REGNRegeneron Pharmaceuticals

We note your disclosures on (i) page 36 regarding the impact of biosimilar competition on net product sales of EYLEA and/or EYLEA HD and (ii) pages 19 and 41 regarding competition from Vabysmo. With reference to Item 303(b)(2)(ii) of Regulation S-K, please revise your Results of Operations disclosures in future filings to discuss trends or uncertainties resulting from competitor products and/or biosimilars that have

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had or could have a material impact on net product sales of EYLEA and/or EYLEA HD.

We acknowledge the Staff's comment and confirm that we will give further consideration to Item 303(b)(2)(ii) of Regulation S-K when preparing Results of Operations disclosures in Regeneron's future filings, in particular to enhance disclosures of trends or uncertainties resulting from competitor products (including, as applicable, Vabysmo® and/or biosimilars) that have had or could have a material impact on net product sales of EYLEA® (aflibercept) Injection and/or EYLEA HD® (aflibercept) Injection 8 mg. Read in the reply ↗

Please address the following as it relates to your presentation of net product sales of Regeneron-discovered products on page 5: • Explain the purpose of this disclosure and its usefulness to investors. • Disclose more prominently that not all of the net product sales presented on page 5 are recognized as revenue in your Statements of Operations.

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• For those net product sales recorded by a collaboration partner and for which you record your share of profits in connection with the collaboration, quantify the amounts recorded and specify where such amounts are recorded on your Statements of Operations (i.e., collaboration revenue). • Provide cross-references to your revenue disclosure for each collaboration in MD&A. Notes to the Consolidated Financial Statements 3. Collaboration, License and Other Agreements

Regeneron is a fully integrated biotechnology company whose primary business is developing intellectual property ("IP") and monetizing Company-developed IP through its own commercialization, commercialization by collaborators, and licensure to third parties. The table of net product sales of Regeneron-discovered products demonstrates the Company's ability to innovate, discover and develop new products, and bring those products to market either alone or based on contractual arrangements with other parties.

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The table also shows the degree to which the Company, a collaborator, and/or a licensee is currently commercializing the products discovered by Regeneron. In arrangements where the Company's collaborator or licensee is currently commercializing such products and is recording net product sales as a result, the Company records its share of profits and/or royalties on such sales in Collaboration revenue or Other revenue, as applicable.

In addition, as noted in Part I. Item 1A. "Risk Factors" and Part II. Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the 2023 Form 10-K, the Company is substantially dependent on the success of EYLEA® (aflibercept) Injection, EYLEA® HD (aflibercept) Injection 8 mg, and Dupixent® (dupilumab) (both in jurisdictions in which Regeneron records net product sales and jurisdictions in which a collaborator records net product sales of such products); therefore, we believe disclosing total net product sales of these products (as well as the other products listed in the table), regardless of the party recording such net product sales, provides useful context for investors.

•Disclose more prominently that not all of the net product sales presented on page 5 are recognized as revenue in your Statements of Operations.

Response:

We direct the Staff to the top of page 5 of the 2023 Form 10-K, which contains the following disclosure:

"Note: Refer to table below (net product sales of Regeneron-discovered products) for information regarding whether net product sales for a particular product are recorded by us or others . . . "

In future filings, we will also include similar disclosure in the lead-in to the table presenting net product sales of Regeneron-discovered products as follows:

"The table below includes net product sales of Regeneron-discovered products. Such net product sales are recorded by us or others, as further described in the footnotes to the table."

•For those net product sales recorded by a collaboration partner and for which you record your share of profits in connection with the collaboration, quantify the amounts recorded and specify where such amounts are recorded on your Statements of Operations (i.e., collaboration revenue).

•Provide cross-references to your revenue disclosure for each collaboration in MD&A.

Response:

To the extent that net product sales presented in the table of net product sales of Regeneron-discovered products are recorded by a collaborator or licensee, we will specify in future filings where our share of profits or royalties on such sales are recorded within our Statements of Operations (i.e., within Collaboration revenue or Other revenue). In addition, to the extent that our share of profits or royalties are separately disclosed in the MD&A because they are deemed to be material, we will include a cross-reference to the relevant disclosure. Accordingly, in future filings, we will amend relevant footnotes to the table presenting net product sales of Regeneron-discovered products to read as follows (changes are noted in italics):

(a) Regeneron records net product sales of EYLEA HD and EYLEA in the United States, and Bayer records net product sales outside the United States. The Company records its share of profits in connection with sales outside the United States within Collaboration revenue. Refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Revenues - Bayer Collaboration Revenue" for such amounts.

(b) Sanofi records global net product sales of Dupixent and Kevzara. The Company records its share of profits in connection with global sales of Dupixent and Kevzara within Collaboration revenue. Refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Revenues - Sanofi Collaboration Revenue" for such amounts.

(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, which is recorded within Other revenue.

(e) Roche records net product sales of Ronapreve outside the United States, and the parties share gross profits from sales, which are recorded within Collaboration revenue. Refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Revenues - Roche Collaboration Revenue" for such amounts.

Notes to the Consolidated Financial Statements

3. Collaboration, License and Other Agreements a. Sanofi, page F-17

Read in the reply ↗

We note your disclosure on page 89 that under your collaboration agreements with Bayer and Sanofi, you have contingent contractual obligations to reimburse Bayer and Sanofi for a defined percentage of agreed-upon development expenses funded by Bayer and Sanofi (i.e., "development balance") if the applicable collaboration is profitable.

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You also disclose that these reimbursements are deducted each quarter, in accordance with a formula, from your share of the collaboration profits otherwise payable to you. Please address the following specifically as it relates to your contingent reimbursement obligation under the Sanofi Antibody License and Collaboration Agreement ("LCA"): • Describe and quantify the contractual terms governing your contingent reimbursement obligation under the LCA and the methods and key assumptions used to determine the associated $2.33 billion contingent obligation as of December 31, 2023. • Clarify why the $2.33 billion contingent repayment obligation does not appear to be recorded as a liability on your balance sheet. In particular, explain your basis for deeming the obligation to be contingent given the likelihood of continued profits under the Antibody LCA. • Clarify your basis for reporting certain reimbursements of Sanofi development expenses as R&D expense, while reporting other such reimbursements as a reduction of collaboration profits. For example, if true, confirm that the $83.7 million in R&D expenses classified as "Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursement of R&D expenses" on page F-17 represents your share of current period R&D expenses incurred by Sanofi based on the original expense sharing percentage in the LCA, while the $459.8 million reported on page 80 as "Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation" represents reimbursements of amounts due under your contingent repayment obligation which relates to cumulative development costs. • Clarify your disclosure on page F-17 that a portion of the value associated with the increase in reimbursement percentage (from 10% to 20%) was deemed to be contingent consideration attributable to your acquisition of the Libtayo (cemiplimab) rights under the IO LCA, which will be recorded as an increase to the Libtayo intangible asset over time as you repay such development costs to Sanofi. Cite the relevant accounting guidance supporting this accounting treatment. • Revise your disclosure accordingly.

We believe the existing disclosure contained in Part I, Item 1. "Business - Collaboration, License, and Other Agreements - Sanofi - Antibody" of the 2023 Form 10-K (which is also included in Note 3 on page F-17) describes the key terms governing our contingent reimbursement obligations (see excerpt below).

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In future filings, the Company will clarify that the July 1, 2022 amendment to the Antibody License and Collaboration Agreement (the "Antibody LCA") was entered into in connection with the Company's acquisition of exclusive worldwide rights to Libtayo described further below in this letter (changes to future filings are noted in italics).

"Under the terms of the Antibody License and Collaboration Agreement (the "LCA"), Sanofi is generally responsible for funding 80% to 100% of agreed-upon development costs. We are obligated to reimburse Sanofi for 30% to 50% of worldwide development expenses that were funded by Sanofi based on our share of collaboration profits from commercialization of collaboration products. 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 LCA, which had been entered into in connection with our acquisition of exclusive worldwide rights to Libtayo, became effective. Pursuant to this amendment, the percentage of Regeneron’s share of profits used to reimburse Sanofi for such development costs has increased from 10% to 20%."

The development balance as of the end of a quarter is contractually defined in the Antibody LCA (previously filed as an exhibit and listed as Exhibit 10.10 to the 2023 Form 10-K) as "(a) fifty percent (50%) of the aggregate amount of Development Costs incurred by both Parties under the Global Development Plan for all Licensed Products from the Effective Date through the close of such Quarter, excluding any Shared Phase 3 Trial Costs, plus (b) thirty percent (30%) of the aggregate amount of Shared Phase 3 Trial Costs incurred by both Parties under the Global Development Plans for all Licensed Products from the Effective Date through the close of such Quarter, less (c) the aggregate amount of Development Compensation Payments included in the calculation of the Quarterly True-Up in all prior Quarters."

As it relates to the $2.33 billion contingent obligation as of December 31, 2023, we note that the method of calculation is also contractually specified. In addition, the inputs necessary to calculate the development costs incurred and the development balance (i.e., the funding percentages described in the preceding paragraph and the percentage used to calculate the Company's quarterly repayment of the development balance (currently defined as 20% of Regeneron's share of profits)) come directly from the accounting records of the Company and Sanofi each quarter or are similarly contractually specified. Consequently, given the nature of these inputs and the contractually specified formula, no assumptions were used to determine the associated $2.33 billion contingent obligation as of December 31, 2023. In addition, Regeneron and Sanofi reconcile the contingent obligation balance with each other on a quarterly basis.

•Clarify why the $2.33 billion contingent repayment obligation does not appear to be recorded as a liability on your balance sheet. In particular, explain your basis for deeming the obligation to be contingent given the likelihood of continued profits under the Antibody LCA.

Response:

We account for arrangements deemed to be collaborations, including the collaboration governed by the Antibody LCA, in accordance with ASC 808, Collaborative Arrangements. In accordance with ASC 808, parts of a collaborative arrangement that are within the scope of other authoritative literature shall be accounted for using the relevant provisions of that literature. Accordingly, the Company utilized the guidance in ASC 730, Research and development expense, to determine the appropriate recognition of amounts received from parties who fund our research and development costs which are subject to potential repayment. We note the following guidance pursuant to ASC 730-20 related to research and development arrangements:

25-2 An entity shall determine the nature of the obligation it incurs when it enters into an arrangement with other parties who fund its research and development . . .

25-3 If the entity is obligated to repay any of the funds provided by the other parties regardless of the outcome of the research and development, the entity shall estimate and recognize that liability. This requirement applies whether the entity may settle the liability by paying cash, by issuing securities, or by some other means.

25-4 To conclude that a liability does not exist, the transfer of the financial risk involved with research and development from the entity to the other parties must be substantive and genuine. To the extent that the entity is committed to repay any of the funds provided by the other parties regardless of the outcome of the research and development, all or part of the risk has not been transferred. The following are some examples in which the entity is committed to repay:

a.The entity guarantees, or has a contractual commitment that assures, repayment of the funds provided by the other parties regardless of the outcome of the research and development.

b.The other parties can require the entity to purchase their interest in the research and development regardless of the outcome.

c.The other parties automatically will receive debt or equity securities of the entity upon termination or completion of the research and development regardless of the outcome.

25-5 Even though the written agreements or contracts under the arrangement do not require the entity to repay any of the funds provided by the other parties, surrounding conditions might indicate that the entity is likely to bear the risk of failure of the research and development. If those conditions suggest it is probable that the entity will repay any of the funds regardless of the outcome of the research and development, there is a presumption that the entity has an obligation to repay the other parties. That presumption can be overcome only by substantial evidence to the contrary. In this context, probable means that repayment is likely.

25-6 Examples of conditions leading to the presumption that the entity will repay the other parties include any of the following:

a.The entity has indicated an intent to repay all or a portion of the funds provided regardless of the outcome of the research and development.

b.The entity would suffer a severe economic penalty if it failed to repay any of the funds provided to it regardless of the outcome of the research and development. An economic penalty is considered severe if in the normal course of business an entity would probably choose to pay the other parties rather than incur the penalty. For example, an entity might purchase the partnership's interest in the research and development if the entity had provided the partnership with proprietary basic technology necessary for the entity's ongoing operations without retaining a way to recover that technology, or prevent it from being transferred to another party, except by purchasing the partnership's interest.

c.A significant related party relationship between the entity and the parties funding the research and development exists at the time the entity enters into the arrangement.

d.The entity has essentially completed the project before entering into the arrangement.

Upon entering into the original Antibody LCA in 2007 (which, in accordance with ASC 730-20-25-2, was the time as of which we were to determine the nature of the obligation to repay Sanofi a portion of the research and development costs funded by Sanofi), the products under the collaboration were in preclinical or early-stage clinical development. At such time, we concluded that there was a substantive and genuine transfer of risk (i.e., it was not probable that research and development costs funded by Sanofi would be repaid by the Company given the risk and uncertainty as to whether any products subject to the Antibody LCA would be approved; and, if approved, whether any such products would generate profits). Therefore, we did not record a liability related to the contingent repayment obligation (i.e., "development balance").

On July 1, 2022, pursuant to an amendment to the Antibody LCA in conjunction with the acquisition of exclusive worldwide rights to Libtayo described further below in this letter, the percentage of the Company's share of profits used to reimburse Sanofi for previously funded development costs increased from 10% to 20%. As a result of this modified arrangement, we determined it was necessary to assess whether it was probable that research and development costs funded prospectively by Sanofi (which are subject to repayment) after the modification would ultimately be repaid. In performing such assessment, we considered the guidance in ASC 730-20 as well as the factors below as of July 1, 2022:

•Each of Dupixent and Kevzara® (sarilumab) had received regulatory approval, and each of these products had been developed under the collaboration governed by the Antibody LCA (the "Antibody Collaboration") and was being commercialized thereunder.

•At the time the modified arrangement became effective in July 2022, the Antibody Collaboration was profitable. For example, for the fiscal year ended December 31, 2021 (i.e., the most recent fiscal year prior to the modification), the Company's share of collaboration profits in connection with the commercialization of Dupixent and Kevzara, prior to any development balance repayment, was $1.511 billion).

•Our forecast related to the Antibody LCA illustrated the continued anticipated profitability of the Antibody Collaboration.

Based on the information above, as of the date of the modification of the arrangement (i.e., July 1, 2022), we concluded that any future Antibody Collaboration research and development costs funded by Sanofi (i.e., funded after July 1, 2022) would not represent a substantive and genuine transfer of risk (i.e., it was probable that research and development costs funded by Sanofi would be repaid by the Company); and, as a result, we determined it was appropriate to recognize a liability each quarter thereafter equal to the amount of funding the Company is obligated to repay in respect of such quarter (i.e., the quarterly increase to the development balance).

In future filings, we will include additional disclosure in the notes to the financial statements to clarify our basis of accounting for research and development funding arrangements as follows:

When the Company enters into or modifies an arrangement with a party to fund its research and development costs, the Company considers whether the costs that it may be obligated to repay represent a liability within the scope of ASC 730-20, Research and development expenses. If the Company concludes that such funding does not represent a substantive and genuine transfer of risk, a liability will be recorded.

In addition, to the extent that a material liability related to the Antibody Collaboration development balance has been recorded as of the balance sheet date, we would disclose such amount within our existing tabular disclosure of contract balances with Sanofi (in the applicable note of our financial statements included in the relevant periodic report).

•Clarify your basis for reporting certain reimbursements of Sanofi development expenses as R&D expense, while reporting other such reimbursements as a reduction of collaboration profits. For example, if true, confirm that the $83.7 million in R&D expenses classified as "Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursement of R&D expenses" on page F-17 represents your share of current period R&D expenses incurred by Sanofi based on the original expense sharing percentage in the LCA, while the $459.8 million reported on page 80 as "Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation" represents reimbursements of amounts due under your contingent repayment obligation which relates to cumulative development costs.

Response:

The guidance in ASC 808 is not prescriptive on the specific presentation of inflows from collaborators and continues to permit entities to classify transactions in a collaborative arrangement that are outside the scope of other guidance, including ASC 606, Revenue from Contracts with Customers, based on an analogy to other US GAAP guidance, or a reasonable, rational, and consistently applied policy election, if there is no appropriate analogy.

We considered the below guidance within ASC 808-10:

45-3 Parts of a collaborative arrangement that are within the scope of other authoritative accounting literature in accordance with paragraph 808-10-15-5A shall be presented using the relevant provisions of that literature. If parts of the arrangement are outside the scope of other authoritative accounting literature, the presentation of those parts shall be based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election. An entity shall evaluate the presentation of parts of a collaborative arrangement on the basis of the nature of the arrangement, the nature of its business operations, and the contractual terms of the arrangement. For example, if one party to an arrangement is required to make a payment to the other party to reimburse a portion of that party’s research and development costs, that portion of the net payment may be classified as research and development expense in the payor’s financial statements in accordance with Topic 730. An entity is precluded from presenting transactions in a collaborative arrangement together with revenue from contracts with customers unless the entity applies the guidance in Topic 606 to a unit of account that is within the scope of that Topic in accordance with paragraph 808-10-15-5B.

As disclosed in Note 1 to the Consolidated Financial Statements included in the 2023 Form 10-K, in arrangements where the Company does not deem its collaborator to be its customer, payments to and from such collaborator are presented in the Company's statement of operations based on the nature of our business operations, the nature of the arrangement, including the contractual terms, and the nature of the payments.

Accordingly, we confirm the following:

•The $83.7 million in R&D expenses classified as "Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursement of R&D expenses" on page F-17 represents our share (net) of current period research and development expenses incurred by both parties during the fiscal year ended December 31, 2023 based on (i) the original expense sharing percentages in the Antibody LCA, and (ii) the amount of the research and development costs funded by Sanofi for the current period that we have deemed to be probable of repayment (as described above). Such amount is recorded within Research and development expenses on our Statements of Operations.

•The $459.8 million reported on page 80 as "Reimbursement of development expenses incurred by Sanofi in accordance with Regeneron's payment obligation" represents reimbursements of amounts due to Sanofi under our contingent repayment obligation related to cumulative development costs incurred prior to July 1, 2022. Such amount, which is contractually specified as a reduction to our share of profits in connection with the Antibody LCA, is recorded as a reduction to Collaboration revenue within our Statements of Operations.

•Clarify your disclosure on page F-17 that a portion of the value associated with the increase in reimbursement percentage (from 10% to 20%) was deemed to be contingent consideration attributable to your acquisition of the Libtayo (cemiplimab) rights under the IO LCA, which will be recorded as an increase to the Libtayo intangible asset over time as you repay such development costs to Sanofi. Cite the relevant accounting guidance supporting this accounting treatment.

Response:

In considering the accounting for the increase in reimbursement percentage from 10% to 20%, we note that this modification to the Antibody LCA was negotiated and entered into in connection and concurrently with the July 1, 2022 Amended and Restated Immuno-oncology License and Collaboration Agreement ("IO LCA") with Sanofi, pursuant to which we obtained the exclusive worldwide rights to Libtayo. Therefore, we concluded this modification to the Antibody LCA represented additional consideration transferred by the Company to Sanofi to acquire the exclusive worldwide rights to Libtayo.

The transaction to acquire the exclusive worldwide rights to Libtayo was accounted for by the Company as an asset acquisition. As the increase in the reimbursement percentage from 10% to 20% represented solely an acceleration of the development balance repayment, rather than a change in the total amount that Sanofi would ultimately receive, we deemed the net present value differential when comparing the 10% repayment rate versus the 20% repayment rate to be the incremental contingent consideration/value the Company was paying to acquire the exclusive worldwide rights to Libtayo.

We considered the following interpretive guidance within the PwC Property, plant, and equipment and other assets accounting guide related to contingent consideration in an asset acquisition:

2.3.3 Contingent consideration arrangements (asset acquisitions)

Asset acquisitions may include contingent consideration, which represents an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met. Obligations of the acquirer to transfer additional assets or equity interests based only upon the passage of time do not represent contingent consideration and instead may represent seller financing.

There is no specific guidance within ASC 805-50 for the recognition and measurement of contingent consideration obligations in an asset acquisition. We believe that contingent consideration in an asset acquisition that is not accounted for under other US GAAP (e.g., as a derivative under ASC 815) should be recognized when probable and reasonably estimable, by analogy to ASC 450-20.

Contingent consideration recognized should be included in the initial cost of the assets acquired. Subsequent changes in the recorded amount of contingent consideration should generally be recognized as an adjustment to the cost basis of the acquired assets, by analogy to ASC 323-10-35-14A and ASC 360-10-30-1. These subsequent changes should be allocated to the acquired assets based on their relative fair value at the date of acquisition.

A change in contingent consideration impacts the cost basis of acquired assets, which may also impact the income statement through subsequent accounting for the acquired asset. We are aware of diversity in practice regarding the subsequent treatment of the income statement effect of changes to the cost basis of the acquired assets. We generally believe the depreciation or amortization of these assets should be recognized as a cumulative "catch up" adjustment, as if the additional amount of consideration that is no longer contingent had been accrued from the outset of the arrangement.

Thus, each quarter, as the development balance repayment is recorded, we also record an addition to the Libtayo intangible asset (as this is additional contingent consideration being provided to Sanofi related to the acquisition of exclusive worldwide rights to Libtayo) related to the net present value of the incremental repayment amount. An excerpt of our policy, as disclosed in Note 1 of the Consolidated Financial Statements included in the 2023 Form 10-K, is as follows:

"Payments to acquire intangible assets in an asset acquisition may include up-front payments and contingent consideration. With regard to contingent consideration in an asset acquisition, the Company recognizes regulatory milestones upon achievement, royalties in the period in which the underlying sales occur, and sales-based milestones when the milestone is deemed probable by the Company of being achieved. If contingent consideration is recognized subsequent to the acquisition date in an asset acquisition, the amount of such consideration is recorded as an addition to the cost basis of the intangible asset with a cumulative catch-up adjustment for amortization expense as if the additional amount of consideration had been accrued from the outset of the acquisition."

In future filings, we will amend our disclosure in Note 3 of the Consolidated Financial Statements included in the relevant periodic report as follows (changes are noted in italics):

"The estimated net present value differential of the 10% repayment rate versus the 20% repayment rate was deemed to be contingent consideration attributable to the Company's acquisition of the Libtayo (cemiplimab) rights described within the "Immuno-Oncology" section below; this portion is recorded as an increase to the Libtayo intangible asset over time as the Company repays such development costs to Sanofi."

•Revise your disclosure accordingly.

Response:

See applicable responses above.

Read in the reply ↗

We note your response to prior comment one and your intended disclosure revisions. As your disclosure of net product sales of Regeneron-discovered products appears to constitute a metric, the disclosure requirements set forth in Staff Release No. 33-10751 are applicable.

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Accordingly, please revise your future filings to include the information provided in your response that describes how management uses these operating metrics in managing or monitoring the performance of your business, and why these metrics provide useful information to investors. Notes to the Consolidated Financial Statements 3. Collaborations, License and Other Agreements

In addition to the disclosure referenced in the Prior Response, we will include the following disclosure starting with the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024:

"The table below includes net product sales of Regeneron-discovered products. Such net product sales are recorded by us or others, as further described in the footnotes to the table.

Rest of the answer

We believe the information in the table is useful to investors as it demonstrates our pipeline productivity and our ability to innovate, discover, and develop new products, and bring those products to market either alone or based on contractual arrangements with other parties, which has a direct impact on our results of operations and financial condition. The table also shows the degree to which we, a collaborator, and/or a licensee is currently commercializing the products discovered by Regeneron. In addition, this information allows management and investors to assess the commercial trends and developments impacting Regeneron-discovered products. In arrangements where our collaborator or licensee is currently commercializing such products and is recording net product sales as a result, the net product sales shown in the table also are an important metric for management's review and assessment of (i) the revenues we record for our share of profits and/or royalties from such sales and (ii) the impact of our obligation to supply commercial product to certain of these collaborators or licensees."

Notes to the Consolidated Financial Statements

3. Collaboration, License and Other Agreements a. Sanofi, page F-17

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We note your response to prior comment two. In order to illustrate the mechanics of your contingent reimbursement obligation and the amounts reported in your Statement of Operations, please provide us with the following: • Provide us with the calculation of your contingent reimbursement obligation as of December 31, 2023 based on the cumulative development costs incurred prior to July 1, 2022 and the contractually

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specified reimbursement percentages, as well as a rollforward of your obligation for each period presented; • Provide us with the calculation of "Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursement of R&D expenses" for each period presented; and • Quantify for us the estimated net present value differential of the 10% repayment rate versus the 20% repayment rate which was deemed to be contingent consideration attributable to your acquisition of the Libtayo rights and the amount recorded as an increase to the Libtayo intangible asset for each period presented.

The calculation and rollforward of our contingent reimbursement obligation is as follows:

(In millions)

Contingent Reimbursement Obligation - Liability Recognized

Contingent Reimbursement Obligation - Liability Not Recognized

Contingent reimbursement obligation as of December 31, 2021 $ — $ 3,152

Development costs incurred by the parties added to the contingent reimbursement obligation

— 98

Development compensation payment (contractually defined as 10% of Regeneron's share of Antibody collaboration profits)

— (110)

Contingent reimbursement obligation as of July 1, 2022

$ — $

Rest of the answer

3,140

One-time reduction to the contingent reimbursement obligation per terms of the amended Antibody License and Collaboration Agreement

— (30)

Development costs incurred by the parties added to the contingent reimbursement obligation(1)(3)

95 —

Development compensation payment(2)(4)

(95) (246)

Contingent reimbursement obligation as of December 31, 2022 $ — $ 2,864

187 —

(187) (535)

Contingent reimbursement obligation as of December 31, 2023 $ — $ 2,329

(1) As described in the Prior Response, as a result of the modification of the Sanofi Antibody collaboration (July 1, 2022), we concluded that any future Antibody collaboration research and development costs funded by Sanofi (i.e., funded after July 1, 2022) would not represent a substantive and genuine transfer of risk (i.e., it was probable that research and development costs funded by Sanofi would be repaid by the Company); and, as a result, we determined it was appropriate to recognize a liability each quarter thereafter equal to the amount of funding the Company is obligated to repay in respect of such quarter (i.e., the quarterly increase to the development balance).

(2) Under the terms of the July 1, 2022 amendment to the Antibody License and Collaboration agreement, the development compensation payment in a given quarter is applied first towards development costs added to the contingent reimbursement obligation after the effective date of the amendment (i.e., the amounts included in (1) above) and any remaining amount of the development compensation payment in such quarter is then applied towards cumulative development costs added to the contingent reimbursement obligation prior to the effective date of the amendment. Subsequent to July 1, 2022, the development compensation payment (in the aggregate) is contractually defined as 20% of Regeneron's share of Antibody collaboration profits.

(3) See subsequent table - amount included in R&D expense.

(4) A portion of the development compensation payment for which a liability was not recognized was deemed to be contingent consideration attributable to the acquisition of the Libtayo rights and is recorded as an increase to the Libtayo intangible asset. Refer to the below response related to the Libtayo intangible asset for further details.

•Provide us with the calculation of "Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursement of R&D expenses" for each period presented;

Response:

The calculation of "Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursements of R&D expenses" for each period presented is as follows:

Statement of Operations Classification Year Ended December 31,

(In millions) 2023 2022 2021

Sanofi Antibody collaboration:

Development costs incurred by the parties added to the contingent reimbursement obligation(1)

(R&D expense) $ (187) $ (95) $ —

Regeneron's obligation for its share of Sanofi R&D expenses(2)

(R&D expense) (38) (42) (47)

Sanofi's reimbursement of Regeneron's R&D expenses(2)

Reduction of R&D expense 142 180 176

Regeneron's obligation for its share of Sanofi R&D expenses, net of reimbursements of R&D expenses

Reduction of R&D expense/(R&D expense)

$ (83) $ 43 $ 129

(1) See preceding table - amount added to the contingent reimbursement obligation in accordance with the contractually specified formula. As described in the Previous Response, such amount represents the research and development costs funded by Sanofi subsequent to July 1, 2022 (i.e., the increase to the contingent reimbursement obligation) that we are obligated to repay from our share of profits and for which we determined it was appropriate to recognize a liability.

(2) Under the terms of the Antibody License and Collaboration Agreement, Sanofi is generally responsible for funding 80% to 100% of agreed-upon development costs. We record the reimbursable amounts from Sanofi as a reduction to R&D expense in the period in which such costs are incurred. When Sanofi performs research and development work, we also recognize, as research and development expense in the period when Sanofi incurs such expense, the portion of Sanofi's expenses that we are obligated to reimburse in accordance with the contractually specified formula, and which do not get added to the contingent reimbursement obligation per the terms of the contract.

•Quantify for us the estimated net present value differential of the 10% repayment rate versus the 20% repayment rate which was deemed to be contingent consideration attributable to your acquisition of the Libtayo rights and the amount recorded as an increase to the Libtayo intangible asset for each period presented.

Response:

As described in the Prior Response, we concluded the modification to the Antibody LCA represented additional consideration transferred by the Company to Sanofi to acquire the exclusive worldwide rights to Libtayo. As of July 1, 2022, the estimated net present value differential of the 10% repayment rate versus the 20% repayment rate, which was deemed to be contingent consideration in an asset acquisition attributable to our acquisition of the Libtayo rights, was $364 million.

Accordingly, a portion of the development compensation payment each quarter under the Antibody LCA is attributable to the acquisition of the Libtayo intangible asset, and as a result, such portion is recognized as an addition to the Libtayo intangible asset over time (i.e., each quarter). During the period from July 1, 2022 to December 31, 2022, $25 million was recorded as an increase to the Libtayo intangible asset related to the differential of the 10% repayment rate versus the 20% repayment rate, and during the year ended December 31, 2023, $73 million was recorded as an increase to the Libtayo intangible asset.

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Please discuss the circumstances under which you would consider having the Chair and CEO roles filled by a single individual, when shareholders would be notified of any such change, and whether you will seek prior input from shareholders. In addition, please discuss how the experience of your Presiding Director is brought to bear in connection with your board’s role in risk oversight.

As a preliminary matter, it is our belief that the Company’s disclosures in the Proxy Statement comply with all applicable rules and regulations, including Item 407(h) of Regulation

S-K. In particular, we note the requirement in Item 407(h) of Regulation S-K is to “[b]riefly describe” the leadership structure of the registrant’s board. In this regard, the Proxy Statement includes a comprehensive discussion of the leadership structure of our Board of Directors (the “Board”).

Rest of the answer

As discussed in the Proxy Statement, the Board has determined that the roles of

Chair and CEO should be held by separate individuals to realize the benefit of the business and industry experience of the Chair and to enhance the Board’s oversight of management. Additionally, as also disclosed in the Proxy Statement, the Board has a Presiding

Director, who is an independent director under the listing standards of the Nasdaq Stock Market LLC and chairs all executive sessions of independent directors (which generally follow each regularly scheduled Board meeting); and the Board believes that this governance arrangement bolsters the Board’s leadership structure and independent oversight of management. Pursuant to the Company’s

Corporate Governance Guidelines (which are posted on the Company’s website and are available to investors), the Board periodically evaluates and determines an appropriate leadership structure for the Board so as to provide effective oversight of management.

Accordingly, the Company believes its current

Proxy Statement disclosure is appropriate and complete under the relevant disclosure requirement. In light of the Staff’s comment, we will continue to evaluate, and consider whether to expand, our disclosure pursuant to Item 407(h) in future proxy statements (including, if applicable, in light of any material developments to the Company’s risk oversight structure).

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Please expand upon the role that your Presiding Director plays in the leadership of the board. For example, please enhance your disclosure to address whether or not your Presiding Director may: • represent the board in communications with shareholders and other stakeholders; • require board consideration of, and/or override your CEO on, any risk matters; or • provide input on design of the board itself.

As described in the response to comment 1 above, the Company believes its disclosures in the Proxy Statement comply with all applicable rules and regulations. Notably, the Proxy Statement currently includes a section titled “Board Leadership Structure–Separate Chair and CEO with Presiding Director” that describes the role of our Presiding Director.

Rest of the answer

Additionally, the Proxy Statement, in the section titled “Shareholder Engagement

Philosophy and Board Responsiveness,” provides that the Company encourages director participation in its shareholder engagement program and that the Presiding Director (who is also the Chair of the Corporate Governance and Compliance Committee of the Board) has led many shareholder discussions. We believe the disclosure in these sections (along with the other applicable disclosures made in the

Proxy Statement) satisfies the required disclosure under Item 407(h).

We seek to comply with the requirement of Item

407(h) to provide a brief description of our leadership structure while balancing our desire to provide information that investors will find useful. While the Company believes its current Proxy Statement disclosure is fully compliant with the applicable disclosure requirements, we will consider carefully the Staff’s comments as we evaluate our disclosures about the role of our Presiding Director in future proxy statements.

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Please expand upon how your board administers its risk oversight function. For example, please disclose: • the timeframe over which you evaluate risks (e.g., short-term, intermediate-term, or long-term) and how you apply different oversight standards based upon the immediacy of the risk assessed; • whether you consult with outside advisors and experts to anticipate future threats and trends, and how often you

Rest of the question

re-assess your risk environment; • how the board interacts with management to address existing risks and identify significant emerging risks; • whether you have a Chief Compliance Officer and to whom this position reports; and • how your risk oversight process aligns with your disclosure controls and procedures.

As described in the responses to comments 1 and

2 above, the Company believes its disclosures in the Proxy Statement comply with all applicable rules and regulations. Specifically,

Item 407(h) requires disclosure of “the extent of the board’s role in the risk oversight of the registrant, such as how the board administers its oversight function, and the effect that this has on the board’s leadership structure.” The Proxy Statement currently includes a section titled “Board Oversight of Risk and Key Pricing Decisions,” which provides a detailed description of the Board’s role in our risk

Rest of the answer

oversight, how the Board and its committees administer risk oversight, and the relationship between the Board and management in risk oversight. In particular, the Proxy Statement highlights the oversight role of the Audit Committee of the Board with respect to the Company’s risk management program and the fact that the Company’s Chief Audit Executive reports independently to the Audit Committee and facilitates the risk management program. The Proxy Statement further describes the duties of the Compensation, Corporate Governance and Compliance, and Technology Committees, which are primarily responsible for oversight of the

Company’s risk framework relating to their respective focus areas. The Proxy Statement provides additional information on how the

Board administers its risk oversight function, as follows:

The Board is kept abreast of its committees’ risk oversight and other activities via reports of the committee chairs to the full Board at regular Board meetings…. In addition, the Board receives detailed regular reports from members of our senior management that include discussions of the risks and exposures involved in their respective areas of responsibility. Further, the Board is routinely informed by the appropriate members of senior management of developments internal and external to the Company that could affect our risk profile.

(Capitalization conformed to the convention used in this letter.)

The Company has established the role of Chief

Compliance Officer, which is currently filled and reports to the Company’s General Counsel. The Chief Compliance Officer provides regular updates to the Corporate Governance and Compliance Committee of the Board, and relevant information is shared with the full Board as part of the Committee’s report to the Board.

We believe our disclosure about the Company’s risk oversight process is both comprehensive and informative. While the Company believes its current Proxy Statement disclosure is fully compliant, we will consider carefully the Staff’s comments as we evaluate our required disclosures pursuant to Item 407(h) in future proxy statements (including, if applicable, in light of any material developments to the Company’s risk oversight structure).

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We note the following statement on page 26 of the proxy statement that has been incorporated by reference “[t]he board has determined that this leadership structure is appropriate for the Company at this time.” In future filings, please provide detail concerning why you have determined that this leadership structure is appropriate given your specific characteristics or circumstances as required by Item 407(h) of

Rest of the question

Regulation S- K.

We believe that the disclosure set forth in the first paragraph under the heading "Board Leadership and Role in Risk Oversight" on page 26 of the proxy statement describing the qualifications of the Chairman of Regeneron's Board of Directors and his role vis-à-vis the Board of Directors and the Chief Executive

Officer is responsive to Item 407(h) of Regulation S-K. However, in future filings, we will revise our disclosure to clarify further why we have determined that our leadership structure is appropriate given our specific characteristics or circumstances. Read in the reply ↗

We note your reference to a share repurchase program in the Compensation Discussion and Analysis section of the definitive proxy statement that is incorporated by reference, and the disclosure in your Form 10-K of repurchases that occurred in 2019. Please tell us why you do not discuss in your CD&A the impact of share repurchases on your compensation levels in 2019.

Rest of the question

Form 10-Q for the Quarterly Period Ended September 30, 2020 Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Interim Financial Statements

We did not discuss in our most recent CD&A the impact of our share repurchases on our executive compensation levels in 2019 because we do not believe our repurchases had a material impact on our executive compensation levels in 2019. Therefore, we do not believe that a discussion of those repurchases would have provided material information necessary to an understanding of the compensation program applicable to our named executive officers in 2019.

Rest of the answer

In particular, we note that the 2019 executive compensation program did not utilize earnings-per-share metrics or other similar metrics directly impacted by the number of outstanding shares of Regeneron common stock reduced as a result of stock repurchases that occurred in 2019.

Form 10-Q for the Quarterly Period Ended September 30, 2020

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Interim Financial Statements

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We note your disclosure that effective January 1, 2020 you changed the presentation of cost reimbursements from collaborators who are not deemed to be your customers from collaboration revenue to a reduction of the corresponding operating expense.

Rest of the question

We note that you also changed the presentation of amounts recognized in connection with up-front and development milestone payments from collaboration revenue to other operating income. Please provide us with your full analysis supporting this change and its impact on each element of your collaboration agreements. In particular, please explain why you changed your conclusion regarding whether your collaborators were deemed to be customers and how this impacted your application of applicable revenue recognition guidance.

Background

The Company is a party to collaboration agreements to develop and commercialize, as applicable, certain products and product candidates. Effective January 1, 2020, the Company implemented changes in the presentation of its financial statements related to certain reimbursements and other payments for products developed and commercialized with collaborators. We note by way of background:

•The Company has entered into various collaborative arrangements.

Rest of the answer

At the inception of each of these arrangements, the Company and its collaborator were each deemed to be active participants in the collaborations' joint operating activities and were exposed to significant risks and rewards dependent on the commercial success of the activity (e.g., profit sharing, sales milestones, etc.). Accordingly, the arrangements were deemed to be collaborations in accordance with ASC 808, Collaborative Arrangements.

•Historically, the Company made a determination that its collaborative arrangements, including those with Sanofi, Bayer, Teva, and Mitsubishi Tanabe Pharma Corporation ("MTPC"), fell within the scope of ASC 808. Given the lack of prescriptive guidance in ASC 808 and the fact that performance of research and development ("R&D") activities was part of Regeneron's ongoing major or central operations, the Company previously presented reimbursements and other payments from its collaborators by analogy to revenue guidance (initially ASC 605, Revenue Recognition, and subsequently ASC 606, Revenue from Contracts with Customers) pursuant to ASC 808-10-45-3 and 45-4 (as originally codified).

•The Company's ongoing major or central operations have evolved from being responsible for providing R&D activities in exchange for consideration to being a "fully integrated biotechnology company" with significant commercial operations (as described in the Company's Form 10-K for the year ended December 31, 2019). The evolution is evidenced by the fact that Regeneron has entered into arrangements whereby its collaborators are responsible for conducting R&D activities in exchange for funding provided by Regeneron. In addition, the Company has been conducting commercialization activities for products that have received regulatory approval. By way of example, through 2016, the Company was performing commercialization activities solely for ARCALYST® (rilonacept) and EYLEA® (aflibercept); from 2017 to 2019, four additional products received marketing approval for which the Company conducts various commercialization activities. We believe that the Company's historical primary activities were consistent with the roles and responsibilities assumed by "Biotech", and that our current primary activities are consistent with the roles and responsibilities assumed by "Pharma", in the illustrative examples included in ASC 808-10-55. Consequently, we believe that it was appropriate to change our accounting presentation for certain reimbursements and other payments from our collaborators to be presented in accordance with ASC 808.

•In addition to the evolution of the Company's ongoing or central operations, there have been changes to the Company's roles and responsibilities within our existing collaborative arrangements. Most notably, in December 2019, we and Sanofi announced our intent to restructure the collaboration for Praluent® and enter into a royalty-based arrangement. The restructuring, which was effective April 1, 2020, resulted in fundamental changes to parties' respective rights and obligations under the collaboration.

Based on the above considerations as well as the analysis below, we believe it is appropriate and preferable to present certain reimbursements and other payments from collaborators outside of revenue. The Company made these changes in presentation effective January 1, 2020 to better reflect the nature of the Company’s costs incurred and revenues earned pursuant to arrangements with collaborators and to enhance the comparability of Regeneron's financial statements with industry peers.

Historical Facts and Circumstances

Historically, a significant portion of the Company's business was related to performing R&D activities in connection with collaborative arrangements, as evidenced by the arrangements summarized below (detailed information related to each of the Company's significant collaborative arrangements can be found in the Company's Form 10-K for the year ended December 31, 2019):

•Bayer – EYLEA. Since 2006, we and Bayer have been parties to a global license and collaboration agreement for the development and commercialization outside the United States of EYLEA. EYLEA was in Phase 2 clinical studies at the time of entering into the arrangement, and it ultimately received U.S. Food and Drug Administration ("FDA") and other marketing approvals outside the United States commencing in 2011. At the inception of the collaboration agreement,

Regeneron was responsible for leading the worldwide development activities. Bayer is responsible for commercialization activities for EYLEA outside the United States and the Company is responsible for commercialization of EYLEA in the United States.

•Sanofi – Antibodies. Since 2007, we and Sanofi have been parties to a global, strategic collaboration to research, develop, and commercialize fully human monoclonal antibodies. The collaboration was governed by a Discovery and Preclinical Development Agreement ("Antibody Discovery Agreement") and a License and Collaboration Agreement (each as amended), collectively referred to as the "Antibody Collaboration". Pursuant to the Antibody Discovery Agreement, as amended, Sanofi was responsible for funding up to a specified amount of our antibody discovery activities each year to identify and validate potential drug discovery targets and develop fully human monoclonal antibodies against these targets. We led the design and conduct of research activities under the Antibody Discovery Agreement, including target identification and validation, research and preclinical activities, and manufacturing of preclinical and clinical supplies. The Company's Antibody Discovery Agreement with Sanofi ended on December 31, 2017 (see "Current Facts and Circumstances" section below).

For each drug candidate identified through discovery research under the Antibody Discovery Agreement, Sanofi had the option to license rights to the candidate under the License and Collaboration Agreement. If it elected to do so, Sanofi would co-develop the drug candidate with us through product approval. Sanofi leads commercialization activities for products developed under the License and Collaboration Agreement, subject to the Company's right to co-commercialize such products.

•Sanofi – Immuno-Oncology. In 2015, we and Sanofi entered into a global strategic 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 Immuno-oncology Discovery and Development Agreement ("IO Discovery Agreement"), and an Immuno-oncology License and Collaboration Agreement ("IO License and Collaboration Agreement") (each as amended). In connection with the IO Discovery Agreement, Sanofi made an up-front payment to us. Pursuant to the original IO Discovery Agreement, we agreed to spend up to a certain amount to identify and validate potential targets and develop antibodies against such targets through clinical proof-of-concept. Sanofi agreed to reimburse us for up to a certain portion of these costs. Pursuant to the IO Discovery Agreement, we were primarily responsible for the design and conduct of all research activities, including target identification and validation, preclinical activities, manufacture of preclinical and clinical supplies, and clinical development. With regard to product candidates for which proof-of-concept is established, Sanofi had the option to license rights to the product candidate pursuant to the IO License and Collaboration Agreement.

Under the terms of the IO License and Collaboration Agreement, Sanofi made an up-front payment to the Company, and the parties were (and are currently) co-developing and co-commercializing Libtayo® (cemiplimab). The parties share equally, on an ongoing basis, agreed-upon development and commercialization expenses for Libtayo. 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.

•Fasinumab. In 2015, we entered into a collaboration agreement with MTPC providing them with development and commercial rights to fasinumab in certain Asian countries. In connection with the agreement, MTPC made an up-front payment to the Company, and the Company is obligated to manufacture and supply MTPC with clinical and commercial supplies of fasinumab.

In 2016, the Company and Teva entered into a collaboration agreement to develop and commercialize fasinumab globally, excluding certain Asian countries that are subject to the Company's collaboration agreement with MTPC. In connection with the Teva Collaboration Agreement, Teva made an up-front payment to the Company. We lead global development activities, and the parties share equally, on an ongoing basis, development costs under a global development plan.

At the inception of each of these arrangements, the Company and its collaborator were each deemed to be active participants in the collaborations' joint operating activities and were exposed to significant risks and rewards dependent on the commercial success of the activity (e.g., profit sharing, sales milestones, etc.). Accordingly, the arrangements were deemed to be collaborations in accordance with ASC 808. In addition, the collaborators were deemed to be the Company's "customer" (by analogy to ASC 605 and subsequently ASC 606) for certain elements of the arrangement, as the collaborator was providing consideration in exchange for the Company providing goods/services (e.g., license to intellectual property ("IP") and R&D services, including manufacturing) utilizing its proprietary technology. Such elements were accounted by applying ASC 606 by analogy because the performance of R&D services was considered to be part of Regeneron’s ongoing major or central operations at the inception of these arrangements. The treatment of bifurcating elements within a collaboration arrangement accounted for under ASC 808 is implicitly permitted in ASC 808 (pre-issuance of ASU 2018-18, Collaborative Arrangements) and occurs in practice. This treatment was later explicitly permitted through the issuance of ASU 2018-18 which the Company adopted on January 1, 2020. In addition, the treatment of consideration received in exchange for the performance of R&D services as revenue is illustrated in Example 1 and 2 of ASC 808-10-55-3 through 55-10.

In determining the historical presentation of reimbursements from its collaborators, we considered the below guidance from ASC 808-10 (as originally codified):

45-3 Payments between participants pursuant to a collaborative arrangement that are within the scope of other authoritative accounting literature on income statement classification shall be accounted for using the relevant provisions of that literature. If the payments are not within the scope of other authoritative accounting literature, the income statement classification for the payments shall be based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election.

45-4 An entity shall evaluate the income statement classification of payments between participants pursuant to a collaborative arrangement based on the nature of the arrangement, the nature of its business operations, the contractual terms of the arrangement, and whether those payments are within the scope of other authoritative accounting literature on income statement classification. If the payments are within the scope of other authoritative accounting literature, then the entity shall apply the relevant provisions of that literature.

Considering the above authoritative guidance, in connection with an assessment of the nature of the arrangements and an assessment of our business operations (including the Company's cash generating activities) at the inception of these arrangements, the Company deemed these collaborators to be its customers by analogy. Accordingly, the Company presented reimbursements from such collaborators "gross" (i.e., within revenue) rather than "net" (i.e., as an offset to the corresponding expense incurred). Specifically, we consistently applied the below accounting for amounts received and/or amounts reimbursed from the Company's collaborators:

•Up-front and development milestone payments – in arrangements where the Company received an up-front payment from its collaborators and determined that its obligations formed a combined unit of account (i.e., license and R&D services), the Company recognized such amounts, as well as any subsequent development milestones earned, as revenue.

•Reimbursement of R&D activities (including manufacture of clinical supplies) – the Company recorded its internal and third-party development costs as R&D expense, and where the Company was entitled to reimbursement of a portion or all of the R&D expenses that it incurred, the Company recorded those reimbursable amounts as revenue.

•Reimbursement of commercialization-related activities – the Company recorded its internal and third-party commercialization-related costs as Selling, General & Administrative ("SG&A") expense, and where the Company was entitled to reimbursement of a portion or all of the SG&A expenses that it incurred, the Company recorded those reimbursable amounts as revenue.

•Reimbursement of commercial supplies – the Company recorded its manufacturing costs associated with products subject to the respective agreements as Cost of collaboration and contract manufacturing ("COCM"), and where the Company is entitled to reimbursement of a portion or all of the COCM expenses that it incurs, the Company recorded those reimbursable amounts as revenue.

•Royalties, share of profits, and sales-based milestone payments – the Company recorded royalties, its share of profits in connection with commercialization of products by its collaborator, and sales-based milestone payments as revenue.

Current Facts and Circumstances

We note that the Company's overall business has developed and changed over time, and the nature and extent of some of the above noted collaborative arrangements have also changed since the original execution of such agreements. The change in the Company’s primary business is evidenced by the following events/transactions that occurred recently:

•The Company's broad, discovery-based arrangements (where the Company was engaged, and paid, by a collaborator to utilize our expertise to discover and research targets/product candidates) have ended or have had the scope narrowed

◦The Company's Antibody Discovery Agreement with Sanofi ended on December 31, 2017 without any extension and, therefore, funding from Sanofi under the Antibody Discovery Agreement for broad-based target discovery ceased after 2017.

◦The Company and Sanofi entered into an amended IO Discovery Agreement, effective December 31, 2018, which narrowed the scope of the existing discovery and development activities conducted by the Company under the 2015 IO Discovery Agreement to developing two therapeutic bi-specific antibodies through clinical proof-of-concept.

•The Company has received regulatory approval and has commercialized, either independently or with its collaborator, several new products since 2010 (note: list below is not meant to be all-inclusive)

◦As of December 31, 2010, the Company had one marketed product, ARCALYST, which had $25 million of net product sales during 2010 and was only approved in the United States. This represented approximately 6% of the Company's total revenues in 2010.

◦We commenced commercialization of EYLEA in the United States in 2011, and Bayer commenced commercialization of EYLEA outside the United States in 2012.

◦Sanofi commenced commercialization of Praluent, Dupixent, and Kevzara globally in 2015, 2017, and 2017, respectively.

◦More recently, in October 2018, the Company commenced selling Libtayo in the United States (and Sanofi has since commenced commercialization of Libtayo outside the United States).

◦In connection with the restructuring of the Sanofi Antibody collaboration (as described below), the Company took over responsibility from Sanofi to commercialize Praluent in the United States effective during 2020.

◦As of December 31, 2019, the Company had seven products that have received marketing approval, which had global net product sales in 2019 of more than $10 billion.

•Certain collaborators have taken the lead on executing development activities for products subject to our collaborations

◦For example, at the inception of the Sanofi collaboration agreements, Regeneron was generally responsible for executing most development activities (i.e., an example of a historical contractual arrangement under which we were providing R&D services to our collaborator). By contrast, for products on which we are currently collaborating with Sanofi, Sanofi has taken the lead on various development activities, including leading several clinical trials (e.g., Dupixent in asthma and REGN3500 in chronic obstructive pulmonary disease ("COPD")).

•The Company has been increasing the number of early-stage, broad-based research and discovery arrangements to provide initial (i.e., up-front) and on-going funding to collaborators for the discovery, research, and/or development of clinical targets (note: list below is not meant to be all-inclusive and detailed information related to each of the below arrangements can be found in the Company's respective Form 10-K for the year in which the arrangement was entered into)

◦In 2016, we entered into a license and collaboration agreement with Intellia Therapeutics, Inc. Intellia is the lead party for the first target selected by the Company. In connection with the execution of the agreement, we made a $75 million up-front payment and are responsible for funding certain research and development costs.

◦In 2018, we entered into a collaboration agreement with bluebird bio, Inc. Under the terms of the agreement, the parties equally share the costs of research and development, which is currently led by bluebird. In connection with the execution of the agreement, we made a payment of $37 million for the prepayment of R&D activities.

◦In April 2019, we entered into a global, strategic collaboration with Alnylam Pharmaceuticals, Inc. We made an up-front payment of $400 million to Alnylam; and 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 million in clinical proof-of-principle milestones.

◦In November 2019, we entered into a research collaboration and option licensing agreement with Vyriad, Inc. Vyriad is primarily responsible for research and development activities. In connection with the execution of the agreement, we made an aggregate of $30 million in up-front payments to Vyriad and are obligated to provide research funding over the research term.

In addition, a significant portion of the Company's revenues earned in 2019 were related to commercialization of products (whether sold by us or our collaborator). For example, net product sales for products commercialized by Regeneron represented over 60% of the Company's 2019 total revenues, and another 16% was generated from our share of profits in connection with commercialization of products by Sanofi and Bayer.

We believe that the points noted above evidence that:

•The Company's primary business is no longer providing R&D services. In this regard, we have not recently entered into any broad-based discovery arrangements where Regeneron is the party primarily responsible for R&D services, and our collaborators are taking the lead on many research and development activities (with funding by Regeneron).

•The Company has successfully developed a commercial function and has demonstrated the ability to independently commercialize products across multiple indications.

•The Company has been generating a significant portion of its revenues from commercialization of products, whether through independently selling such or sharing profits/getting paid royalties on product sales by a collaborator.

In addition, we and Sanofi announced in December 2019 our intent to restructure the Antibody Collaboration for Praluent and enter into a royalty-based arrangement. Effective April 1, 2020, Sanofi gained sole global rights to Praluent outside of the United States and Regeneron gained sole U.S. rights to Praluent. In accordance with the revised agreement, each party is solely responsible for funding development and commercialization expenses in its respective territory. The restructuring resulted in fundamental changes to the parties' respective rights and obligations under the Antibody Collaboration, and as a direct result, changed the corresponding economics of the arrangement. This further demonstrates the recent shift in the Company's business operations.

Based on the above factors, we believe that the Company's primary business is currently developing IP and monetizing such through its own commercialization, commercialization by collaborators, and the licensure to third parties for future consideration.

In noting the above change to the Company's primary business, and considering the amendments to the Antibody Collaboration, we believe that it was appropriate to reassess whether Sanofi should continue to be deemed the Company's "customer" (by analogy) for accounting purposes. As described above, the parties' roles and responsibilities have changed, with Sanofi no longer solely obtaining the output of the Company’s primary activities (i.e., R&D activities, as was the case at the inception of the contract) and both parties now taking the lead on various activities for the collaboration (e.g., Sanofi taking the lead on various development activities and participating in manufacturing activities, and the Company participating in commercialization-related activities, etc.). In accordance with ASC 606, revenue is defined as "inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations [emphasis added]." Accordingly, a reassessment of the accounting for the arrangement based on the current facts and circumstances caused management to conclude that Sanofi should be treated not as its "customer" by analogy but rather as its "collaborator," and thus, inflows received from Sanofi pursuant to the Antibody Collaboration would no longer be presented within revenue as such inflows would not be paid in exchange for the output of the Company’s current ongoing major or central operations.

In consideration of the change in facts and circumstances since the inception of these collaboration agreements (as described above), we also believe that it was appropriate to reassess and change the presentation of certain reimbursements and other payments received from the Company's other collaboration agreements (i.e., Sanofi IO, Bayer, Teva, and Mitsubishi).

Change in Presentation for Reimbursements and Certain Other Payments from Collaborators

We considered the guidance within ASC 250-10, Accounting Changes and Error Corrections (paragraphs 45-1, 45-2, and 45-12), related to changes in accounting principle. A voluntary change in accounting principle can be a change from one generally accepted accounting principle to another generally accepted accounting principle when there are two or more generally accepted accounting principles that apply (e.g., the presentation of reimbursements from its collaborators "gross" or "net"). Further, ASC 250-10-55-1 states "...preferability among accounting principles shall be determined on the basis of whether the new principle constitutes an improvement in financial reporting and not on the basis of the income tax effect alone."

SAB Topic 6.G(2)(b)1, Reporting Requirements for Accounting Changes (codified in ASC 250-10-S99-4) provides additional information to help assess management's obligation in evaluating whether a proposed accounting change is preferable. The SAB indicates that management’s plans and judgments that are made in good faith are major considerations in determining whether a change is to a preferable accounting principle.

We believe that the change in presentation of reimbursements from collaborators from "gross" to "net," and the presentation of amounts recognized in connection with up-front and development milestone payments from collaborators within other operating income, is preferable based on the following:

•Qualitative Factors:

◦Authoritative support:

▪The Financial Accounting Standards Board ("FASB") issued ASU 2018-18, which was effective for fiscal years beginning after December 15, 2019. The guidance in ASC 808 is non-prescriptive on the specific presentation of inflows from collaborators and continues to permit entities to classify transactions in a collaborative arrangement that are outside the scope of other guidance, including ASC 606 based on an analogy to other US GAAP guidance, or a reasonable, rational and consistently applied policy election, if there is no appropriate analogy.

▪In considering the clarifications to ASC 808 as a result of the issuance of ASU 2018-18, we considered the below amended ASC 808 guidance (which effectively combined paragraph 45-3 and 45-4 (cited above) into a single paragraph of the guidance):

45-3 Parts of a collaborative arrangement that are within the scope of other authoritative accounting literature in accordance with paragraph 808-10-15-5A shall be presented using the relevant provisions of that literature. If parts of the arrangement are outside the scope of other authoritative accounting literature, the presentation of those parts shall be based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election. An entity shall evaluate the presentation of parts of a collaborative arrangement on the basis of the nature of the arrangement, the nature of its business operations, and the contractual terms of the arrangement. For example, if one party to an arrangement is required to make a payment to the other party to reimburse a portion of that party’s research and development costs, that portion of the net payment may be classified as research and development expense in the payor’s financial statements in accordance with Topic 730. An entity is precluded from presenting transactions in a collaborative arrangement together with revenue from contracts with customers unless the entity applies the guidance in Topic 606 to a unit of account that is within the scope of that Topic in accordance with paragraph 808-10-15-5B.

▪We additionally considered the below paragraphs from the Background Information and Basis for Conclusions of ASC 808, which notes, among other things, the FASB's acknowledgement that there exists diversity in practice and there is no "one-size-fits-all" accounting model for "nonrevenue" collaborative arrangements:

BC32.The FASB staff explored a potential nonrevenue model that was flexible and would have allowed an entity to reflect the underlying economics of the collaborative arrangement. That model intentionally left substantial room for judgment to allow for different accounting outcomes for a wide range of arrangements that had significant differences in economics. Under that model, once a collaborative arrangement participant determined that an identified unit of account was outside the scope of Topic 606, it would recognize a transaction as either a reduction of cost or other income depending on whether the nature of the underlying transaction was related to a specific and identifiable cost incurred in accordance with the collaboration agreement (using concepts from Topic 606).

BC33. In December 2017, the FASB hosted two workshops for preparers and auditors to provide feedback on the operability of the staff’s potential nonrevenue model. Because of the proposed model’s flexibility, certain participants raised concerns that the model would be difficult to apply and that it may not solve many of the challenges raised about recognition. Specifically, certain participants indicated that the potential model would not remove the difficulties in determining an activity's underlying nature, allocating consideration to interrelated activities, and determining the recognition period for a unit of account. Overall, the feedback received during the workshops made it clear that if a nonrevenue model was developed, practice would desire more prescriptive guidance; however, there were strong opposing views on what that guidance should be. Because of the diverse views and various issues raised, the Board concluded that it would have been difficult to develop a "one-size-fits-all" accounting model for the various types of collaborative arrangements, particularly within the context of this project on targeted improvements for collaborative arrangements. Therefore, the Board decided not to provide recognition and measurement guidance for nonrevenue transactions in a collaborative arrangement.

▪We note that in collaborative arrangements where its obligations form a combined unit of account (i.e., license and R&D services), the Company views contractually mandated cost reimbursements differently from both up-front (i.e., "buy-in") payments and contingent milestone payments. Accordingly, with regards to the amounts recognized in connection with up-front and development milestones being presented separately (i.e., in other operating income) from reimbursements from collaborators (i.e., as a reduction of the corresponding expense incurred), we determined it was acceptable to employ a reasonable, rational, and consistently applied accounting policy to present up-front and milestone payments on a different income statement line item from the reimbursement for R&D services.

In making this determination, we considered the guidance pursuant to the Securities and Exchange Commission's Regulation S-X Rule 5-03, Statements of comprehensive income, which remains intact after the issuance of ASC 606 and requires a registrant to state material revenue streams separately (i.e., in more than one line item) on the face of their income statement based on their nature.

In addition to considering the above referenced guidance, we note that a number of our peers in the biotechnology/pharmaceutical industry appear to present upfront/development milestone payments in a different line item from cost reimbursements.

Therefore, the Company ultimately determined that separating these forms of consideration into different line items on the income statement is acceptable and consistent with industry practice.

◦Rationality:

•The change:

◦Represents a more accurate reflection of the Company's costs and revenues given the nature of the Company's current business operations and current arrangements with collaborators.

◦Aligns more closely with the substance of the collaboration events/transactions being recognized (i.e., reimbursement of corresponding expenses incurred by the Company).

•The change in presentation is appropriate in light of changes in the Company's primary business (as described above). We note, pursuant to ASC 250 and SAB Topic 6, that business judgment and business planning often are major considerations in determining that the change is to a preferable method because the change results in improved financial reporting.

•We historically provided forward-looking financial guidance, as well as actual financial results, to investors, analysts, and internal stakeholders (i.e., members of senior management and the Board of Directors) related to "Unreimbursed R&D" expense (which is calculated as R&D expenses reduced by R&D expense reimbursements), as we viewed this as an important metric of the Company's financial performance. Thus, the change in the presentation of the Company's financial statements served to more closely align to this metric utilized by investors, analysts, and internal stakeholders. Accordingly, we no longer require separate presentation of "Unreimbursed R&D" as a metric as it will be captured in our financial statement line item.

◦Industry practice:

•We acknowledge that diversity in practice exists with respect to the presentation of cash inflows from collaborative arrangements. However, based on our review of publicly available financial statements, "net" presentation is a widely recognized practice in the biotechnology/pharmaceutical industry.

•In addition to "net" presentation of reimbursements, we also note that several of these same companies appear to present amounts recognized in connection with up-front and development milestone payments earned under such arrangements as other operating income or revenue (as applicable). These examples demonstrate an industry practice of presenting inflows from up-front and development milestone payments in a separate financial statement caption from reimbursements received from a collaborator.

•Quantitative Factors:

◦As described in Note 1 of the Company's Forms 10-Q for each of the quarterly periods during 2020, the financial statement accounts impacted by the change in accounting policy were as follows:

•Balance sheet – Certain balance sheet captions were renamed (e.g., Deferred revenue) to disaggregate existing balances between customer and non-customer arrangements.

▪Statement of Operations – The change in presentation resulted in lower revenue and lower expense (R&D, SG&A, and COCM) by corresponding amounts. However, there was no impact to income from operations, net income, or earnings per share.

•We additionally considered the financial statement disclosure implications related to the voluntary change in accounting principle, noting the following:

◦The Company has disclosed the nature of and justification for the change as well as the effects of the change on net income (i.e., no impact) for the period in which the change is made. Furthermore, the disclosure of the change explains why the newly adopted principle is preferable to the previously-applied principle. See Note 1 of the Company's Forms 10-Q for each of the quarterly periods during 2020.

◦As required by S-X 10-01(b)(6), a letter from our auditors, PricewaterhouseCoopers LLP, indicating that the change, in their judgment, is preferable under the circumstances is included as Exhibit 18 attached to the Company's Form 10-Q for the quarterly period ended March 31, 2020.

◦As it relates to significant collaborative arrangements (i.e., Sanofi, Bayer, and other significant collaborative arrangements that may arise in the future), the Company will continue to disclose the amounts of reimbursements received from collaborators in a disaggregated manner, where on the Statement of Operations such reimbursements have been presented, and the Company’s accounting policy for collaborative arrangements. See Note 3 of the Company's Forms 10-Q for each of the quarterly periods during 2020.

Conclusion

Based on the above considerations, we believe it is appropriate and preferable to present certain reimbursements and other payments from collaborators outside of revenue. The Company made these changes in presentation to better reflect the nature of the Company’s costs incurred and revenues earned pursuant to arrangements with collaborators and to enhance the comparability of Regeneron's financial statements with industry peers. Consequently, we have applied the below accounting policies for amounts received and/or amounts reimbursed in such arrangements, and we have reclassified prior-period amounts presented in our financial statements to conform with the new presentation.

•Up-front and development milestone payments – in arrangements where the Company receives an up-front payment and development milestone payments from its collaborator and determines that its obligations form a combined unit of account (i.e., license and R&D services), the Company recognizes such amounts as Other operating income.

•Reimbursement of R&D activities (including manufacture of clinical supplies) – the Company records its internal and third-party development costs as R&D expense, and where the Company is entitled to reimbursement of a portion or all of the R&D expenses that it incurs, the Company records those reimbursable amounts as a reduction to R&D expense.

•Reimbursement of commercialization-related activities – the Company records its internal and third-party commercialization-related costs as SG&A expense, and where the Company is entitled to reimbursement of a portion or all of the SG&A expenses that it incurs, the Company records those reimbursable amounts as a reduction to SG&A expense.

In addition, it should be noted that we have not changed our historical accounting presentation for amounts received and/or amounts reimbursed in connection with the following transactions from our collaborative arrangements:

•Reimbursement of commercial supplies

•Royalties, share of profits, and sales-based milestone payments

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