Collaboration Agreements

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

a. Sanofi

The collaboration revenue we earned from Sanofi is detailed below:



	Three Months Ended September 30,						Nine Months Ended September 30,
Sanofi Collaboration Revenue	2019			2018			2019			2018
Antibody:
Reimbursement of Regeneron research and development expenses	$	60.2		$	76.2		$	216.5		$	201.0
Reimbursement of Regeneron commercialization-related expenses	111.6			103.7			349.3			292.8
Reimbursement for Regeneron's manufacturing of commercial supplies	78.5			40.3			133.3			94.4
Regeneron's share of profits (losses) in connection with commercialization of antibodies	94.2			(38.9		)	105.2			(182.6		)
Other	4.8			(7.2		)	(0.6		)	(12.3		)
Total Antibody	349.3			174.1			803.7			393.3
Immuno-oncology:
Reimbursement of Regeneron research and development expenses	38.0			74.8			120.9			225.7
Reimbursement of Regeneron commercialization-related expenses	3.0			3.2			7.0			6.5
Amounts recognized in connection with up-front payments received	18.5			7.9			73.8			65.2
Other	(4.6		)	(3.7		)	(5.7		)	(7.2		)
Total Immuno-oncology	54.9			82.2			196.0			290.2
	$	404.2		$	256.3		$	999.7		$	683.5

Antibody

The Company is party to a global, strategic collaboration with Sanofi to discover, develop, and commercialize fully human monoclonal antibodies (the "Antibody Collaboration"). Under the companies' Antibody License and Collaboration Agreement, 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. All other agreed-upon worldwide development expenses incurred by both companies are funded by Sanofi. The Company recognized as research and development expense $10.2 million and $13.4 million during the three months ended September 30, 2019 and 2018, respectively, and during the nine months ended September 30, 2019 and 2018, the Company recognized as research and development expense $29.8 million and $37.2 million, respectively, its share of antibody development expenses that Sanofi incurred related to Dupixent^® (dupilumab), Praluent^®(alirocumab), and Kevzara^® (sarilumab).

Effective January 7, 2018, the Company and Sanofi entered into a letter agreement (the "Letter Agreement") in connection with, among other matters, the allocation of additional funds to certain activities relating to dupilumab and REGN3500 (collectively, the "Dupilumab/REGN3500 Eligible Investments"). Refer to the "Immuno-Oncology" section below for further details regarding the Letter Agreement. During the three months ended September 30, 2019, Sanofi elected to sell, and we elected to purchase (in cash), 69,143 shares of the Company's Common Stock in connection with Sanofi's funding obligation for Dupilumab/REGN3500 Eligible Investments. Consequently, we recorded the cost of the shares received, or $19.4 million, as Treasury Stock during the three months ended September 30, 2019.

Sanofi leads commercialization activities for products developed under the Antibody Collaboration, subject to the Company's right to co-commercialize such products. In addition to profit and loss sharing, the Company is entitled to receive up to $250.0 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 twelve-month basis. The amount of variable consideration related to our share of profits and losses, as well as sales milestones, is deemed to be constrained as of September 30, 2019, and therefore has not been included in the transaction price.

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



	September 30,		December 31,
	2019		2018
Accounts receivable	$	332.5	$	138.2
Deferred revenue	$	377.0	$	236.1

Significant changes in deferred revenue balances are as follows:



	Nine Months Ended September 30, 2019
Increase due to shipments of commercial supplies to Sanofi	$	294.3
Revenue recognized that was included in deferred revenue at the beginning of the period	$	(159.0	)

We recognize Sanofi antibody collaboration revenue in an amount equal to the amount we have the right to invoice and such amount corresponds directly with the value to Sanofi of our performance to date. Therefore, we do not disclose the value of the transaction price allocated to our remaining unsatisfied performance obligations.

Immuno-Oncology

In 2015, the Company and Sanofi entered into a collaboration to discover, develop, and commercialize antibody-based cancer treatments in the field of immuno-oncology (the "IO Collaboration"). The IO Collaboration is governed by an Amended and Restated Immuno-oncology Discovery and Development Agreement ("Amended IO Discovery Agreement"), and an Immuno-oncology License and Collaboration Agreement ("IO License and Collaboration Agreement").

Effective December 31, 2018, the Company and Sanofi entered into an Amended IO Discovery Agreement, which narrowed the scope of the existing discovery and development activities conducted by the Company ("IO Development Activities") under the

2015 IO Discovery Agreement to developing therapeutic bispecific antibodies targeting (i) BCMA and CD3 (the "BCMAxCD3 Program") and (ii) MUC16 and CD3 (the "MUC16xCD3 Program") through clinical proof-of-concept. The Amended IO Discovery Agreement provided for Sanofi’s payment of $461.9 million to the Company as consideration for (x) the termination of the 2015 IO Discovery Agreement, (y) the prepayment for certain IO Development Activities regarding the BCMAxCD3 Program and the MUC16xCD3 Program, and (z) the reimbursement of costs incurred by the Company under the 2015 IO Discovery Agreement during the fourth quarter of 2018.

If Sanofi exercises its option to license rights to a BCMAxCD3 Program antibody or MUC16xCD3 Program antibody thereunder, it will co-develop these drug candidates with the Company through product approval. Sanofi will fund development costs up front for a BCMAxCD3 Program antibody and we will reimburse half of the total development costs for such antibody from our share of future IO Collaboration profits to the extent they are sufficient for this purpose. In addition, we and Sanofi will share equally, on an ongoing basis, the development costs for a MUC16xCD3 Program antibody.

Under the terms of the IO License and Collaboration Agreement, the parties are co-developing and co-commercializing Libtayo (cemiplimab), an antibody targeting the receptor known as programmed cell death protein 1 (PD-1). The parties share equally, on an ongoing basis, agreed-upon development and commercialization expenses for Libtayo. Pursuant to the Letter Agreement, the Libtayo development budget was increased and the Company has agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to the Libtayo development and Dupilumab/REGN3500 Eligible Investments by selling up to an aggregate of 1,400,000 shares (of which 869,828 currently remains available) of our Common Stock directly or indirectly owned by Sanofi through September 30, 2020. If Sanofi desires to sell shares of our Common Stock during the term of the Letter Agreement to satisfy a portion or all of its funding obligations for the Libtayo development and/or Dupilumab/REGN3500 Eligible Investments, we may elect to purchase, in whole or in part, such shares from Sanofi. If we do not elect to purchase such shares, Sanofi may sell the applicable number of shares (subject to certain daily and quarterly limits) in one or more open-market transactions. During the three months ended September 30, 2019, Sanofi elected to sell, and we elected to purchase (by issuing a credit towards the amount owed by Sanofi), 103,761 shares of the Company's Common Stock to satisfy Sanofi's funding obligation related to Libtayo development costs. Consequently, we recorded the cost of the shares received, or $29.2 million, as Treasury Stock during the three months ended September 30, 2019. Refer to the "Antibody" section above for a description of share transactions related to Dupilumab/REGN3500 Eligible Investments.

The Company has principal control over the development of Libtayo and leads commercialization activities in the United States, while Sanofi leads commercialization activities outside of the United States and the parties equally share profits and losses from worldwide sales. As it relates to revenue earned in connection with the IO Collaboration, "Reimbursement of Regeneron commercialization-related expenses" represents reimbursement of costs by Sanofi in connection with the commercialization of Libtayo outside of the United States.

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



	September 30,		December 31,
	2019		2018
Accounts receivable	$	8.2	$	77.9
Deferred revenue	$	602.0	$	289.9

Significant changes in deferred revenue balances are as follows:



	Nine Months Ended September 30, 2019
Increase as a result of payment received from Sanofi in connection with the Amended IO Discovery Agreement	$	415.9
Revenue recognized that was included in deferred revenue at the beginning of the period	$	(73.8	)
Revenue recognized that was added to deferred revenue during the period	$	(37.9	)

The aggregate amount of the transaction price under the IO Collaboration allocated to the Company's performance obligation that was unsatisfied (or partially unsatisfied) as of September 30, 2019 was $1,196.9 million. This amount is expected to be recognized as revenue over the remaining period in which the Company is obligated to satisfy its performance obligation in connection with performing development activities.

b. Bayer

Revenue earned in connection with our Bayer EYLEA collaboration is as follows (note that the table excludes amounts in connection with our Bayer Ang2 antibody and PDGFR-beta antibody collaboration agreements, which were previously terminated):



	Three Months Ended September 30,				Nine Months Ended September 30,
Bayer EYLEA Collaboration Revenue	2019		2018		2019		2018
Regeneron's net profit in connection with commercialization of EYLEA outside the United States	$	275.0	$	243.2	$	793.3	$	721.5
Reimbursement of Regeneron EYLEA development expenses	5.0		1.7		15.6		8.8
Other	22.8		20.7		59.1		45.4
	$	302.8	$	265.6	$	868.0	$	775.7

The Company is party to a license and collaboration agreement with Bayer for the global development and commercialization of EYLEA outside the United States. Bayer markets EYLEA outside the United States, where, for countries other than Japan, the companies share equally in profits and losses from sales of EYLEA. In Japan, the Company is currently entitled to receive a tiered percentage of between 33.5% and 40.0% of EYLEA net product sales. In addition, the Company and Bayer share the funding of agreed-upon EYLEA development costs.

c. Teva

In 2016, the Company and Teva entered into a collaboration agreement (the "Teva Collaboration Agreement") to develop and commercialize fasinumab globally, excluding certain Asian countries that are subject to our collaboration agreement with Mitsubishi Tanabe Pharma Corporation. In connection with the Teva Collaboration Agreement, Teva made a $250.0 million non-refundable up-front payment during 2016. The Company leads global development activities, and the parties share development costs equally, on an ongoing basis, under a global development plan. The Company is also responsible for the manufacture and supply of fasinumab globally.

The Company recognized $57.4 million and $69.1 million of revenue for the three months ended September 30, 2019 and 2018, respectively, and $172.2 million and $196.6 million for the nine months ended September 30, 2019 and 2018, respectively, in connection with the Teva Collaboration Agreement.

The following table summarizes contract balances in connection with the Teva Collaboration Agreement:



	September 30,		December 31,
	2019		2018
Accounts receivable (recorded within Prepaid expenses and other current assets)	$	36.0	$	28.8
Deferred revenue	$	127.8	$	194.5

Significant changes in deferred revenue balances are as follows:



	Nine Months Ended September 30, 2019
Revenue recognized that was included in deferred revenue at the beginning of the period	$	(68.7	)

The aggregate amount of the transaction price under the Teva Collaboration Agreement allocated to the Company's performance obligation that was unsatisfied (or partially unsatisfied) as of September 30, 2019 was $300.6 million. This amount is expected to be recognized as revenue over the remaining period in which the Company is obligated to satisfy its performance obligation in connection with performing development activities.

d. Alnylam

In April 2019, the Company and Alnylam Pharmaceuticals, Inc. entered into a global, strategic collaboration to discover, develop, and commercialize RNA interference ("RNAi") therapeutics for a broad range of diseases by addressing therapeutic disease targets expressed in the eye and central nervous system ("CNS"), in addition to a select number of targets expressed in the liver. The collaboration is governed by a Master Collaboration Agreement (the "Master Agreement") (including the form of a License Agreement and a Co-Commercialization Collaboration Agreement). Under the terms of the Master Agreement, we made an up-front payment of $400.0 million to Alnylam, which was recorded in Research and development expense during the second quarter of 2019. For each program, we will provide Alnylam with a specified amount of funding at program initiation and at lead candidate designation, and Alnylam is eligible to receive up to $200.0 million in clinical proof-of-principle milestones for eye or CNS programs.

Under 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 License Agreement or a Co-Commercialization Collaboration 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 ranging from $200.0 million to $400.0 million; the actual amount of the fee will be determined based on the acceptance of one or more INDs (or their equivalent in certain other countries) for programs in the eye and CNS.

In connection with the collaboration, we and Alnylam also entered into a Stock Purchase Agreement. Pursuant to the terms of the Stock Purchase Agreement, we purchased shares of Alnylam common stock for aggregate cash consideration of $400.0 million.

In August 2019, the parties entered into a Co-Commercialization Collaboration Agreement for a silencing 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 product consisting of such siRNA therapeutic and a fully human monoclonal antibody targeting C5 being developed by us, with us as the licensee. The C5 siRNA Co-Commercialization Collaboration Agreement is consistent with the financial terms contained in the form of the existing Co-Commercialization Collaboration Agreement with Alnylam and the parties will share in development expenses equally. The C5 siRNA License Agreement contains a flat low double-digit royalty payable to Alnylam on our potential future net sales of the combination product only subject to customary reductions, as well as up to $325.0 million in commercial milestones.