601.1 | | | 450.0 | | | 151.1 | | | Cost of goods sold | | 208.4 | | | 207.3 | | | 1.1 | | Cost of collaboration and contract manufacturing(b) | | 249.1 | | | 197.6 | | | 51.5 | | | Other operating (income) expense, net | | (0.5) | | | (20.2) | | | 19.7 | | | Total operating expenses | | $ | 2,215.4 | | | $ | 1,706.6 | | | $ | 508.8 | | | | | | | | | | Average headcount | | 12,099 | | | 10,492 | | | 1,607 | | | | | | | | | (a) Includes costs incurred net of any cost reimbursements from collaborators who are not deemed to be our customers | (b) Cost of collaboration and contract manufacturing includes costs we incur in connection with producing commercial drug supplies for collaborators and others. |
Operating expenses included a total of $125.1$238.7 million inand $166.9 million for the third quarterthree months ended March 31, 2023 and $380.1 million in the first nine months of 2017, respectively, and $131.4 million in the third quarter and $405.3 million in the first nine months of 2016,2022, respectively, of non-cashstock-based compensation expense related to employee stock option and restricted stockequity awards (Non-cash Compensation Expense).granted under our long-term incentive plans. Research and Development Expenses The following table summarizes our estimates of direct research and development expenses by clinical development program and other significant categories of research and development expenses. Direct research and development expenses are comprised primarily of costs paid to third parties for clinical and product development activities, including costs related to preclinical research activities, clinical trials, drug filling, packaging, and labeling, and the portion of research and development expenses incurred by our collaborators that we are obligated to reimburse. Indirect research and development expenses have not been allocated directly to each program, and primarily consist of costs to compensate personnel, overhead and infrastructure costs to maintain our facilities, costs to manufacture bulk drug product (including pre-launch commercial supplies which were not capitalized as inventory) at our manufacturing facilities, and other costs related to activities that benefit multiple projects.
Clinical manufacturing costs primarily consist of costs to manufacture bulk drug product for clinical development purposes as well as related drug filling, packaging, and labeling costs. Clinical manufacturing costs also includes pre-launch commercial supplies which did not meet the criteria to be capitalized as inventory. The table below also includes reimbursements of research and development expenses by collaborators, as when we are entitled to reimbursement of all or a portion of such expenses that we incur under a collaboration, we record those reimbursable amounts in the period in which such costs are incurred.
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | | | (In millions) | | 2023 | | 2022* | | $ Change | | Direct research and development expenses: | | | | | | | | Dupixent (dupilumab) | | $ | 49.2 | | | $ | 32.1 | | | $ | 17.1 | | | Fianlimab | | 34.8 | | | 3.4 | | | 31.4 | | | Libtayo (cemiplimab) | | 32.9 | | | 38.6 | | | (5.7) | | | Aflibercept 8 mg | | 25.7 | | | 20.2 | | | 5.5 | | | Odronextamab | | 22.1 | | | 11.5 | | | 10.6 | | | Linvoseltamab | | 14.8 | | | 5.3 | | | 9.5 | | | Other product candidates in clinical development and other research programs | | 142.9 | | | 84.6 | | | 58.3 | | | Total direct research and development expenses | | 322.4 | | | 195.7 | | | 126.7 | | | | | | | | | | Indirect research and development expenses: | | | | | | | | Payroll and benefits | | 399.0 | | | 283.8 | | | 115.2 | | | Lab supplies and other research and development costs | | 49.9 | | | 38.0 | | | 11.9 | | | Occupancy and other operating costs | | 121.9 | | | 120.3 | | | 1.6 | | | Total indirect research and development expenses | | 570.8 | | | 442.1 | | | 128.7 | | | | | | | | | | Clinical manufacturing costs | | 250.1 | | | 271.7 | | | (21.6) | | | | | | | | | | Reimbursement of research and development expenses by collaborators | | (42.1) | | | (65.7) | | | 23.6 | | | | | | | | | | Total research and development expenses | | $ | 1,101.2 | | | $ | 843.8 | | | $ | 257.4 | | | | | | | | | * Certain prior year amounts have been reclassified to conform to the current year's presentation. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Research and Development Expenses | | Three Months Ended
September 30, | | Increase | | Nine Months Ended
September 30, | | Increase | | (In millions) | | 2017 | | 2016* | | (Decrease) | | 2017 | | 2016* | | (Decrease) | | Direct research and development expenses: | | | | | | | | | | | | | | Dupilumab | | $ | 50.0 |
| | $ | 54.2 |
| | $ | (4.2 | ) | | $ | 150.0 |
| | $ | 171.1 |
| | $ | (21.1 | ) | | Cemiplimab | | 33.7 |
| | 11.0 |
| | 22.7 |
| | 78.3 |
| | 27.3 |
| | 51.0 |
| | Fasinumab | | 39.1 |
| | 29.4 |
| | 9.7 |
| | 112.0 |
| | 76.9 |
| | 35.1 |
| | Praluent | | 21.2 |
| | 21.5 |
| | (0.3 | ) | | 61.1 |
| | 61.3 |
| | (0.2 | ) | | Suptavumab | | 17.0 |
| | 8.4 |
| | 8.6 |
| | 31.4 |
| | 18.4 |
| | 13.0 |
| | Sarilumab | | 2.4 |
| | 3.0 |
| | (0.6 | ) | | 7.6 |
| | 16.7 |
| | (9.1 | ) | | Other product candidates in clinical development and other research programs | | 55.2 |
| | 61.1 |
| | (5.9 | ) | | 168.4 |
| | 189.4 |
| | (21.0 | ) | | Total direct research and development expenses | | 218.6 |
| | 188.6 |
| | 30.0 |
| | 608.8 |
| | 561.1 |
| | 47.7 |
| | Indirect research and development expenses: | | | | | | | | | | | | | | Payroll and benefits | | 145.3 |
| | 142.5 |
| | 2.8 |
| | 438.5 |
| | 421.9 |
| | 16.6 |
| | Clinical manufacturing costs | | 97.7 |
| | 122.7 |
| | (25.0 | ) | | 300.9 |
| | 309.6 |
| | (8.7 | ) | | Research, licensing, and other development costs | | 17.1 |
| | 40.6 |
| | (23.5 | ) | | 47.1 |
| | 139.6 |
| | (92.5 | ) | | Occupancy and other operating costs | | 51.0 |
| | 48.6 |
| | 2.4 |
| | 151.9 |
| | 140.9 |
| | 11.0 |
| | Total indirect research and development expenses | | 311.1 |
| | 354.4 |
| | (43.3 | ) | | 938.4 |
| | 1,012.0 |
| | (73.6 | ) | | Total research and development expenses | | $ | 529.7 |
| | $ | 543.0 |
| | $ | (13.3 | ) | | $ | 1,547.2 |
| | $ | 1,573.1 |
| | $ | (25.9 | ) | | | | | | | | | | | | | | | | * Certain prior year amounts have been reclassified to conform to the current year's presentation |
DirectTotal research and development expenses increased for cemiplimab and fasinumab in the third quarter and first ninethree months of 2017, compared to the same periods in 2016, primarily due to continued enrollment in clinical studies and the initiation of additional clinical studies. Direct research and development expenses decreased for dupilumab in the first nine months of 2017,ended March 31, 2023, compared to the same period in 2016, as some later-stage clinical studies had been completed. Clinical manufacturing costs decreased in the third quarter of 2017, compared2022, partially due to the same period in 2016, primarily dueimpact of the amendments to a higher proportionthe Sanofi collaboration agreements (which were effective July 1, 2022) described under the "Collaboration, License, and Other Agreements" section above, as (i) Sanofi is no longer reimbursing us for 50% of commercial manufacturing at our facilities. Research, licensing, and otherLibtayo development costs in 2016 included the $75.0 million up-front payment madeand (ii) we recognize our 50% share of research and development expenses in connection with the April 2016 license and collaboration agreement with Intellia and the $25.0 million up-front payment made in connection with the July 2016 license and collaboration agreement with Adicet. Sanofi Antibody Collaboration.
Research and development expenses included Non-Cash Compensation Expensestock-based compensation expense of $70.1$139.5 million and $213.2$92.4 million in the third quarter and first nine months of 2017, respectively, and $80.6 million and $238.0 million in the third quarter and first nine months of 2016, respectively. Drug development and approval in the United States is a multi-step process regulated by the FDA. The process begins with discovery and preclinical evaluation, leading up to the submission of an IND to the FDA which, if successful, allows the opportunity for study in humans, or clinical study, of the potential new drug. Clinical development typically involves three phases of study: Phases 1, 2, and 3. The most significant costs in clinical development are in Phase 3 clinical trials, as they tend to be the longest and largest studies in the drug development process. Following successful completion of Phase 3 clinical trials for a biological product, a BLA must be submitted to, and accepted by, the FDA and the FDA must approve the BLA prior to commercialization of the drug. It is not uncommon for the FDA to request additional data following its review of a BLA, which can significantly increase the drug development timelinethree months ended March 31, 2023 and expenses. We may elect either on our own, or at the request of the FDA, to conduct further studies that are referred to as Phase 3b and 4 studies. Phase 3b studies are initiated and either completed or substantially completed while the BLA is under FDA review. These studies are conducted under an IND. Phase 4 studies, also referred to as post-marketing studies, are studies that are initiated and conducted after the FDA has approved a product for marketing. In addition, as discovery research, preclinical development, and clinical programs progress, opportunities to expand development of drug candidates into new disease indications can emerge. We may elect to add such new disease indications to our development efforts
(with the approval of our collaborator for joint development programs), thereby extending the period in which we will be developing a product.2022, respectively.
There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development, uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes in the competitive landscape affecting a product candidate, and other risks and uncertainties described in Part II, Item 1A,1A. "Risk Factors." There is also variability in the duration and costs necessary to develop a pharmaceutical product, potential opportunities and/or uncertainties related to future indications to be studied, and the estimated cost and scope of the projects. The lengthy process of seeking FDA and other applicable approvals, and subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any failure by us to obtain, or delay in obtaining, regulatory approvals could materially adversely affect our business. For these reasons and due to the variability in the costs necessary to develop a pharmaceutical product and the uncertainties related to future indications to be studied, the estimated cost and scope of the projects, and our ultimate ability to obtain governmental approval for commercialization, accurate and meaningful estimates of the total cost to bring our product candidates to market are not available. Similarly, we We are unable to reasonably estimate if our product candidates in clinical development will generate material product revenues and net cash inflows.
Acquired In-process Research and Development ("IPR&D") Acquired IPR&D for the three months ended March 31, 2023 included a $45.0 million up-front payment in connection with our collaboration agreement with Sonoma Biotherapeutics, Inc. Acquired IPR&D for the three months ended March 31, 2022
included a $20.0 million opt-in payment in connection with a product candidate under our collaboration agreement with Adicet Bio, Inc. Selling, General, and Administrative Expenses Selling, general, and administrative expenses increased for the three months ended September 30, 2017,March 31, 2023, compared to the same period in 2016,2022, primarily due to an increase in commercialization-related expenses for Libtayo outside the United States (as effective July 1, 2022, the Company became solely responsible for the commercialization of Libtayo worldwide), higher headcount and headcount-related costs, and higher contributions to support the launches of Dupixent and Kevzara and an increaseindependent not-for-profit patient assistance organization. These increases were partly offset by a decrease in commercialization-related expenses associated with EYLEA and Dupixent.for EYLEA. Selling, general, and administrative expenses increased for the nine months ended September 30, 2017, compared to the same period in 2016, primarily due to higher headcount and headcount-related costs to support the launchesalso included stock-based compensation expense of Dupixent and Kevzara and an increase in commercialization-related expenses associated with EYLEA, Dupixent, and Kevzara, partly offset by lower commercialization-related expenses associated with Praluent. Selling, general, and administrative expenses included Non-Cash Compensation Expense of $47.7$76.8 million and $146.2$60.7 million in the third quarter and first nine months of 2017, respectively, and $49.4 million and $157.2 million in the third quarter and first nine months of 2016, respectively. Cost of Goods Sold
Cost of goods sold increased for the three and nine months ended September 30, 2017, compared to the same periods in 2016, principally due to an increase in start-up costs for our Limerick manufacturing facility. For the nine months ended September 30, 2017, this increase was offset due to the fact that, effective May 2016, we are no longer obligated to pay royalties to Genentech based on U.S. sales of EYLEA.March 31, 2023 and 2022, respectively.
Cost of Collaboration and Contract Manufacturing Cost of collaboration and contract manufacturing increased for the three months ended September 30, 2017,March 31, 2023, compared to the same period in 2016,2022, primarily due to the recognition of costs we incurred in connection with validating our Limerick manufacturing commercial facilitysupplies for Sanofi related to Praluent outside the United States and Dupixent globally. Other Operating (Income) Expense Other operating (income) expense, net, for the three months ended March 31, 2022 included recognition of amounts previously deferred in connection with up-front and development milestone payments, as applicable, received in connection with our collaborationSanofi IO, Teva, and MTPC collaborative arrangements. As the A&R IO LCA became effective July 1, 2022, the three months ended June 30, 2022 was the last period in which such amounts were recognized in connection with Sanofi. Cost of collaboration and contract manufacturing increased forour Sanofi IO Collaboration. In addition, during the ninethree months ended September 30, 2017, compared2022, the Company discontinued further clinical development of fasinumab, and, as a result, we deemed our obligation to the same period in 2016, primarily due to costs we incurredprovide development services in connection with validating our Limerick manufacturing commercial facility relatedthe Teva and MTPC collaborative arrangements to products that are in collaboration with Sanofi, partly offset by the fact that the first nine months of 2016 included royalties payable to Genentech based on sales of EYLEA outside the United States (which ended in May 2016). Cost of collaboration and contract manufacturing was also adversely impacted by inventory write-offs and reserves totaling $50.6 million in the first nine months of 2017 primarily related to product that no longer met quality specifications, compared to $6.8 million in the first nine months of 2016.be complete. Other Income and Expense(Expense) Other expenses inincome (expense) consists of the first nine months of 2017 included the recognition of a $30.1 million loss on debt extinguishment related to the 2017 Tarrytown lease transaction. See Note 10 to our Condensed Consolidated Financial Statements.following:
| | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions) | | 2023 | | 2022 | | Unrealized (losses) gains on equity securities, net | | $ | (164.7) | | | $ | (211.2) | | | Interest income | | 95.2 | | | 18.5 | | | Other | | (1.2) | | | 8.9 | | | Other (expense) income, net | | (70.7) | | | (183.8) | | | Interest expense | | (18.0) | | | (13.6) | | | Total other income (expense) | | $ | (88.7) | | | $ | (197.4) | |
Income Taxes | | | | | | | | | | | | Three Months Ended
March 31, | | | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | | | (In millions) | | 2017 | | 2016 | | 2017 | | 2016 | | | (In millions, except effective tax rate) | | (In millions, except effective tax rate) | | 2023 | | 2022 | | Income tax expense | | $ | 177.3 |
| | $ | 101.1 |
| | $ | 498.8 |
| | $ | 345.9 |
| Income tax expense | | $ | 40.2 | | $ | 87.6 | | Effective tax rate | | 31.3 | % | | 27.6 | % | | 32.7 | % | | 35.0 | % | Effective tax rate | | 4.7% | | 8.3% |
The Company's effective tax rate for the three and nine months ended September 30, 2017 and 2016March 31, 2023 was positively impacted, compared to the U.S. federal statutory rate, primarily by the tax benefit associated with stock-based compensation the domestic manufacturing deduction, and the federal tax credit for increased research activities, offset by the negative impact of losses incurredincome earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate and the non-tax deductible Branded Prescription Drug Fee. Ourrate. The effective tax rate for the three months ended September 30, 2016March 31, 2023 was also positively impacted, compared to the same period in 2022, primarily by changes to tax reserves.stock-based compensation.
Liquidity and Capital Resources Our financial condition is summarized as follows: | | | | | | | | | | | | | | | | | | | March 31, | | December 31, | | | | (In millions) | 2023 | | 2022 | | $ Change | | Financial assets: | | | | | | | Cash and cash equivalents | $ | 3,916.3 | | | $ | 3,105.9 | | | $ | 810.4 | | | Marketable securities - current | 5,043.4 | | | 4,636.4 | | | 407.0 | | | Marketable securities - noncurrent | 6,066.6 | | | 6,591.8 | | | (525.2) | | | $ | 15,026.3 | | | $ | 14,334.1 | | | $ | 692.2 | | | | | | | | | Working capital: | | | | | | | Current assets | $ | 16,909.2 | | | $ | 15,884.1 | | | $ | 1,025.1 | | | Current liabilities | 3,100.1 | | | 3,141.3 | | | (41.2) | | | $ | 13,809.1 | | | $ | 12,742.8 | | | $ | 1,066.3 | | | | | | | | | Borrowings and finance lease liabilities: | | | | | | | Long-term debt | $ | 1,981.8 | | | $ | 1,981.4 | | | $ | 0.4 | | | Finance lease liabilities | $ | 720.0 | | | $ | 720.0 | | | $ | — | |
| | | | | | | | | | | | | | | September 30, | | December 31, | | Increase | | (In millions) | 2017 | | 2016 | | (Decrease) | | Financial assets: | | | | | | | Cash and cash equivalents | $ | 792.1 |
| | $ | 535.2 |
| | $ | 256.9 |
| | Marketable securities - current | 586.9 |
| | 503.5 |
| | 83.4 |
| | Marketable securities - non-current | 1,327.3 |
| | 864.3 |
| | 463.0 |
| | | $ | 2,706.3 |
| | $ | 1,903.0 |
| | $ | 803.3 |
| | | | | | | | | Working capital: | | | | | | | Current assets | $ | 4,135.7 |
| | $ | 3,180.2 |
| | $ | 955.5 |
| | Current liabilities | 1,138.6 |
| | 1,241.5 |
| | (102.9 | ) | | | $ | 2,997.1 |
| | $ | 1,938.7 |
| | $ | 1,058.4 |
|
Additionally, asAs of September 30, 2017,March 31, 2023, we also had borrowing availability of $750.0 million under a revolving credit facility (see further description under "Credit Facility" below).facility.
Sources and Uses of Cash for the NineThree Months Ended September 30, 2017March 31, 2023 and 20162022 | | | | | | | | | | | | | | | September 30, | | September 30, | | Increase | | (In millions) | 2017 | | 2016 | | (Decrease) | | Cash flows provided by (used in) operating activities | $ | 740.2 |
| | $ | 1,095.5 |
| | $ | (355.3 | ) | | Cash flows provided by (used in) investing activities | (669.4 | ) | | (775.5 | ) | | 106.1 |
| | Cash flows provided by (used in) financing activities | 186.1 |
| | (208.7 | ) | | 394.8 |
|
Cash Flows from Operating Activities
Our net income of $1,025.0 million in the first nine months of 2017 included Non-cash Compensation Expense of $380.1 million. Deferred tax assets as of September 30, 2017 increased by $108.2 million, compared to December 31, 2016, primarily due to Non-cash Compensation Expense. Sanofi, Bayer, and trade accounts receivable increased by $359.8 million as of September 30, 2017, compared to December 31, 2016, primarily due to higher EYLEA sales and higher production of commercial inventory in connection with our Sanofi collaboration.
Our net income of $642.4 million in the first nine months of 2016 included Non-cash Compensation Expense of $405.3 million. Deferred tax assets as of September 30, 2016 increased by $190.3 million, compared to December 31, 2015, primarily due to an increase in Non-cash Compensation Expense, the tax basis of intangible assets, and deferred revenue. Deferred revenue increased by $282.2 million as of September 30, 2016, compared to December 31, 2015, primarily due to $250.0 million and $60.0 million of payments received in the first nine months of 2016 from Teva and Mitsubishi, respectively, in connection with our fasinumab collaborations, and the $50.0 million up-front payment from Bayer in connection with the companies' Ang2 collaboration, partly offset by the amortization of these 2016 payments and up-front payments from Sanofi. Accounts payable, accrued expenses, and other liabilities increased by $107.4 million as of September 30, 2016, compared to December 31, 2015, primarily due to higher tax-related liabilities, partly offset by lower royalties payable since our obligation to pay Genentech based on sales of EYLEA ended in May 2016. | | | | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | | | (In millions) | 2023 | | 2022 | | $ Change | | Cash flows provided by operating activities | $ | 1,367.6 | | | $ | 2,101.7 | | | $ | (734.1) | | | Cash flows used in investing activities | $ | (235.7) | | | $ | (1,705.3) | | | $ | 1,469.6 | | | Cash flows (used in) provided by financing activities | $ | (322.5) | | | $ | 64.7 | | | $ | (387.2) | |
Cash Flows from Investing Activities Capital expenditures were $165.0 million and $361.5 million induring the first ninethree months of 2017 and 2016, respectively. Capital expenditures in the first nine months of 2017 primarilyended March 31, 2023 included costs incurred in connection with renovations and additions to certain buildings at our Rensselaer, New York and Limerick, Ireland manufacturing facilities, as well as, to a lesser extent, atthe expansion of our Tarrytown, New York laboratory and office facilities. Capital expenditures incampus, as well costs associated with the first nine months of 2016 primarily included costs in connection with renovationsexpansion of our Limerick, Ireland manufacturing facility, tenant improvement and associated costs at our leased Tarrytown, New York facilities renovations to certain areas of ourin Rensselaer, New York manufacturing facilities,(including the purchaseongoing construction of an office building near our Rensselaer manufacturing facilities,a fill/finish facility and purchases of equipment. Capital expenditures decreased in the first nine months of 2017, compared to the first nine months of 2016, in part due to less capital expenditures in connection with renovations at our Limerick, Ireland manufacturing facility as by the end of 2016 a substantial portion of the initial build-out of the plant had been completed.related equipment). We expect to incur capital expenditures of approximately $100$800 million to $120$900 million for the full year of 2023 primarily in connection with the continued expansion of our research, preclinical manufacturing, and support facilities at our Tarrytown campus and our Rensselaer manufacturing facility (including the fill/finish facility). Payments for Libtayo intangible asset of $100.9 million during the fourth quarterthree months ended March 31, 2023 were related to contingent consideration in connection with our acquisition of 2017.the exclusive right to develop, commercialize, and manufacture Libtayo worldwide (as described in "Collaboration, License, and Other Agreements - Sanofi - Immuno-Oncology" above). Cash Flows from Financing Activities In the first nine monthsProceeds from issuances of 2017, proceedsCommon Stock, in connection with capitalexercises of employee stock options, were $485.2 million during the three months ended March 31, 2023, compared to $521.6 million during the three months ended March 31, 2022. For information related to repurchases of Common Stock, see "Share Repurchase Programs" section below.
Share Repurchase Programs In November 2021, our board of directors authorized a share repurchase program to repurchase up to $3.0 billion of our Common Stock. The share repurchase program permits the Company to make repurchases through a variety of methods, including open-market transactions (including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act), privately negotiated transactions, accelerated share repurchases, block trades, and facility lease obligations relateother transactions in
compliance with Rule 10b-18 of the Exchange Act. Share repurchases may be made from time to our receipt of $57.0 million in connection withtime at management's discretion, and the March 2017 lease transaction as described below under "Tarrytown, New York Leases". In the first nine months of 2016, we paid an aggregatetiming and amount of $242.1 millionany such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors. The program has no time limit and can be discontinued at any time. There can be no assurance as to warrant holders to reduce the maximumtiming or number of shares of Common Stock issuable upon exercise ofany repurchases in the warrants. No warrants remained outstanding as of December 31, 2016. Credit Facilityfuture.
In March 2015, we entered intoJanuary 2023, our board of directors authorized an agreement with a syndicate of lenders (the Credit Agreement) which provides for a $750.0 million senior unsecured five-year revolving credit facility (the Credit Facility). The Credit Agreement includes an option for usadditional share repurchase program to elect to increase the commitments under the Credit Facility and/or to enter into one or more tranches of term loans in the aggregate principal amount ofrepurchase up to $250.0 million subject to the consent of the lenders providing the additional commitments or term loans, as applicable, and certain other conditions. Proceeds of the loans under the Credit Facility may be used to finance working capital needs, and for general corporate or other lawful purposes, of Regeneron and its subsidiaries. The Credit Agreement also provides a $100.0 million sublimit for letters of credit. The Credit Agreement includes an option for us to elect to extend the maturity date of the Credit Facility beyond March 2020, subject to the consent of the extending lenders and certain other conditions. Amounts borrowed under the Credit Facility may be prepaid, and the commitments under the Credit Facility may be terminated, at any time without premium or penalty. We had no borrowings outstanding under the Credit Facility as of September 30, 2017. The Credit Agreement contains financial and operating covenants. Financial covenants include a maximum total leverage ratio and a minimum interest expense coverage ratio. We were in compliance with all covenants of the Credit Facility as of September 30, 2017.
Tarrytown, New York Leases
We lease laboratory and office facilities in Tarrytown, New York. On December 30, 2016, we entered into a Purchase Agreement with BMR-Landmark at Eastview LLC and BMR-Landmark at Eastview IV LLC (collectively, BMR), pursuant to which we agreed to purchase BMR's Tarrytown, New York facilities (the Facility) for a purchase price of $720.0 million. We occupy a significant portion of the Facility, with the remaining rentable area under leases to third-party tenants. In accordance with the terms of the Purchase Agreement, we paid $57.0 million toward the purchase price to BMR in December 2016.
On March 3, 2017, we entered into a Participation Agreement with Banc of America Leasing & Capital LLC (BAL), as lessor, and a syndicate of lenders (collectively, the Participants). The Participation Agreement provided for lease financing in connection with the acquisition by BAL of the Facility and our lease of the Facility from BAL. On March 3, 2017, we assigned our right to take title to the Facility under the Purchase Agreement to BAL, and the Participants advanced $720.0 million, which was used by BAL to finance the purchase price for the Facility and to reimburse us for the $57.0 million payment we made to BMR in December 2016.
On March 3, 2017, we entered into a lease agreement (the Lease) with BAL, pursuant to which we have leased the Facility from BAL for a five-year term. As a result of entering into the lease agreement, certain parts of the Facility became subleased from us by existing third-party tenants. The Lease requires us to pay all maintenance, insurance, taxes, and other costs arising out of the use of the Facility. We are also required to make monthly payments of basic rent during the term of the Lease in an amount equal to a variable rate per annum based on the one-month London Interbank Offered Rate (LIBOR), plus an applicable margin that varies with our debt rating and total leverage ratio.
The Participation Agreement and the Lease include an option for us to elect to extend the maturity date of the Participation Agreement and the term of the Lease for an additional five-year period, subject to the consent$3.0 billion of all the Participants and certain other conditions. We also have the option prior to the end of the term of the Lease to (a) purchase the Facility by paying an amount equal to the outstanding principal amount of the Participants' advancesour Common Stock. The share repurchase program was approved under the Participation Agreement, all accrued and unpaid interest and yield thereon, and all other outstanding amounts under the Participation Agreement, the Lease, and certain related documents or (b) sell the Facility to a third party on behalf of BAL. The advances under the Participation Agreement mature, and all amounts outstanding thereunder will become due and payable in full at the end of the term of the Lease.
The Participation Agreement and the Lease contain financial and operating covenants, which areterms substantially similar to the covenants set forth in our Credit Facility. We were in compliance with all covenantsshare repurchase program above.
As of March 31, 2023, an aggregate of $3.051 billion remained available for share repurchases under the Participation Agreement and the Lease as of September 30, 2017. Funding Requirementsprograms.
The amount we need to fund operations will depend on various factors, including revenues from net product sales,table below summarizes the potential regulatory approval and commercializationshares of our product candidatesCommon Stock we repurchased and the timing thereof, the status of competitive products, the success of our research and development programs, the potential future need to expand our professional and support staff and facilities, the status of patents and other intellectual property rights (and future litigation related thereto), the delay or failure of a clinical trial of any of our potential drug candidates, and the continuation, extent, and success of our collaborations (in particular those with Sanofi and Bayer). We believe that our existing capital resources, borrowing availability under our revolving credit facility, funds generated by anticipated EYLEA net product sales, and, as described above under "Collaboration Agreements," funding for reimbursement of research and development costs that we are entitled to receive under our collaboration agreements, will enable us to meet our projected operating needs for the foreseeable future. We expect continued increases in our expenditures, particularly in connection with our research and development activities (including preclinical and clinical programs). The amount of funding that will be required for our clinical programs depends upon the results of our research and preclinical programs and early-stage clinical trials, regulatory requirements, the duration and results of clinical trials underway and of additional clinical trials that we decide to initiate, and the various factors that affect the cost of each trial. Under certain collaboration agreements, the amountshares, which were recorded as Treasury Stock.
| | | | | | | | | | | | | | | | | Three Months Ended
March 31, | | (In millions) | | 2023 | | 2022 | | Number of shares | | 0.9 | | | 0.6 | | | Total cost of shares | | $ | 693.9 | | | $ | 352.0 | |
Critical Accounting Estimates A summary of funding for reimbursementcritical accounting estimates is presented in Part II, Item 7. "Management's Discussion and Analysis of researchFinancial Condition and development costs that we are entitled to receive is capped at a specified amount; therefore, we may elect to independently fund certain research and development costs in excessResults of such capped amounts. Pursuant to the Antibody Discovery Agreement, as amended, Sanofi is responsible for funding up to $130.0 millionOperations" of our antibody discovery activities in 2017. Our Antibody Discovery Agreement with Sanofi will endAnnual Report on Form 10-K for the fiscal year ended December 31, 2017 and, therefore, funding from Sanofi under2022 (filed February 6, 2023). There have been no material changes to critical accounting estimates during the Antibody Discovery Agreement will cease after 2017. See "Collaboration Agreements - Collaborations with Sanofi - Antibodies" above for further information. We anticipate continuing to incur substantial commercialization costs for EYLEA, Dupixent, Praluent, and Kevzara. Commercialization costs over the next few years will depend on, among other things, the market potential for product candidates, whether commercialization costs are shared with a collaborator, regulatory approval of additional product candidates, and whether we may be required to pay additional royalties or share the profits from sales of products pursuant to our license or collaboration agreements or otherwise.
We expect that expenses related to the filing, prosecution, defense, and enforcement of patents and other intellectual property will be substantial.
We enter into research collaboration and licensing agreements that may require us to pay (i) amounts upon the achievement of various development and commercial milestones, which, in the aggregate, could be significant, and/or (ii) royalties calculated based on a percentage of net product sales. The payment of these amounts, however, is contingent upon the occurrence of various future events, which have a high degree of uncertainty of occurring and for which the specific timing cannot be predicted.
three months ended March 31, 2023.
Future Impact of Recently Issued Accounting Standards See Note 15 to our Condensed Consolidated Financial Statements for a summaryAs of March 31, 2023, the future adoption of recently issued accounting standards.standards is not expected to have a material impact on the Company's financial position or results of operations.
ITEMItem 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKQuantitative and Qualitative Disclosures About Market Risk
Our market risks, and the way we manage them, are summarized in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K for the fiscal year ended December 31, 20162022 (filed February 9, 2017)6, 2023). We There have exposure to market risk forbeen no material changes in interest rates, including the interest rate risk relating to our March 2017 variable rate Tarrytown, New York lease (as described in Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Tarrytown, New York Leases"). Our interest rate exposure is partially offset by our investments in marketable securities. In addition, beginning in the second quarter of 2017, we began to further manage our interest rate exposure through the use of derivative instruments. All of our derivative instruments are utilized for risk management purposes, and are not used for tradingmarket risks or speculative purposes. We continue to monitor our interest rate risk and may utilize additional derivative instruments and/or other strategies in the future to further mitigate our interest rate exposure.
We have hedged a portion of our floating interest rate exposure using interest rate swap and interest rate cap contracts (see Note 11 to our Condensed Consolidated Financial Statements). The following table summarizes the notional amountsmanagement of our outstanding interest rate swap and cap contractssuch risks as of September 30, 2017:March 31, 2023.
| | | | | | | (In millions) | | Notional Amount | | Interest rate swap contracts | | $ | 75.0 |
| | Interest rate cap contracts | | $ | 75.0 |
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ITEMItem 4. CONTROLS AND PROCEDURESControls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) andor 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer each concluded that, as of the end of such period, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported on a timely basis, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) andor 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2017March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION ITEMItem 1. LEGAL PROCEEDINGSLegal Proceedings
From timeThe information called for by this item is incorporated herein by reference to time, we are a partythe information set forth in Note 11 to legal proceedingsour Condensed Consolidated Financial Statements included in the course of our business, including those described in our Annual Report on Form 10-K for the year ended December 31, 2016 (filed February 9, 2017), our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 (filed May 4, 2017), our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 (filed August 3, 2017), and those described below. The outcome of any such proceedings, regardless of the merits, is inherently uncertain. For a description of risks relating to these and other legal proceedings we face, see Part II, Item 1A. "Risk Factors," including the discussion under the headings entitled "Risks Related to Intellectual Property and Market Exclusivity," "Regulatory and Litigation Risks," and "Risks Related to Our Common Stock."
Proceedings Relating to '287 Patent, '163 Patent, and '018 Patent
As previously reported, on September 25, 2013, we commenced patent infringement litigation against Kymab Ltd in the English High Court of Justice, Chancery Division, Patents Court, in London, asserting our European Patent No. 1,360,287 (the '287 Patent) and our European Patent No. 2,264,163 (the '163 Patent), each of which concerns genetically engineered mice capable of producing chimeric antibodies that are part human and part mouse. On February 1, 2016, the court issued a final judgment, finding that the asserted claims of the '287 and '163 Patents are novel, not obvious, and infringed by Kymab's genetically engineered mice. However,
this report.
the court invalidated the '287 and '163 Patents on the ground of insufficiency. The hearing for our appeal and Kymab's cross-appeal was held on October 17 - 20, 2017.
As previously reported, on March 11, 2014, we commenced patent infringement litigation against Merus B.V. in the United States District Court for the Southern District of New York, asserting our U.S. Patent No. 8,502,018 (the '018 Patent), which concerns genetically engineered mice capable of producing chimeric antibodies that are part human and part mouse. On November 21, 2014, the United States District Court for the Southern District of New York issued its Opinion and Order on Claim Construction in the '018 Patent infringement litigation, in which it held the '018 Patent invalid and not infringed. On November 2, 2015, the United States District Court for the Southern District of New York issued an opinion and order finding that the '018 Patent was procured by inequitable conduct, thus rendering it unenforceable. On July 27, 2017, the United States Court of Appeals for the Federal Circuit (the Federal Circuit) affirmed the District Court's decision regarding inequitable conduct without deciding the issues of validity and infringement. On September 12, 2017, we submitted a petition for panel rehearing and/or rehearing en banc in the Federal Circuit. On November 2, 2017, Merus filed its response to our petition.
Proceedings Relating to Praluent (alirocumab) Injection
As previously reported, in the United States, Amgen Inc. has asserted a number of U.S. patents, which were subsequently narrowed to U.S. Patent Nos. 8,829,165 (the '165 Patent) and 8,859,741 (the '741 Patent), and seeks a permanent injunction to prevent us and the Sanofi defendants from commercial manufacturing, using, offering to sell, or selling within the United States (as well as importing into the United States) (collectively, Commercializing) Praluent. Amgen also seeks a judgment of patent infringement of the asserted patents, monetary damages (together with interest), costs and expenses of the lawsuits, and attorneys' fees. A jury trial in this litigation was held in the United States District Court for the District of Delaware (the District Court) from March 8 to March 16, 2016. During the course of the trial, the District Court ruled as a matter of law in favor of Amgen that the asserted patent claims were not obvious, and in favor of Regeneron and the Sanofi defendants that there was no willful infringement of the asserted patent claims by Regeneron or the Sanofi defendants. On March 16, 2016, the jury returned a verdict in favor of Amgen, finding that the asserted claims of the '165 and '741 Patents were not invalid based on either a lack of written description or a lack of enablement. On January 3, 2017, the District Court issued a final opinion and judgment, denying our and the Sanofi defendants' motions for new trial and judgment as a matter of law. On October 5, 2017, the Federal Circuit reversed in part the District Court's decision, remanded for a new trial on the issues of written description and enablement, and vacated the District Court's permanent injunction. In addition, it affirmed the District Court's ruling that Amgen's patents were not obvious. The Federal Circuit further concluded that we and the Sanofi defendants were not entitled to judgment as a matter of law on the issues of written description and enablement on this record.
As previously reported, on July 25, 2016, Amgen filed a lawsuit for infringement of its European Patent No. 2,215,124 (the '124 Patent) against Regeneron, Sanofi-Aventis Groupe S.A., Sanofi Winthrop Industrie S.A., and Sanofi-Aventis Deutschland GmbH in the Regional Court of Düsseldorf, Germany, seeking a permanent injunction, an accounting of marketing activities, a recall of Praluent and its removal from distribution channels, and damages. Oral hearing on this infringement lawsuit was held on October 19, 2017.
Proceedings Relating to Dupixent (dupilumab) Injection
As previously reported, on March 23, 2017, we, Sanofi-Aventis U.S. LLC, and Genzyme Corporation initiated an inter partes review (IPR) in the United States Patent and Trademark Office (USPTO) seeking a declaration of invalidity of U.S. Patent No. 8,679,487 (the '487 Patent) owned by Immunex Corporation relating to antibodies that bind the human interleukin-4 receptor. On July 28 and 31, 2017, the same parties filed two additional IPR petitions in the USPTO seeking declarations of invalidity of the '487 Patent based on different grounds (the Additional IPR Petitions). On October 4, 2017, the Patent Trial and Appeal Board of the USPTO issued a decision on the first IPR petition and declined to institute an IPR proceeding to review the validity of the '487 Patent. The Additional IPR Petitions are still pending.
As previously reported, on April 5, 2017, Immunex Corporation filed a complaint against us, Sanofi, Sanofi-Aventis U.S. LLC, Genzyme Corporation, and Aventisub LLC in the United States District Court for the Central District of California seeking a judgment of patent infringement of the '487 Patent and a declaratory judgment of infringement of the '487 Patent, in each case by our and the other defendants' Commercializing of Dupixent; monetary damages (together with interest); an order of willful infringement of the '487 Patent, which would allow the court in its discretion to award damages up to three times the amount assessed; costs and expenses of the lawsuit; and attorneys' fees. Immunex is not seeking an injunction in this proceeding at this time. On June 21, 2017, the court denied a motion to dismiss Immunex's complaint previously filed by us and the Sanofi parties. On June 28, 2017, we and the Sanofi parties filed an answer to Immunex's complaint and counterclaims against Immunex and Amgen (which was amended on October 31, 2017 to, among other things, add an inequitable conduct allegation), and Immunex and Amgen filed an answer to the counterclaims on July 28, 2017. A jury trial has been scheduled to start on March 19, 2019.
Proceedings Relating to Shareholder Derivative Claims
As previously reported, on or about December 15, 2015, we received a shareholder litigation demand upon our board of directors made by a purported Regeneron shareholder. On or about November 3, 2017, we received a second shareholder litigation demand upon our board of directors made by another purported Regeneron shareholder, which is substantially similar to the December 15, 2015 shareholder litigation demand. The demands assert that the then current and certain former non-employee members of the board of directors and the Chairman of the board of directors excessively compensated themselves in 2013 and 2014. The demands request that our board of directors investigate and bring legal action against these directors for breach of fiduciary duty, unjust enrichment, and corporate waste, and implement internal controls and systems designed to prohibit and prevent similar actions in the future. Our board of directors is evaluating the impact of the New York Supreme Court's decision pertaining to the motion to dismiss filed by the defendants in the shareholder derivative litigation (discussed in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 (filed August 3, 2017)) on the board's response to these demands.
ITEMItem 1A. RISK FACTORSRisk Factors
We operate in an environment that involves a number of significant risks and uncertainties. We caution you to read the following risk factors, which have affected, and/or in the future could affect, our business, prospects, operating results, and financial condition. The risks described below include forward-looking statements, and actual events and our actual results may differ materially from these forward-looking statements. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also impair our business, prospects, operating results, and financial condition. Furthermore, additional risks and uncertainties are described under other captions in this report and should also be considered by our investors. For purposes of this section (as well as this report in general), references to our products encompass products marketed or otherwise commercialized by us and/or our collaborators or licensees; and references to our product candidates encompass product candidates in development by us and/or our collaborators or licensees (in the case of collaborated or licensed products or product candidates under the terms of the applicable collaboration or license agreements), unless otherwise stated or required by the context. In this section, we first provide a summary of the more significant risks and uncertainties we face and then provide a full set of risk factors and discuss them in greater detail. Summary of Risk Factors As noted above, we are subject to a number of risks that if realized could materially harm our business, prospects, operating results, and financial condition. Some of the more significant risks and uncertainties we face include those summarized below. The summary below is not exhaustive and is qualified by reference to the full set of risk factors set forth in this "Risk Factors" section. Please carefully consider all of the information in this Form 10-Q, including the full set of risks set forth in this "Risk Factors" section, and in our other filings with the SEC before making an investment decision regarding Regeneron. Commercialization Risks •We are substantially dependent on the success of EYLEA and Dupixent. •Sales of our products are dependent on the availability and extent of reimbursement from third-party payors, including private payors and government programs such as Medicare and Medicaid, which could change due to various factors such as drug price control measures that have been or may be enacted or introduced in the United States by various federal and state authorities. •The commercial success of our products is subject to significant competition from products or product candidates that may be superior to, or more cost effective than, our products or product candidates. •We and our collaborators on which we rely to commercialize some of our marketed products may be unable to continue to successfully commercialize or co-commercialize our products, both in the United States and abroad. Regulatory and Development Risks •Drug development and obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain. •Serious complications or side effects in connection with the use or development of our products or product candidates could cause our regulatory approvals to be revoked or limited or lead to delay or discontinuation of development of our product candidates or new indications for our marketed products. •We may be unable to formulate or manufacture our product candidates in a way that is suitable for clinical or commercial use, which would delay or prevent continued development of such candidates and/or receipt of regulatory approval or commercial sale. •Many of our products are intended to be used in combination with drug-delivery devices, which may result in additional regulatory, commercialization, and other risks. Intellectual Property and Market Exclusivity Risks •We may not be able to protect the confidentiality of our trade secrets, and our patents or other means of defending our intellectual property may be insufficient to protect our proprietary rights. •Patents or proprietary rights of others may restrict our development, manufacturing, and/or commercialization efforts and subject us to patent litigation and other proceedings that could find us liable for damages. •Loss or limitation of patent rights, and regulatory pathways for biosimilar competition, could reduce the duration of market exclusivity for our products, including EYLEA. Manufacturing and Supply Risks •We rely on limited internal and contracted manufacturing and supply chain capacity, which could adversely affect our ability to commercialize our products and to advance our clinical pipeline. As we increase our production in response to higher product demand or in anticipation of a potential regulatory approval, our current manufacturing capacity will
likely not be sufficient, and our dependence on our collaborators and/or contract manufacturers may increase, to produce adequate quantities of drug material for both commercial and clinical purposes. •Expanding our manufacturing capacity and establishing fill/finish capabilities will be costly and we may be unsuccessful in doing so in a timely manner, which could delay or prevent the launch and successful commercialization of our products approved for marketing and could jeopardize our clinical development programs. •Our ability to manufacture products may be impaired if any of our or our collaborators' manufacturing activities, or the activities of other third parties involved in our manufacture and supply chain, are found to infringe patents of others. •If sales of our marketed products do not meet the levels currently expected, or if the launch of any of our product candidates is delayed or unsuccessful, we may face costs related to excess inventory or unused capacity at our manufacturing facilities and at the facilities of third parties or our collaborators. •Third-party service or supply failures, failures at our manufacturing facilities in Rensselaer, New York and Limerick, Ireland, or failures at the facilities of any other party participating in the supply chain would adversely affect our ability to supply our products. •Our or our collaborators' failure to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates could result in incurring substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if regulatory approval is obtained, and a reduction in sales. Other Regulatory and Litigation Risks •If the testing or use of our products harms people, or is perceived to harm them even when such harm is unrelated to our products, we could be subject to costly and damaging product liability claims. •Our business activities have been, and may in the future be, challenged under U.S. federal or state and foreign healthcare laws, which may subject us to civil or criminal proceedings, investigations, or penalties. •If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions, and fines. •We face risks from the improper conduct of our employees, agents, contractors, or collaborators, including those relating to potential non-compliance with relevant laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act. •Our operations are subject to environmental, health, and safety laws and regulations, including those governing the use of hazardous materials. •Changes in laws and regulations affecting the healthcare industry could adversely affect our business. •Tax liabilities and risks associated with our operations outside of the United States could adversely affect our business. •We face risks related to the personal data we collect, process, and share. Risks Related to Our Reliance on or Transactions with Third Parties •If our collaborations with Sanofi or Bayer or other third parties are terminated or breached, our ability to develop, manufacture, and commercialize certain of our products and product candidates in the time expected, or at all, would be materially harmed. •Our collaborators and service providers may fail to perform adequately in their efforts to support the development, manufacture, and commercialization of our drug candidates and current and future products. •We have undertaken and may in the future undertake strategic acquisitions, and any difficulties from integrating such acquisitions could adversely affect our business, operating results, and financial condition. Other Risks Related to Our Business and Our Common Stock •Our business is dependent on our key personnel and will be harmed if we cannot recruit and retain leaders in our research, development, manufacturing, and commercial organizations. •Significant disruptions of information technology systems or breaches of data security could adversely affect our business. •Public health outbreaks, epidemics, or pandemics (such as the COVID-19 pandemic) have adversely affected and may in the future adversely affect our business. •We may need additional funding in the future, which may not be available to us, and which may force us to delay, reduce, or eliminate our product development programs or commercialization efforts. •Our indebtedness could adversely impact our business. •Our stock price is extremely volatile. •Our existing shareholders may be able to exert substantial influence over matters requiring shareholder approval and over our management.
* * * Risks Related to Commercialization of EYLEAOur Marketed Products, Product Candidates, and New Indications for Our Marketed Products We are substantially dependent on the success of EYLEA. If we or Bayer are unable to continue to successfully commercialize EYLEA our business, prospects, operating results, and financial condition will be materially harmed.Dupixent. EYLEA net product sales represent a substantial portion of our revenues and this concentration of our net sales in a single product makes us substantially dependenton that product. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, EYLEA net product sales in the United States represented 64%45% and 68%51% of our total revenues, respectively. For the three months ended March 31, 2023, EYLEA global net product sales decreased by 4%, compared to the same period in 2022, as discussed in Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations." If we were to experience difficulty with the commercialization of EYLEA in the United States or if Bayer were to experience any difficulty with the commercialization of EYLEA outside the United States, if EYLEA net product sales experience a sustained decline in or outside the United States, or if we and Bayer are unable to maintain current marketing approvals of EYLEA, we may experience a reduction in revenue and may not be able to sustain profitability,stay profitable at the levels we previously achieved or at all, and our business, prospects, operating results, and financial condition wouldmay be materially harmed. In the United States, the regulatory exclusivity period for EYLEA (i.e., the period during which no biosimilar product can be approved by the FDA) will expire after May 17, 2024. See "Risks Related to Intellectual Property and Market Exclusivity - Loss or limitation of patent rights, and regulatory pathways for biosimilar competition, could reduce the duration of market exclusivity for our products" below. As a result, we face the risk of lower EYLEA net product sales due to biosimilar competition following such expiration, which may have a material adverse impact on our results of operations. While we have submitted a BLA for aflibercept 8 mg with the FDA, the degree to which any future net product sales of aflibercept 8 mg (if approved) may offset any potential decrease in EYLEA net product sales, resulting from the factors discussed above or otherwise, is highly uncertain. In addition, we are dependent on our share of profits from the commercialization of Dupixent under our Antibody Collaboration with Sanofi. If we or Sanofi were to experience any difficulty with the commercialization of Dupixent or if we or Sanofi are unable to maintain current marketing approvals of Dupixent, we may experience a reduction in revenue and our business, prospects, operating results, and financial condition may be materially harmed. If we or our collaborators are unable to continue to successfully commercialize our products, our business, prospects, operating results, and financial condition will be materially harmed. We expect that the continueddegree of commercial success of EYLEAour marketed products will continue to depend on many factors, including the following:following (as applicable): •effectiveness of the commercial strategy in and outside the United States for the marketing of EYLEA,our products, including pricing strategy and the continued effectiveness of efforts to obtain, and the timing of obtaining, adequate third-party reimbursements;strategy; maintaining and successfully monitoring commercial manufacturing arrangements for EYLEA with third parties who perform fill/finish or other steps in the manufacture of EYLEA to ensure that they meet our standards and those of regulatory authorities, including the FDA, which extensively regulate and monitor pharmaceutical manufacturing facilities;
our ability to meet the demand for commercial supplies of EYLEA;
| | • | our ability to differentiate EYLEA from Lucentis® (ranibizumab) and other competitive products, and the willingness of retinal specialists and patients to switch from Lucentis or off-label use of repackaged Avastin® (bevacizumab) to EYLEA or to start treatment with EYLEA;
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•sufficient coverage of, and reimbursement for, EYLEAour marketed products by third-party payers,payors, including Medicare and Medicaid in the United States and other government and private payerspayors in the United States and foreign jurisdictions;jurisdictions, as well as U.S. and foreign payor restrictions on eligible patient populations and the reimbursement process (including drug price control measures that have been or may be enacted or introduced in the United States by various federal and state authorities); •our ability and our collaborators' ability to maintain sales of EYLEAour marketed products in the face of competitive products and to differentiate our marketed products from competitive products, including thoseas applicable product candidates currently in clinical development; development (such as aflibercept 8 mg); and, in the results of post-approval studiescase of EYLEA, (whether conducted by usthe existing and potential new branded and biosimilar competition for EYLEA (discussed further under "The commercial success of our products and product candidates is subject to significant competition - Marketed Products" below) and the willingness of retinal specialists and patients to start or by others and whether mandated by regulatory agenciescontinue treatment with EYLEA or voluntary), and studies of other products that could implicate VEGF inhibitors as a class or are perceived to do so, as well as the results of the studies investigating nesvacumab (an antibodyswitch from another product to angiopoietin-2) co-formulated with aflibercept conducted by us and Bayer;EYLEA; •the effect of existing and new health care laws and regulations currently being considered or implemented in the United States, including measures requiring the U.S. government in the future to negotiate the prices of certain drugs and price reporting and other disclosure requirements of such laws and regulations and the potential impact of such requirements on physician prescription practices;prescribing practices and payor coverage; risks associated•serious complications or side effects in connection with intellectual propertythe use of other parties and pending or future litigation relating thereto,our marketed products, as discussed under "Risks Related to Intellectual Property and Market Exclusivity" below.
More detailed information about the risks related to the commercialization of EYLEA is provided in the risk factors below.
We and Bayer are subject to significant ongoing regulatory obligations and oversight with respect to EYLEA. If we or Bayer fail to maintain regulatory compliance for EYLEA, EYLEA marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition.
We and Bayer are subject to significant ongoing regulatory obligations and oversight with respect to EYLEA for its currently approved indications in the United States, EU, and other countries where the product is approved. If we or Bayer fail to maintain regulatory compliance for EYLEA for its currently approved indications (including for any of the reasons discussed below under "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain"), EYLEA marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition. Failure to comply may also subject us to sanctions, product recalls, or withdrawals of previously approved marketing applications. See also "Risks Related to Manufacturing and Supply - If we fail to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates, we could incur substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if they obtain regulatory approval, and a reduction in sales" below.
Serious complications or side effects in connection with the use of EYLEA could materially harm our business, prospects, operating results, and financial condition.
Serious complications or serious, unexpected side effects in connection with the use of EYLEA could materially harm our business, prospects, operating results, and financial condition. For additional information about some of these risks, see "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Serious complications or side effects in connection with the use of our products and in clinical trials for our product candidates and new indications for our marketed products could cause our regulatory approvals to be revoked or limited or lead to delay or discontinuation of development of our product candidates or new indications for our marketed products, which could severely harm our business, prospects, operating results, and financial condition" below;
•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 proceedings relating to EYLEA, Praluent, and REGEN-COV (described further in Note 11 to our Condensed Consolidated Financial Statements included in this report), as well as other risks relating to our marketed products and product candidates 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 outcome of the pending government proceedings and investigations and other matters described in Note 11 to our Condensed Consolidated Financial Statements included in this report (including the civil complaint filed against us on June 24, 2020 in the U.S. District Court for the District of Massachusetts by the U.S. Attorney's Office for the District of Massachusetts); and •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. More detailed information about the risks related to the commercialization of our marketed products is provided in the risk factors below. We and our collaborators are subject to significant ongoing regulatory obligations and oversight with respect to the products we or our collaborators commercialize. If we or our collaborators fail to maintain regulatory compliance for any of such products, the applicable marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition. We and our collaborators are subject to significant ongoing regulatory obligations and oversight with respect to the products we or they commercialize for the products' currently approved indications in the United States, EU, and other countries where such products are approved. If we or our collaborators fail to maintain regulatory compliance or satisfy other obligations for such products' currently approved indications (including because the product does not meet the relevant endpoints of any required post-approval studies (such as those required under an accelerated approval by the FDA or other similar type of approval), or for any of the reasons discussed below under "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain"), the applicable marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition. Failure to comply may also subject us to sanctions, product recalls, or withdrawals of previously approved marketing applications. See also "Risks Related to Manufacturing and Supply - Our or our collaborators' failure to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates could result in incurring substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if regulatory approval is obtained, and a reduction in sales" below. Sales of EYLEAour marketed products are dependent on the availability and extent of reimbursement from third-party payers,payors, and changes to such reimbursement may materially harm our business, prospects, operating results, and financial condition. Our salesSales of our marketed products in the United States of EYLEA are dependent, in large part, on the availability and extent of reimbursement from third-party payers,payors, including private payerpayor healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies ("PBMs"), and government programs such as Medicare and Medicaid. Sales of EYLEAour marketed products in other countries are dependent, in large part, on similar reimbursement mechanisms and programs in those countries.
Our future revenues and profitability will be adversely affected in a material manner if such third-party payors do not adequately defray or reimburse the cost of our marketed products. If these entities do not provide coverage and reimbursement with respect to our marketed products or provide an insufficient level of coverage and reimbursement, such products may be too costly for many patients to afford them, and physicians may not prescribe them. Many third-party payors cover only selected drugs, or may prefer selected drugs, making drugs that are not covered or preferred by such payors more expensive for patients. Third-party payors may also require prior authorization for reimbursement, or require failure on another type of treatment before covering a particular drug, particularly with respect to higher-priced drugs. As our currently marketed products and most of our product candidates are biologics, bringing them to market may cost more than bringing traditional, small-molecule drugs to market due to the complexity associated with the research, development, production, supply, and regulatory review of such products. Given cost sensitivities in many health care systems, our currently marketed products and product candidates are
likely to be subject to continued pricing pressures, which may have an adverse impact on our business, prospects, operating results, and financial condition. In addition, in order for private insurance and governmental payors (such as Medicare and Medicaid in the United States, thereStates) to reimburse the cost of our marketed products, we must maintain, among other things, our FDA registration and our National Drug Code, formulary approval by PBMs, and recognition by insurance companies and the Centers for Medicare & Medicaid Services ("CMS"). There is an increased focus fromno certainty that we will be able to obtain or maintain the federal governmentapplicable requirements for reimbursement (including relevant formulary coverage, as discussed further below) of our current and others on analyzing the impact of various regulatory programs on the federal deficit,future marketed products, which could result in increased pressure on federal programs to reduce costs, including limiting federal healthcare expenditures. For example, in September 2011 the Office of Inspector General (OIG) of the Department of Health and Human Services issued a report entitled "Review of Medicare Part B Avastin and Lucentis Treatments for Age-Related Macular Degeneration" in which the OIG details possible savings to the Medicare program by using off-label, repackaged Avastin rather than Lucentis for the treatment of wet AMD. A reduction in the availability or extent of reimbursement from U.S. government programs couldmay have a material adverse effect on the sales of EYLEA. Economic pressure on state budgets may also have a similar impact. In addition,our business. Government and other third-party payerspayors (including pharmacy benefit management companies)PBMs) are challenging the prices charged for healthcare products and increasingly limiting, and attempting to limit, both coverage and level of reimbursement for prescription drugs, such as by requiring outcomes-based or other pay-for-performance pricing arrangements. They are also imposing restrictions on eligible patient populations and the reimbursement process, including by means of required prior authorizations and utilization management criteria, such as step therapy (i.e., requiring the use of less costly medications before more costly medications are approved for coverage). Some states are also considering legislation that would control the prices and reimbursement of prescription drugs, and state Medicaid programs are increasingly requesting manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any prescription drug for which supplemental rebates are not being paid. It is likely that federal and state legislatures and health agencies will continue to focus on additional health care reform measures in the future that will impose additional constraints on prices and reimbursements for our marketed products. Further, there have been several recent U.S. Congressional inquiries and recently approved or proposed federal and state legislation and policies (in addition to those already in effect) designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the out-of-pocket cost of prescription drugs, and reform government program reimbursement methodologies for drugs. Since EYLEANotably, the U.S. Congress recently passed the Inflation Reduction Act ("IRA"), which includes, among other items, provisions regarding the following: •Implementation of a Medicare Drug Price Negotiation Program (the "Medicare Drug Price Negotiation Program"). The Medicare Drug Price Negotiation Program requires the government to set prices for select high-expenditure drugs covered under Medicare Parts B and D. In the first two years, only Part D drugs are eligible for inclusion in the Medicare Drug Price Negotiation Program. Starting in 2026, the government is too expensiveauthorized to select both Part B and Part D drugs for mostinclusion in the Medicare Drug Price Negotiation Program, with established prices for selected drugs to go into effect in 2028 absent certain disqualifying events. •Medicare Inflation Based Rebates. The IRA includes measures penalizing manufacturers that raise prices of drugs covered under Medicare Parts B and D at a rate that exceeds the rate of inflation. •Medicare Part D Program Redesign. The IRA implements changes to the Medicare Part D benefits to limit patient out-of-pocket drug costs and shift program liabilities from patients to afford withoutother stakeholders, including health plans, manufacturers, and the government. While enacted into law, it is currently unclear how many of the provisions of the IRA (including the Medicare Drug Price Negotiation Program with respect to Part B drugs and biologics) will be implemented and the extent to which the policy changes will ultimately impact reimbursement levels of our marketed products, including those covered under Medicare Part B (such as EYLEA) or our product candidates that may be covered under Medicare Part B (such as aflibercept 8 mg) or Medicare Part D in the future. At the state level, legislatures are becoming increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and price and marketing cost disclosure and transparency measures. In some cases, these measures are designed to encourage importation from other countries and bulk purchasing. A reduction in the availability or extent of reimbursement from U.S. government programs (including as a result of the legislation, proposals, initiatives, and developments described above) could have a material adverse effect on the sales of EYLEA or our other marketed products. Economic pressure on state budgets may also have a similar impact. In addition, PBMs and other managed-care organizations often develop formularies to reduce their cost for medications. The breadth of the products covered by formularies varies considerably from one PBM to another. Failure to be included in such formularies or to achieve favorable formulary status may negatively impact the utilization and market share of our marketed products. If our marketed products are not included within an adequate number of formularies, adequate reimbursement levels are not provided, the eligible insured patient population for our products is limited, or a key payor refuses to provide reimbursement for our products in a particular jurisdiction altogether, this could have a material adverse effect on our and our collaborators' ability to commercialize the applicable product.
In many foreign countries, pricing, coverage, and level of reimbursement of prescription drugs are subject to governmental control, and we and our collaborators may be unable to obtain coverage, pricing, and/or reimbursement on terms that are favorable to us or necessary for us or our collaborators to successfully commercialize our marketed products in those countries. In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country, and may take into account the clinical effectiveness, cost, and service impact of existing, new, and emerging drugs and treatments. For example, the EU provides options for its member states to restrict the range of medicinal products for which their national health insurance coverage,systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. Our results of operations may suffer if adequatewe or our collaborators are unable to market our products in foreign countries or if coverage and reimbursement by third-party payers, including Medicare and Medicaidfor our marketed products in foreign countries is limited or delayed. As discussed below under "If we are unable to establish commercial capabilities outside the United States is not available, our abilityfor Libtayo, Dupixent, or any other products we intend to successfully commercialize EYLEA will be materially adversely impacted. Our sales and potential profits andor co-commercialize outside the United States, our business, prospects, operating results, and financial condition wouldmay be materially harmed. See also "Risks Relatedadversely affected," we will need to Commercialization of Products - The successful commercialization of our marketed products, as well as our late-stage product candidates or new indicationsmanage these and other commercialization-related risks in order for our marketed products, if approved, will depend on obtaining and maintaining coverage and reimbursement for use of these products from third-party payers, including Medicare and Medicaid inus to successfully develop commercial capabilities outside the United States (including those necessary for our successful commercialization and these payers may not cover or adequately reimburse for useco-commercialization of our products or may do so at levels that make our products uncompetitive and/or unprofitable, which would materially harm our business, prospects, operating results,Libtayo and financial condition" below.
Dupixent, respectively).
The commercial success of EYLEAour products and product candidates is subject to strongsignificant competition. The marketMarketed Products
There is substantial competition in the biotechnology and pharmaceutical industries from biotechnology, pharmaceutical, and chemical companies. Many of our competitors have substantially greater research, preclinical and clinical product development and manufacturing capabilities, as well as financial, marketing, and human resources, than we do. Our competitors, regardless of their size, may also enhance their competitive position if they acquire or discover patentable inventions, form collaborative arrangements, or merge with other pharmaceutical or biotechnology companies. There is significant actual and potential future competition for eye disease products is very competitive.each of our marketed products. EYLEA and (if approved) aflibercept 8 mg. EYLEA faces and, if approved, aflibercept 8 mg will face, significant competition in the marketplace. For example, EYLEA competes in one or more of its approved indications with other VEGF inhibitors, including Genentech/Roche's Vabysmo® (faricimab-svoa) and Susvimo® (ranibizumab ocular implant), Novartis AG and Genentech/RocheRoche's Lucentis® (ranibizumab), and Novartis' Beovu® (brolucizumab), as well as biosimilar versions of Lucentis commercialized in the United States by Biogen Inc. and Coherus BioSciences, Inc. Ophthalmologists are collaborating on the commercialization and further developmentalso using off-label, third-party repackaged versions of aGenentech/Roche's approved VEGF antibody fragment, Lucentis,antagonist, bevacizumab, for the treatment of various eye indications. Lucentis is approved in one or more jurisdictions for the treatmentcertain of wet AMD, macular edema followingEYLEA's indications, and we are aware of another company developing an ophthalmic formulation of such product. In DME and RVO, (including CRVO and BRVO), DME, diabetic retinopathy, and mCNV. Competitors areEYLEA also exploring the development of a biosimilar version of Lucentis; in particular, Pfenex Inc. is developing PF582 (a Phase 1b/2a trial in patientscompetes with wet AMD has been completed), Formycon AG (in collaboration with Bioeq GmbH) is developing FYB201 (currently in a Phase 3 trial in patients with wet AMD), and Samsung Bioepis is developing SB11 (currently in a Phase 3 trial in patients with wet AMD). Other competitive or potentially competitive products include Allergan, Plc's Ozurdex® (dexamethasone) (approved by the FDA for the treatment of macular edema following RVO and for the treatment of DME) and Alimera Sciences, Inc's Iluvien® (fluocinolone ophthalmic implant) (approved by the FDA for the treatment of DME in patients who have been previously treated with a course of corticosteroids and did not have a clinically significant rise in intraocular pressure), both of which are intravitreal implants of corticosteroids. Many otherWe are also aware of a number of companies are working on the development of product candidates and extended delivery devices for the potential treatment of wet AMD, DME, and RVO,one or more of EYLEA's indications, including those that act by blocking VEGF and VEGF receptors as well as small interfering ribonucleic acids (siRNAs) that modulate(including therapies designed to extend the treatment interval) and/or other targets. In addition, we are aware of several companies developing biosimilar versions of EYLEA and other approved anti-VEGF treatments. Other potentially competitive products in development include products for use in combination with EYLEA and/or other anti-VEGF treatments, small-molecule tyrosine kinase inhibitors, gene expression. For example, Genentech/Roche is developing a Lucentisport delivery system implant (currently in a Phase 2 study in patients with wet AMD). Novartis is developing RTH258 (ESBA1008), a humanized monoclonal single-chain FV (scFv) antibody fragment targeting VEGF-A for wet AMD,therapies, and announced in June 2017 that two Phase 3 studies of RTH258 met their primary endpoint of non-inferiority to EYLEA. Allergan is developing abicipar pegol for wet AMD and related conditions (currently studied in Phase 3 trials against Lucentisas a comparator drug). Additionally, companies are developing products (or combinations of products) to treat wet AMD that act by blocking VEGF and VEGF receptors, as well as other targets (for example, Ang2). Genentech/Roche is developing a bi-specific antibody (RG7716) targeting both VEGF and Ang2 for wet AMD and DME (currently in Phase 2 trials for both indications). Competitors are also developing eye-drop formulations, devices, and oral therapies,therapies. There also is a risk that third parties repackage ZALTRAP for off-label use and gene/cell therapies for various indications that, if approved, would compete with EYLEA in one or more of its currently approved indications.
In addition, ophthalmologists are using off-label, third-party repackaged versions of Genentech/Roche's approved VEGF antagonist, Avastin,sale for the treatment of wet AMD, DME, and RVO. The relatively low costdiseases of therapy with repackaged Avastin presents a significant competitive challenge in these indications. Competitors (including Amgen) are also developing a biosimilar version of Avastin. Avastin is also being evaluated in eye diseases in clinical trials in certain countries. Furthermore, Lucentis and off-label use of repackaged Avastin present significant competitive challenges as doctors and patients have had significant experience using these medicines. The relatively low cost of repackaged Avastin in treating patients may exacerbate the competitive challenge which EYLEA faces in the eye, indications for which it is approved.
Finally,even though ZALTRAP has not been manufactured and formulated for use in intravitreal injections, and there is a risk that third parties may attempt to repackage ZALTRAP for off-label use and sale for the treatment of wet AMD and other diseases of the eye, which would present a potential low-cost competitive threat to EYLEA for its approved indications.injections. We are aware of claims by third parties, including those based on published clinical data, alleging that ZALTRAP (ziv-aflibercept) may be safely administered to the eye. If approved, we expect that aflibercept 8 mg will be entering a highly competitive environment; and our success in potentially commercializing aflibercept 8 mg will depend on a number of factors, including the extent to which we and our collaborators are able to differentiate aflibercept 8 mg from competitive products and the applicability of any restrictions imposed by payors at the time, such as step therapy.
SeeDupixent. The market for Dupixent's current and potential future indications is also "Risks Relatedincreasingly competitive. In atopic dermatitis, there are topical and systemic JAK inhibitors and an antibody against IL-13 approved for atopic dermatitis and others are in development. In addition, a number of companies are developing antibodies against IL-4Ra, IL-13Ra1, OX40(L), and/or IL-31R that may compete with Dupixent in atopic dermatitis and other indications (including asthma and/or prurigo nodularis), as applicable. In asthma, competitors to CommercializationDupixent include antibodies against the IL-5 ligand or the IL-5 receptor, immunoglobulin E, or thymic stromal lymphopoietin ("TSLP"); and some of Products - these antibodies are either approved or in development for indications that also compete or may compete in the future with Dupixent in CRSwNP and EoE. There are several other potentially competitive products in development that may compete with Dupixent in asthma, as well as potential future indications, including antibodies against the IL-33 ligand or receptor. Dupixent also faces competition from inhaled products in asthma and potential future indications.
Libtayo. Libtayo also faces significant competition. There are several competitors that are marketing and/or developing antibodies against PD-1 and/or PDL-1 (some of which were approved in the relevant indications and commercialized before Libtayo), including Merck's Keytruda® (pembrolizumab), Bristol-Myers Squibb's Opdivo® (nivolumab), Roche's Tecentriq® (atezolizumab), and AstraZeneca's Imfinzi® (durvalumab). Other marketed products. There is also significant actual and potential future competition for other products marketed or otherwise commercialized by us and/or our collaborators under our collaboration agreements with them. For example, there are several companies that are marketing and/or developing antibodies or other molecules (such as small interfering RNA molecules, or siRNAs) against PCSK9, ANGPTL3 and IL-6 and/or IL-6R, which currently (or, for product candidates in development, may in the future if approved) compete with Praluent, Evkeeza, and Kevzara, respectively. Product Candidates Our VelocImmune® technology, other antibody generation technologies, and late-stage and earlier-stage clinical candidates face competition from many pharmaceutical and biotechnology companies using various technologies, including antibody generation technologies and other approaches such as RNAi, chimeric antigen receptor T cell (CAR-T cell), and gene therapy technologies. For example, we are aware of other pharmaceutical and biotechnology companies actively engaged in the research and development of antibody-based products against targets that are also the targets of our early- and late-stage product candidates. We are also aware of other companies developing or marketing small molecules or other treatments that may compete with our antibody-based product candidates in various indications, if such product candidates obtain regulatory approval in those indications. If any of these or other competitors announces a successful clinical study involving a product that may be unsuccessful in continuing the commercializationcompetitive with one of our marketed products or in commercializing our product candidates or new indicationsthe grant of marketing approval by a regulatory agency for our marketed products, if approved, which would materially and adversely affecta competitive product, such developments may have an adverse effect on our business profitability,or future prospects. In addition, the first product to reach the market in a therapeutic area is often at a significant competitive advantage relative to later entrants to the market. Accordingly, the relative speed with which we, or our collaborators, can develop our product candidates, complete the clinical trials and approval processes, and, if such product candidates are approved for marketing and sale, supply commercial quantities to the market is expected to continue to be an important competitive factor. Due to the uncertainties associated with developing biopharmaceutical products, we may not be the first to obtain marketing approval for a product against any particular target, which may have a material adverse effect on our business or future prospects" below.prospects. We rely on our collaborationcollaborations with Bayer and Sanofi for commercializing EYLEA.some of our marketed products. While we have established our own sales and marketing organization for EYLEA in the United States for its currently approved indications, we have no sales, marketing, commercial, or distribution capabilities for EYLEA outside the United States. Under the terms of our license and collaboration agreement with Bayer (which is terminable by Bayer at any time upon six or twelve months' advance notice, depending on the circumstances giving rise to termination), we rely on Bayer (and, in Japan, Santen pursuant to a Co-Promotion and Distribution Agreement with Bayer's Japanese affiliate) for sales, marketing, and distribution of EYLEA (and, if approved, will rely on Bayer for such activities relating to aflibercept 8 mg) in countries outside the United States. In addition, under the terms of our Antibody Collaboration, we and Sanofi co-commercialize Dupixent in the United States and, as further discussed below, certain jurisdictions outside the United States. As a result, we rely in part on Sanofi's sales and marketing organization for Dupixent. If we and Sanofi fail to coordinate our sales and marketing efforts effectively, sales of Dupixent may be materially affected. Sanofi also maintains other important responsibilities relating to Dupixent. For example, Sanofi records product sales for Dupixent in the United States and leads negotiations with payors relating to this product. We also rely on Sanofi for sales, marketing, and distribution of Dupixent in countries outside the United States. While we exercised our option under the Antibody Collaboration to co-commercialize Dupixent in certain jurisdictions outside the United States, we will continue to rely in part on Sanofi's sales and marketing organization in such jurisdictions. If we and Bayerour collaborators are unsuccessful in continuing to commercialize EYLEA,the marketed products subject to such collaborations, or if Bayer or Sanofi terminate their respective collaborations with us, our ability to sustain profitabilitybusiness, prospects, operating results, and financial condition would be materially impaired. We have limited commercial capabilities outside the United States and would have to develop or outsource these capabilities. Therefore, termination of the Bayer collaboration agreement or our Antibody Collaboration would create substantial new and additional risks to the successful commercialization of EYLEA,the applicable products, particularly outside the United States. For additional information regarding our collaborationcollaborations with Bayer and Sanofi, see "Risks Related to Our Reliance on or Transactions with Third Parties - If our collaboration with Bayer for EYLEA is terminated, or Bayer materially breaches its obligations thereunder, our business, prospects, operating results, and financial condition, and our ability to continue to develop EYLEA and commercialize EYLEA outside the United States would be materially harmed" below and "Risks Related to Our Reliance on or Transactions with Third Parties - If our Antibody Collaboration with Sanofi is terminated, or Sanofi materially breaches its obligations thereunder, our business, prospects, operating results, and financial
condition, and our ability to develop, manufacture, and commercialize certain of our products and product candidates in the time expected, or at all, would be materially harmed" below.
Sales of EYLEAour marketed products recorded by us and Bayerour collaborators could be reduced by imports from countries where EYLEAsuch products may be available at lower prices. Our sales of EYLEAproducts we commercialize in the United States and Bayer'sour collaborators' sales of EYLEAproducts they commercialize or co-commercialize with us under our collaboration agreements with them in the United States and other countries (which impact our share of any profits or losses from the commercialization of these products under the relevant collaboration agreements and, therefore, our results of operations) may be reduced if EYLEAthe applicable product is imported into those countries from lower priced markets, whether legally or illegally (a practice known as parallel trading or reimportation). Parallel traders (who may repackage or otherwise alter the original product or sell it through alternative channels such as mail order or the Internet) take advantage of the price differentials between markets arising from factors including sales costs, market conditions (such as intermediate trading stages), tax rates, or national regulation of prices. Under our arrangement with Bayer, pricing and reimbursement for EYLEA outside the United States is the responsibility of Bayer. Prices for EYLEA in jurisdictions outside the United States are based on local market economics and competition and are likely to differ from country to country. In the United States, prices for pharmaceuticals are generally higher than in the bordering nations of Canada and Mexico and our sales of EYLEA in the United States may be reduced if EYLEA marketed in those nations is imported into the United States. Parallel-trading practices also are of particular relevance to the EU, where they have been encouraged by the current regulatory framework. These types of imports may exert pressure on the pricing of EYLEA in a particular market or reduce our or Bayer's sales, thereby adversely affecting our results of operations. In addition, there are proposals to legalize the import of pharmaceuticals from outside the United States into the United States. If such proposals were implemented, our future revenues derived from EYLEA sales could be reduced. Risks Related to Commercialization of Our Antibody-based Products (Dupixent, Praluent, and Kevzara)
If we or Sanofi are unable to successfully commercialize Dupixent, Praluent, or Kevzara, our business, prospects, operating results, and financial condition may be materially harmed.
We expect that the commercial success of Dupixent, Praluent, and Kevzara will depend on many factors, including the following (as applicable):
effectiveness of the commercial strategy in and outside the United States for the marketing of these products, including pricing strategy and the effectiveness of efforts to obtain, and the timing of obtaining, adequate third-party reimbursements;
| | • | our and Sanofi's ability to differentiate these products from competitive products (including, in the case of Dupixent, Pfizer Inc.'s Xeljanz® (tofacitinib) and Eli Lilly and Company's Olumiant® (baricitinib); in the case of Praluent, Amgen's Repatha® (evolocumab); and, in the case of Kevzara, Genentech/Roche's Actemra® (tocilizumab)), as well as product candidates currently in clinical development (such as, in the case of Dupixent, the antibody product candidates being developed by Roche, LEO Pharma Inc., AstraZeneca PLC, Galderma S.A., AnaptysBio, Inc., and Amgen);
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the outcome of the pending patent infringement proceedings relating to Dupixent (described further in Part II, Item 1. "Legal Proceedings" of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, and this report), and other risks relating to Dupixent associated with intellectual property of other parties and pending or future litigation relating thereto, as discussedSimilarly, under "Risks Related to Intellectual Property and Market Exclusivity" below;
the outcome of the pending patent infringement proceedings relating to Praluent initiated by Amgen against us and Sanofi (described further in Part I, Item 3. "Legal Proceedings" of our Annual Report on Form 10-K for the year ended December 31, 2016 and Part II, Item 1. "Legal Proceedings" of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, and this report), and other risks relating to Praluent 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;
sufficient coverage of, and reimbursement for, these 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;
payer restrictions on eligible patient populations and the reimbursement process, both in the United States and abroad;
the results of post-approval studies, whether conducted by us or by others and whether mandated by regulatory agencies or voluntary (including, in the case of Praluent, the ongoing ODYSSEY OUTCOMES trial prospectively assessing the potential of Praluent to demonstrate cardiovascular benefit), and studies of other products that could implicate an entire class of products or are perceived to do so;
our ability to meet the demand for commercial supplies of these products;
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; and
maintaining and successfully monitoring commercial manufacturing arrangements for these products with parties who perform fill/finish or other steps in the manufacture of these products to ensure that they meet our standards and those of regulatory authorities, including the FDA, which extensively regulate and monitor pharmaceutical manufacturing facilities.
More detailed information about the risks related to the commercialization of Dupixent, Praluent, and Kevzara is provided in the risk factors below.
We and Sanofi are subject to significant ongoing regulatory obligations and oversight with respect to Dupixent, Praluent, and Kevzara. If we or Sanofi fail to maintain regulatory compliance for Dupixent, Praluent, or Kevzara, the applicable marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition.
We and Sanofi are subject to significant ongoing regulatory obligations and oversight with respect to Dupixent, Praluent, and Kevzara for their currently approved indications in the United States, EU, and other countries. If we or Sanofi fail to maintain regulatory compliance for Dupixent, Praluent, or Kevzara for the currently approved indications (including because the product does not meet the relevant endpoints of any required post-approval studies, such as, in the case of Praluent, the ongoing ODYSSEY OUTCOMES trial, or for any of the other reasons discussed below under "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain"), the applicable marketing approval may be withdrawn, which would materially harm our business, prospects, operating results, and financial condition. Failure to comply may also subject us to sanctions, product recalls, or withdrawals of previously approved marketing applications. See also "Risks Related to Manufacturing and Supply - If we fail to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates, we could incur substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if they obtain regulatory approval, and a reduction in sales" below.
Serious complications or side effects in connection with the use of Dupixent, Praluent, or Kevzara could materially harm our business, prospects, operating results, and financial condition.
Serious complications or serious, unexpected side effects in connection with the use of Dupixent, Praluent, or Kevzara could materially harm our business, prospects, operating results, and financial condition. For additional information about some of these risks, see "Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products - Serious complications or side effects in connection with the use of our products and in clinical trials for our product candidates and new indications for our marketed products could cause our regulatory approvals to be revoked or limited or lead to delay or discontinuation of development of our product candidates or new indications for our marketed products, which could severely harm our business, prospects, operating results, and financial condition" below.
Sales of Dupixent, Praluent, and Kevzara are dependent on the availability and extent of reimbursement from third-party payers in the United States and other countries, and changes to such reimbursement may materially harm our business, prospects, operating results, and financial condition.
Sales in the United States of Dupixent, Praluent, and Kevzara are dependent, in large part, on the availability and extent of reimbursement from third-party payers, including private payer healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies, and government programs such as Medicare and Medicaid. Sales of Dupixent, Praluent, and Kevzara in other countries are dependent, in large part, on similar reimbursement mechanisms and programs in those countries.
Government and other third-party payers (including pharmacy benefit management companies) are challenging the prices charged for healthcare products and increasingly limiting, and attempting to limit, both coverage and level of reimbursement for prescription drugs, such as by requiring outcomes-based or other pay-for-performance pricing arrangements. They are also imposing restrictions on eligible patient populations and the reimbursement process, including by means of required prior authorizations and utilization management criteria. For example, pharmacy benefit management companies often develop formularies to reduce their cost for medications. The breadth of the products covered by formularies varies considerably from one pharmacy benefit management company to another. Failure to be included in such formularies or to achieve favorable formulary status may negatively impact the utilization and market share of Dupixent, Praluent, and Kevzara. If Dupixent, Praluent, or Kevzara is not included within an adequate number of formularies, adequate reimbursement levels are not provided, the eligible insured patient population for Dupixent, Praluent, or Kevzara is limited, or a key payer refuses to provide reimbursement for Dupixent, Praluent, or Kevzara in a particular jurisdiction altogether, this could have a material adverse effect on our and Sanofi's ability to commercialize the applicable product.
In the United States, there also is an increased focus from the federal government and others on analyzing the impact of various regulatory programs on the federal deficit, which could result in increased pressure on federal programs to reduce costs, including limiting federal healthcare expenditures. Economic pressure on state budgets may also have a similar impact. A reduction in the availability or extent of reimbursement from U.S. government programs could have a material adverse effect on the sales of Dupixent, Praluent, and Kevzara. Since Dupixent, Praluent, and Kevzara are too expensive for most patients to afford without health insurance coverage, if adequate coverage and reimbursement by third-party payers in the United States and other countries, including Medicare and Medicaid in the United States, is not available, our ability to successfully commercialize the applicable product will be materially adversely impacted. Our sales and potential profits and our business, prospects, operating results, and financial condition would be materially harmed. See also "Risks Related to Commercialization of Products - The successful commercialization of our marketed products, as well as our late-stage product candidates or new indications for our marketed products, if approved, will depend on obtaining and maintaining coverage and reimbursement for use of these products from third-party payers, including Medicare and Medicaid in the United States, and these payers may not cover or adequately reimburse for use of our products or may do so at levels that make our products uncompetitive and/or unprofitable, which would materially harm our business, prospects, operating results, and financial condition" below.
The commercial success of Dupixent, Praluent, and Kevzara is subject to strong competition.
There is significant actual and potential future competition for Dupixent. A number of companies are developing antibodies that, if approved, may compete with Dupixent in its current or potential future indications, including Roche (in collaboration with Dermira, Inc.) (an antibody against IL-13); LEO Pharma (in collaboration with AstraZeneca ) (IL-13 antibody tralokinumab being developed in the atopic dermatitis indication); AstraZeneca (antibodies against IL-4R and IL-5R, as well as IL-13 antibody tralokinumab being developed in the asthma indication); Galderma (an antibody against IL-31R); AnaptysBio (an antibody against IL-33); and Amgen (in collaboration with AstraZeneca) (an antibody against thymic stromal lymphopoietin, or TSLP). GSK's Nucala® (mepolizumab) and Teva's Cinqair® (reslizumab), both of which are antibodies against IL-5, may also compete with Dupixent in its current or potential future indications. We are also aware of companies developing or marketing small molecules that may compete with Dupixent in its current or potential future indications. These include Pfizer's EucrisaTM (crisaborole), a topical ointment that competes with Dupixent in the atopic dermatitis indication; and JAK inhibitors, such as AbbVie Inc.'s upadacitinib, Pfizer's Xeljanz, and Eli Lilly's Olumiant.
There also is significant actual and potential future competition for Praluent. Amgen's PCSK9 program is currently the most advanced of the competitors, having already received regulatory approvals in jurisdictions including the U.S., the EU, and Japan for its PCSK9 inhibitor Repatha. Amgen may obtain marketing approval for Repatha in one or more additional countries before Praluent is approved in those countries. Other companies with development programs for injectables against PCSK9 include Alnylam Pharmaceuticals, Inc. (in collaboration with The Medicines Company), which has a clinical program underway with inclisiran, an RNAi molecule against PCSK9. In addition, there are therapeutic products targeting PCSK9 operating through other mechanisms of action in development, including oral products and vaccines. Oral products that lower LDL-C, if approved, may also be competitive with PCSK9 inhibitors, including Praluent. These include bempedoic acid, which is being developed by Esperion Therapeutics, Inc.; gemcabene, which is being developed by Gemphire Therapeutics, Inc.; and an inhibitor of cholesterylester transfer protein (CETP), which is being developed by DalCor Pharmaceuticals.
Kevzara also faces competition from actual and potential future products. Genentech/Roche is marketing an antibody against IL-6R (Actemra) for the treatment of rheumatoid arthritis that competes with Kevzara. In addition, several other companies, including Alder Biopharmaceuticals, Inc. (in collaboration with Vitaeris Inc.), Ablynx, R-Pharm, and Bird Rock Bio, Inc. have antibodies against IL-6 or IL-6R in clinical development. Further, oral, small-molecule JAK inhibitors such as Pfizer's Xeljanz, Eli Lilly's Olumiant, and AbbVie's upadacitinib may pose a competitive threat for Kevzara.
We rely on our Antibody Collaboration with Sanofi for commercializing Dupixent, Praluent, and Kevzara.
In accordance with the terms of our Antibody Collaboration with Sanofi, we have elected to co-promote Dupixent, Kevzara, and Praluent with Sanofi in the United States. As such, we continue to rely in part on Sanofi's sales and marketing organization in the United States. If we and Sanofi fail to coordinate our United States sales and marketing efforts effectively, sales of Dupixent, Praluent, or Kevzara (as applicable) may be materially affected. Sanofi also maintains other important responsibilities relating to Dupixent, Praluent, and Kevzara in the United States. For example, Sanofi records product sales for Dupixent, Praluent, and Kevzara in the United States, serves as the lead regulatory party for certain products and product candidates included in the Antibody Collaboration (e.g., is responsible for regulatory filings and negotiations relating to such products and product candidates) in the United States, and may lead negotiations with payors relating to such products and product candidates. We also rely on Sanofi for sales, marketing, and distribution of Dupixent, Praluent, and Kevzara in countries outside the United States. If we or Sanofi are unsuccessful in commercializing Dupixent, Praluent, or Kevzara, or if Sanofi terminates the Antibody Collaboration with us, our business, prospects, operating results, and financial condition may be materially impaired. We have limited commercial capabilities outside the United States and would have to develop or outsource these capabilities for Dupixent, Praluent, and Kevzara. Therefore, termination of our Antibody Collaboration would create substantial new and additional risks to the successful commercialization of Dupixent, Praluent, and Kevzara, particularly outside the United States. For additional information regarding our Antibody Collaboration with Sanofi, see "Risks Related to Our Reliance on Third Parties - If any of our collaborations with Sanofi is terminated, our business, prospects, operating results, and financial condition, and our ability to discover, develop, manufacture, and commercialize our pipeline of product candidates in the time expected, or at all, would be materially harmed" below.
Sales of Dupixent, Praluent, and Kevzara recorded by Sanofi could be reduced by imports from countries where these products may be available at lower prices.
Sales of Dupixent, Praluent, and Kevzara recorded by Sanofi in the United States and other countries (which impact our share of any profits or losses from the commercialization of these products under our Antibody Collaboration with Sanofi and, therefore, our results of operations) may be reduced if the applicable product is imported into those countries from lower priced markets, whether legally or illegally (a practice known as parallel trading or reimportation). Parallel traders (who may repackage or otherwise alter the original product or sell it through alternative channels such as mail order or the Internet) take advantage of the price differentials between markets arising from factors including sales costs, market conditions (such as intermediate trading stages), tax rates, or national regulation of prices. Under our Antibody Collaboration with Sanofi, pricing and reimbursement for Dupixent, Praluent, and Kevzarathe products commercialized or co-commercialized thereunder outside the United States isare the responsibility of Sanofi. Prices for Dupixent, Praluent, and Kevzaraour marketed products in jurisdictions outside the United States are based on local market economics and competition and are likely to differ from country to country. In the United States, prices for pharmaceuticals are generally higher than in the bordering nations of Canada and Mexico and sales of Dupixent, Praluent, and Kevzaraour marketed products in the United States that are recorded by Sanofi may be reduced if the applicable product marketed in those bordering nations is imported into the United States. In addition, there are proposals to legalize the import of pharmaceuticals from outside the United States into the United States. If such proposals were implemented, our future revenues derived from sales of our marketed products could be reduced. Parallel-trading practices also are of particular relevance to the EU, where they have been encouraged by the current regulatory framework. These types of imports may exert pressure on the pricing of Dupixent, Praluent, and Kevzaraour marketed products in a particular market or thereduce sales recorded by Sanofi,us or our collaborators, thereby adversely affecting our results of operations.
We may be unsuccessful in continuing the commercialization of our marketed products or in commercializing our product candidates or new indications for our marketed products, if approved, which would materially and adversely affect our business, profitability, and future prospects. Even if clinical trials demonstrate the safety and effectiveness of any of our product candidates for a specific disease and the necessary regulatory approvals are obtained, the commercial success of any of our product candidates or new indications for our marketed products will depend upon, among other things, their acceptance by patients, the medical community, and third-party payors and on our and our collaborators' ability to successfully manufacture, market, and distribute those products in substantial commercial quantities or to establish and manage the required infrastructure to do so, including large-scale information technology systems and a large-scale distribution network. Establishing and maintaining sales, marketing, and distribution capabilities are expensive and time-consuming. Even if we obtain regulatory approval for our product candidates or new indications, if they are not successfully commercialized, we will not be able to recover the significant investment we have made in developing such products and our business, prospects, operating results, and financial condition would be severely harmed. The commercial success of our products may also be adversely affected by guidelines or recommendations to healthcare providers, administrators, payors, and patient communities that result in decreased use of our products. Such guidelines or recommendations may be published not only by governmental agencies, but also professional societies, practice management groups, private foundations, and other interested parties. Our product candidates are delivered either by intravenous infusion or by intravitreal or subcutaneous injections, which are generally less well received by patients than tablet or capsule delivery and this could adversely affect the commercial success of those products if they receive marketing approval. We are dependent upon a small number of customers for a significant portion of our revenue, and the loss of or significant reduction in sales to these customers would adversely affect our results of operations. We sell our marketed products for which we record net product sales in the United States to several distributors and specialty pharmacies, as applicable, which generally sell the product directly to healthcare providers or other pharmacies (as applicable). For the three months ended March 31, 2023 and 2022, our gross product sales of such products to two customers accounted on a combined basis for 77% and 85% of our total gross product revenue, respectively. We expect significant customer concentrationto continue for the foreseeable future. Our ability to generate and grow sales of these products will depend, in part, on the extent to which our distributors and specialty pharmacies are able to provide adequate distribution of these products to healthcare providers. Although we believe we can find additional distributors, if necessary, our revenue during any period of disruption could suffer and we might incur additional costs. In addition, therethese customers are proposalsresponsible for a significant portion
of our net trade accounts receivable balances. The loss of any large customer, a significant reduction in sales we make to legalizethem, any cancellation of orders they have made with us, or any failure to pay for the importproducts we have shipped to them could adversely affect our results of pharmaceuticals fromoperations. If we are unable to establish commercial capabilities outside the United States intofor Libtayo, Dupixent, and any other products we intend to commercialize or co-commercialize outside the United States, our business, prospects, operating results, and financial condition may be adversely affected. We have limited commercial capabilities outside the United States and do not currently have a fully established organization for the sales, marketing, and distribution of marketed products outside the United States. If such proposals were implemented,We will need to establish some or all of these capabilities outside the United States for any product we decide to independently commercialize or co-commercialize outside the United States. For example, in 2022, we and Sanofi amended the IO Collaboration to transfer all rights to develop, commercialize, and manufacture Libtayo exclusively to our future revenues derived fromCompany, on a worldwide basis, over the course of a defined transition period, and we will need to establish certain sales, marketing, distribution, and manufacturing capabilities for Libtayo to support certain markets outside the United States. We will also need to obtain and/or maintain regulatory approvals for Libtayo in many jurisdictions outside of the United States. In addition, following the exercise of our option under the Antibody Collaboration to co-commercialize Dupixent Praluent,in certain jurisdictions outside the United States, we have established certain commercial capabilities for Dupixent in some of these jurisdictions and are in the process of establishing these capabilities in others. There may be other circumstances in which we need to establish commercial capabilities outside the United States, including because we decide to commercialize a particular product independently; we are unable to find an appropriate collaborator; or Kevzaraan existing collaborator decides to opt out or breaches its obligations to us with respect to a particular product. In order to commercialize or co-commercialize any products outside the United States, we must build our sales, marketing, distribution, regulatory, managerial, and other capabilities in the relevant markets or make arrangements with third parties to perform these services, any of which will likely be expensive and time consuming and could delay product launch or the co-commercialization of a product in one or more markets outside the United States. We cannot be reduced.certain that we will be able to successfully develop commercial capabilities outside the United States (including as it relates to Libtayo and Dupixent) within an acceptable time frame, without incurring substantial expenses, or at all. These and other difficulties relating to commercializing our products outside the United States may harm our business, prospects, operating results, and financial condition. Risks Related to Maintaining Approval of Our Marketed Products and the Development and Obtaining Approval of Our Product Candidates and New Indications for Our Marketed Products If we or our collaborators do not maintain regulatory approval for our marketed products, and obtain regulatory approval for our product candidates or new indications for our marketed products, we will not be able to market or sell them, which would materially and negatively impact our business, prospects, operating results, and financial condition. We cannot sell or market products without regulatory approval.approval or other authorization. If we or our collaborators do not maintain regulatory approval for our marketed products, and obtain regulatory approval for our product candidates or new indications of our marketed products the value of our company and our business, prospects, operating results, and financial condition will be materially harmed. If we are unable to obtain regulatory approval for our product candidates, or if we(or are materially delayed in doing so,so), the value of our Company and our business, prospects, operating results, and financial condition may be materially harmed. Obtaining and maintaining regulatory approval for drug products is costly, time-consuming, and highly uncertain. In the United States, we (which, for purposes of this risk factor, includes our collaborators, unless otherwise stated or required by the context) must obtain and maintain approval from the FDA for each drug we intend to sell. Obtaining FDA approval for a new drug or indication is typically a lengthy and expensive process, and approval is highly uncertain. We cannot predict with certainty if or when we might submit for regulatory approval for any of our product candidates currently under development. Any approvals we may obtain may not cover all of the clinical indications for which we are seeking approval. Also, an approval might contain
significant limitations in the form of narrow indications, warnings, precautions, or contra-indications with respect to conditions of use. Additionally, the FDA may determine that a Risk Evaluation and Mitigation Strategy ("REMS") is necessary to ensure that the benefits of a new product outweigh its risks, and the product can therefore be approved. A REMS may include various elements, ranging from a medication guide or patient package insert to limitations on who may prescribe or dispense the drug, depending on what the FDA considers necessary for the safe use of the drug. The FDA has substantial discretion in the approval process (including with respect to setting specific conditions for submission) and may either refuse to accept an application for substantive review or may form the opinion after review of an application that the application is insufficient to allow approval of a product candidate. If the FDA does not accept our application for review or approve our application, it may require that we conduct additional clinical, preclinical, or manufacturing validation studies and submit the data before it will reconsider our application. Depending on the extent of these or any other studies that might be required, approval of any applications that we submit may be delayed significantly, or we may be required to expend more resources. It is
also possible that any such additional studies, if performed and completed, may not be considered sufficient by the FDA to make our applications approvable. If any of these outcomes occur, we may be forced to delay or abandon our applications for approval. In certain instances (such as when we use a biomarker-based test to identify and enroll specific patients in a clinical trial), regulatory approval of a companion diagnostic to our therapeutic product candidate may be required as a condition to regulatory approval of the therapeutic product candidate. We may need to rely on third parties to provide companion diagnostics for use with our product candidates. Such third parties may be unable or unwilling on terms acceptable to us to provide such companion diagnostics or to obtain timely regulatory approval of or product labeling updates for such companion diagnostics, which could negatively impact regulatory approval of our product candidates or may result in increased development costs or delays. The FDA may also require us to conduct additional clinical trials after granting approval of a product. Its ability to do so has been enhanced by the Food and Drug Administration Amendments Act of 2007, pursuant to which theThe FDA has the explicit authority to require postmarketingpost-marketing studies (also referred to as post-approval or Phase 4 studies), labeling changes based on new safety information, and compliance with FDA-approved risk evaluation and mitigation strategies. Post-approval studies, whether conducted by us or by others and whether mandated by regulatory agencies or voluntary, and other data about our marketed products (or data about products similar to our marketed products that implicate an entire class of products or are perceived to do so) may result in changes in product labeling, restrictions on use, product withdrawal or recall, loss of approval, or lower sales of our products. Obligations equivalent in scope, but which can vary widely in application, apply in foreign countries. According to the FDA policies under the Prescription Drug User Fee Act, the FDA system of review times for new drugs includes standard review and priority review. StandardThe FDA's goal for a standard review can be accomplished inis to review the application within a ten-month10-month time frame from the time the application is filed by the FDA (filing date), which typically occurs approximately 60 days following submission of the application by the applicant. The FDA has stated the goal to act on 90% of standard new molecular entity (NME)("NME") New Drug Application (NDA)("NDA") and original BLA submissions within 10 months of the filing date. A priority review designation is given to drugs that treat a serious condition and offer major advances in treatment, or provide a treatment where no adequate therapy exists, and may also be afforded to a human drug application based on a priority review voucher. The FDA has stated the goal to act on 90% of priority NME NDA and original BLA submissions within six months of the filing date. However, the FDA's review goals are subject to change and the duration of the FDA's review depends on a number of factors, including the number and types of other applications that are submitted to the FDA around the same time period or are pending.pending, and may be delayed for reasons beyond our control. For example, in 2022, an FDA travel complication related to scheduling a routine clinical trial site inspection in eastern Europe delayed by nearly two months the FDA's approval of our sBLA for the combination treatment of Libtayo with chemotherapy in NSCLC. If we believe we meet eligibility requirements, we may apply for various regulatory incentives in the United States, such as breakthrough therapy designation, fast track designation, accelerated approval, or priority review, where available, that serve to expedite drug development and/or review, and we may also seek similar designations elsewhere in the world. Often, regulatory agencies have broad discretion in determining whether or not product candidates qualify for such regulatory incentives and benefits, and we cannot guarantee we would be successful in obtaining beneficial regulatory designations by the FDA or other regulatory agencies. Even if obtained, such designations may not result in faster development processes, reviews, or approvals compared to drugs considered for approval under conventional FDA procedures. In addition, the FDA may later decide that any of our applications receivesdevelopment programs no longer meets the conditions for a priority reviewbeneficial regulatory designation we may not ultimately be able(including due to obtain approval offactors beyond our application within acontrol, such as intervening competitive developments) or decide that the time frame consistent with the FDA's stated review goals or at all, and such designation may not actually lead to a faster development or regulatoryperiod for FDA review or approval process.will not be shortened. The FDA enforcesand comparable foreign regulatory authorities enforce Good Clinical Practices (GCPs)Practice requirements ("GCPs") and other regulations and legal requirements through periodic inspections of trial sponsors, clinical research organizations (CROs)("CROs"), principal investigators, and trial sites. If we or any of the third parties conducting our clinical studies are determined to have failed to fully comply with GCPs, the study protocol or applicable regulations, the clinical data generated in those studies may be deemed unreliable. This and similar instances of non-compliance with GCPs could result in non-approval of our product candidates by the FDA or foreign regulatory authorities such as the EC, or we or the FDA or such other regulatory authorities may decide to conduct additional inspections or require additional clinical studies, which would delay our development programs, require us to incur additional costs, and could substantially harm our business, prospects, operating results, and financial condition. Before approving a new drug or biologic product, the FDA requiresand such comparable foreign regulatory authorities require that the facilities at which the product will be manufactured or advanced through the supply chain be in compliance with current Good Manufacturing Practices, or cGMP, requirements and regulations governing the manufacture, shipment, and storage of the product. Additionally, manufacturers of biological products and their facilities are subject to payment of substantial user fees
and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations and adherence to any commitments made in the applicable BLA. These cGMP requirements and regulations are not prescriptive instructions on how to manufacture products, but rather a series of principles that must be observed during manufacturing; as a result, their implementation may not be clearly delineated and may present a challenging task. Manufacturing product candidates in compliance with these regulatory requirements is complex, time-consuming, and expensive. To be successful, our products must be manufactured in compliance with regulatory requirements, and at competitive costs. If we or any of our product collaborators, or third-party manufacturers, product packagers, labelers, or other parties performing steps in the supply chain are unable to maintain regulatory compliance with cGMP, the FDA and comparable foreign regulatory authorities can impose regulatorymonetary penalties or other civil or criminal sanctions, including, among other things, refusal to approve a pending application for a new drug or biologic product, or revocation of a pre-existing approval. For example, on October 28, 2016, the FDA issued a Complete Response Letter relating to the BLA for Kevzara, which referred to certain
deficiencies identified during a routine cGMP inspection of the Sanofi facility in Le Trait, France where Kevzara is filled and finished; while the BLA for Kevzara has since been approved by the FDA, this delayed the FDA approval of Kevzara. For additional information, see "Risks Related to Manufacturing and Supply - If we failOur or our collaborators' failure to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates we could incurresult in incurring substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if they obtain regulatory approval is obtained, and a reduction in sales." Our business, prospects, operating results, and financial condition may be materially harmed as a result of noncompliance with the requirements and regulations described in this paragraph.
We are also subject to ongoing requirements imposed by the FDA and comparable foreign regulatory authorities governing the labeling, packaging, storage, distribution, safety surveillance, advertising, promotion, record-keeping, and reporting of safety and other post-marketing information. The holder of an approved BLA or foreign equivalent is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA. The holder of an approved BLA or foreign equivalent must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process. Advertising and promotional materials must comply with FDA regulations and those of foreign regulatory authorities and may be subject to other potentially applicable federal and state laws. The applicable regulations in countries outside the U.S. grant similar powers to the competent authorities and impose similar obligations on companies. In addition to the standard drug approval process, the Secretary of the U.S. Department of Health and Human Services ("HHS") may authorize the issuance of, and the FDA Commissioner may issue, an EUA to allow an unapproved medical product to be used in an emergency based on criteria established by the Food, Drug, and Cosmetic Act, including that the product at issue may be effective in diagnosing, treating, or preventing serious or life-threatening diseases when there are no adequate, approved, and available alternatives. An EUA terminates when the emergency determination underlying the EUA terminates. The FDA may also revoke, revise, or restrict an EUA for a variety of reasons, including where it is determined that the underlying health emergency no longer exists or warrants such authorization or the medical product is no longer effective in diagnosing, treating, or preventing the underlying health emergency. For example, in January 2022, the FDA revised the EUA previously granted for REGEN-COV to exclude its use in geographic regions (currently including all U.S. states, territories, and jurisdictions) where, based on available information including variant susceptibility and regional variant frequency, infection or exposure is likely due to a variant such as an Omicron-lineage variant that is not susceptible to the treatment. Any such termination, revocation, or revision of an EUA could adversely impact our business in a variety of ways, including by having to absorb related manufacturing and overhead costs as well as potential inventory write-offs if regulatory approval is not obtained timely or at all. For example, during each of the years ended December 31, 2022 and 2021, we recorded a charge to write down inventory related to REGEN-COV. In addition to the FDA and other regulatory agency regulations in the United States, we are subject to a variety of foreign regulatory requirements governing human clinical trials, manufacturing, marketing and approval of drugs, and commercial sale and distribution of drugs in foreign countries. The foreign regulatory approval process is similarly likely to be a lengthy and expensive process, the result of which is highly uncertain, and foreign regulatory requirements include all of the risks associated with FDA approval as well as country specific regulations. We and our collaborators must maintain regulatory compliance for the products we or they commercialize in foreign jurisdictions. From time to time, we may hold a product's marketing approval in a jurisdiction outside the United States where we may have less experience and where our regulatory capabilities may be more limited. In addition, actions by a regulatory agency in a country or region with respect to a product candidate may have an impact on the approval process for that product candidate in another country or region. Foreign regulatory authorities may ask for additional data in order to begin a clinical study, including Phase 3 clinical trials required to submit a MAA in the EU. In addition, such authorities often also have the authority to require post-approval studies, such as a post-authorization safety study ("PASS") and/or post-authorization efficacy study ("PAES"), which involve various risks similar to those described above. Whether or not we obtain FDA approval for a product in the United States, we must obtain approval of the product by the comparable regulatory authorities in foreign countries before we can conduct clinical trials of or market that product or any other product in those countries.
Furthermore, we are subject to pharmacovigilance reporting and other pharmacovigilance requirements, which may differ in the numerous countries in which we conduct clinical trials or commercialize a product. Failure to comply with any such requirements may result in the premature closure of the clinical trials and other enforcement actions by the relevant regulatory authorities. For example, if we do not manage to retain a Qualified Person Responsible for Pharmacovigilance ("QPPV"), to maintain a Pharmacovigilance System Master File ("PSMF"), or to comply with other pharmacovigilance obligations in the European Economic Area ("EEA"), we may be at risk of our clinical trials being closed prematurely, our marketing authorization being suspended, and we may be subject to other enforcement actions by the national competent authorities of the EEA or the EC. Preclinical and clinical studies required for our product candidates and new indications of our marketed products are expensive and time-consuming, and their outcome is highly uncertain. If any such studies are delayed or yield unfavorable results, regulatory approval for our product candidates or new indications of our marketed products may be delayed or become unobtainable. As described above, we must conduct extensive testing of our product candidates and new indications of our marketed products before we can obtain regulatory approval to market and sell them. We need to conduct both preclinical animal testing and human clinical trials. Conducting such studies is a lengthy, time-consuming, and expensive process. These tests and trials may not achieve favorable results for many reasons, including, among others, failure of the product candidate to demonstrate safety or efficacy, the development of serious or life-threatening adverse events (or side effects) caused by or connected with exposure to the product candidate (or prior or concurrent exposure to other products or product candidates), difficulty in enrolling and maintaining subjects in a clinical trial, clinical trial design that may not make it possible to enroll or retain a sufficient number of patients to achieve a statistically significant result or the desired level of statistical significance for the endpoint in question, lack of sufficient supplies of the product candidate or comparator drug, and the failure of clinical investigators, trial monitors, contractors, consultants, or trial subjects to comply with the trial plan, protocol, or applicable regulations related to the FDA's Good Laboratory Practices (GLPs)Practice requirements ("GLPs") or GCPs. A clinical trial may fail because it did not include and retain a sufficient number of patients to detect the endpoint being measured or reach statistical significance. A clinical trial may also fail because the dose(s) of the investigational drug included in the trial were either too low or too high to determine the optimal effect of the investigational drug in the disease setting. Additionally, conducting clinical trials in foreign countries presents additional risks, including political and economic risks that are not present in the United States, such as armed conflict and economic embargoes or boycotts. For example, we and our collaborators are currently conducting and may in the future conduct or initiate clinical trials with sites in Russia and/or Ukraine. While we currently do not expect the conflict between Russia and Ukraine and related developments to have a significant impact on our ability to obtain results from clinical trials conducted by us or our collaborators, actions taken by Russia or potentially other countries in Ukraine and surrounding areas may adversely affect our ability to adequately conduct certain clinical trials and maintain compliance with relevant protocols due to, among other reasons, the prioritization of hospital resources away from clinical trials, reallocation or evacuation of site staff and subjects, or as a result of government-imposed curfews, warfare, violence, or other governmental action or other events that restrict movement. These developments may also result in our inability to access sites for monitoring or to obtain data from affected sites or patients going forward. We could also experience disruptions in our supply chain or limits to our ability to provide sufficient investigational materials in Ukraine and surrounding regions. Clinical trial sites may suspend or terminate the trials being conducted and patients could be forced to evacuate or choose to relocate, making them unavailable for initial or further participation in such trials. Alternative sites in these areas may not be available and we may need to find other countries to conduct the relevant trials. Furthermore, military action may prevent the FDA or other regulatory agencies from inspecting clinical sites in these countries. Such interruptions may delay our plans for clinical development and approvals for our product candidates. We will need to reevaluate any drug candidate that does not test favorably and either conduct new studies, which are expensive and time consuming, or abandon that drug development program. If preclinical testing yields unfavorable results, product candidates may not advance to clinical trials. The failure of clinical trials to demonstrate the safety and effectiveness of our clinical candidates for the desired indication(s) would preclude the successful development of those candidates for such indication(s), in which event our business, prospects, operating results, and financial condition may be materially harmed. Furthermore, some of our products and product candidates (such as cemiplimab)Libtayo) are studied in combination with agents and treatments developed by us or our collaborators. There may be additional risks and unforeseen safety issues resulting from such combined administration, any of which may materially adversely impact clinical development of these product candidates and our ability to obtain regulatory approval. In some jurisdictions such as the EU, initiating Phase 3 clinical trials and clinical trials in the pediatric population is subject to a requirement to obtain approval or a waiver from the competent authorities of the EU Member States and/or the European Medicines Agency ("EMA"). If we do not obtain such approval, our ability to conduct clinical trials and obtain marketing authorizations or approvals may be severely impaired and our business may be adversely impacted.
Certain of our research and development activities are conducted at our existing facilities primarily located in Tarrytown, New York. As we continue to expand, we may lease, operate, purchase, or construct additional facilities to expand our research and development capabilities in the future. Expanding our research and laboratory facilities may require significant time and resources. Further, we may be unable to pursue our research and development efforts if the relevant facility were to cease operations due to fire, climate change, natural disasters, acts of war or terrorism, or other disruptions. Any related delays may interfere with our research and development efforts and our business may be adversely impacted. Successful development of our current and future product candidates is uncertain. Only a small minority of all research and development programs ultimately result in commercially successful drugs. Clinical trials may not demonstrate statistically sufficient effectiveness and safety to obtain the requisite regulatory approvals for these product candidates in these indications. Many companies in the biopharmaceutical industry, including our company,Company, have suffered significant setbacks in clinical trials, even after promising results havehad been obtained in earlier trials. In a number of instances, we have terminated the development of product candidates due to a lack of or only modest effectiveness and/or safety concerns, and clinical trials evaluating our product candidates have failed to meet the relevant endpoints. For example, in August 2017, we reported that the Phase 3 study evaluating suptavumab (REGN2222), an antibody to respiratory syncytial virus (RSV), did not meet its primary endpoint of preventing medically-attended RSV infections in infants and that we planned to discontinue further clinical development of this antibody.
Moreover, even if we obtain positive results from preclinical testing or clinical trials, we may not achieve the same success in future trials, or the FDA and analogous foreign regulatory authorities may deem the results insufficient for an approval. For instance, based onIf concerns arise about the resultssafety of three Phase 3 studies, we submitted a supplemental BLA filing toproduct candidate or non-compliance with the protocol or applicable regulatory requirements, the FDA seeking approvalor other regulatory authorities can delay or suspend a clinical trial by placing it on a full or partial "clinical hold" pending receipt of ARCALYST foradditional data or the preventionsatisfaction of gout flares in patients initiating uric acid-lowering drug therapy. In May 2012,other conditions. A clinical hold may require us to spend significant resources to address the Arthritis Advisory Committeeunderlying causes of the FDA votedclinical hold and may result in a delay in the clinical program, which may be significant. In addition, if we are not able to recommend against approval of ARCALYST forsuccessfully address such underlying causes or our response is not deemed adequate to lift the prevention of gout flares in patients initiating uric acid-lowering drug therapy and, in July 2012, we received a Complete Response Letter fromclinical hold, the FDA requesting additional information, including clinical data, as well as additional CMC information relatedprogram may have to a proposed new dosage form. We have discontinued development of ARCALYST for gout.be terminated. Any such clinical program delays or terminations may adversely affect our business. Many of our clinical trials are conducted under the oversight of Independent Data Monitoring Committees (IDMCs)("IDMCs"). These independent oversight bodies are made up of external experts who review the progress of ongoing clinical trials, including available safety and efficacy data, and make recommendations concerning a trial's continuation, modification, or termination based on interim, unblinded data. Any of our ongoing clinical trials may be discontinued or amended in response to recommendations made by responsible IDMCs based on their review of such interim trial results. For example, in September 2009,we previously discontinued actively treating patients with fasinumab following a Phase 3 trial that was evaluating ZALTRAP as a first-line treatment for metastatic pancreatic cancer in combination with gemcitabine was discontinued atrecommendation from the recommendation of anresponsible IDMC after a planned analysis of interim efficacy data determined that the trial would not meet its efficacy endpoint.program be terminated based on available evidence at that time; and we later discontinued further clinical development of fasinumab. The recommended termination or material modification of any of our ongoing late-stage clinical trials by an IDMC could negatively impact the future development of our product candidate(s), and our business, prospects, operating results, and financial condition may be materially harmed. We are studying our antibody-based product candidates in a wide variety of indications in clinical trials. Many of these trials are exploratory studies designed to evaluate the safety profile of these compounds and to identify what diseases and uses, if any, are best suited for these product candidates. These product candidates may not demonstrate the requisite efficacy and/or safety profile to support continued development for some or all of the indications that are being, or are planned to be, studied, which would diminish our clinical "pipeline" and could negatively affect our future prospects and the value of our company.Company. Serious complications or side effects in connection with the use of our products and in clinical trials for our product candidates and new indications for our marketed products could cause our regulatory approvals to be revoked or limited or lead to delay or discontinuation of development of our product candidates or new indications for our marketed products, which could severely harm our business, prospects, operating results, and financial condition. During the conduct of clinical trials, patients report changes in their health, including illnesses, injuries, and discomforts, to their study doctor. Often, it is not possible to determine whether or not the drug candidate being studied caused these conditions. Various illnesses, injuries, and discomforts have been reported from time-to-time during clinical trials of our product candidates and new indications for our marketed products. It is possible that as we test our drug candidates or new indications in larger, longer, and more extensive clinical programs, or as use of these drugs becomes more widespread if they receive regulatory approval, illnesses, injuries, and discomforts that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients. Many times, side effects are only detectable after investigational drugs are tested in large-scale, Phase 3 clinical trials or, in some cases, after they are made available to patients after approval. If additional clinical experience indicates that any of our product candidates or new indications for our marketed products has many side effects or causes serious or life-threatening side effects, the development of the product candidate may be delayed or fail, or, if the product candidate has received regulatory approval, such approval may be revoked, which would severely harm our business, prospects, operating results, and financial condition. With respect to EYLEA is being studied in additional indications, and aflibercept is being studied as a combination product. There8 mg, there are many potential safety concerns associated with significant blockade of VEGF that may limit our ability to further successfully develop and/or commercialize aflibercept.EYLEA and to obtain regulatory approval for aflibercept
8 mg. These serious and potentially life-threatening risks, based on clinical and preclinical experience of VEGF inhibitors, include bleeding, intestinal perforation, hypertension, proteinuria, congestive heart failure, heart attack, and stroke. Other VEGF blockers have reported side effects that became evident only after large-scale trials or after marketing approval when large numbers of patients were treated. There are risks inherent in the intravitreal administration of drugs like aflibercept (such as intraocular inflammation ("IOI"), sterile and culture positive endophthalmitis, corneal decomposition, retinal detachment, and retinal tear), which can cause injury to the eye and other complications. For example, in our Phase 3 trials of EYLEA in wet AMD, the most frequent ocular adverse events wereThe side effects previously reported for aflibercept include conjunctival hemorrhage, macular degeneration, eye pain, retinal hemorrhage, and vitreous floaters. There is no guarantee that we will be able to successfully obtain regulatory approval for aflibercept 8 mg. In addition, commercialization of EYLEA or our other products and potential future commercialization of aflibercept 8 mg or our other product candidates may be impacted by actions of third parties on which we rely, such as manufacturers of syringes or other devices used in the administration of our products. These and other complications or issues or side effects could harm further development and/or commercialization of EYLEA as well as further development and potential future commercialization of aflibercept 8 mg. Dupixent and Libtayo are being studied in additional indications, as shown in the table under Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - Programs in Clinical Development." There is no guarantee that regulatory approval of Dupixent or Libtayo (as applicable) in any of these indications will be successfully obtained. The side effects previously reported for Dupixent include hypersensitivity reactions, eye problems (including conjunctivitis and keratitis), injection-site reactions, eye and eyelid inflammation, cold sores, oropharyngeal pain, eosinophilia, insomnia, toothache, gastritis, joint pain (arthralgia), parasitic (helminth) infections, and facial rash or redness; and the side effects previously reported for Libtayo include certain immune-mediated adverse reactions that may occur in any organ system or tissue, including pneumonitis, colitis, hepatitis, endocrinopathies, nephritis, and dermatologic reactions, as well as infusion-related reactions, cellulitis, sepsis, pneumonia, urinary tract infection, fatigue, rash, and diarrhea. These and other complications or side effects could harm further development and/or commercialization of aflibercept. Dupilumab is being studied in additional indications, including atopic dermatitis in adolescentDupixent and pediatric patients, asthma in adults and adolescents, nasal polyps, and eosinophilic esophagitis. There is no guarantee that marketing approval of dupilumab in any of these indications will be successfully obtained. The side effects previously reported for dupilumab include hypersensitivity reactions, conjunctivitis and keratitis, injection-site reactions, eye and eyelid inflammation, and cold sores. These and other complications or side effects could harm further development and/or commercialization of dupilumab.
The potential of Praluent to demonstrate cardiovascular benefit is being prospectively assessed in the ongoing ODYSSEY OUTCOMES trial. There is no guarantee that Praluent will meet the relevant endpoints of this trial. In addition, there are potential safety concerns associated with PCSK9 inhibitor antibodies such as Praluent that may limit our ability to further successfully develop and/or commercialize Praluent, including new-onset diabetes mellitus, injection-site reactions, hypersensitivity reactions, immunogenicity, demyelination, and changes in neurocognitive function.Libtayo (as applicable).
There also are risks inherent in subcutaneous injections (which are used for administering most of our antibody-based products and product candidates, including Dupixent, Praluent, and Kevzara)candidates), such as injection-site reactions (including redness, itching, swelling, pain, and tenderness) and other side effects. In addition, there are risks inherent in intravenous administration (which are used for some of our antibody-based products and product candidates), such as infusion-related reactions (including nausea, pyrexia, rash, and dyspnea). These and other complications or side effects could harm further development and/or commercialization of our antibody-based products and product candidates including Dupixent, Praluent, or Kevzara.utilizing this method of administration. OurMany of our product candidates in development are recombinant proteins that could cause an immune response, resulting in the creation of harmful or neutralizing antibodies against the therapeutic protein.
In addition to the safety, efficacy, manufacturing, and regulatory hurdles faced by our product candidates, the administration of recombinant proteins frequently causes an immune response, sometimes resulting in the creation of antibodies against the therapeutic protein. The antibodies can have no effect or can totally neutralize the effectiveness of the protein, or require that higher doses be used to obtain a therapeutic effect. In some cases, the antibody can cross-react with the patient's own proteins, resulting in an "auto-immune" type disease. Whether antibodies will be created can often not be predicted from preclinical or clinical experiments, and their detection or appearance is often delayed, so neutralizing antibodies may be detected at a later date, in some cases even after pivotal clinical trials have been completed. We may be unable to formulate or manufacture our product candidates in a way that is suitable for clinical or commercial use, which would delay or prevent continued development of such candidates and/or receipt of regulatory approval or commercial sale, which could materially harm our business, prospects, operating results, and financial condition. If we are unable to continue to develop suitable product formulations or manufacturing processes to support large-scale clinical testing of our product candidates, including our antibody-based product candidates, we may be unable to supply necessary materials for our clinical trials, which would delay or prevent the development of our product candidates. Similarly, if we are unable, directly or through our collaborators or third parties, to supply sufficient quantities of our products or develop formulations of our product candidates suitable for commercial use, we will be unable to obtain regulatory approval for those product candidates. Many of our products are intended to be used and, if approved, our product candidates may be used in combination with drug-delivery devices, which may result in additional regulatory, commercialization, and other risks. Many of our products (including Dupixent, Praluent, and Kevzara) are used and if approved, some of our products and product candidates may be used, if approved, in combination with a drug-delivery device, including a pre-filled syringe, patch pump, auto-injector, or other delivery system. For example, in the United States and the EU, EYLEA is approved in the 2mg pre-filled syringe. The success of our products and product candidates may depend to a significant extent on the performance of such devices, some of which may be novel or comprised of
complex components. Given the increased complexity of the review process when approval of the product and device is sought under a single marketing application and the additional risks resulting from a product candidate's designation as a combination product discussed below, our product candidates used with such drug-delivery devices may be substantially delayed in receiving regulatory approval or may not be approved at all. The FDA review process and criteria for such applications isare not a well-established area,well established, which could also lead to delays in the approval process. In addition, some of these drug-delivery devices may be provided by single-source, third-party providers or our collaborators. In any such case, we may be dependent on the sustained cooperation of those third-party providers or collaborators to supply and manufacture the devices; to conduct the studies and prepare related documentation required for approval or clearance by the applicable regulatory agencies; and to continue to meet the applicable regulatory and other requirements to maintain approval or clearance once it has been received. In addition, other parties may allege that our drug-delivery devices infringe patents or other intellectual property rights. For example, we are currently party to patent infringement and other proceedings relating to the EYLEA pre-filled syringe, as described in Note 11 to our Condensed Consolidated Financial Statements. Failure to successfully develop or supply the devices, delays in or failure of the studies conducted by us, our collaborators, or third-party providers, or failure of our company,Company, our collaborators, or the third-party providers to obtain or maintain regulatory approval or clearance of the devices could result in increased development costs, delays in or failure to obtain regulatory approval, and associated delays in a product or product candidate reaching the market. Loss of regulatory approval or clearance of a device that is used with our product may also result in the removal of our product from the market. Further, failure to successfully develop or supply and manufacture these devices, or to gain or maintain their approval, could adversely affect sales of the related products. In the United States, each component of a combination product is subject to the requirements established by the FDA for that type of component, whether a drug, biologic, or device. The determination whether a product is a combination product or two separately regulated products is made by the FDA on a case-by-case basis. Although a single marketing application is generally sufficient for the approval, clearance, or licensure of a combination product, the FDA may determine that separate marketing applications are necessary. In addition, submitting separate marketing applications may be necessary to receive some benefit that accrues only from approval under a particular type of application. This could significantly increase the resources and time required to bring a particular combination product to market.
Risks Related to Intellectual Property and Market Exclusivity For purposes of this subsection, references to our intellectual property (including patents, trademarks, copyrights, and trade secrets) include that of our collaborators and licensees, unless otherwise stated or required by the context. If we cannot protect the confidentiality of our trade secrets, or our patents or other means of defending our intellectual property are insufficient to protect our proprietary rights, our business and competitive position will be harmed. Our business requires using sensitive and proprietary technology and other information that we protect as trade secrets. We seek to prevent improper disclosure of these trade secrets through confidentiality agreements.agreements and other means. If our trade secrets are improperly disclosed, by our current or former employees, our collaborators, or otherwise, it wouldcould help our competitors and adversely affect our business. We will be able to protect our proprietary rights only to the extent that our proprietary technologies and other information are covered by valid and enforceable patents or are effectively maintained as trade secrets. The patent position of biotechnology companies, including our company,Company, involves complex legal and factual questions and, therefore, enforceability cannot be predicted with certainty. Our patents may be challenged, invalidated, held to be unenforceable, or circumvented. PatentFor example, certain of our U.S. patents (including those pertaining to our key products, such as EYLEA) have been and may in the future be challenged by parties who file a request for post-grant review or inter partes review under the America Invents Act of 2011 or ex parte reexamination, as described in Note 11 to our Condensed Consolidated Financial Statements included in this report. Post-grant proceedings are increasingly common in the United States and are costly to defend. In addition, patent applications filed outside the United States may be challenged by other parties, for example, by filing pre-grant third-party observations that argue against patentability or ana post-grant opposition. Such opposition proceedings are increasingly common in the EUEurope and are costly to defend. For example, in 2021, anonymous parties initiated opposition proceedings in the European Patent Office ("EPO") against our European Patent No. 1,360,287 was, and our European Patent No. 2,264,163 is, the subject of opposition proceedings in the EPO,2,944,306 (which concerns pre-filled syringes comprising ophthalmic formulations containing VEGF antagonists such as aflibercept for intravitreal administration), as described in Part I, Item 3. "Legal Proceedings" ofNote 11 to our Annual Report on Form 10-K for the year ended December 31, 2016 and Part II, Item 1. "Legal Proceedings" of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017.Condensed Consolidated Financial Statements included in this report. We have pending patent applications in the USPTO,United States Patent and Trademark Office (the "USPTO"), the EPO, and the patent offices of other foreign jurisdictions, and it is likely that we will need to defend patents from challenges by others from time to time in the future. Certain of our U.S. patents may also be challenged by parties who file a request for post-grant review or inter partes reexamination under the America Invents Act of 2011 or ex parte reexamination. Post-grant proceedings are increasingly common in the United States and are costly to defend. Our patent rights may not provide us with a proprietary position or competitive advantages against competitors. Furthermore, even if the outcome is favorable to us, the enforcement of our intellectual property rights can be extremely expensive and time consuming. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions or our ability to obtain, maintain, and enforce our intellectual property rights. Any such changes could
also affect the value of our intellectual property or narrow the scope of our patents. We cannot be certain that our intellectual property rights related to any current or future product or product candidate or technology would not be eliminated, narrowed, or weakened by any such change or other rulemaking. Additionally, the United States and other government actions related to Russia's invasion of Ukraine may limit or prevent filing, prosecution, and maintenance of patent applications in Russia. These actions could result in abandonment or lapse of our patents or patent applications, resulting in partial or complete loss of patent rights in Russia. Further, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by patent holders from the United States without consent or compensation. Consequently, we would not be able to prevent third parties from practicing our inventions in Russia or from selling or importing products made using our inventions in and into Russia. We also currently hold issued trademark registrations and have trademark applications pending in the United States and other jurisdictions, any of which may be the subject of a governmental or third-party objection, which could prevent the maintenance or issuance of the trademark. As our products mature, our reliance on our trademarks to differentiate us from our competitors increases and as a result, if we are unable to prevent third parties from adopting, registering, or using trademarks that infringe, dilute or otherwise violate our trademark rights, our business could be adversely affected. We may be restricted in our development, manufacturing, and/or commercialization activities by patents or other proprietary rights of others, and could be subject to damage awards of damages if we are found to have infringed such patents or rights. Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of others.others (including those relating to trademarks, copyrights, and trade secrets). Other parties may allege that they own blocking patents to our products in clinical development or even to products that have received regulatory approval and are being or have been commercialized, either because they claim to hold proprietary rights to the composition of a product or the way it is manufactured or the way it is used. Moreover, other parties may allege that they have blocking patents to antibody-based products made using our VelocImmune technology, or any other of our technologies, either because of the way the antibodies are discovered or produced or because of a proprietary composition covering an antibody or the antibody's target. We have been in the past, are currently, and may in the future be involved in patent litigation and other proceedings involving patents and other intellectual property. For example, we and/or Sanofi are currently party to patent infringement proceedings initiated by Amgen against us andand/or Sanofi relating to Praluent, as described in Part I, Item 3. "Legal Proceedings" ofNote 11 to our Annual Report on Form 10-K for the year ended December 31, 2016 and Part II, Item 1. "Legal Proceedings" of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, and this report; and patent infringement proceedings relating to Dupixent, as described in Part II, Item 1. "Legal Proceedings" of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, and this report.Condensed Consolidated Financial Statements. In addition, we are currently party to patent infringement and other proceedings initiated by us relating to our European Patent No. 1,360,287, our European Patent No. 2,264,163,EYLEA and our U.S. Patent No. 8,502,018, all of which concern genetically altered mice capable of producing chimeric antibodies that are part human and part mouse,REGEN-COV, as described in Part I, Item 3. "Legal Proceedings" ofNote 11 to our Annual Report on Form 10-K for the year ended December 31, 2016 and Part II, Item 1. "Legal Proceedings" of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, and this report (as applicable).Condensed Consolidated Financial Statements. We are aware of patents and pending patent applications owned by others that respectively claim antibodies to IL-4Rcompositions and methods of treatingtreatment relating to targets and conditions including atopic dermatitis and asthma with such antibodies; antibodies to IL-6R and methods of treating conditions including rheumatoid arthritis with such antibodies; antibodies to PCSK9 and methods of treating hypercholesterolemia with such antibodies; and antibodies to PD-1 and methods of treating cancer with such antibodies. In addition to Dupixent (dupilumab), Praluent (alirocumab), and Kevzara (sarilumab), our late-stage antibody-based pipeline includes fasinumab, an antibody to NGF; and cemiplimab, an antibody to PD-1, intended for the treatment of certain cancer indications including advanced cutaneous squamous cell carcinoma. With respect to Dupixent,that we are aware of certain patents owned by Immunex Corporation, a wholly owned subsidiary of Amgen. These patents include U.S. Patent No. 8,679,487 (currently subject to the patent infringement proceedings described in Part II, Item 1. "Legal Proceedings" ofalso pursuing with our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017, and this report) and European Patent No. 2,292,665 (the '665 Patent) and are generally directed to antibodies that bind to IL-4R.
On September 30, 2016, Sanofi initiated a revocation proceeding to invalidate the U.K. counterpart of the '665 Patent in the United Kingdom. At the joint request of the parties to the revocation proceeding, the U.K. Patents Court ordered on January 30, 2017 that the revocation action be stayed pending the final determination of the currently pending EPO opposition proceedings initiated by us and Sanofi in relation to the '665 Patent. The oral hearing before the EPO on the oppositions is currently scheduled for November 20, 2017. The original patent term of the Immunex patents is set to expire in 2021.
products and/or product candidates. Although we do not believe that any of our products or our late-stage antibody-based product candidates infringesinfringe any valid claim in these patents or patent applications,these other parties could initiate lawsuits for patent infringement and assert that their patents are valid and cover our products or our late-stage antibody-based product candidates, similar to the patent infringement proceedings referred to above. Further, we are aware of a number of patent applications of others that, if granted with claims as currently drafted, may cover our current or planned activities. It could be determined that our products and/or actions in manufacturing or selling our products or product candidates infringe such patents. Patent holders could assert claims against us for damages and seek to prevent us from manufacturing, selling, or developing our products or product candidates, and a court may find that we are infringing validly issued patents of others. In the event that the manufacture, use, or sale of any of our products or product candidates infringes on the patents or violates other proprietary rights of others, we may be prevented from pursuing product development, manufacturing, and commercialization of those drugs and may be required to pay costly damages. In addition, in the event that we assert our patent rights against other parties that we believe are infringing our patent rights, such parties may challenge the validity of our patents and we may become the target of litigation, which may result in an outcome that is unfavorable to us. Any of these adverse developments may materially harm our business, prospects, operating results, and financial condition. In any event, legal disputes are likely to be costly and time consuming to defend. We seek to obtain licenses to patents when, in our judgment, such licenses are needed or advisable. For example, in 2018, we and Sanofi entered into a license agreement with Bristol-Myers Squibb, E. R. Squibb & Sons, and Ono Pharmaceutical to obtain a license under certain patents owned and/or exclusively licensed by one or more of these parties that includes the right to develop and sell Libtayo. If any licenses are required, we may not be able to obtain such licenses on commercially reasonable terms, if at all. The failure to obtain any such license could prevent us from developing or commercializing any one or more of our products or product candidates, which could severely harm our business.
In addition, other parties may have regulatory exclusivity in the United States or foreign jurisdictions for products relating to targets or conditions we are also pursuing, which could prevent or delay our ability to apply for or obtain regulatory approval for our product candidates in such jurisdictions. For example, in the EU, a designated orphan drug is provided up to 10 years of market exclusivity in the orphan indication, during which time the EMA is generally precluded from accepting a MAA for a similar medicinal product unless it can be demonstrated that it is safer, more effective, or otherwise clinically superior to the original orphan medicinal product. Loss or limitation of patent rights, and new regulatory pathways for biosimilar competition, could reduce the duration of market exclusivity for our products. In the pharmaceutical and biotechnology industries, the majority of an innovative product's commercial value is usually realized during the period in which it has market exclusivity. In the United States and some other countries, when market exclusivity expires and generic versions of a product are approved and marketed, there usually are very substantial and rapid declines in the product's sales. If our late-stage product candidates or other clinical candidates are approved for marketing in the United States or elsewhere, market exclusivity for those products will generally be based upon patent rights and/or certain regulatory forms of exclusivity. As described above under "If we cannot protect the confidentiality of our trade secrets, or our patents or other means of defending our intellectual property are insufficient to protect our proprietary rights, our business and competitive position will be harmed," the scope and enforceability of our patent rights may vary from country to country. The failure to obtain patent and other intellectual property rights, or limitations on the use, or the loss, of such rights could materially harm us. Absent patent protection or regulatory exclusivity for our products, it is possible, both in the United States and elsewhere, that generic, biosimilar, and/or biosimilarinterchangeable versions of those products may be approved and marketed, which would likely result in substantial and rapid reductions in revenues from sales of those products. Under the federal PPACA, enacted in 2010,Patient Protection and Affordable Care Act ("PPACA"), there is an abbreviated path in the United States for regulatory approval of products that are demonstrated to be "biosimilar" or "interchangeable" with an FDA-approved biological product. The PPACA provides a regulatory mechanism that allows for FDA approval of biologic drugs that are similar to (but not generic copies of) innovative drugs on the basis of less extensive data than is required by a full BLA. Under this regulation, an application for approval of a biosimilar may be filed four years after approval of the innovator product. However, qualified innovative biological products will receive 12 years of regulatory exclusivity, meaning that the FDA may not approve a biosimilar version until 12 years after the innovative biological product was first approved by the FDA. However, the term of regulatory exclusivity may not remain at 12 years in the United States and could be shortened.shortened if, for example, the PPACA is amended. A number of jurisdictions outside of the United States have also established abbreviated pathways for regulatory approval of biological products that are biosimilar to earlier versions of biological products. For example, the EU has had an established regulatory pathway for biosimilars since 2005. The increased likelihood of biosimilar competition has increased the risk of loss of innovators' market exclusivity. It is also not possible to predict changes in United States regulatory law that might reduce biological product regulatory exclusivity. Due to this risk, and uncertainties regarding patent protection, if our late-stage product candidates or other clinical candidates are approved for marketing, it is not possible to predict the length of market exclusivity for any particular product we currently or may in the future commercialize with certainty based solely on the expiration of the relevant patent(s) or the current forms of regulatory exclusivity. ItWe are aware of several companies developing biosimilar versions of EYLEA, as discussed further under "Risks Related to Commercialization of Our Marketed Products, Product Candidates, and New Indications for Our Marketed Products - The commercial success of our products and product candidates is also not possiblesubject to predict changes
insignificant competition - Marketed Products" above. In the United States, the regulatory law that might reduce biologicalexclusivity period for EYLEA (i.e., the period during which no biosimilar product regulatory exclusivity.can be approved by the FDA) extends through May 17, 2024 following the pediatric exclusivity granted by the FDA. The loss of market exclusivity for a product (such as EYLEA) would likely materially and negatively affect revenues from product sales of that product and thus our financial results and condition.
Risks Related to Manufacturing and Supply We rely on limited internal and contracted manufacturing and supply chain capacity, which could result inadversely affect our being unableability to continue to successfully commercializeEYLEA, to successfully commercialize Dupixent, Praluent, and Kevzaraour marketed products and, if approved, our product candidates or other indications for our marketed products, and to advance our clinical pipeline. OurWe have large-scale manufacturing operations in Rensselaer, New York and Limerick, Ireland. Manufacturing facilities operated by us and by third-party contract manufacturers engaged by us would be inadequate to produce the active pharmaceutical ingredients of (a) our current marketed products including EYLEA, Dupixent, Praluent, and Kevzara, and (b) our antibody-based product candidates in sufficient clinical quantities if our clinical pipeline advances as planned.planned or if there is greater demand than currently expected for our marketed products. In addition to expanding our internal capacity, we intend to continue to rely on our collaborators, as well asand may also rely on contract
manufacturers, to produce commercial quantities of drug material needed for commercialization of our products to the extent such quantities are not manufactured at our own facility.products. As we increase our production in anticipation of potential regulatory approval for our late-stage antibody-based product candidates, our current manufacturing capacity will likely not be sufficient, and we may dependour dependence on our collaborators and/or contract manufacturers may increase, to produce adequate quantities of drug material for both commercial and clinical purposes. The COVID-19 pandemic has exacerbated and may in the future further exacerbate certain of these risks. For example, the impact of prioritizing certain manufacturing-related resources for our COVID-19 monoclonal antibodies has included and may in the future include, among other things, drawing down inventory safety stock levels for certain of our other products (including Dupixent and EYLEA). Depending on the demand for our products, our ability to re-establish successfully our customary manufacturing cadence, and other relevant factors, we may not be able to replenish our inventory safety stock to the levels we deem prudent or supply our products and product candidates in sufficient quantities to satisfy our commercial and development needs. We also rely entirely on other parties and our collaborators for filling and finishing services. Generally, in order for other parties to perform any step in the manufacturing and supply chain, we must transfer technology to the other party, which can be time consuming and may not be successfully accomplished without considerable cost and expense, or at all. We will have to depend on these other parties to perform effectively on a timely basis and to comply with regulatory requirements. If for any reason they are unable to do so, and as a result we are unable to directly or through other parties manufacture and supply sufficient commercial and clinical quantities of our products on acceptable terms, or if we should encounter delays or other difficulties in our relationships with our collaborators, contract manufacturers, warehouses, shipping, testing laboratories, or other parties involved in our supply chain which adversely affect the timely manufacture and supply of our products or product candidates, our business, prospects, operating results, and financial condition may be materially harmed. Expanding our manufacturing capacity and establishing fill/finish capabilities will be costly and we may be unsuccessful in doing so in a timely manner, which could delay or prevent the launch and successful commercialization of our marketed products and late-stage product candidates or other indications for our marketed products if they are approved for marketing and could jeopardize our current and future clinical development programs. We have acquiredIn addition to our existing manufacturing facilities in Rensselaer, New York and are renovating a 400,000 square foot facility in Limerick, Ireland, to expand our manufacturing capacity to support our global supply chain. In the future, we may lease, operate, purchase, or construct additional facilities to conduct expanded manufacturing activities.or other related activities in the future. Expanding our manufacturing capacity to supply commercial quantities of the active pharmaceutical ingredients for our marketed products and our late-stage product candidates if they are approved for marketing, and to supply clinical drug material to support the continued growth of our clinical programs, will require substantial additional expenditures, time, and various regulatory approvals and permits. This also holds true for establishing fill/finish capabilities in the future, for which we are in the process of constructing fill/finish facilities (refer to Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources" for information about expected capital expenditures relating to this and other projects). In addition, we may need to develop or acquire additional manufacturing capabilities to the Limerick, Ireland facility remains subject to securing certain governmental permits,extent we or our collaborators pursue the development of drugs generated by means other than our existing "Trap" or VelociSuite® technologies, such as siRNA gene silencing, genome editing, and there is no guarantee that we will be able to obtain the remaining required permits in the contemplated timeframe, or at all.targeted viral-based gene delivery and expression. Further, we will need to hire and train significant numbers of employees and managerial personnel to staff our expanding manufacturing and supply chain operations.operations, as well as any future fill/finish activities. Start-up costs can be large, and scale-up entails significant risks related to process development and manufacturing yields. In addition, we may face difficulties or delays in developing or acquiring the necessary production equipment and technology to manufacture sufficient quantities of our product candidates at reasonable costs and in compliance with applicable regulatory requirements. The FDA and analogous foreign regulatory authorities must determine that our existing and any expanded manufacturing facilities and any future fill/finish activities comply, or continue to comply, with cGMP requirements for both clinical and commercial production and license them, or continue to license them, accordingly, and such facilities must also comply with applicable environmental, safety, and other governmental permitting requirements. We may not successfully expand or establish sufficient manufacturing or any future fill/finish capabilities or manufacture our products economically or in compliance with cGMPs and other regulatory requirements, and we and our collaborators may not be able to build or procure additional capacity in the required timeframe to meet commercial demand for our late-stage product candidates if they receive regulatory approval, and to continue to meet the requirements of our clinical programs. This would interfere with our efforts to successfully commercialize our marketed products, including EYLEA, Dupixent, Praluent, and Kevzara, andit could also delay or require us to discontinue one or more of our clinical development programs. As a result, our business, prospects, operating results, and financial condition could be materially harmed.
Our ability to manufacture products may be impaired if any of our or our collaborators' manufacturing activities, or the activities of other third parties involved in our manufacture and supply chain, are found to infringe patents of others. Our ability to continue to manufacture products in our Rensselaer, New York and Limerick, Ireland facilities and at additional facilities (such as the Limerick, Ireland facility)(if any) in the future or(including our ability to conduct any fill/finish activities in the future), the ability of our collaborators to manufacture products at their facilities, and our ability to utilize other third parties to produce our products, to supply raw materials or other products, or to perform fill/finish services or other steps in our manufacture and supply chain, depends on our and their ability to operate without infringing the patents or other intellectual property rights of others. Other
parties may allege that our or our collaborators' manufacturing activities, or the activities of other third parties involved in our manufacture and supply chain (which may be located in jurisdictions outside the United States), infringe patents or other intellectual property rights. For example, we are currently party to patent infringement and other proceedings relating to the EYLEA pre-filled syringe, as described in Note 11 to our Condensed Consolidated Financial Statements. A judicial or regulatory decision in favor of one or more parties making such allegations could directly or indirectly preclude the manufacture of our products to which those intellectual property rights apply on a temporary or permanent basis, which could materially harm our business, prospects, operating results, and financial condition. If sales of EYLEA, Dupixent, Praluent, or Kevzaraour marketed products do not meet the levels currently expected, or if the launch of any of our product candidates is delayed or unsuccessful, we may face costs related to excess inventory or unused capacity at our manufacturing facilities and at the facilities of third parties.parties or our collaborators. We have large-scale manufacturing operations in Rensselaer, New York and are in the process of building a large-scale manufacturing facility in Limerick, Ireland. We use our manufacturing facilities primarily to produce bulk product for commercial supply of our marketed products and clinical and preclinical candidates for ourselves and our collaborations. We also plan to use such facilities to produce bulk product for commercial supply of new indications of our marketed products and new product candidates if they are approved for marketing.marketing or otherwise authorized for use. If our clinical candidates are discontinued or their clinical development is delayed, if the launch of new indications for our marketed products or new product candidates is delayed or does not occur, or if such products are launched and the launch is unsuccessful or the product is subsequently recalled or marketing approval is rescinded, we may have to absorb one hundred percent of related overhead costs and inefficiencies, as well as similar costs of third-party contract manufacturers performing services for us. In addition, if we or our collaborators experience excess inventory, it may be necessary to write down or even write off such excess inventory or incur an impairment charge with respect to the facility where such product is manufactured, which could adversely affect our operating results. For example, during each of the years ended December 31, 2022 and 2021, we recorded a charge to write down inventory related to REGEN-COV.
Third-party service or supply failures, or other failures, business interruptions, or other disasters affecting our manufacturing facilities in Rensselaer, New York and Limerick, Ireland, the manufacturing facilities of our collaborators, or the facilities of any other party participating in the supply chain, would adversely affect our ability to supply our products. WeBulk drug materials are currently manufacture all of our bulk drug materialsmanufactured at our manufacturing facilities in Rensselaer, New York.York and Limerick, Ireland, as well as at our collaborators' facilities. We and our collaborators would be unable to manufacture these materials if our Rensselaer facilitiesthe relevant facility were to cease production due to regulatory requirements or actions, business interruptions, labor shortages or disputes, supply chain interruptions or constraints (including with respect to natural gas and other raw materials), contaminations, fire, climate change, natural disasters, acts of war or terrorism, or other problems.
Many of our products and product candidates are very difficult to manufacture. As our products and most of our product candidates are biologics, they require processing steps that are more difficult than those required for mostmany other chemical pharmaceuticals. Accordingly, multiple steps are needed to control the manufacturing processes. Problems with these manufacturing processes, even minor deviations from the normal process or from the materials used in the manufacturing process (which may not be detectable by us or our collaborators in a timely manner), could lead to product defects or manufacturing failures, resulting in lot failures, product recalls, product liability claims, and insufficient inventory. Also, the complexity of our manufacturing process may make it difficult, time-consuming, and expensive to transfer our technology to our collaborators or contract manufacturers. Also, certainCertain raw materials or other products necessary for the manufacture and formulation of our marketed products and product candidates, some of which are difficult to source, are provided by single-source unaffiliated third-party suppliers. In addition, we rely on certain third parties or our collaborators to perform filling, finishing, distribution, laboratory testing, and other services related to the manufacture of our marketed products and product candidates, and to supply various raw materials and other products. We would be unable to obtain these raw materials, other products, or services for an indeterminate period of time if any of these third parties were to cease or interrupt production or otherwise fail to supply these materials, products, or services to us for any reason, including due to regulatory requirements or actions (including recalls), adverse financial developments at or affecting the supplier, failure by the supplier to comply with cGMPs, contaminations, business interruptions, or labor shortages or disputes.disputes (in each case, including as a result of the COVID-19 pandemic and Russia's invasion of Ukraine, which have exacerbated many of these issues). In any such circumstances, we may not be able to engage a backup or alternative supplier or service provider in a timely manner or at all. This, in turn, could materially and adversely affect our or our collaborators' ability to manufacture or supply marketed products and product candidates, which could materially and adversely affect our business and future prospects.
Certain of the raw materials required in the manufacture and the formulationtesting of our products and product candidates may be derived from biological sources, including mammalian tissues, bovine serum, and human serum albumin. There are certain European regulatory restrictions on using these biological source materials. If we or our collaborators are required to substitute for these sources to comply with Europeansuch regulatory requirements, our clinical development or commercial activities may be delayed or interrupted. 61
If we failOur or our collaborators' failure to meet the stringent requirements of governmental regulation in the manufacture of drug products or product candidates we could incurresult in incurring substantial remedial costs, delays in the development or approval of our product candidates or new indications for our marketed products and/or in their commercial launch if they obtain regulatory approval is obtained, and a reduction in sales.
We and our collaborators and other third-party providers are required to maintain compliance with cGMPs, and are subject to inspections by the FDA or comparable agencies in other jurisdictions to confirm such compliance. Changes of suppliers or modifications of methods of manufacturing may require amending our application(s) to the FDA or such comparable foreign agencies and acceptance of the change by the FDA or such comparable foreign agencies prior to release of product(s). Because we produce multiple products and product candidates at our facilityfacilities in Rensselaer, New York including EYLEA, Dupixent, Praluent, Kevzara, ZALTRAP, and ARCALYST,Limerick, Ireland, there are increased risks associated with cGMP compliance. Our inability, or the inability of our collaborators and third-party fill/finish or other service providers, to demonstrate ongoing cGMP compliance could require us to engage in lengthy and expensive remediation efforts, withdraw or recall product, halt or interrupt clinical trials, and/or interrupt commercial supply of any marketed products, and could also delay or prevent our obtaining regulatory approval for our late-stage product candidates or new indications for our marketed products. For example, on October 28, 2016, the FDA issued a Complete Response Letter relating to the BLA for Kevzara, which referred to certain deficiencies identified during a routine cGMP inspection of the Sanofi fill-and-finish facility in Le Trait, France. While the BLA for Kevzara has since been approved by the FDA, this delayed the FDA approval of Kevzara. Any delay, interruption, or other issue that arises in the manufacture, fill/finish, packaging, or storage of any drug product or product candidate as a result of a failure of our facilities or the facilities or operations of our collaborators or other third parties to pass any regulatory agency inspection or maintain cGMP compliance could significantly impair our ability to develop, obtain approval for, and successfully commercialize our products, which would substantially harm our business, prospects, operating results, and financial condition. Any finding of non-compliance could also increase our costs, cause us to delay the development of our product candidates, result in delay in our obtaining, or our not obtaining, regulatory approval of product candidates or new indications for our marketed products, and cause us to lose revenue from any marketed products, which could be seriously detrimental to our business, prospects, operating results, and financial condition. Risks Related to Commercialization of Products
We may be unsuccessful in continuing the commercialization of our marketed products or in commercializing our product candidates or new indications for our marketed products, if approved, which would materially and adversely affect our business, profitability, and future prospects.
Even if clinical trials demonstrate the safety and effectiveness of any of our product candidates for a specific disease and the necessary regulatory approvals are obtained, the commercial success of any of our product candidates or new indications for our marketed products will depend upon, among other things, their acceptance by patients, the medical community, and third-party payers and on our and our collaborators' ability to successfully manufacture, market and distribute those products in substantial commercial quantities or to establish and manage the required infrastructure to do so, including large-scale information technology systems and a large-scale distribution network. Establishing and maintaining sales, marketing, and distribution capabilities are expensive and time-consuming. Even if we obtain regulatory approval for our product candidates or new indications, if they are not successfully commercialized, we will not be able to recover the significant investment we have made in developing such products and our business, prospects, operating results, and financial condition would be severely harmed.
The commercial success of our products maySignificant noncompliance could also be adversely affected by guidelines or recommendations to healthcare providers, administrators, payers, and patient communities that result in decreased usethe imposition of our products. Such guidelines or recommendations may be published not only by governmental agencies, but also professional societies, practice management groups, private foundations, and other interested parties.
Our product candidates are delivered either by intravenous infusion or by intravitreal or subcutaneous injections, which are generally less well received by patients than tablet or capsule delivery and this could adversely affect the commercial success of those products if they receive marketing approval.
For a description of additional risks relating specifically to the commercialization of EYLEA, Dupixent, Praluent, and Kevzara, see above under "Risks Related to Commercialization of EYLEA" and "Risks Related to Commercialization of Our Antibody-based Products (Dupixent, Praluent, and Kevzara)" (as applicable).
Our marketed products are subject to significant competition, and our product candidates or new indications for our marketed products, if any are approved for marketing, may face significant competition.
There is substantial competition in the biotechnology and pharmaceutical industries from biotechnology, pharmaceutical, and chemical companies. Many of our competitors have substantially greater research, preclinical and clinical product development and manufacturing capabilities, as well as financial, marketing, and human resources, than we do. Our smaller competitors may also enhance their competitive position if they acquire or discover patentable inventions, form collaborative arrangements, or merge with large pharmaceutical companies. Even if we achieve commercialization of our product candidates, our competitors have achieved, and may continue to achieve, product commercialization before our products are approved for marketing and sale.
The market for eye disease products is very competitive, as described in greater detail above under "Risks Related to Commercialization of EYLEA - The commercial success of EYLEA is subject to strong competition."
There is also significant actual and potential future competition for Dupixent, Praluent, and Kevzara, as described in greater detail above under "Risks Related to Commercialization of Our Antibody-based Products (Dupixent, Praluent, and Kevzara) - The commercial success of Dupixent, Praluent, and Kevzara is subject to strong competition."
Our earlier-stage clinical candidates in development are all fully human monoclonal antibodies, which were generated using our VelocImmune technology. Our antibody generation technologies and earlier-stage clinical candidates face competition from many pharmaceutical and biotechnology companies using various technologies.
We are aware of several pharmaceutical and biotechnology companies actively engaged in the research and development of antibody-based products against targets that are also the targets of our early- and late-stage product candidates. For example, Pfizer (in collaboration with Eli Lilly) is developing an antibody-based product candidate against NGF. For cemiplimab, there are several competitors that are marketing or developing antibodies against PD-1 and/or PDL-1, including Bristol-Myers Squibb Company (Opdivo® (nivolumab)), Merck & Co., Inc.'s (Keytruda® (pembrolizumab)), Roche (Tecentriq® (atezolizumab)), AstraZeneca (Imfinzi® (durvalumab)), Pfizer (Bavencio® (avelumab)), Novartis (PDR001), and TESARO, Inc. (TSR-042). We are also aware of several companies developing or marketing small molecules that may compete with our antibody-based product candidates in various indications, if such product candidates obtain regulatory approval in those indications.
If any of thesemonetary penalties or other competitors announces a successful clinical study involving a product that may be competitive with one ofcivil or criminal sanctions and damage our product candidates or the grant of marketing approval by a regulatory agency for a competitive product, such developments may have an adverse effect on our business or future prospects. In addition, the first product to reach the market in a therapeutic area is often at a significant competitive advantage relative to later entrants to the market. Accordingly, the relative speed with which we, or our collaborators, can develop our products candidates, complete the clinical trials and approval processes, and, if such product candidates are approved for marketing and sale, supply commercial quantities to the market is expected to continue to be an important competitive factor. Due to the uncertainties associated with developing biopharmaceutical products, we may not be the first to obtain marketing approval for a product against any particular target, which may have a material adverse effect on our business or future prospects.reputation.
The successful commercialization of our marketed products, as well as our late-stage product candidates or new indications for our marketed products, if approved, will depend on obtaining and maintaining coverage and reimbursement for use of these products from third-party payers, including Medicare and Medicaid in the United States, and these payers may not cover or adequately reimburse for use of our products or may do so at levels that make our products uncompetitive and/or unprofitable, which would materially harm our business, prospects, operating results, and financial condition.
Our future revenues and profitability will be adversely affected in a material manner if United States and foreign governmental payers, private third-party insurers and payers (such as health maintenance organizations and pharmacy benefit management companies), and other third-party payers, including Medicare and Medicaid, do not adequately defray or reimburse the cost of our products to the patients. If these entities do not provide coverage and reimbursement with respect to our products or provide an insufficient level of coverage and reimbursement, our products may be too costly for many patients to afford them, and physicians may not prescribe them. Many third-party payers cover only selected drugs, or may prefer selected drugs, making drugs that are not covered or preferred by such payers more expensive for patients. Third-party payers may also require prior authorization for reimbursement, or require failure on another type of treatment before covering a particular drug, particularly with respect to higher-priced drugs. As our currently marketed products and product candidates are biologics, bringing them to market may cost more than bringing traditional, small-molecule drugs to market due to the complexity associated with the research, development, production, supply and regulatory review of such products. Given cost sensitivities in many health care systems, our currently marketed products and product candidates are likely to be subject to continued pricing pressures, which may have an adverse impact on our business, prospects, operating results, and financial condition.
In addition, in order for private insurance and governmental payers (such as Medicare and Medicaid in the United States) to reimburse the cost of our products, we must, among other things, maintain our FDA registration and our National Drug Code,
maintain formulary approval by pharmacy benefits managers, and maintain recognition by insurance companies and CMS. There is no certainty that we will be able to obtain or maintain the applicable requirements for reimbursement (including relevant formulary coverage) of our current and future products, which may have a material adverse effect on our business.
Government and other third-party payers (including pharmacy benefit management companies) are challenging the prices charged for healthcare products and increasingly limiting, and attempting to limit, both coverage and level of reimbursement for prescription drugs, such as by requiring outcomes-based or other pay-for-performance pricing arrangements. They are also imposing restrictions on eligible patient populations and the reimbursement process (including by means of required prior authorizations and utilization management criteria). In March 2010, the PPACA and a related reconciliation bill were enacted in the United States. This legislation imposes cost-containment and other measures that are likely to adversely affect the amount of reimbursement for our current and future products. The full effects of this legislation depend on a number of factors, many of which are beyond our control, including new regulations and guidance issued by CMS and other federal and state agencies. Some states are also considering legislation that would control the prices and reimbursement of prescription drugs, and state Medicaid programs are increasingly requesting manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any prescription drug for which supplemental rebates are not being paid. It is likely that federal and state legislatures and health agencies will continue to focus on additional health care reform measures in the future that will impose additional constraints on prices and reimbursements for our products.
There is a risk that third-party payers, including Medicare and Medicaid in the United States, may not cover and/or reimburse our current and future products at levels required for us to successfully commercialize these products. Any limitation imposed by third-party payers on the use of our products if they are approved for marketing, or any action or decision by CMS or analogous foreign agencies or authorities which for any reason denies coverage or reimbursement for our products or provides coverage or reimbursement at levels that harm our products' competitiveness or leads to lower prices for those products, will have a material negative effect on our ability to sustain profitability. In certain foreign countries, pricing, coverage, and level of reimbursement of prescription drugs are subject to governmental control, and we and our collaborators may be unable to obtain coverage, pricing, and/or reimbursement on terms that are favorable to us or necessary for us or our collaborators to successfully commercialize our products in those countries. In some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country, and may take into account the clinical effectiveness, cost, and service impact of existing, new, and emerging drugs and treatments. For example, the EU provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. Our results of operations may suffer if we or our collaborators are unable to market our products in foreign countries or if coverage and reimbursement for our products in foreign countries is limited or delayed.
We are dependent upon a small number of customers for a significant portion of our revenue, and the loss of or significant reduction in sales to these customers would adversely affect our results of operations.
We sell EYLEA in the United States to several distributors and specialty pharmacies. Under this distribution model, the distributors and specialty pharmacies generally take physical delivery of product and generally sell the product directly to healthcare providers. For the three months ended September 30, 2017, product sales to three customers accounted on a combined basis for 99% of our total gross product revenue. We expect this significant customer concentrationto continue for the foreseeable future. Our ability to generate and grow sales of EYLEA will depend, in part, on the extent to which our distributors and specialty pharmacies are able to provide adequate distribution of EYLEA to healthcare providers. Although we believe we can find additional distributors, if necessary, our revenue during any period of disruption could suffer and we might incur additional costs. In addition, these customers are responsible for a significant portion of our net trade accounts receivable balances. The loss of any large customer, a significant reduction in sales we make to them, any cancellation of orders they have made with us, or any failure to pay for the products we have shipped to them could adversely affect our results of operations.
If we need to establish commercial capabilities outside the United States and are unable to do so, our business, prospects, operating results, and financial condition may be adversely affected.
We have limited commercial capabilities outside the United States and do not currently have an organization for the sales, marketing, and distribution of marketed products outside the United States. There may be circumstances in which we need to establish commercial capabilities outside the United States, including because we decide to exercise our option to co-promote a product outside the United States or commercialize a particular product independently; we are unable to find an appropriate collaborator; or our existing collaborator decides not to opt in, decides to opt out, or breaches its obligations to us with respect to a particular product.
In order to commercialize any products outside the United States, we must build our sales, marketing, distribution, managerial, and other non-technical capabilities in the relevant markets or make arrangements with third parties to perform these services, which would likely be expensive and time consuming and could delay product launch in one or more markets outside the United States. We cannot be certain that we will be able to successfully develop commercial capabilities outside the United States within an acceptable time frame or at all. These and other difficulties relating to commercializing our products outside the United States may severely harm our business, prospects, operating results, and financial condition.
For additional risks relating to commercialization of EYLEA, Dupixent, Praluent, and Kevzara outside the United States, see also "Risks Related to Commercialization of EYLEA - We rely on our collaboration with Bayer for commercializing EYLEA" and "Risks Related to Commercialization of Our Antibody-based Products (Dupixent, Praluent, and Kevzara) - We rely on our Antibody Collaboration with Sanofi for commercializing Dupixent, Praluent, and Kevzara" (as applicable).
Other Regulatory and Litigation Risks If the testing or use of our products harms people, or is perceived to harm them even when such harm is unrelated to our products, we could be subject to costly and damaging product liability claims. The testing, manufacturing, marketing, and sale of drugs for use in people expose us to product liability risk. Any informed consent or waivers obtained from people who enroll in our clinical trials may not protect us from liability or the cost of litigation. We may also be subject to claims by patients who use our approved products, or our product candidates if those product candidates receive regulatory approval and become commercially available, that they have been injured by a side effect associated with the drug. Even in a circumstance in which we do not believe that an adverse event is related to our products or product candidates, the related investigation may be time consuming or inconclusive and may have a negative impact on our reputation or business. We may face product liability claims and be found responsible even if injury arises from the acts or omissions of third parties who provide fill/finish or other services. To the extent we maintain product liability insurance in relevant periods, such insurance may not cover all potential liabilities or may not completely cover any liability arising from any such litigation. Moreover, in the future we may not have access to liability insurance or be able to maintain our insurance on acceptable terms. If we marketOur business activities have been, and sell approved productsmay in a way that violatesthe future be, challenged under U.S. federal or state and foreign healthcare laws, wewhich may be subject us to civil or criminal proceedings, investigations, or penalties.
The FDA regulates the marketing and promotion of our products, which must comply with the Food, Drug, and Cosmetic Act and applicable FDA implementing standards. The FDA's review of promotional activities includes healthcare provider-directed and direct-to-consumer advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and sales representatives' communications. Failure to comply with applicable FDA requirements and restrictions in this area may subject a company to adverse enforcement action by the FDA, the Department of Justice, or the Office of the Inspector General of the HHS, as well as sales representatives' communications.state authorities. This could subject a company to a range of penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes a drug. Any such failures could also cause significant reputational harm. The FDA may take enforcement action for promoting unapproved uses of a product or other violations of its advertising laws and regulations. The applicable regulations in countries outside the U.S. grant similar powers to the competent authorities and impose similar obligations on companies.
In addition to FDA and related regulatory requirements, we are subject to health care "fraud and abuse" laws, such as the federal civil False Claims Act, the anti-kickback provisions of the federal Social Security Act, and other state and federal laws and regulations. Federal and stateThe U.S. federal healthcare program anti-kickback laws prohibit,statute (the "AKS") prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving payments or other remuneration, directly or indirectly, to induce or reward someone to purchase, prescribe, endorse, arrange for, or recommend a product or service that is reimbursed under federal healthcare programs such as Medicare or state healthcare programs.Medicaid. If we provide payments or other remuneration to a healthcare professional to induce the prescribing of our products, we could face liability under state and federal anti-kickback laws. The Bipartisan Budget Act of 2018 has increased the criminal and civil penalties that can be imposed for violating certain federal health care laws, including the federal anti-kickback statute. Federal false claims laws prohibitThe federal civil False Claims Act prohibits any person from, among other things, knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. The False Claims Act also permits a private individual acting as a "whistleblower" to bring actions on behalf of the federal government alleging violations of the statute and to share in any monetary recovery. Pharmaceutical companies have been investigated and/or prosecuted under these laws for a variety of alleged promotional and marketing activities, such as allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in promotion for uses that the FDA has not approved, known as off-label uses, that caused claims to be submitted to Medicaid for non-covered off-label uses; and submitting inflated best price information to the Medicaid Rebate program. Pharmaceutical and other healthcare companies also are subject to other federal false claims laws, including, among others, federal criminal fraud and false statement statutes that extend to non-government health benefit programs.
The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer.payor. Sanctions under these federal and state laws may include civil monetary penalties, damages, exclusion of a manufacturer's products from reimbursement under government programs, criminal fines, and imprisonment.imprisonment for individuals and the curtailment or restructuring of operations. Even if it is determined that we have not violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which would harm our business, prospects, operating results, and financial condition. Because of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities could be challenged under one or more of such laws.
Massachusetts concerning our support of a 501(c)(3) organization that provides financial assistance to patients; and we are cooperating with pending government investigations concerning certain other business activities. Any adverse decision, finding, allegation, or exercise of enforcement or regulatory discretion in any such proceedings or investigations could harm our business, prospects, operating results, and financial condition.
As part of the PPACA, the federal government requires that pharmaceutical manufacturers record any "transfers of value" made to U.S. prescribers and certain other healthcare providerslicensed physicians and teaching hospitals.hospitals as well as ownership and investment interests held by physicians and their immediate family members. Information provided by companies is aggregated and posted annually on an "Open Payments" website, which is managed by CMS, the agency responsible for implementing these disclosure requirements. Applicable manufacturers also are required to report information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants, and certified nurse-midwives. We will need toalso have similar reporting obligations in other countries based on laws, regulations, and/or industry trade association requirements. We continue to dedicate significant resources to comply with these requirements and need to be prepared to comply with additional reporting obligations outside of the United States that may apply in the future. The PPACA also includes various provisions designed to strengthen fraud-and-abuse enforcement, such as increased funding for enforcement efforts and the lowering of the intent requirement of the federal anti-kickback statute and criminal health care fraud statute such that a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. In addition, several states have legislation requiring pharmaceutical companies to establish marketing compliance programs, file periodic reports with the state, or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities.activities; restrict when pharmaceutical companies may provide meals or gifts to prescribers or engage in other marketing-related activities; require identification or licensing of sales representatives; and restrict the ability of manufacturers to offer co-pay support to patients for certain prescription drugs. Many of these requirements and standards are new or uncertain, and the penalties for failure to comply with these requirements may be unclear. If we are found not to be in full compliance with these laws, we could face enforcement actions, fines, and other penalties, and could receive adverse publicity, which would harm our business, prospects, operating results, and financial condition. Additionally, access to such data by fraud-and-abuse investigators and industry critics may draw scrutiny to our collaborations with reported entities.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations, and future prospects. We participate in the Medicaid Drug Rebate program, the Public Health Service's 340B drug pricing program (the "340B program") (which is administered by the Health Resources and Services Administration ("HRSA")), the U.S. Department of Veterans Affairs ("VA") Federal Supply Schedule ("FSS") pricing program, and the Tricare Retail Pharmacy Program. Pricing and rebate calculations vary across products and programs, are complex, and are often subject to interpretation by us, governmental or regulatory agencies, and the courts. Such interpretation can change and evolve over time. In the case of our Medicaid pricing data, if we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the pricing data, we are obligated to resubmit the corrected data for up to three years after those data originally were due. Such restatements and recalculations increase our costs for complying with the laws and regulations governing the Medicaid Drug Rebate program and could result in an overage or underage in our rebate liability for past quarters. Price recalculations also may affect the ceiling price at which we are required to offer our products under the 340B program. Civil monetary penalties can be applied if we are found to have knowingly submitted any false price or product information to the government, if we are found to have made a misrepresentation in the reporting of our average sales price, if we fail to submit the required price data on a timely basis, or if we are found to have charged 340B covered entities more than the statutorily mandated ceiling price. CMS could also decide to terminate our Medicaid drug rebate agreement, or HRSA could decide to terminate our 340B program participation agreement, in which case federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs. Our failure to comply with our reporting and payment obligations under the Medicaid Drug Rebate program and other governmental programs could negatively impact our financial results. The final regulation governing the Medicaid Drug Rebate program issued by CMS has increased and will continue to increase our costs and the complexity of compliance, has been and will continue to be time-consuming to implement, and could have a material adverse effect on our results of operations, particularly if CMS challenges the approach we have taken in our implementation of the final regulation. Other regulations and coverage expansion by various governmental agencies relating to the Medicaid Drug Rebate program may have a similar impact. In addition, the final regulation issued by HRSA regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities has affected our obligations and potential liability under the 340B program. We are also required to report the 340B ceiling prices for our covered outpatient drugs to HRSA, which then publishes them to 340B covered entities. Any charge by HRSA that we have violated the requirements of the program or the regulation could negatively impact our financial results. Moreover, under a final regulation effective January 13, 2021, HRSA established an ADR process for claims by covered entities that a manufacturer has engaged in overcharging, and by manufacturers that a covered entity violated the prohibitions against diversion or duplicate discounts. Such claims are to be resolved through an ADR panel of government officials rendering a decision that could be appealed only in federal court. An ADR proceeding could subject us to onerous procedural requirements and could result in additional liability. On November 30, 2022, HRSA issued a notice of proposed rulemaking that proposes several changes to the ADR process. Further, any additional future changes to the definition of average manufacturer price and the Medicaid rebate amount under the PPACA or otherwise could affect our 340B ceiling price calculations and negatively impact our results of operations. We have obligations to report the average sales price for certain of our drugs to the Medicare program. Statutory or regulatory changes or CMS guidance could affect the average sales price calculations for our products and the resulting Medicare payment rate, and could negatively impact our results of operations. Starting in 2023, manufacturers must pay refunds to Medicare for single-source drugs or biological products, or biosimilar biological products, reimbursed under Medicare Part B and packaged in single-dose containers or single-use packages for units of discarded drug reimbursed by Medicare Part B in excess of 10 percent of total allowed charges under Medicare Part B for that drug. Manufacturers that fail to pay refunds could be subject to civil monetary penalties of 125 percent of the refund amount. Pursuant to applicable law, knowing provision of false information in connection with price reporting or contract‑based requirements under the VA/FSS and/or Tricare programs can subject a manufacturer to civil monetary penalties. These program and contract-based obligations also contain extensive disclosure and certification requirements. If we overcharge the government in connection with our arrangements with FSS or Tricare, we are required to refund the difference to the government. Failure to make necessary disclosures or to identify contract overcharges can result in allegations against us under the False Claims Act and other laws and regulations. Unexpected refunds to the government, and/or response to a government
investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial condition, results of operations, and future prospects. Risks from the improper conduct of employees, agents, contractors, or collaborators could adversely affect our reputation and our business, prospects, operating results, and financial condition. We cannot ensure that our compliance controls, policies, and procedures will in every instance protect us from acts committed by our employees, agents, contractors, or collaborators that would violate the laws or regulations of the jurisdictions in which we operate, including, without limitation, healthcare, employment, foreign corrupt practices, trade restrictions and sanctions, environmental, competition, and patient privacy and other privacy laws and regulations. Such improper actions could subject us to civil or criminal investigations, and monetary and injunctive penalties, and could adversely impact our ability to conduct business, operating results, and reputation. In particular, our business activities outside of the United States (which have recently increased, and are expected to continue to increase, due to, in part, our efforts to establish our commercialization and co-commercialization capabilities in certain jurisdictions outside the United States) are subject to the Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate, including the U.K. Bribery Act. The FCPA generally prohibits offering, promising, giving, or authorizing others to give anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action, or otherwise obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, our dealings with these prescribers and purchasers are subject to regulation under the FCPA. Recently the Securities and Exchange Commission, or SEC and Department of Justice have increased their FCPA enforcement activities with respect to pharmaceutical companies. There is no certainty that all of our employees, agents, contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts,ability to expand internationally, our ability to attract and retain employees, and our business, prospects, operating results, and financial condition. Our operations may involve hazardous materials and are subject to environmental, health, and safety laws and regulations.regulations, including those governing the use of hazardous materials. Compliance with these laws and regulations is costly, and we may incur substantial liability arising from our activities involving the use of hazardous materials. As a biopharmaceuticalfully integrated biotechnology company with significant research and development and manufacturing operations, we are subject to extensive environmental, health, and safety laws and regulations, including those governing the use of hazardous materials. Our research and development and manufacturing activities involve the controlled use of chemicals, infectious agents (such as viruses, bacteria, and fungi), radioactive compounds, and other hazardous materials. The cost of compliance with environmental, health, and safety regulations is substantial. If an accident involving these materials or an environmental discharge were to occur, we could be held liable for any resulting damages, or face regulatory actions, which could exceed our resources or insurance coverage.
Our business is subject to increasingly complex corporate governance, public disclosure, and accounting requirements and regulations that could adversely affect our business, operating results, and financial condition. We are subject to changing rules and regulations of various federal and state governmental authorities as well as the stock exchange on which our Common Stock is listed. These entities, including the SEC and The NASDAQ Stock Market LLC, have issued a significant number of new and increasingly complex requirements and regulations over the course of the last several years and continue to develop additional requirements and regulationsregulations. For example, in response to laws enacted by Congress, including the Sarbanes-Oxley Act of 2002 and, most recently, the Dodd-Frank Wall Street Reform and Protection Act, or the Dodd-Frank Act. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that expressly authorized or requiredMarch 2022, the SEC proposed new rules for extensive and prescriptive climate-related disclosure in annual reports and registration statements, which would also require inclusion of certain climate-related financial metrics in companies' audited financial statements. Also in March 2022, the SEC proposed rules that are intended to adopt additional rules in these areas, a number of which have yet to be fully implemented.enhance and standardize disclosures regarding cybersecurity risk management, strategy, and governance, as well as cybersecurity incident reporting, by public companies. Our efforts to comply with these requirements and regulations (as well as corporate governance and disclosure expectations of investors and other stakeholders) have resulted in, and are likely to continue to result in, an increase in expenses and a diversion of management's time from other business activities.
Changes in laws and regulations affecting the healthcare industry could adversely affect our business. All aspects of our business, including research and development, manufacturing, marketing, pricing, sales, litigation, and intellectual property rights, and the framework for dispute resolution and asserting our rights against others, are subject to extensive legislation and regulation. Changes in applicable federal and state laws and agency regulations could have a materially negative impact on our business. These include: •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 prescription drugs or other healthcare products, 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 cGMPscGMP requirements 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. As described above, the PPACA and potential regulations thereunder easing the entry of competing follow-on biologics into the marketplace, other new legislation or implementation of existing statutory provisions on importation of lower-cost competing drugs from other jurisdictions, and legislation on comparative effectiveness research are examples of previously enacted and possible future changes in laws that could adversely affect our business. The current U.S. administration and Congressfederal or state governments could carry out other significant changes in legislation, regulation, andor government policy, (includingincluding with respect to the possible repeal of all or portions of the PPACA, possible government reimbursement changes possibleor drug price control measures (such as those discussed above under "Risks Related to Commercialization of Our Marketed Products, Product Candidates, and New Indications for Our Marketed Products - Sales of our marketed products are dependent on the availability and extent of reimbursement from third-party payors, and changes into such reimbursement may materially harm our business, prospects, operating results, and financial condition") or the existing treaty and trade relationships withPPACA or other countries, and tax reform), as evidenced by statements and recent actions of the current president and certain members of Congress.healthcare reform laws. While it is not possible to predict whether and when any such changes will occur, changes in the laws, regulations, and policies governing the development and approval of our product candidates and the commercialization, importation, and reimbursement of our products could adversely affect our business. In addition, our development and commercialization activities could be harmed or delayed by a shutdown of the U.S. government, including the FDA. For example, a prolonged shutdown may significantly delay the FDA's ability to timely review and process any submissions we have filed or may file or cause other regulatory delays, which could materially and adversely affect our business. Risks associated with our operations outside of the United States could adversely affect our business. We have operations and conduct business in several countries outside the United States and we plan to significantly expand the scope of these activities.activities in existing and/or additional countries. For example, as discussed above, we will need to establish commercial capabilities related to Libtayo in certain markets outside the United States following the amendment to the IO Collaboration; and we perform co-commercialization activities under the Antibody Collaboration related to Dupixent in certain jurisdictions outside the United States. Consequently, we are, and will continue to be, subject to risks related to operating in foreign countries, particularly those in which we have not previously established operations, and many of these risks will increase as we expand our activities in such jurisdictions. These risks include: •unfamiliar foreign laws or regulatory requirements or unexpected changes to those laws or requirements;requirements, including those with which we and/or our collaborators must comply in order to maintain our marketing authorizations outside the United States; •other laws and regulatory and industry trade association requirements to which our business activities abroad are subject, such as the FCPA and the U.K. Bribery Act (discussed in greater detail above under "Risks from the improper conduct of employees, agents, contractors, or collaborators could adversely affect our reputation and our business, prospects, operating results, and financial condition"); •changes in the political or economic condition of a specific country or region;region, including as a result of Russia's invasion of Ukraine; •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. For example, on June 23, 2016, the United Kingdom held a referendum in which voters approved an exit from the EU, commonly referred to as "Brexit." As a result of the referendum, the British government has begun negotiating the terms of the United
Kingdom's future relationship with the EU. We do not know to what extent Brexit will impact the businesshave large-scale manufacturing operations in Limerick, Ireland and regulatory environmenthave also established offices in the United Kingdom, Germany, and other countries outside the rest of the EU, or other countries.United States. Changes impacting our ability to conduct business in the United Kingdom or other EUthose countries, or changes to the regulatory regime applicable to our operations in those countries (such as with respect to the approval of our product candidates), may materially and adversely impact our business, prospects, operating results, and financial condition.
We may incur additional tax liabilities related to our operations. We are subject to income tax in the United States and various foreign jurisdictions.jurisdictions in which we operate. Significant judgment is required in determining our worldwide tax liabilities, and our effective tax rate is derived from a combination of the applicable statutory tax rates and relative earnings in the various jurisdictions in which we operate.each taxing jurisdiction. We record liabilities for uncertain tax positions that involve significant management judgment for uncertain tax positions. The Internal Revenue Service or other domesticas to the application of law. Domestic or foreign taxing authorities have previously disagreed, and may in the future disagree, with our interpretation of tax law as applied to the operations of Regeneron and its subsidiaries or with the positions we may take with respect to particular tax issues on our tax returns. Consequently, our reported effective tax rate and our after-tax cash flows may be materially and adversely affected by tax assessments or judgments in excess of accrued amounts that we have estimated in preparing our financial statements.statements may materially and adversely affect our reported effective tax rate or our cash flows. Further, other factors may adversely affect our effective tax rate, may also be adversely affected by numerous other factors, including changes in the mix of our profitability from country to country, and changes in tax laws and regulations. Changesregulations, and tax effects of the accounting for stock-based compensation (which depend in part on the price of our stock and, therefore, are beyond our control). For example, the IRA has created a corporate alternative minimum tax laws of various jurisdictions in which we do business could also result from15% on adjusted financial statement income and an excise tax of 1% of the base erosion and profits shifting, or BEPS, recommendationsvalue of certain stock repurchases that apply to certain corporations for tax years beginning after December 31, 2022. Further, actions taken by the Organization for Economic Co-operation and Development. If these recommendations (or other changesDevelopment and the EC could also influence tax laws in law) were adopted by the countries in which we dooperate, including the implementation of a global minimum tax. Changes to these or other laws and regulations or their interpretations could materially adversely impact our effective tax rate or cash flows. We face risks related to the personal data we collect, process, and share. Our ability to conduct our business itis significantly dependent on the data that we collect, process, and share in discovering, developing, and commercializing drug products. These data are often considered personal data and are therefore regulated by data privacy laws in applicable jurisdictions. Our activities outside the U.S., including clinical trial programs and research collaborations (such as our consortium with a group of companies to fund the generation of genetic exome sequence data from the UK Biobank health resource), implicate non-U.S. data protection laws, including the EU's General Data Protection Regulations ("GDPR"). The GDPR has a wide range of compliance obligations, including increased transparency requirements and data subject rights. Violations of the GDPR carry significant financial penalties for noncompliance (including possible fines of up to 4% of global annual turnover for the preceding financial year or €20 million (whichever is higher)). In addition to the GDPR, certain EU Member States have issued or will be issuing their own implementation legislation. In June 2021, the EC introduced new standard contractual clauses required to be incorporated into certain new and existing agreements within prescribed timeframes in order to continue to lawfully transfer personal data outside the EU. Compliance with these requirements has been and is expected to continue to be costly and time consuming. We conduct clinical trials in many countries around the world, which have new or evolving data privacy laws that have resulted in increased liability in the management of clinical trial data, and additional contractual and due-diligence obligations that could lead to a delay in clinical trial site start-up. There is an increase of enforcement activities in various EU countries that require evidence of compliance with local data privacy requirements. While we continue to monitor these developments, there remains some uncertainty surrounding the legal and regulatory environment for these evolving privacy and data protection laws. Complying with varying jurisdictional requirements could increase the costs and complexity of compliance, including the risk of substantial financial penalties for insufficient notice and consent, failure to respond to data subject rights requests, lack of a legal basis for the transfer of personal information out of the EU, or improper processing of personal data under the GDPR. Failure by our collaborators to comply with the strict rules on the transfer of personal data outside the EU into the U.S. may result in the imposition of criminal and administrative sanctions on such collaborators or impact the flow of personal data outside the EU, which could adversely affect our provisionbusiness and could create liability for income tax and our current rate. We face potential liability related to the privacy of health information we obtain from clinical trials sponsored by us or our collaborators, from research institutions and our collaborators, and directly from individuals.us.
Most U.S. health care providers, including research institutions from which we or our collaborators obtain patient health information,clinical trial data, are subject to privacy and security regulations promulgated under the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act.HIPAA. For example, as part of our human genetics initiative, our wholly-owned subsidiary, Regeneron Genetics Center LLC, has entered into collaborations with many research institutions, including the Geisinger Health System, which are subject to such regulations.HIPAA. Regeneron is not currently classified as a covered entity or business associate under HIPAA and thus is not subject to its requirementsrequirements. However, we could be subject to criminal penalties if we, our affiliates, or penalties. However, any person may be prosecutedour agents knowingly receive PHI in a manner that is not permitted under HIPAA's criminal provisions either directly or under aiding-and-abetting or conspiracy principles.HIPAA. Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly receive individually identifiable health informationPHI from a HIPAA-covered health care provider or research institution that has not satisfied HIPAA's requirements for disclosureits disclosure. There are instances where we collect and maintain personal data, which may include
health information that we receiveis outside the scope of HIPAA but within the scope of state health privacy laws or similar state level privacy legislation. This information may be received throughout the clinical trial process, in the course of our research collaborations, and directly from individuals (or their healthcare providers) who enroll in our patient assistance programs. As such,programs, and from our own employees in a pandemic response process (such as in connection with the COVID-19 pandemic). Consumer protection laws impact the manner in which we may be subjectdevelop and maintain processes to statesupport our patient assistance programs, product marketing activities, and the sharing of employee and clinical data for internal and third-party commercial activities. Several U.S. states have proposed and passed consumer privacy laws, requiring notificationwhich were modeled after the California Consumer Privacy Act of affected individuals2018 ("CCPA") and state regulators ininfluenced by the event of a breach of personal information, whichGDPR. The CCPA is a broader classconsumer protection law that establishes requirements for data use and sharing transparency and provides California residents with personal data privacy rights regarding the use, disclosure, and retention of information thantheir personal data. Amendments to the health information protected by HIPAA. Our clinical trial programs and research collaborations outside the U.S. (such as RGC's collaboration with U.K. Biobank and GSK) may implicate internationalCCPA have, among other things, imposed new obligations to provide notice where personal data protection laws, including the EU Data Protection Directive and legislation of the EU member states implementing it. Our activities outside the U.S. impose additional compliance requirements and generate additional risks of enforcement for noncompliance.will be de-identified. Failure by our collaborators to comply with the strict rules on the transfer of personal data outside of the EU into the U.S.CCPA may result in, among other things, significant civil penalties and injunctive relief, or statutory or actual damages. In addition, California residents have the impositionright to bring a private right of criminalaction in connection with data privacy incidents involving certain elements of personal data. These claims may result in significant liability and administrative sanctionsdamages. These laws and regulations are constantly evolving and may impose limitations on such collaborators,our business activities. Several other U.S. states have introduced similar consumer protection laws, some of which could adversely affect our business. are set to go into effect in the near future. At the federal level, Section 5 of the FTC Act is a consumer protection law that bars unfair and deceptive acts and practices and requires, among other things, companies to notify individuals that they will safeguard their personal data and that they will fulfil the commitments made in their privacy notices. The FTC has brought legal actions against organizations that have violated consumers' privacy rights or have misled them by failing to maintain appropriate security. Furthermore, certain health privacy laws, data breach notification laws, consumer protection laws, data localization laws, and genetic testingprivacy laws may apply directly to our operations and/or those of our collaborators and may impose restrictions on our collection, use, and dissemination of individuals' health information.and other personal data. New state level genetic privacy and consumer protection laws in the United States may require additional transparency and permissions in our informed consent forms. Moreover, patientsindividuals about whom we or our collaborators obtain health information,or other personal data, as well as the providers and third parties who share this information with us, may have statutory or contractual rightslimits that limitimpact our ability to use and disclose the information. We mayare likely to be required to expend significant capital and other resources to ensure ongoing compliance with applicable privacy and data security laws.laws both inside and outside the United States. Many of these laws differ from each other in significant ways and have different effects. Many of the state laws enable a state attorney general to bring actions and provide private rights of action to consumers as enforcement mechanisms. Compliance with these laws requires a flexible privacy framework as they are constantly evolving. Failure to comply with these laws and regulations could result in government enforcement actions and create liability for us (which could include civil and/or criminal penalties), private litigation, and/or adverse publicity. Federal regulators, state attorneys general, and plaintiffs' attorneys have been active in this space. Claims that we have violated individuals' privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business. If we or any collaborators fail to comply with applicable federal, state, local, or localforeign regulatory requirements, we could be subject to a range of regulatory actions that could affect our or any collaborators' ability to commercialize our products and could harm, prevent, or preventsubstantially increase the cost of marketing and sales of any affected products that we are able to commercialize, or could substantially increase the costs and expenses of commercializing and marketing our products.commercialize. Any threatened or actual government enforcement action could also generate adverse publicity and require that we devote substantial resources that could otherwise be used in other aspects of our business.
Increasing use of social media could give rise to liability, breaches of data security, or reputational damage. We and our employees are increasingly utilizing social media tools as a means of communication both internally and externally. Despite our efforts to monitor evolving social media communication guidelines and comply with applicable rules, there is a risk that the use of social media by us or our employees to communicate about our products or business may cause us to be found in violation of applicable requirements. In addition, our employees may knowingly or inadvertently make use of social media in ways that may not comply with our social media policyor other legal or contractual requirements, which may give rise to liability, lead to the loss of trade secrets or other intellectual property, or result in public exposure of personal informationdata of our employees, clinical trial patients, customers, and others. Furthermore, negative posts or comments about us or our products in social media could seriously damage our reputation, brand image, and goodwill.Any of these events could have a material adverse effect on our business, prospects, operating results, and financial condition and could adversely affect the price of our Common Stock.
Risks Related to Our Reliance on or Transactions with Third Parties If any of our collaborationsAntibody Collaboration with Sanofi is terminated, or Sanofi materially breaches its obligations thereunder, our business, prospects, operating results, and financial condition, and our ability to discover, develop, manufacture, and commercialize certain of our pipeline ofproducts and product candidates in the time expected, or at all, would be materially harmed. We rely heavily on fundingsupport from Sanofi to supportdevelop, manufacture, and commercialize certain research and development programs, including our immuno-oncology research and development programs. Sanofi has committed to reimburse us for up to $825.0 million of the costs of our effortsproducts and product candidates. With respect to identifythe products that we are co-developing with Sanofi under our Antibody Collaboration (currently consisting of Dupixent, Kevzara, and validate potential immuno-oncology targets and develop fully-human therapeutic antibodies against such targets under the IO Discovery and Development Agreement over the termitepekimab), Sanofi funds a significant portion of the IO Discovery and Development Agreement. Sanofi also initially funds almost all of the development expenses incurred in connection with the clinical development of product candidates for which Sanofi is the principal controlling party under our IO Collaboration.these products. In addition, Sanofi initially funds half of the development expenses incurred in connection with the clinical development of product candidates for which we are the principal controlling party under our IO Collaboration. We rely on Sanofi to fund these activities. In addition, with respect to those antibodies that Sanofi elects to co-develop with us under our Antibody Collaboration (such as Dupixent, Praluent, Kevzara, and REGN3500) or for which Sanofi is the principal controlling party under our IO Collaboration, we rely on Sanofi to lead much of the clinical development efforts, and assist with obtainingor lead efforts to obtain and maintainingmaintain regulatory approval. Following regulatory approval, we also rely on Sanofi toapprovals, and lead (i) the commercialization efforts to support all of the antibody-basedfor these products that are co-developed by Sanofi and us under our Antibody Collaboration and (ii) the commercialization efforts outside the Unites States to support all products that are co-developed by Sanofi and us under our IO Collaboration (as well as the commercialization efforts in the United States to support all products for which Sanofi is the principal controlling party under our IO Collaboration).product candidates. If Sanofi does not elect to co-develop the product candidates discovered under our Antibody Collaboration or our IO Collaboration or opts out of their development, unless we enter into a collaboration agreement with another party, we would be required to fund and oversee on our own the clinical trials, any regulatory responsibilities, and the ensuing commercialization efforts to support those antibody-based products. For example, under our Antibody Collaboration, Sanofi has elected not to continue co-development of fasinumab and trevogrumab, and decided not to opt in to the evinacumab and other programs. In addition, as previously reported, after 2017 we will be required to fund our antibody discovery activities and the research and preclinical development activities of our drug candidates, as Sanofi’s funding obligations under the Antibody Discovery Agreement will cease.
If Sanofi terminates the License and Collaboration Agreement or the IOAntibody Collaboration or fails to comply with its payment obligations under any of our collaborations, our business, prospects, operating results, and financial condition would be materially harmed. We would be required to either expend substantially more resources than we have anticipated to support our research and development efforts, which could require us to seek additional funding that might not be available on favorable terms or at all, or materially cut back on such activities. If Sanofi does not perform its obligations with respect to the product candidates that it elects to co-develop,is co-developing with us, our ability to develop, manufacture, and commercialize these product candidates will be significantly adversely affected. We have limited commercial capabilities outside the United States and would have to develop or outsource these capabilities for products commercialized under our Antibody Collaboration such as Dupixent, Praluent, and Kevzara (see also "Risks Related to Commercialization of Our Marketed Products, Product Candidates, and New Indications for Our Marketed Products - If we needare unable to establish commercial capabilities outside the United States and are unablefor Libtayo, Dupixent, or any other products we intend to do so,commercialize or co-commercialize outside the United States, our business, prospects, operating results, and financial condition may be adversely affected" above). Termination of the License andAntibody Collaboration Agreement would create substantial new and additional risks to the successful development and commercialization of Dupixent, Praluent, and Kevzara,the products subject to such collaborations, particularly outside the United States.
If our collaboration with Bayer for EYLEA is terminated, or Bayer materially breaches its obligations thereunder, our business, prospects, operating results, and financial condition, and our ability to continue to develop EYLEA and commercialize EYLEA outside the United States in the time expected, or at all, would be materially harmed. We rely heavily on Bayer to assist with the development, and particularlyrespect to the commercialization outside the United States, of EYLEA. Under our agreement with them, Bayer is required to fund approximately half of the development expenses incurred by both companies in connection with the global EYLEA development program. As the EYLEA program continues, we will continue to rely on Bayer to assist with funding the EYLEA development program, continue to lead the development of EYLEA outside the United States obtain(and, if approved, will rely on Bayer with respect to any potential future commercialization of aflibercept 8 mg outside the United States, including the activities discussed below). Bayer is responsible for obtaining and maintainmaintaining regulatory approval outside the United States, and provideas well as providing all sales, marketing, and commercial support for the product outside the United States. In particular, Bayer has responsibility for selling EYLEA outside the United States using its sales force and, in Japan, in cooperation with Santen Pharmaceuticals Co. Ltd. pursuant to a Co-Promotion and Distribution Agreement with Bayer's Japanese affiliate. We cannot assure you that regulatory approvals will be received for EYLEA in additional indications outside the United States or that EYLEA will be successfully commercialized outside the United States. If Bayer and, in Japan, Santen do not perform their obligations in a timely manner, or at all, our ability to develop, manufacture, and commercialize EYLEA outside the United States will be significantly adversely affected. Bayer has the right to terminate its collaboration agreement with us at any time upon six or twelve months' advance notice, depending on the circumstances giving rise to termination. If Bayer were to terminate its collaboration agreement with us, we wouldmay not have the resources or skills to replace those of our collaborator, which could require us to seek additional funding or another collaboration that might not be available on favorable terms or at all, and could cause significant delays inissues for the development and/or commercialization of EYLEA outside the United States and result in substantial additional costs and/or lower revenues to us. We have limited commercial capabilities outside the United States and would have to develop or outsource these capabilities (see also "Risks Related to Commercialization of Our Marketed Products, Product Candidates, and New Indications for Our Marketed Products - If we needare unable to establish commercial capabilities outside the United States and are unablefor Libtayo, Dupixent, or any other products we intend to do so,commercialize or co-commercialize outside the United States, our business, prospects, operating results, and financial condition may be adversely affected" above). Termination of the Bayer collaboration agreement would create substantial new and additional risks to the successful development and commercialization of EYLEA particularlyand, if approved, any potential future commercialization of aflibercept 8 mg outside the United States. Our collaborators and service providers may fail to perform adequately in their efforts to support the development, manufacture, and commercialization of our drug candidates and current and future products. We depend upon third-party collaborators, including Sanofi and Bayer, and service providers such as CROs, outside testing laboratories, clinical investigator sites, and third-party manufacturers, fill/finish providers, and product packagers and labelers, to assist us in the manufacture and preclinical and clinical development of our product candidates. We also depend, or will depend, on some of these or other third parties in connection with the commercialization of our marketed products and our late-stage product candidates and new indications for our marketed products if they are approved for marketing. If any of our existing collaborators or service providers breaches or terminates its agreement with us or does not perform its development or manufacturing services under an agreement in a timely manner (including as a result of its inability to perform due to financial
or other relevant constraints, such as due to Russia's invasion of Ukraine) or in compliance with applicable GMPs, GLPs, or GCP standards, we could experience additional costs, delays, and difficulties in the manufacture or development of, or in obtaining approval by regulatory authorities for, or successfully commercializing our product candidates. We and our collaborators rely on third-party service providers to support the distribution of our marketed products and for many other related activities in connection with the commercialization of these marketed products. Despite our or our collaborators' arrangements with them, these third parties may not perform adequately. If these service providers do not perform their services adequately, sales of our marketed products will suffer. RiskWe have undertaken and may in the future undertake strategic acquisitions, and any difficulties from integrating such acquisitions could adversely affect our business, operating results, and financial condition.
We may acquire companies, businesses, products, or product candidates that complement or augment our existing business. For example, in May 2022, we completed our acquisition of Checkmate Pharmaceuticals, Inc. The process of proposing, negotiating, completing, and integrating any such acquisition is lengthy and complex. Other companies may compete with us for such acquisitions. In addition, we may not be able to integrate any acquired business successfully or operate any acquired business profitably. Integrating any newly acquired business could be expensive and time consuming. Integration efforts often take a significant amount of time, place a significant strain on managerial, operational, and financial resources, result in a loss of key personnel of the acquired business, and could prove to be more difficult or expensive than we predict. The diversion of our management’s attention and any delay or difficulties encountered in connection with any acquisitions we may consummate could result in the disruption of our ongoing business or inconsistencies in standards and controls that could negatively affect our ability to maintain third-party relationships. Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses, products, or product candidates, which may result in dilution for shareholders or the incurrence of indebtedness. As part of our efforts to acquire companies, businesses, products, or product candidates or to enter into other significant transactions, we will conduct business, legal, and financial due diligence with the goal of identifying and evaluating material risks involved in the transaction. Despite our efforts, we ultimately may be unsuccessful in ascertaining or evaluating all such risks and, as a result, might not realize the intended advantages of the transaction. If we fail to realize the expected benefits from acquisitions we have consummated or may consummate in the future, whether as a result of unidentified risks or liabilities, integration difficulties, regulatory setbacks, litigation with current or former employees and other events, our business, operating results, and financial condition could be adversely affected. For any acquired product candidates, we will also need to make certain assumptions about, among other things, development costs, the likelihood of receiving regulatory approval, and the market for any such product candidates. Our assumptions may prove to be incorrect, which could cause us to fail to realize the anticipated benefits of these transactions. In addition, we may experience significant charges to earnings in connection with our efforts, if any, to consummate acquisitions. For transactions that are ultimately not consummated, these charges may include fees and expenses for investment bankers, attorneys, accountants, and other advisors in connection with our efforts. Even if our efforts are successful, we may incur, as part of a transaction, substantial charges for closure costs associated with elimination of duplicate operations and facilities and acquired in-process research and development charges. In either case, the incurrence of these charges could adversely affect our operating results for particular periods. Other Risks Related to EmployeesOur Business We are dependent on our key personnel and if we cannot recruit and retain leaders in our research, development, manufacturing, and commercial organizations, our business will be harmed. We are highly dependent on certain of our executive officers and other key members of our senior management team, and our Chairman.team. If we are not able to retain (or for any other reason lose the services of) any of these persons, our business may suffer. In particular, we depend on the services of P. Roy Vagelos, M.D., the Chairman of our board of directors; Leonard S. Schleifer, M.D., Ph.D., our President and Chief Executive Officer;Officer, and George D. Yancopoulos, M.D., Ph.D., our President and Chief Scientific Officer; and Neil Stahl, Ph.D., our Executive Vice President, Research and Development. As we continue to commercialize EYLEA, Dupixent, Praluent, and Kevzara and, assuming the receipt of required regulatory approvals, other products, weOfficer. We are also highly dependent on the expertise and services of members of ourother senior management members leading theseour research, development, manufacturing, and commercialization efforts. There is intense competition in the biotechnology industry for qualified scientists and managerial personnel in the research, development, manufacture, and commercialization of drugs. We may not be able to continue to attract and retain the qualified personnel necessary to continue to advance our business and achieve our strategic objectives. 70
Information Technology Risks
Significant disruptions of information technology systems or breaches of data security could adversely affect our business. Our business is increasingly dependent on critical, complex, and interdependent information technology systems, including Internet-based systems, to support business processes as well as internal and external communications. These systems are also critical to enable remote working arrangements, which have been growing in importance. The size and complexity of our computer systems make us potentially vulnerable to IT system breakdowns, internal and external malicious intrusion, and computer viruses and ransomware, which may impact product production and key business processes. We also have outsourced significant elements of our information technology infrastructure and operations to third parties, which may allow them to access our confidential information and may also make our systems vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by such third parties or others. In addition, our systems are potentially vulnerable to data security breaches - whether by employees or others - which may expose sensitive data to unauthorized persons. Data security breaches could lead to the loss of trade secrets or other intellectual property, result in demands for ransom or other forms of blackmail, or lead to the public exposure of personal information (including sensitive personal information) of our employees, clinical trial patients, customers, and others. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives (including industrial espionage)espionage or extortion) and expertise, including by organized criminal groups, “hacktivists,”"hacktivists," nation states, and others. As a company with an increasingly global presence, our systems are subject to frequent attacks. There is the potential that our systems may be directly or indirectly affected as nation-states conduct global cyberwarfare, including in connection with the current Russia-Ukraine hostilities. Due to the nature of some of these attacks, there is a risk that an attack may remain undetected for a period of time. While we continue to make investments to improve the protection of data and information technology, and to oversee and monitor the security measures of our suppliers and/or service providers, there can be no assurance that our efforts will prevent service interruptions or security breaches. In addition, we depend in part on third-party security measures over which we do not have full control to protect against data security breaches. SuchIf we or our suppliers and/or service providers fail to maintain or protect our information technology systems and data security effectively and in compliance with U.S. and foreign laws, or fail to anticipate, plan for, or manage significant disruptions andto these systems, we or our suppliers and/or service providers could have difficulty preventing, detecting, or controlling such disruptions or security breaches, of securitywhich could result in legal proceedings, liability under U.S. and foreign laws that protect the privacy of personal information, disruptions to our operations, government investigations, breach of contract claims, and damage to our reputation (in each case in the U.S. or globally), which could have a material adverse effect on our business, prospects, operating results, and financial condition.
Public health outbreaks, epidemics, or pandemics (such as the COVID-19 pandemic) have adversely affected and may in the future adversely affect our business. The COVID-19 pandemic previously adversely affected, and the COVID-19 pandemic or other actual or threatened public health outbreaks, epidemics, or pandemics may in the future adversely affect, among other things, the economic and financial markets and labor resources of the countries in which we operate; our manufacturing and supply chain operations, research and development efforts, commercial operations and sales force, administrative personnel, third-party service providers, and business partners and customers; and the demand for our marketed products. These and other adverse effects may result from various developments including the following: •The imposition of various restrictions and mandates to reduce the spread of outbreaks, epidemics, or pandemics, including governmental orders that direct individuals to shelter at their places of residence, direct businesses and governmental agencies to cease non-essential operations at physical locations, prohibit certain non-essential gatherings, maintain social distancing, order cessation of non-essential travel, and require proof of vaccination and/or negative test results. •Negative impacts on productivity, disruptions to our business, and delays to our clinical programs and development timelines caused by the imposition of various government-imposed or private-sector measures relating to outbreaks, epidemics, or pandemics. Such restrictions and limitations could also negatively impact our access to regulatory authorities (which may be affected, among other things, by travel restrictions and may be delayed in responding to inquiries, reviewing filings, and conducting inspections); our ability to perform regularly scheduled quality checks and maintenance; and our ability to obtain services from third-party specialty vendors and other providers or to access their expertise as fully and timely as needed. •The loss of key personnel, either temporarily or permanently.
•Negative impacts to our sales and marketing efforts due to the postponement or cancellation of face-to-face meetings and restrictions on access by non-essential personnel to hospitals or clinics to the extent such measures slow down adoption or further commercialization of our marketed products. •Reduced demand for some or all of our marketed products due to, among other factors, shelter-in-place, social distancing, or similar orders. •Supply chain strains or disruptions (such as port closures and government or other restrictions or limitations, whether resulting from a public health outbreak, epidemic, pandemic, or otherwise, such as those that may be imposed under the Defense Production Act) that result in reduced availability or increased cost of materials produced by or purchased from our suppliers or other third parties on which we rely. •Microbial, viral, or other contamination of our products, product candidates, the materials used for their production, or in our facilities (or in the facilities of our collaborators, third-party contract manufacturers, or other providers or suppliers), which could result in the closure of or other impact to the affected facilities for an extended period of time, or could result in other delays or disruptions in our direct or indirect supply chain. •Disruptions to the healthcare and healthcare regulatory systems, which could among other matters, divert healthcare resources away from, or materially delay, regulatory review and potential approval of our product candidates and new indications for our marketed products. •Pricing pressures, rebates, clawbacks, and other changes in reimbursement policies and programs resulting from the financial strain of a public health outbreak, epidemic, or pandemic on government-funded healthcare systems. •Risks Relatedrelated to Our Financial Results, Liquidity,any therapies we may have developed or be in the process of developing in response to any such public health outbreak, epidemic, or pandemic (such as REGEN-COV and Needour "next generation" monoclonal antibodies targeting SARS-CoV-2), including heightened regulatory scrutiny; restrictions on administration that limit widespread and timely access to any such therapies; fluctuations in, or elimination of, demand for Additional Financingany such therapies (including due to the availability of superior or competitive therapies or preventative measures); mutations of the disease-causing pathogen impacting efficacy; and revocations of or restrictions on any emergency use authorizations. If we cannot sustain profitability,•Impacts on our clinical trials due to delays in site initiation and patient enrollment as a result of prioritization of hospital resources to address the public health outbreak, epidemic, or pandemic, patients' inability to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, and restrictions on trial initiations imposed by hospitals and other trial sites. Similarly, our ability to recruit and retain patients and principal investigators and site staff could be delayed or disrupted. Any such disruptions could negatively impact the progress of our clinical trials, including the readouts of trial results, the timing of regulatory review, and any anticipated program milestones.
•Significant disruption to the global financial markets or economy, which may make it more difficult for us to access capital if needed. In addition, a recession or market correction resulting from a public health outbreak, epidemic, or pandemic could materially affect the value of our Common Stock. These and similar, and perhaps more severe, disruptions in our operations may materially adversely impact our business, prospects, operating results, and financial condition. To the extent a public health outbreak, epidemic, or pandemic adversely affects our business, prospects, operating results, or financial condition, would be materially harmed. Beginning in 2012, we reported profitability; prior to that, we generally incurred net losses. If we cannot sustain profitability, weit may be unable to continue our operations. Inalso have the absenceeffect of substantial revenue from the sale of products on an ongoing basis, including our sales of EYLEA, and our shareheightening many of the profits from Bayer's sales of EYLEA outside the United States, or from other sources, the amount, timing, nature, or source of which cannot be predicted, we may incur substantial losses again as we conduct our research and development activities, commercialize our approved products, and prepare for possible commercialization of our other product candidates and new indications of our marketed products.risks described in this "Risk Factors" section.
We may need additional funding in the future, which may not be available to us, and which may force us to delay, reduce or eliminate our product development programs or commercialization efforts. We expend substantial resources for research and development, including costs associated with clinical testing of our product candidates and new indications of our marketed products, the commercialization of products, and capital expenditures. We believe our existing capital resources and borrowing availability under our revolving credit facility, together with funds generated by our current and anticipated EYLEA net product sales and funding we are entitled to receive under our collaboration agreements and other similar agreements (including our share of profits in connection with commercialization of EYLEA and Dupixent under our collaboration agreements with Bayer and Sanofi, respectively), will enable us to meet our anticipated operating needs for the foreseeable future. However, one or more of our collaboration agreements may terminate, our revenues may fall short of our projections or be delayed, or our expenses may increase, any of which could result in our capital being consumed significantly faster than anticipated. In addition, ourOur expenses may increase for many reasons, including expenses in connection with the commercialization of our marketed products and the potential commercial launches of our product candidates and new indications for our marketed products, manufacturing scale-up, expenses related to clinical trials testing of antibody-based product candidates we are developing on our own (without a collaborator), and expenses for which we are responsible in accordance with the terms of our collaboration agreements. We cannot be certain that our existing capital resources and our current and anticipated revenues will be sufficient to meet our operating needs. We may require additional financing in the future and we may not be able to raise additional funds on acceptable terms or at all. For example, there is no guarantee that we will have the ability to pay the principal amount due on
our senior unsecured notes at maturity or redeem, repurchase, or refinance the notes prior to maturity on acceptable terms or at all. In addition, in March 2017,2022, we completed an extension of the $720.0 million lease financing for our existing corporate headquarters and other rentable area consisting of approximately 170150 acres of predominately office buildings and laboratory space located in the towns of Mount Pleasant and Greenburgh, NY,Tarrytown, New York, which will become due and payableis set to expire in full on the five-year anniversary of the closing date unless extended with the consent of all the participants and subject to certain other conditions.March 2027. Our ability to refinance or to obtain additional financing could be adversely affected if there is a significant decline in the demand for our products or other significantly unfavorable changes in economic conditions. Volatility in the financial markets could increase borrowing costs or affect our ability to raise capital. If additional financing is necessary and we obtain it through the sale of equity securities, such
sales will likely be dilutive to our shareholders. Debt financing arrangements may require us to pledge certain assets or enter into covenants that would restrict our business activities or our ability to incur further indebtedness and may be at interest rates and contain other terms that are not favorable to our shareholders. Should we require and be unable to raise sufficient funds (i) to complete the development of our product candidates, (ii) to successfully commercialize our late-stage product candidates or new indications for our marketed products if they obtain regulatory approval, and (iii) to continue our manufacturing and marketing of our marketed products, we may face delay, reduction, or elimination of our research and development or preclinical or clinical programs and our commercialization activities, which would significantly limit our potential to generate revenue. Our indebtedness could adversely impact our business. We have certain indebtedness and contingent liabilities, including milestone and royalty payment obligations. As of March 31, 2023, we had an aggregate of $2.702 billion of outstanding indebtedness under our senior unsecured notes and the lease financing facility. We may also incur additional debt in the future. Any such indebtedness could: •limit our ability to access capital markets and incur additional debt in the future; •require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes, including business development efforts, research and development, and mergers and acquisitions; and •limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, thereby placing us at a competitive disadvantage compared to competitors that have less debt. Changes in foreign currency exchange rates could have a material adverse effect on our operating results. Our revenue from outside of the United States will increase as our products, whether marketed or otherwise commercialized by us or our collaborators, gain marketing approval in such jurisdictions. Our primary foreign currency exposure relates to movements in the Japanese yen, euro, British pound sterling, Canadian dollar, Chinese yuan, and Australian dollar. If the U.S. dollar weakens against a specific foreign currency, our revenues will increase, having a positive impact on net income, but our overall expenses will increase, having a negative impact. Likewise,Conversely, if the U.S. dollar strengthens against a specific foreign currency, our revenues will decrease, having a negative impact on net income, but our overall expenses will decrease, having a positive impact. Therefore, significant changes in foreign exchange rates can impact our operating results and the financial condition of our company.Company. For example, as previously reported, the amount of our share of profits we earned in connection with commercialization of antibodies outside the United States was adversely impacted in 2022 by the U.S. dollar strengthening against foreign currencies, including the Japanese yen and the euro. Our investments are subject to risks and other external factors that may result in losses or affect the liquidity of these investments. As of September 30, 2017,March 31, 2023, we had $792.1 million$3.916 billion in cash and cash equivalents and $1,914.2 million$11.110 billion in marketable securities (including $88.0 million$1.059 billion in equity securities). Our investments consist primarily of fixed-incomedebt securities, including investment-grade corporate bonds. These fixed-income investments are subject to external factors that may adversely affect their market value or liquidity, such as interest rate, liquidity, market, and issuer credit risks, including actual or anticipated changes in credit ratings. The equity securities we hold may experience significant volatility and may decline in value or become worthless if the issuer experiences an adverse development. Furthermore, our equity investments could be subject to dilution (and decline in value) as a result of the issuance of additional equity interests.interests by the applicable issuer. If any of our investments suffer market price declines, that are other than temporary, their value could be impaired, whichsuch declines may have an adverse effect on our financial condition and operating results.
Risks Related to Our Common Stock Our stock price is extremely volatile. There has been significant volatility in our stock price and generally in the market prices of biotechnology companies' securities. Various factors and events may have a significant impact on the market price of our Common Stock. These factors include, by way of example: •net product sales of our marketed products (as recorded by us or our collaborators), in particular EYLEA, Dupixent, and Dupixent,Libtayo, as well as our overall operating results; •if any of our product candidates (such as aflibercept 8 mg) 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, Dupixent, and Dupixent;Libtayo; •whether our net productsproduct 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)PBMs) 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;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 or other employees, directors, or significant shareholders;shareholders (or the expectation of any such sales); •changes in tax rates, laws, or interpretation of tax laws; •arrivals and departures of key personnel; •general market conditions; •impact of public health outbreaks, epidemics, or pandemics (such as the COVID-19 pandemic) on our business; •our ability to repurchase our Common Stock under any share repurchase program on favorable terms or at all; •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. The trading price of our Common Stock has been, and could continue to be, subject to wide fluctuations in response to these and other factors, including the sale or attempted sale of a large amount of our Common Stock in the market. As discussed in greater detail under "Future sales of our Common Stock by our significant shareholders or us may depress our stock price and impair our ability to raise funds in new share offerings" below, a large percentage of our Common Stock is owned by a small number of our principal shareholders, and our largest shareholder, Sanofi, has been maintaining its percentage ownership of our Common Stock but has previously publicly disclosed that it may opportunistically increase its percentage ownership of our Common Stock.shareholders. As a result, the public float of our Common Stock (i.e.(i.e., the portion of our Common Stock held by public investors, as opposed to the Common Stock held by our directors, officers, and principal shareholders) is low relative to manymay be lower than the public float of other large public companies. As our Common Stock is less liquid than the stock of companies with broader public ownership, itsownership. Therefore, the trading price of our Common Stock may fluctuate significantly more than the stock market as a whole. These factors may exacerbate the volatility in the trading price of our Common Stock and may negatively impact your ability to liquidate your investment in Regeneron at the time you wish at a price you consider satisfactory. Broad market fluctuations may also adversely affect the market price of our Common Stock. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and
resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation, which may harm our business, prospects, operating results, and financial condition. Future sales of our Common Stock by our significant shareholders or us may depress our stock price and impair our ability to raise funds in new share offerings. A small number of our shareholders beneficially own a substantial amount of our Common Stock. As of September 30, 2017,April 11, 2023, our five largest shareholders plus Dr. Schleifer, our Chief Executive Officer, beneficially owned approximately 48.2%40.4% 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 September 30, 2017. As of September 30, 2017, Sanofi beneficially owned 23,880,537 shares ofApril 11, 2023. If our Common Stock, representing approximately 22.6% of the shares of Common Stock then outstanding. Under our January 2014 amended and restated investor agreement with Sanofi, Sanofi has three demand rights to require us to use all reasonable efforts to conduct a registered underwritten offering with respect to shares of our Common Stock held by Sanofi from time to time; however, shares of our Common Stock held by Sanofi from time to time are subject to a "lock-up" and may not be sold until December 20, 2020. These restrictions on dispositions are subject to earlier termination upon the occurrence of certain events, such as the consummation of a change-of-control transaction involving us or a dissolution or liquidation of our company. In December 2015, Sanofi disclosed in an amendment to its Schedule 13D filed with the SEC its intention to purchase (subject to market conditions, including the price and availability of shares of our Common Stock, and legal and regulatory requirements) additional shares of our Common Stock to maintain and opportunistically increase its beneficial ownership on a percentage basis up to the maximum allowed under the "standstill" provisions of our amended and restated investor agreement with Sanofi, or 30% of our Class A Stock and Common Stock (taken together). If Sanofi, our other significant shareholders or we sell substantial amounts of our Common Stock in the public market, or there is a perception that such sales may occur, the market price of our Common Stock could fall. Sales of Common Stock by our significant shareholders including Sanofi, also might make it more difficult for us to raise funds by selling equity or equity-related securities in the future at a time and price that we deem appropriate.
There can be no assurance that we will repurchase shares of our Common Stock or that we will repurchase shares at favorable prices.
directors authorized a share repurchase program to repurchase up to $3.0 billion of our Common Stock; and, in January 2023, our board of directors authorized an additional $3.0 billion for share repurchases (of which $3.051 billion remained available in the aggregate as of March 31, 2023). There can be no assurance of any future share repurchases or share repurchase program authorizations. Any share repurchases will depend upon, among other factors, our cash balances and potential future capital requirements, our results of operations and financial condition, the price of our Common Stock on the NASDAQ Global Select Market, and other factors that we may deem relevant. We can provide no assurance that we will repurchase shares of our Common Stock at favorable prices, if at all.
Our existing shareholders may be able to exert significantsubstantial influence over matters requiring shareholder approval and over our management. Holders of Class A Stock, who are generally the shareholders who purchased their stock from us before our initial public offering, are entitled to ten votes per share, while holders of Common Stock are entitled to one vote per share. As of September 30, 2017,April 11, 2023, holders of Class A Stock held 15.3%14.4% of the combined voting power of all shares of Common Stock and Class A Stock then outstanding. These shareholders, if acting together, would be in a position to significantlysubstantially influence the election of our directors and the vote on certain corporate transactions that require majority or supermajority approval of the combined classes, including mergers and other business combinations. This may result in our taking corporate actions that other shareholders may not consider to be in their best interest and may affect the price of our Common Stock. As of September 30, 2017:April 11, 2023: •our current executive officers and directors beneficially owned 10.3%7.0% 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 September 30, 2017,April 11, 2023, and 21.4%18.4% 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 September 30, 2017;April 11, 2023; and •our five largest shareholders plus Dr. Schleifer, our Chief Executive Officer, beneficially owned approximately 48.2%40.4% 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 September 30, 2017.April 11, 2023. In addition, these five shareholders plus our Chief Executive Officer held approximately 53.8%47.4% 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 September 30, 2017.April 11, 2023. Pursuant to the January 2014 amended and restated investor agreement with us, Sanofi has agreed to vote its shares as recommended by our board
In addition, we are required under the amended and restated investor agreement to appoint an individual agreed upon by us and Sanofi to our board of directors. Subject to certain exceptions, we are required to use our reasonable efforts (including recommending that our shareholders vote in favor) to cause the election of this designee at our annual shareholder meetings for so long as Sanofi maintains an equity interest in us that is the lower of (i) the highest percentage ownership Sanofi attains following its acquisition of 20% of our outstanding shares of Class A Stock and Common Stock (taken together) (which occurred in April 2014), and (ii) 25% of our outstanding shares of Class A Stock and Common Stock (taken together). This designee is required to be "independent" of our company, as determined under NASDAQ rules, and not to be a current or former officer, director, employee, or paid consultant of Sanofi. The current Sanofi designee, N. Anthony Coles, M.D., is a Class II director whose current term expires at the 2020 annual shareholder meeting.
The anti-takeover effects of provisions of our charter, by-laws, and of New York corporate law, as well as the contractual provisions in our investor and collaboration agreements and certain provisions of our compensation plans and agreements, could deter, delay, or prevent an acquisition or other "change inof control" of us and could adversely affect the price of our Common Stock. Our certificate of incorporation, our by-laws, and the New York Business Corporation Law contain various provisions that could have the effect of delaying or preventing a change in control of our companyCompany or our management that shareholders may consider favorable or beneficial. Some of these provisions could discourage proxy contests and make it more difficult for shareholders to elect directors and take other corporate actions. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock. These provisions include: •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 companyCompany and an "interested shareholder," a plan of merger or consolidation of our companyCompany 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 significantsubstantial influence over matters requiring shareholder approval and over our management." Pursuant toFurther, certain of our collaborators are currently bound by "standstill" provisions under their respective agreements with us. These include the January 2014 amended and restated investor agreement between us and Sanofi, Sanofi is bound by certain "standstill" provisions,as amended, and our 2016 ANG2 license and collaboration agreement with Bayer, which contractually prohibit Sanofi and Bayer, respectively, from seeking to directly or indirectly exert control of our companyCompany or acquiring more than 30%a specified percentage of our Class A Stock and Common Stock, (taken together). This prohibition will remaintaken together (30% in place until the earliestcase of (i)Sanofi and 20% in the latercase of the fifth anniversaries of the expiration or earlier termination of our License and Collaboration Agreement with Sanofi relating to our Antibody Collaboration or our ZALTRAP collaboration agreement with Sanofi, each as amended; (ii) our announcement recommending acceptance by our shareholders of a tender offer or exchange offer that, if consummated, would constitute a change of control involving us; (iii) the public announcement of any definitive agreement providing for a change of control involving us; (iv) the date of any issuance of shares of Common Stock by us that would result in another party having more than 10% of the voting power of our outstanding Class A Stock and Common Stock (taken together) unless such party enters into a standstill agreement containing certain terms substantially similar to the standstill obligations of Sanofi; or (v) other specified events, such as a liquidation or dissolution of our company.Bayer).
Similarly, under our 2016 ANG2 license and collaboration agreement with Bayer, Bayer is bound by certain "standstill" provisions, which contractually prohibit Bayer from seeking to influence the control of our company or acquiring more than 20% of our outstanding Class A Stock and Common Stock (taken together). This prohibition will remain in place until the earliest of (i) the fifth anniversary of the expiration or earlier termination of the agreement; (ii) the public announcement of a tender offer, exchange offer, or other proposal that would constitute a change of control of our company; (iii) the acquisition by a third party or a group of third parties (other than by Dr. Schleifer or his affiliates) of more than 20% of the voting power of our outstanding Class A Stock and Common Stock (taken together); (iv) the issuance of shares of capital stock to another party (other than to an underwriter in a public offering) that would result in such party's having more than 7% of the voting power of our outstanding Class A Stock and Common Stock (taken together) unless such third party enters into a standstill agreement containing terms substantially similar to the standstill obligations of Bayer; or (v) other specified events, such as a liquidation or dissolution of our company.
Further, pursuant to the 2016 collaboration agreement between us and Teva, Teva and its affiliates are bound by certain "standstill" provisions, which contractually prohibit them from seeking to directly or indirectly exert control of our company or acquiring more than 5% of our Class A Stock and Common Stock (taken together). This prohibition will remain in place until the earliest of (i) the fifth anniversary of the expiration or earlier termination of the agreement; (ii) our announcement recommending acceptance by our shareholders of a tender offer or exchange offer that, if consummated, would constitute a change of control involving us; (iii) the public announcement of any definitive agreement providing for a change of control involving us; (iv) the acquisition by a third party or a group of third parties of more than 30% of the voting power of our outstanding Class A Stock and Common Stock (taken together); (v) the date of any issuance of shares of capital stock by us that would result in another party having more than 10% of the voting power of our outstanding Class A Stock and Common Stock (taken together) unless such party enters into a standstill agreement containing certain terms substantially similar to the standstill obligations of Teva; or (vi) other specified events, such as a liquidation or dissolution of our company.
In addition, our Change in Control Severance Plan and the employment agreement with our Chief Executive Officer, each as amended and restated, provide for severance benefits in the event of termination as a result of a change in control of our company.Company. Also, stock optionsequity awards issued under our Second Amended and Restated 2000 Long-Term Incentive Plan, our 2014 Long-Term Incentive Plan, and our Amended and Restated 2014 Long-Term Incentive Planlong-term incentive plans may become fully vested in connection with a "change in control" of our company,Company, as defined in the plans. Further, under the amended and restated investor agreement between us and Sanofi, we are required to appoint an individual agreed upon by us and Sanofi to our board of directors and to use our reasonable efforts to cause the election of this designee at our annual shareholder meetings for so long as Sanofi maintains a specified equity interest in us. As described above under "Our existing shareholders may be able to exert significant influence over matters requiring shareholder approval and over our management," a Sanofi designee currently serves on our board of directors. These contractual provisions may also have the effect of deterring, delaying, or preventing an acquisition or other change in control.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities The table below reflects shares of Common Stock we repurchased under our share repurchase programs, as well as Common Stock withheld by us for employees to satisfy their tax withholding obligations arising upon the vesting of restricted stock granted under one of our long-term incentive plans, during the three months ended March 31, 2023. Refer to Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources" for further details of the share repurchase programs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Period | | Total Number of Shares Purchased | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of Publicly Announced Programs | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs(b) (in millions) | | 1/1/2023–1/31/2023 | | 366,315 | | | $ | 722.22 | | | 364,000 | | | $ | 3,482.3 | | | 2/1/2023–2/28/2023 | | 276,587 | | | $ | 755.04 | | | 275,311 | | | $ | 3,274.4 | | | 3/1/2023–3/31/2023 | | 290,931 | | | $ | 766.88 | | | 290,931 | | | $ | 3,051.3 | | | Total | | 933,833 | | (a) | | | 930,242 | | (a) | | | | | | | | | | | (a) The difference between the total number of shares purchased and the total number of shares purchased as part of a publicly announced programs relates to Common Stock withheld by us for employees to satisfy their tax withholding obligations arising upon the vesting of restricted stock granted under one of our long-term incentive plans. | (b) In January 2023, our board of directors authorized an additional share repurchase program to repurchase up to $3.0 billion of our Common Stock. See Part I, Item 2. "Liquidity and Capital Resources - Share Repurchase Programs" for further details. |
ITEMItem 6. EXHIBITSExhibits
(a) Exhibits | | | | | | | | | | Exhibit Number | | Description | | | | | 10.2* | | Third Amended and Restated Participation Agreement, dated as of March 27, 2023, by and among Old Saw Mill Holdings LLC, as lessee, Bank of America, N.A., as administrative agent, BA Leasing BSC, LLC, as lessor, and the rent assignees party thereto from time to time. (Incorporated by reference from the Form 8-K for Regeneron Pharmaceuticals, Inc. (the "Registrant"), filed March 29, 2023.) | 10.3* | | | 10.4* | | | | 31.1 | | | | | | | | | | | | 101 | | Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL"): (i) the Registrant's Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022; (ii) the Registrant's Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2023 and 2022; (iii) the Registrant's Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2023 and 2022; (iv) the Registrant's Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022; and (v) the notes to the Registrant's Condensed Consolidated Financial Statements. | | 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | 101.INS | | | XBRL Instance Document | 101.SCH | | | XBRL Taxonomy Extension Schema† Indicates a management contract or compensatory plan or arrangement. | 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 | ______ | | | | | | | * Certain of the exhibits and/or schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request. |
SIGNATURESIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | | | | | | | | | | | REGENERON PHARMACEUTICALS, INC. | | | | | | | | | Date: | May 4, 2023 | | REGENERON PHARMACEUTICALS, INC.By: | | | | | | | | Date: | November 8, 2017 | | By: | /s/ Robert E. Landry | | | | | | | | | | | | Robert E. Landry | | | | | | SeniorExecutive Vice President, Finance and | | | | | | Chief Financial Officer | | | | | | (Duly Authorized Officer) | |
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