Collaboration and Contract Research Agreements

The Company has entered into various agreements related to its activities to develop and commercialize product candidates and utilize its technology platforms. Significant agreements of this kind are described below.

a. Sanofi

As described in Note 14, Sanofi owned a total of 15,816,953 shares of the Company's Common Stock as of December 31, 2013, principally purchased in connection with the companies' ZALTRAPand antibody collaborations described below. Total Company-incurred expenses associated with these Sanofi collaborations, which include reimbursable and non-reimbursable amounts and an allocable portion of general and administrative costs, were $600.1 million in 2013, $405.8 million in 2012, and $318.2 million in 2011.

ZALTRAP(aflibercept)

In September 2003, the Company entered into a collaboration agreement (the “ZALTRAPAgreement”) with Aventis Pharmaceuticals Inc. (predecessor to Sanofi U.S.), to jointly develop and commercialize ZALTRAP. In connection with this agreement, Sanofi made a non-refundable up-front payment of $80.0 million and purchased 2,799,552 newly issued unregistered shares of the Company's Common Stock for $45.0 million. In January 2005, the Company and Sanofi amended the ZALTRAP Agreement to exclude intraocular delivery of aflibercept to the eye (“Intraocular Delivery”) from joint development under the agreement, and product rights to aflibercept in Intraocular Delivery reverted to Regeneron. In connection with this amendment, Sanofi made a $25.0 million non-refundable payment to Regeneron (the “Intraocular Termination Payment”). In December 2005, the Company and Sanofi amended the ZALTRAP Agreement to expand the territory in which the companies are collaborating on the development of ZALTRAP to include Japan. In connection with this amendment, Sanofi agreed to make a $25.0 million non-refundable up-front payment to the Company, which was received in January 2006.

Sanofi commenced sales of ZALTRAP Injection for Intravenous Infusion, in combination with FOLFIRI, for patients with mCRC that is resistant to or has progressed following an oxaliplatin-containing regimen, in the United States in the third quarter of 2012 and in certain European and other countries in the first quarter of 2013. The Company earned, and recorded as revenue in 2012, a $50.0 million substantive milestone payment from Sanofi upon FDA approval of ZALTRAP. The Company currently manufactures clinical and commercial supplies of ZALTRAP.

Under the ZALTRAP Agreement, as amended, the Company and Sanofi share co-promotion rights and profits and losses on sales of ZALTRAP outside of Japan, for disease indications included in the companies' collaboration. The Company is entitled to receive a percentage of approximately 35% on annual sales of ZALTRAP in Japan, subject to certain potential adjustments. According to the terms of the ZALTRAP Agreement, the Company may also receive up to $350 million in additional substantive milestone payments upon receipt of specified marketing approvals.

Under the ZALTRAP Agreement, as amended, agreed upon worldwide development expenses incurred by both companies during the term of the agreement are funded by Sanofi. If the collaboration becomes profitable, Regeneron will be obligated to reimburse Sanofi for 50% of these development expenses, in accordance with a formula based on the amount of development expenses and Regeneron's share of the collaboration profits, or at a faster rate at Regeneron's option. In connection with the January 2005 amendment to the ZALTRAP Agreement, the Intraocular Termination Payment of $25.0 million will also be subject to 50% reimbursement by Regeneron to Sanofi if the collaboration becomes profitable. In particular, the Company's total contingent reimbursement obligation to Sanofi for ZALTRAP was approximately $446 million as of December 31, 2013. Regeneron has the option to conduct additional pre-Phase III studies at its own expense.

Sanofi has the right to terminate the agreement without cause with at least twelve months advance notice. Upon termination of the agreement for any reason, Regeneron's obligation to reimburse Sanofi for 50% of ZALTRAP development expenses will terminate, and the Company will retain all rights to ZALTRAP.

In accordance with the Company's revenue recognition policy described in Note 2, the up-front payments received in September 2003 and January 2006, of $80.0 million and $25.0 million, respectively, and reimbursement of Regeneron-incurred development expenses, are being recognized as collaboration revenue over the related performance period.

The collaboration revenue related to ZALTRAP that the Company earned from Sanofi is detailed below:



	Year ended December 31,
Sanofi Collaboration Revenue - ZALTRAP	2013			2012			2011
Regeneron's share of losses in connection with commercialization of ZALTRAP	$	(30,810	)	$	(25,634	)	$	(9,321	)
Substantive milestone payment	—			50,000			—
Reimbursement of Regeneron research and development expenses	5,639			10,702			16,871
Other	9,682			13,268			9,932
	$	(15,489	)	$	48,336		$	17,482

In connection with the ZALTRAP Agreement, (i) at December 31, 2013 and 2012, there was a net payable of $1.4 million and $2.7 million, respectively, to Sanofi, and (ii) deferred revenue at December 31, 2013 and 2012 was $18.2 million and $14.8 million, respectively.

Antibodies

In November 2007, the Company entered into a global, strategic collaboration (the “Antibody Collaboration”) with Sanofi to discover, develop, and commercialize fully human monoclonal antibodies.

The Antibody Collaboration is governed by a Discovery and Preclinical Development Agreement (the “Discovery Agreement”) and a License and Collaboration Agreement (the “License Agreement”). In connection with the execution of the Discovery Agreement in 2007, the Company received a non-refundable up-front payment of $85.0 million from Sanofi. In addition, under the Discovery Agreement, Sanofi is funding the Company's research to identify and validate potential drug discovery targets and develop fully human monoclonal antibodies against these targets. In November 2009, the Company and Sanofi amended these collaboration agreements to expand and extend the Antibody Collaboration. Pursuant to the Discovery Agreement, as amended, Sanofi agreed to fund up to $160 million per year of the Company's research activities in 2010 through 2017. Sanofi has an option to extend certain antibody development and preclinical activities relating to selected program targets for up to an additional three years after 2017.

For each drug candidate identified under the Discovery Agreement, Sanofi has the option to license rights to the candidate under the License Agreement. If it elects to do so, Sanofi will co-develop the drug candidate with the Company through product approval. Under certain defined circumstances, upon exercising its option to license rights to particular candidates, Sanofi must make a $10 million substantive milestone payment to the Company. If Sanofi does not exercise its option to license rights to a particular drug candidate under the License Agreement, the Company retains the exclusive right to develop and commercialize such drug candidate, and Sanofi will receive a royalty on sales, if any. The Company and Sanofi are currently co-developing seven therapeutic antibodies under the License Agreement.

Under the License Agreement, agreed upon worldwide development expenses incurred by both companies during the term of the agreement are funded by Sanofi, 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 (“Shared Phase 3 Trial Costs”) are shared 80% by Sanofi and 20% by Regeneron. Consequently, commencing in 2013, the Company recognized as additional research and development expense $17.6 million of antibody development expenses that the Company was obligated to reimburse to Sanofi related to alirocumab and sarilumab. If the Antibody Collaboration becomes profitable, Regeneron will be obligated to reimburse Sanofi for 50% of worldwide development expenses that were fully funded by Sanofi and 30% of Shared Phase 3 Trial Costs, in accordance with a defined formula based on the amounts of these expenses and the Company's share of collaboration profits from commercialization of collaboration products. However, the Company is not required to apply more than 10% of its share of the profits from the antibody collaboration in any calendar quarter to reimburse Sanofi for these development costs. In particular, the Company's contingent reimbursement obligation to Sanofi was approximately $879 million as of December 31, 2013.

Sanofi will lead commercialization activities for products developed under the License Agreement, subject to the Company's right to co-promote such products. The parties will equally share profits and losses from sales within the United States. The parties will share profits outside the United States on a sliding scale based on sales starting at 65% (Sanofi)/35% (Regeneron) and ending at 55% (Sanofi)/45% (Regeneron), and losses outside the United States at 55% (Sanofi)/45% (Regeneron). In addition to profit sharing, the Company is entitled to receive up to $250 million in sales milestone payments, with milestone payments commencing only if and after aggregate annual sales outside the United States exceed $1.0 billion on a rolling 12-month basis.

Regeneron is obligated to use commercially reasonable efforts to supply clinical requirements of each drug candidate under the Antibody Collaboration until commercial supplies of that drug candidate are being manufactured. In connection with the November 2009 amendment of the collaboration's Discovery Agreement, Sanofi funded $30.0 million of agreed-upon costs the Company incurred to expand its manufacturing capacity at its Rensselaer, New York facilities.

With respect to each antibody product which enters development under the License Agreement, Sanofi or the Company may, by giving twelve months' notice, opt-out of further development and/or commercialization of the product, in which event the other party retains exclusive rights to continue the development and/or commercialization of the product. The Company may also opt-out of the further development of an antibody product if it gives notice to Sanofi within thirty days of the date that Sanofi enters joint development of such antibody product under the License Agreement. Each of the Discovery Agreement and the License Agreement contains other termination provisions, including for material breach by the other party. Prior to December 31, 2017, Sanofi has the right to terminate the amended Discovery Agreement without cause with at least three months advance written notice; however, except under defined circumstances, Sanofi would be obligated to immediately pay to the Company the full amount of unpaid research funding during the remaining term of the research agreement through December 31, 2017. Upon termination of the collaboration in its entirety, the Company's obligation to reimburse Sanofi for development costs out of any future profits from collaboration products will terminate. Upon expiration of the amended Discovery Agreement, Sanofi has an option to license the Company's VelocImmune technology for agreed-upon consideration.

In connection with the Antibody Collaboration, in August 2008, the Company entered into a separate agreement with Sanofi, which extended through December 2012, to use Regeneron's proprietary VelociGene^® technology platform to supply Sanofi with genetically modified mammalian models of gene function and disease (the “VelociGene Agreement”). The VelociGene Agreement provided for minimum annual order quantities for the term of the agreement, for which the Company expects to receive payments totaling $21.5 million.

In accordance with the Company's revenue recognition policy described in Note 2, the (i) $85.0 million up-front payment received in December 2007, (ii) reimbursement of Regeneron-incurred expenses under the Discovery and License Agreements, (iii) $21.5 million of aggregate minimum payments under the VelociGene Agreement, and (iv) reimbursement of agreed-upon costs to expand the Company's manufacturing capacity are being recognized as collaboration revenue over the related performance period.

In May 2013, the Company acquired from Sanofi full exclusive rights to two families of novel antibodies invented at Regeneron and previously included in the Company's antibody collaboration with Sanofi. The Company acquired full rights to antibodies targeting the PDGF (platelet derived growth factor) family of receptors and ligands in ophthalmology and all other indications and to antibodies targeting the Ang2 (angiopoietin-2) receptor and ligand in ophthalmology. At the time of acquisition, antibodies to the PDGF receptor and Ang2 were in preclinical development for use in ophthalmology. With respect to PDGF antibodies, the Company made a $10.0 million up-front payment to Sanofi in the second quarter of 2013 and a $5.0 million development milestone payment in January 2014, and is obligated to pay up to $35 million in additional potential development milestones and royalties on any future sales. With respect to Ang2 antibodies in ophthalmology, the Company also made a $10.0 million up-front payment to Sanofi in the second quarter of 2013, and is obligated to pay a potential $5 million development milestone payment and royalties on any future sales.

In connection with the Antibody Collaboration, the collaboration revenue the Company recognized is detailed below:



	Year ended December 31,
Sanofi Collaboration Revenue - Antibody	2013			2012		2011
Reimbursement of Regeneron research and development expenses	$	453,489		$	365,245	$	299,281
Up-front payments to Sanofi for acquisition of rights related to two antibodies	(20,000		)	—		—
Other	12,111			10,233		9,846
	$	445,600		$	375,478	$	309,127

In connection with the Antibody Collaboration, at December 31, 2013 and 2012, amounts receivable from Sanofi totaled $106.1 million and $102.6 million and deferred revenue was $71.2 million and $78.7 million, respectively.

b. Bayer HealthCare LLC

EYLEA outside the United States

In October 2006, the Company entered into a license and collaboration agreement with Bayer HealthCare for the global development and commercialization outside the United States of EYLEA. Under the terms of the agreement, Bayer HealthCare made a non-refundable up-front payment to the Company of $75.0 million. The Company also received from Bayer HealthCare a $20.0 million development milestone payment in 2007 (which, for the purpose of revenue recognition, was not considered substantive), a $20.0 million substantive development milestone payment in 2009, and a $10.0 million substantive milestone payment in each of 2010 and 2011 (both of which were earned in 2010).

Bayer HealthCare commenced sales of EYLEA for the treatment of wet AMD in the fourth quarter of 2012 following receipt of regulatory approvals in the EU and other regions, and for the treatment of macular edema secondary to CRVO in the fourth quarter of 2013 following receipt of regulatory approvals in the EU and Japan. Bayer HealthCare markets EYLEA outside the United States, where, for countries other than Japan, the Company and Bayer HealthCare will share equally in profits and losses from sales of EYLEA. The Company is entitled to receive a percentage of between 33.5% and 40.0% of EYLEA annual sales in Japan. The Company is obligated to reimburse Bayer HealthCare out of its share of the collaboration profits (including the Company's percentage of sales of EYLEA in Japan) for 50% of the agreed upon development expenses that Bayer HealthCare has incurred in accordance with a formula based on the amount of development expenses that Bayer HealthCare has incurred and the Company's share of the collaboration profits, or at a faster rate at the Company's option. In particular, the Company's contingent reimbursement obligation to Bayer HealthCare was approximately $276 million as of December 31, 2013. Within the United States, the Company is responsible for commercialization of EYLEA and retains exclusive rights to all profits from such commercialization in the United States.

In 2012, the Company earned and received a $15.0 million and $10.0 million substantive milestone payment related to marketing and pricing approval, respectively, of EYLEA for the treatment of wet AMD in Japan. In 2013, the Company earned and received a $15.0 million and a $10.0 million substantive milestone payment related to marketing and pricing approval, respectively, of EYLEA for the treatment of macular edema secondary to CRVO. In addition, in 2013, the Company earned and recorded as revenue, three $15.0 million sales milestone payments from Bayer HealthCare upon total aggregate net sales of EYLEA outside the United States exceeding $200 million, $300 million, and $400 million, respectively, over a twelve-month period. The Company is eligible to receive up to $90 million in additional sales milestone payments if twelve-month sales of EYLEA outside the United States achieve certain specified levels up to $1 billion. In addition, in connection with a November 2013 agreement under which Bayer HealthCare obtained rights to use certain of the Company’s EYLEA clinical data for a regulatory filing, the Company became eligible to receive up to $30 million in additional sales milestone payments if twelve-month sales of specific commercial supplies of EYLEA outside the United States achieve certain specified levels up to $200 million.

Since 2009, all agreed upon EYLEA development expenses incurred by the Company and Bayer HealthCare, under a global development plan, are being shared equally. The Company is also obligated to use commercially reasonable efforts to supply clinical and commercial bulk product of EYLEA.

In January 2014, Bayer HealthCare exercised its right to opt-in to the global development and commercialization of EYLEA outside the United States for the treatment of macular edema following branch retinal vein occlusion ("BRVO"). In connection with its opt-in, Bayer HealthCare will reimburse Regeneron for a defined share of the EYLEA global development costs that the Company has incurred or will incur for the BRVO indication. In addition, profits or losses on sales of EYLEA outside of the United States for the treatment of macular edema following BRVO will also be shared.

Bayer HealthCare has the right to terminate the Bayer Agreement without cause with at least six months or twelve months advance notice depending on defined circumstances at the time of termination. In the event of termination of the agreement for any reason, the Company retains all rights to EYLEA.

The $75.0 million up-front licensing payment and the $20.0 million milestone payment received in 2007 from Bayer HealthCare are being recognized as collaboration revenue over the related estimated performance period in accordance with the Company's revenue recognition policy as described in Note 2. In periods when the Company recognizes EYLEA development expenses that the Company incurs under the collaboration, the Company also recognizes, as collaboration revenue, the portion of those EYLEA development expenses that is reimbursable from Bayer HealthCare. In periods when Bayer HealthCare incurs agreed upon EYLEA development expenses that benefit the collaboration and Regeneron, the Company also recognizes, as additional research and development expense, the portion of Bayer HealthCare's EYLEA development expenses that the Company is obligated to reimburse.

The collaboration revenue the Company earned from Bayer HealthCare is detailed below:



	Year ended December 31,
Bayer HealthCare Collaboration Revenue	2013		2012		2011
Regeneron's net profit in connection with commercialization of EYLEA outside the United States	$	101,494	—		—
Sales and substantive development milestone payments	70,000		$	25,000	—
Cost-sharing of Regeneron EYLEA development expenses	20,905		34,892		$	33,682
Other	27,890		10,207		9,390
	$	220,289	$	70,099	$	43,072

In addition, in 2013, 2012, and 2011, the Company recognized as additional research and development expense $15.3 million, $21.9 million, and $47.8 million, respectively, of EYLEA development expenses that the Company was obligated to reimburse to Bayer HealthCare.

In connection with the companies' collaboration, $63.2 million and $2.8 million was receivable from Bayer HealthCare at December 31, 2013 and 2012, respectively. In addition, at December 31, 2013 and 2012, deferred revenue from the Company's collaboration with Bayer HealthCare was $36.4 million and $36.5 million, respectively.

PDGFR-beta antibody outside the United States

In January 2014, the Company entered into a license and collaboration agreement with Bayer HealthCare governing the joint development and commercialization outside the United States of an antibody product candidate to Platelet Derived Growth Factor Receptor Beta (PDGFR-beta), including in combination with EYLEA, for the treatment of ocular diseases or disorders. REGN2176-3, a combination product candidate comprised of an antibody to PDGFR-beta co-formulated with EYLEA, is being developed under the agreement. Under the agreement, the Company will conduct the initial development of the PDGFR-beta antibody through completion of the first proof-of-concept study, upon which Bayer HealthCare will have a right to opt-in to the collaboration for further development and commercialization outside the United States.

In connection with the agreement, Bayer HealthCare made a $25.5 million non-refundable upfront payment to the Company in January 2014, and is obligated to pay 25% of global development costs and 50% of development costs exclusively for the territory outside the United States under the initial development plan. In addition, Bayer HealthCare is obligated to reimburse the Company for 50% of development milestone payments to Sanofi related to the Company's acquisition of rights to antibodies targeting the PDGF family of receptors in May 2013, as described above. In that regard, Bayer HealthCare made a $2.5 million payment (which, for the purpose of revenue recognition, was not considered substantive) to the Company in January 2014. Further, in connection with the Company’s initial development of the PDGFR-beta antibody through completion of the first proof-of-concept study, the Company is eligible to receive up to $17.5 million in future development milestone payments from Bayer HealthCare, although certain of these development milestone payments could be reduced by half if Bayer HealthCare does not opt-in to the collaboration.

If Bayer HealthCare exercises its right to opt-in to the collaboration, they will obtain exclusive commercialization rights to the product outside the United States, pay for 25% of global development costs and 50% of development costs exclusively for the territory outside the United States, pay a $20 million opt-in payment to the Company, pay a $20 million development milestone to the Company upon receipt of the first marketing approval in the European Union or Japan, share profits from sales outside the United States equally with the Company, and be responsible for the payment of royalties on sales outside the United States to Sanofi.

Within the United States, the Company has exclusive commercialization rights and will retain all of the profits from sales. If Bayer HealthCare does not opt-in to the collaboration, the Company will have exclusive rights to develop and commercialize PDGFR-beta antibodies (except as a combination product with EYLEA) for use outside the United States.

The Company also has the right to opt-out of the collaboration upon completion of the first proof-of-concept study for the PDGFR-beta antibody. If the Company opts-out of the collaboration and Bayer HealthCare exercises their right to opt-in to the collaboration, Bayer HealthCare will obtain exclusive rights to the PDGFR-beta antibody (except as a combination product with EYLEA) outside of the United States, be responsible for all development costs outside of the United States, be responsible for all royalty and milestone payments to a third party, and will retain all of the profits from sales of the PDGFR-beta antibody outside of the United States.

Under the agreement, Bayer HealthCare has also agreed to a “standstill” provision, which prohibits Bayer HealthCare and its affiliates from seeking to influence the control of the Company or acquiring more than 20% of the Company's then outstanding shares of Class A Stock and Common Stock (taken together).

Unless terminated earlier in accordance with its provisions, the agreement will continue to be in effect until such time as neither party or its respective affiliates or sublicensees is developing or commercializing a PDGFR-beta antibody in the specified field outside of the United States and such discontinuation is acknowledged as permanent by both the Company and Bayer HealthCare in writing.