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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
September 30, 2019
 
 
OR
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________ to __________
  
Commission File Number:
0-19034
 
REGENERON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)

New York
 
13-3444607
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
777 Old Saw Mill River Road
Tarrytown,
New York
10591-6707
(Address of principal executive offices, including zip code)

(914) 847-7000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock - par value $.001 per share
REGN
NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
No
 
 
 
 
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
 
Emerging growth company
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No

The number of shares outstanding of each of the registrant's classes of common stock as of October 24, 2019:
Class of Common Stock
 
Number of Shares
Class A Stock, $.001 par value
 
1,848,970
Common Stock, $.001 par value
 
107,946,794




REGENERON PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS

 
 
 
 
Page Numbers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 









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


Table of Contents


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions, except share data)
 
September 30,
 
December 31,
 
2019
 
2018
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
1,384.8

 
$
1,467.7

Marketable securities
1,493.1

 
1,342.2

Accounts receivable - trade, net
2,027.7

 
1,723.7

Accounts receivable from Sanofi
345.4

 
226.4

Accounts receivable from Bayer
286.9

 
293.1

Inventories
1,344.3

 
1,151.2

Prepaid expenses and other current assets
226.9

 
243.3

Total current assets
7,109.1

 
6,447.6

 
 
 
 
Marketable securities
3,112.6

 
1,755.0

Property, plant, and equipment, net
2,771.4

 
2,575.8

Deferred tax assets
808.3

 
828.7

Other noncurrent assets
137.9

 
127.4

Total assets
$
13,939.3

 
$
11,734.5

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 
 
 
Accounts payable
$
335.6

 
$
218.2

Accrued expenses and other current liabilities
821.1

 
772.1

Deferred revenue from Sanofi
427.1

 
246.7

Deferred revenue - other
181.6

 
205.8

Total current liabilities
1,765.4

 
1,442.8

 
 
 
 
Finance lease liabilities
712.7

 
708.5

Deferred revenue from Sanofi
551.9

 
279.3

Deferred revenue - other
131.9

 
184.9

Other noncurrent liabilities
273.0

 
361.7

Total liabilities
3,434.9

 
2,977.2

 
 
 
 
Stockholders' equity:
 
 
 
Preferred Stock, $.01 par value; 30,000,000 shares authorized; issued and outstanding - none

 

Class A Stock, convertible, $.001 par value; 40,000,000 shares authorized; shares issued and outstanding - 1,848,970 in 2019 and 1,911,354 in 2018

 

Common Stock, $.001 par value; 320,000,000 shares authorized; shares issued - 112,039,746 in 2019 and 111,084,951 in 2018
0.1

 
0.1

Additional paid-in capital
4,388.4

 
3,911.6

Retained earnings
6,587.8

 
5,254.3

Accumulated other comprehensive income (loss)
16.5

 
(12.3
)
Treasury Stock, at cost; 4,167,018 shares in 2019 and 3,990,021 shares in 2018
(488.4
)
 
(396.4
)
Total stockholders' equity
10,504.4

 
8,757.3

Total liabilities and stockholders' equity
$
13,939.3

 
$
11,734.5

 
 
 
 
The accompanying notes are an integral part of the financial statements.

2


Table of Contents


REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
(In millions, except per share data)
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Statements of Operations
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Net product sales
 
$
1,238.3

 
$
1,025.5

 
$
3,548.0

 
$
3,009.8

Sanofi collaboration revenue
 
404.2

 
256.3

 
999.7

 
683.5

Bayer collaboration revenue
 
302.8

 
264.4

 
868.0

 
775.2

Other revenue
 
103.1

 
117.3

 
278.2

 
314.5

 
 
2,048.4

 
1,663.5

 
5,693.9

 
4,783.0

 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
Research and development
 
663.4

 
557.0

 
2,353.5

 
1,584.8

Selling, general, and administrative
 
419.9

 
369.2

 
1,248.0

 
1,064.9

Cost of goods sold
 
115.9

 
30.8

 
253.8

 
136.1

Cost of collaboration and contract manufacturing
 
110.7

 
79.6

 
304.5

 
180.9

 
 
1,309.9

 
1,036.6

 
4,159.8

 
2,966.7

 
 
 
 
 
 
 
 
 
Income from operations
 
738.5

 
626.9

 
1,534.1

 
1,816.3

 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
Other income (expense), net
 
37.8

 
16.4

 
28.7

 
81.8

Interest expense
 
(7.8
)
 
(7.4
)
 
(23.5
)
 
(20.8
)
 
 
30.0

 
9.0

 
5.2

 
61.0

 
 
 
 
 
 
 
 
 
Income before income taxes
 
768.5

 
635.9

 
1,539.3

 
1,877.3

 
 
 
 
 
 
 
 
 
Income tax expense
 
(98.9
)
 
(41.2
)
 
(215.5
)
 
(253.3
)
 
 
 
 
 
 
 
 
 
Net income
 
$
669.6

 
$
594.7

 
$
1,323.8

 
$
1,624.0

 
 
 
 
 
 
 
 
 
Net income per share - basic
 
$
6.12

 
$
5.50

 
$
12.12

 
$
15.06

Net income per share - diluted
 
$
5.86

 
$
5.17

 
$
11.54

 
$
14.14

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
 
109.4

 
108.0

 
109.2

 
107.8

Weighted average shares outstanding - diluted
 
114.2

 
115.1

 
114.7

 
114.8

 
 
 
 
 
 
 
 
 
Statements of Comprehensive Income
 
 
 
 
 
 
 
 
Net income
 
$
669.6

 
$
594.7

 
$
1,323.8

 
$
1,624.0

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
Unrealized gain (loss) on debt securities
 
1.0

 
0.7

 
31.5

 
(6.9
)
Unrealized (loss) gain on cash flow hedges
 
(0.3
)
 
0.3

 
(2.7
)
 
2.4

Comprehensive income
 
$
670.3

 
$
595.7

 
$
1,352.6

 
$
1,619.5

 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of the financial statements.


3


Table of Contents


REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
(In millions)
 
 
Class A Stock
 
Common Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Treasury Stock
 
Total Stockholders' Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
Balance, December 31, 2018
 
1.9

 

 
111.1

 
$
0.1

 
$
3,911.6

 
$
5,254.3

 
$
(12.3
)
 
(4.0
)
 
$
(396.4
)
 
$
8,757.3

Issuance of Common Stock in connection with exercise of stock options
 

 

 
0.6

 

 
140.9

 

 

 

 

 
140.9

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations
 

 

 

 

 
(10.7
)
 

 

 

 

 
(10.7
)
Issuance/distribution of Common Stock in connection with 401(k) Savings Plan
 

 

 

 

 
4.3

 

 

 
0.1

 
6.2

 
10.5

Repurchases of Common Stock from Sanofi
 

 

 

 

 

 

 

 
(0.1
)
 
(54.0
)
 
(54.0
)
Stock-based compensation charges
 

 

 

 

 
114.8

 

 

 

 

 
114.8

Adjustment upon adoption of new accounting standard
 

 

 

 

 

 
9.7

 

 

 

 
9.7

Net income
 

 

 

 

 

 
461.1

 

 

 

 
461.1

Other comprehensive gain, net of tax
 

 

 

 

 

 

 
15.1

 

 

 
15.1

Balance, March 31, 2019
 
1.9

 

 
111.7

 
0.1

 
4,160.9

 
5,725.1

 
2.8

 
(4.0
)
 
(444.2
)
 
9,444.7

Issuance of Common Stock in connection with exercise of stock options
 

 

 
0.3

 

 
13.9

 

 

 

 

 
13.9

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations
 

 

 
(0.1
)
 

 
(29.7
)
 

 

 

 

 
(29.7
)
Issuance/distribution of Common Stock in connection with 401(k) Savings Plan
 

 

 

 

 
9.3

 

 

 

 
2.4

 
11.7

Stock-based compensation charges
 

 

 

 

 
109.2

 

 

 

 

 
109.2

Net income
 

 

 

 

 

 
193.1

 

 

 

 
193.1

Other comprehensive gain, net of tax
 

 

 

 

 

 

 
13.0

 

 

 
13.0

Balance, June 30, 2019
 
1.9

 

 
111.9

 
0.1

 
4,263.6

 
5,918.2

 
15.8

 
(4.0
)
 
(441.8
)
 
9,755.9

Issuance of Common Stock in connection with exercise of stock options
 

 

 
0.1

 

 
8.3

 

 

 

 

 
8.3

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations
 

 

 

 

 
(0.1
)
 

 

 

 

 
(0.1
)
Issuance/distribution of Common Stock in connection with 401(k) Savings Plan
 

 

 

 

 
3.9

 

 

 

 
2.1

 
6.0

Repurchases of Common Stock from Sanofi
 

 

 

 

 

 

 

 
(0.2
)
 
(48.7
)
 
(48.7
)
Conversion of Class A Stock to Common Stock
 
(0.1
)
 

 
0.1

 

 

 

 

 

 

 

Stock-based compensation charges
 

 

 

 

 
112.7

 

 

 

 

 
112.7

Net income
 

 

 

 

 

 
669.6

 

 

 

 
669.6

Other comprehensive gain, net of tax
 

 

 

 

 

 

 
0.7

 

 

 
0.7

Balance, September 30, 2019
 
1.8

 

 
112.1

 
$
0.1

 
$
4,388.4

 
$
6,587.8

 
$
16.5

 
(4.2
)
 
$
(488.4
)
 
$
10,504.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4


Table of Contents


CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (continued)
 
 
Class A Stock
 
Common Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Treasury Stock
 
Total Stockholders' Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
Shares
 
Amount
 
Balance, December 31, 2017
 
1.9

 

 
109.5

 
$
0.1

 
$
3,512.9

 
$
2,946.7

 
$
0.6

 
(3.8
)
 
$
(316.2
)
 
$
6,144.1

Issuance of Common Stock in connection with exercise of stock options
 

 

 
0.1

 

 
13.6

 

 

 

 

 
13.6

Issuance of Common Stock in connection with 401(k) Savings Plan
 

 

 
0.1

 

 
(0.7
)
 

 

 

 

 
(0.7
)
Stock-based compensation charges
 

 

 

 

 
85.8

 

 

 

 

 
85.8

Cumulative-effect adjustment upon adoption of new accounting standards
 

 

 

 

 

 
(136.9
)
 
(6.6
)
 

 

 
(143.5
)
Net income
 

 

 

 

 

 
477.9

 

 

 

 
477.9

Other comprehensive loss, net of tax
 

 

 

 

 

 

 
(9.7
)
 

 

 
(9.7
)
Balance, March 31, 2018
 
1.9

 

 
109.7

 
0.1

 
3,611.6

 
3,287.7

 
(15.7
)
 
(3.8
)
 
(316.2
)
 
6,567.5

Issuance of Common Stock in connection with exercise of stock options
 

 

 
0.4

 

 
19.8

 

 

 

 

 
19.8

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations
 

 

 
(0.2
)
 

 
(31.9
)
 

 

 

 

 
(31.9
)
Repurchases of Common Stock from Sanofi
 

 

 

 

 

 

 

 
(0.1
)
 
(37.6
)
 
(37.6
)
Stock-based compensation charges
 

 

 

 

 
113.1

 

 

 

 

 
113.1

Net income
 

 

 

 

 

 
551.4

 

 

 

 
551.4

Other comprehensive gain, net of tax
 

 

 

 

 

 

 
4.1

 

 

 
4.1

Balance, June 30, 2018
 
1.9

 

 
109.9

 
0.1

 
3,712.6

 
3,839.1

 
(11.6
)
 
(3.9
)
 
(353.8
)
 
7,186.4

Issuance of Common Stock in connection with exercise of stock options
 

 

 
0.4

 

 
57.3

 

 

 

 

 
57.3

Common Stock tendered upon exercise of stock options and vesting of restricted stock for employee tax obligations
 

 

 

 

 
(45.2
)
 

 

 

 

 
(45.2
)
Repurchases of Common Stock from Sanofi
 

 

 

 

 

 

 

 
(0.1
)
 
(42.6
)
 
(42.6
)
Stock-based compensation charges
 

 

 

 

 
116.5

 

 

 

 

 
116.5

Net income
 

 

 

 

 

 
594.7

 

 

 

 
594.7

Other comprehensive gain, net of tax
 

 

 

 

 

 

 
1.1

 

 

 
1.1

Balance, September 30, 2018
 
1.9

 

 
110.3

 
$
0.1

 
$
3,841.2

 
$
4,433.8

 
$
(10.5
)
 
(4.0
)
 
$
(396.4
)
 
$
7,868.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of the financial statements.


5


Table of Contents


REGENERON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
 
 
Nine Months Ended
September 30,
 
 
2019
 
2018
Cash flows from operating activities:
 
 
 
 
Net income
 
$
1,323.8

 
$
1,624.0

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
156.0

 
105.4

Non-cash compensation expense
 
330.8

 
300.7

Other non-cash items, net
 
113.2

 
(82.7
)
Deferred taxes
 
(110.0
)
 
(33.5
)
Changes in assets and liabilities:
 
 
 
 
Increase in Sanofi, Bayer, and trade accounts receivable
 
(460.9
)
 
(228.6
)
Increase in inventories
 
(227.2
)
 
(281.6
)
Decrease (increase) in prepaid expenses and other assets
 
21.2

 
(87.8
)
Increase (decrease) in deferred revenue
 
375.8

 
(29.5
)
Increase in accounts payable, accrued expenses, and other liabilities
 
119.9

 
179.9

Total adjustments
 
318.8

 
(157.7
)
Net cash provided by operating activities
 
1,642.6

 
1,466.3

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of marketable and other securities
 
(2,834.9
)
 
(1,533.6
)
Sales or maturities of marketable securities
 
1,306.4

 
644.1

Capital expenditures
 
(290.6
)
 
(297.6
)
Other
 

 
(10.0
)
Net cash used in investing activities
 
(1,819.1
)
 
(1,197.1
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from issuance of Common Stock
 
163.5

 
87.4

Payments in connection with Common Stock tendered for employee tax obligations
 
(40.5
)
 
(77.1
)
Repurchases of Common Stock
 
(29.4
)
 
(4.4
)
Net cash provided by financing activities
 
93.6