UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2020
	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

Commission File Number: 0-19034

REGENERON PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices, including zip code)

(914) 847-7000

(Registrant's telephone number, including area code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yes	☒	No	☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).	Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.		☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).	Yes	☐	No	☒

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

Class of Common Stock	Number of Shares
Class A Stock, $.001 par value	1,848,970
Common Stock, $.001 par value	104,857,294

REGENERON PHARMACEUTICALS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page Numbers
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	2
	Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 2020 and 2019	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2020 and 2019	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 6.	Exhibits	86
SIGNATURE PAGE		87

"ARCALYST®," "EYLEA®," "Inmazeb™," "Libtayo®" (in the United States), "Praluent®" (in the United States), "Regeneron®," "Regeneron Genetics Center®," "Veloci-Bi®," "VelociGene®," "VelociMab®," "VelocImmune®," "VelociMouse®," "VelociSuite®," "VelociT™," and "ZALTRAP®" are trademarks of Regeneron Pharmaceuticals, Inc. Trademarks and trade names of other companies appearing in this report are, to the knowledge of Regeneron Pharmaceuticals, Inc., the property of their respective owners.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions, except share data)

	September 30,		December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	1,573.0	$	1,617.8
Marketable securities	1,452.9		1,596.5
Accounts receivable - trade, net	3,092.5		2,100.0
Accounts receivable - Sanofi	460.8		260.6
Accounts receivable - other	486.2		425.0
Inventories	1,801.6		1,415.5
Prepaid expenses and other current assets	230.6		273.7
Total current assets	9,097.6		7,689.1
Marketable securities	2,875.1		3,256.8
Property, plant, and equipment, net	3,138.3		2,890.4
Deferred tax assets	804.2		824.2
Other noncurrent assets	168.8		144.7
Total assets	$	16,084.0	$	14,805.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	443.1	$	418.1
Accrued expenses and other current liabilities	1,303.0		1,211.4
Deferred revenue - Sanofi	409.3		310.5
Deferred revenue - other	85.5		71.6
Other liabilities - Sanofi	96.9		85.0
Total current liabilities	2,337.8		2,096.6
Long-term debt	1,978.3		—
Finance lease liabilities	716.5		713.9
Deferred revenue - Sanofi	37.9		27.7
Deferred revenue - other	67.0		77.6
Other liabilities - Sanofi	367.0		482.0
Other noncurrent liabilities	454.0		317.7
Total liabilities	5,958.5		3,715.5
Stockholders' equity:
Preferred Stock, $.01 par value; 30,000,000 shares authorized; issued and outstanding - none	—		—
Class A Stock, convertible, $.001 par value; 40,000,000 shares authorized; shares issued and outstanding - 1,848,970 in 2020 and 2019	—		—
Common Stock, $.001 par value; 320,000,000 shares authorized; shares issued - 120,516,837 in 2020 and 113,288,103 in 2019	0.1		0.1
Additional paid-in capital	6,592.8		4,428.6
Retained earnings	9,743.8		7,379.8
Accumulated other comprehensive income	30.8		21.1
Treasury Stock, at cost; 15,741,824 shares in 2020 and 4,860,123 shares in 2019	(6,242.0)		(739.9)
Total stockholders' equity	10,125.5		11,089.7
Total liabilities and stockholders' equity	$	16,084.0	$	14,805.2
The accompanying notes are an integral part of the financial statements.

2

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

(In millions, except per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Statements of Operations
Revenues:
Net product sales	$	1,482.2	$	1,238.3	$	3,945.8	$	3,548.0
Sanofi collaboration revenue	353.3		175.0		869.3		232.8
Bayer collaboration revenue	299.9		293.6		825.5		834.8
Other revenue	158.6		36.8		433.6		78.5
	2,294.0		1,743.7		6,074.2		4,694.1
Expenses:
Research and development	684.6		526.0		1,990.5		1,897.6
Selling, general, and administrative	326.9		304.4		1,042.5		890.1
Cost of goods sold	131.0		115.9		312.3		253.8
Cost of collaboration and contract manufacturing	143.0		109.6		454.5		289.6
Other operating (income) expense, net	(44.6)		(50.7)		(135.2)		(171.1)
	1,240.9		1,005.2		3,664.6		3,160.0
Income from operations	1,053.1		738.5		2,409.6		1,534.1
Other income (expense):
Other (expense) income, net	(28.5)		37.8		218.3		28.7
Interest expense	(26.3)		(7.8)		(42.1)		(23.5)
	(54.8)		30.0		176.2		5.2
Income before income taxes	998.3		768.5		2,585.8		1,539.3
Income tax expense	156.2		98.9		221.8		215.5
Net income	$	842.1	$	669.6	$	2,364.0	$	1,323.8
Net income per share - basic	$	7.98	$	6.12	$	21.83	$	12.12
Net income per share - diluted	$	7.39	$	5.86	$	20.36	$	11.54
Weighted average shares outstanding - basic	105.5		109.4		108.3		109.2
Weighted average shares outstanding - diluted	113.9		114.2		116.1		114.7
Statements of Comprehensive Income
Net income	$	842.1	$	669.6	$	2,364.0	$	1,323.8
Other comprehensive income (loss), net of tax:
Unrealized (loss) gain on debt securities	(4.9)		1.0		10.9		31.5
Unrealized gain (loss) on cash flow hedges	0.2		(0.3)		(1.2)		(2.7)
Comprehensive income	$	837.4	$	670.3	$	2,373.7	$	1,352.6
The accompanying notes are an integral part of the financial statements.

3

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

(In millions)

	Class A Stock		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders' Equity
	Shares	Amount	Shares	Amount								Shares	Amount
Balance, December 31, 2019	1.8	—	113.3	$	0.1	$	4,428.6	$	7,379.8	$	21.1	(4.9)	$	(739.9)	$	11,089.7
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	3.1	—		817.4		—		—		—	—		817.4
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	(0.4)	—		(155.1)		—		—		—	—		(155.1)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		12.5		—		—		—	2.1		14.6
Repurchases of Common Stock	—	—	—	—		—		—		—		(0.8)	(336.0)		(336.0)
Stock-based compensation charges	—	—	—	—		108.0		—		—		—	—		108.0
Net income	—	—	—	—		—		624.6		—		—	—		624.6
Other comprehensive loss, net of tax	—	—	—	—		—		—		(30.2)		—	—		(30.2)
Balance, March 31, 2020	1.8	—	116.0	0.1		5,211.4		8,004.4		(9.1)		(5.7)	(1,073.8)		12,133.0
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	4.4	—		1,355.5		—		—		—	—		1,355.5
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	(0.6)	—		(416.5)		—		—		—	—		(416.5)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		7.4		—		—		—	2.7		10.1
Repurchases of Common Stock	—	—	—	—		—		—		—		(9.9)	(5,071.8)		(5,071.8)
Stock-based compensation charges	—	—	—	—		105.2		—		—		—	—		105.2
Net income	—	—	—	—		—		897.3		—		—	—		897.3
Other comprehensive income, net of tax	—	—	—	—		—		—		44.6		—	—		44.6
Balance, June 30, 2020	1.8	—	119.8	0.1		6,263.0		8,901.7		35.5		(15.6)	(6,142.9)		9,057.4
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	0.9	—		297.5		—		—		—	—		297.5
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	(0.2)	—		(80.9)		—		—		—	—		(80.9)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		8.6		—		—		—	1.3		9.9
Repurchases of Common Stock	—	—	—	—		—		—		—		(0.1)	(100.4)		(100.4)
Stock-based compensation charges	—	—	—	—		104.6		—		—		—	—		104.6
Net income	—	—	—	—		—		842.1		—		—	—		842.1
Other comprehensive loss, net of tax	—	—	—	—		—		—		(4.7)		—	—		(4.7)
Balance, September 30, 2020	1.8	—	120.5	$	0.1	$	6,592.8	$	9,743.8	$	30.8	(15.7)	$	(6,242.0)	$	10,125.5

4

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (continued)
	Class A Stock		Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders' Equity
	Shares	Amount	Shares	Amount								Shares	Amount
Balance, December 31, 2018	1.9	—	111.1	$	0.1	$	3,911.6	$	5,254.3	$	(12.3)	(4.0)	$	(396.4)	$	8,757.3
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	0.6	—		140.9		—		—		—	—		140.9
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	—	—		(10.7)		—		—		—	—		(10.7)
Issuance of Common Stock for 401(k) Savings Plan	—	—	—	—		4.3		—		—		0.1	6.2		10.5
Repurchases of Common Stock	—	—	—	—		—		—		—		(0.1)	(54.0)		(54.0)
Stock-based compensation charges	—	—	—	—		114.8		—		—		—	—		114.8
Adjustment upon adoption of new accounting standard	—	—	—	—		—		9.7		—		—	—		9.7
Net income	—	—	—	—		—		461.1		—		—	—		461.1
Other comprehensive income, net of tax	—	—	—	—		—		—		15.1		—	—		15.1
Balance, March 31, 2019	1.9	—	111.7	0.1		4,160.9		5,725.1		2.8		(4.0)	(444.2)		9,444.7
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	0.3	—		13.9		—		—		—	—		13.9
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	(0.1)	—		(29.7)		—		—		—	—		(29.7)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		9.3		—		—		—	2.4		11.7
Stock-based compensation charges	—	—	—	—		109.2		—		—		—	—		109.2
Net income	—	—	—	—		—		193.1		—		—	—		193.1
Other comprehensive income, net of tax	—	—	—	—		—		—		13.0		—	—		13.0
Balance, June 30, 2019	1.9	—	111.9	0.1		4,263.6		5,918.2		15.8		(4.0)	(441.8)		9,755.9
Issuance of Common Stock for equity awards granted under long-term incentive plans	—	—	0.1	—		8.3		—		—		—	—		8.3
Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations	—	—	—	—		(0.1)		—		—		—	—		(0.1)
Issuance/distribution of Common Stock for 401(k) Savings Plan	—	—	—	—		3.9		—		—		—	2.1		6.0
Repurchases of Common Stock	—	—	—	—		—		—		—		(0.2)	(48.7)		(48.7)
Conversion of Class A Stock to Common Stock	(0.1)	—	0.1	—		—		—		—		—	—		—
Stock-based compensation charges	—	—	—	—		112.7		—		—		—	—		112.7
Net income	—	—	—	—		—		669.6		—		—	—		669.6
Other comprehensive income, net of tax	—	—	—	—		—		—		0.7		—	—		0.7
Balance, September 30, 2019	1.8	—	112.1	$	0.1	$	4,388.4	$	6,587.8	$	16.5	(4.2)	$	(488.4)	$	10,504.4
The accompanying notes are an integral part of the financial statements.

5

REGENERON PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net income	$	2,364.0	$	1,323.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	174.2		156.0
Non-cash compensation expense	310.5		330.8
Other non-cash items, net	(111.3)		113.2
Deferred taxes	117.9		(110.0)
Changes in assets and liabilities:
Increase in Sanofi, trade, and other accounts receivable	(1,275.3)		(464.5)
Increase in inventories	(402.4)		(227.2)
Decrease in prepaid expenses and other assets	16.4		24.8
Increase in deferred revenue	112.3		166.8
Increase in accounts payable, accrued expenses, and other liabilities	80.8		328.9
Total adjustments	(976.9)		318.8
Net cash provided by operating activities	1,387.1		1,642.6
Cash flows from investing activities:
Purchases of marketable and other securities	(2,642.7)		(2,834.9)
Sales or maturities of marketable and other securities	3,330.3		1,306.4
Capital expenditures	(453.2)		(290.6)
Net cash provided by (used in) investing activities	234.4		(1,819.1)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	1,981.9		—
Proceeds from bridge loan facility	1,500.0		—
Repayment of bridge loan facility	(1,500.0)		—
Proceeds from issuance of Common Stock	2,471.1		163.5
Payments in connection with Common Stock tendered for employee tax obligations	(652.5)		(40.5)
Repurchases of Common Stock	(5,465.7)		(29.4)
Net cash (used in) provided by financing activities	(1,665.2)		93.6
Net decrease in cash, cash equivalents, and restricted cash	(43.7)		(82.9)
Cash, cash equivalents, and restricted cash at beginning of period	1,630.3		1,480.2
Cash, cash equivalents, and restricted cash at end of period	$	1,586.6	$	1,397.3
The accompanying notes are an integral part of the financial statements.

6

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Unless otherwise noted, dollars in millions, except per share data)

1. Interim Financial Statements

Basis of Presentation

The interim Condensed Consolidated Financial Statements of Regeneron Pharmaceuticals, Inc. and its subsidiaries ("Regeneron," "Company," "we," "us," and "our") have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and disclosures necessary for a presentation of the Company's financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, these financial statements reflect all normal recurring adjustments and accruals necessary for a fair statement of the Company's condensed consolidated financial statements for such periods. The results of operations for any interim period are not necessarily indicative of the results for the full year. The December 31, 2019 Condensed Consolidated Balance Sheet data were derived from audited financial statements, but do not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

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

Effective January 1, 2020, we changed the presentation of cost reimbursements from collaborators who are not deemed to be our customers from collaboration revenue to a reduction of the corresponding operating expense (i.e., either Research and development or Selling, general, and administrative) incurred by us. We also changed the presentation of amounts recognized in connection with up-front and development milestone payments received from collaboration revenue to other operating income. We made these changes in presentation because we believe the new presentation is preferable, as it better reflects the nature of the Company’s costs incurred and revenues earned pursuant to arrangements with collaborators and enhances the comparability of our financial statements with industry peers.

The change in presentation has been applied retrospectively. The tables below present the impact of the change on the Company’s previously-filed Consolidated Balance Sheet as of December 31, 2019, the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019, and the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2019. The Company’s previously-filed balance sheet has been updated to reflect the addition of the caption Other liabilities for the presentation of up-front and development milestones paid by collaborators that are deferred. There was no impact on the Company’s previously-filed Consolidated Statements of Stockholders’ Equity.

	December 31, 2019
Balance Sheet Data:	As Previously Reported		Adjustments		As Revised
Accrued expenses and other current liabilities	$	1,086.8	$	124.6	$	1,211.4
Deferred revenue - Sanofi (current)	$	395.5	$	(85.0)	$	310.5
Deferred revenue - other (current)	$	196.2	$	(124.6)	$	71.6
Other liabilities - Sanofi (current)	—		$	85.0	$	85.0
Deferred revenue - Sanofi (noncurrent)	$	509.7	$	(482.0)	$	27.7
Deferred revenue - other (noncurrent)	$	109.3	$	(31.7)	$	77.6
Other liabilities - Sanofi (noncurrent)	—		$	482.0	$	482.0
Other noncurrent liabilities	$	286.0	$	31.7	$	317.7

7

REGENERON PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Unless otherwise noted, dollars in millions, except per share data)

	Three Months Ended September 30, 2019						Nine Months Ended September 30, 2019
Statement of Operations Data:	As Previously Reported		Adjustments		As Revised		As Previously Reported		Adjustments		As Revised
Sanofi collaboration revenue	$	404.2	$	(229.2)	$	175.0	$	999.7	$	(766.9)	$	232.8
Bayer collaboration revenue	$	302.8	$	(9.2)	$	293.6	$	868.0	$	(33.2)	$	834.8
Other revenue	$	103.1	$	(66.3)	$	36.8	$	278.2	$	(199.7)	$	78.5
Total revenues	$	2,048.4	$	(304.7)	$	1,743.7	$	5,693.9	$	(999.8)	$	4,694.1
Research and development	$	663.4	$	(137.4)	$	526.0	$	2,353.5	$	(455.9)	$	1,897.6
Selling, general, and administrative	$	419.9	$	(115.5)	$	304.4	$	1,248.0	$	(357.9)	$	890.1
Cost of collaboration and contract manufacturing(1)	$	110.7	$	(1.1)	$	109.6	$	304.5