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`10-K 1 regn-123115x10k.htm 10-K
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`10-K
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`FORM 10-K
`
`(Mark One)
`(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
`For the fiscal year ended December 31, 2015
`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
`(State or other jurisdiction of incorporation or organization)
`777 Old Saw Mill River Road, Tarrytown, New York
`(Address of principal executive offices)
`
`13-3444607
`(I.R.S. Employer Identification No.)
`10591-6707
`(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
`Name of each exchange on which registered
`NASDAQ Global Select Market
`Common Stock - par value $.001 per share
`Securities registered pursuant to section 12(g) of the Act: None
`
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
`
`Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
`
`Yes (cid:68) No
`
`Yes No (cid:68)
`
`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 (cid:68) No
`
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
`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 and post such
`files).
`
`Yes (cid:68) No
`
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§232.405 of this chapter) is not contained herein, and will not be contained, to the
`best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K.
`
`(cid:68)
`
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”,
`“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
`Large accelerated
`Accelerated
`Non-accelerated
`Smaller reporting
`filer (cid:68)
`filer
`filer
`company
`
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
`
`Yes No (cid:68)
`
`The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $50,626,000,000, computed by reference to the closing sales price of the stock on NASDAQ on
`June 30, 2015, the last trading day of the registrant's most recently completed second fiscal quarter. For purposes of this calculation only, the registrant has assumed that all of its directors and executive
`officers, and no other persons, are its affiliates. This determination of affiliate status is not necessarily a determination for other purposes.
`
`The number of shares outstanding of each of the registrant's classes of common stock as of February 4, 2016:
`
`Class of Common Stock
`
`Number of Shares
`
`Class A Stock, $.001 par value
`
`Common Stock, $.001 par value
`
`1,913,776
`
`102,874,369
`
`DOCUMENTS INCORPORATED BY REFERENCE:
`Specified portions of the Registrant's definitive proxy statement to be filed in connection with solicitation of proxies for its 2016 Annual Meeting of Shareholders are incorporated by reference into Part III
`of this Form 10-K. Exhibit index is located on pages 91 to 97 of this filing.
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`SANOFI v. GENENTECH
`IPR2015-01624
`EXHIBIT 2098
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`5/9/2016
`Table of Contents
`
`10-K
`
`REGENERON PHARMACEUTICALS, INC.
`ANNUAL REPORT ON FORM 10-K
`TABLE OF CONTENTS
`
`
`PART I
`Item 1.
`Item 1A.
`Item 1B.
`Item 2.
`Item 3.
`Item 4.
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`PART II
`Item 5.
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`Item 6.
`Item 7.
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`Item 7A.
`Item 8.
`Item 9.
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`Item 9A.
`Item 9B.
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`PART III
`Item 10.
`Item 11.
`Item 12.
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`Item 13.
`Item 14.
`
`
`PART IV
`Item 15.
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`
`
`
` Business
` Risk Factors
` Unresolved Staff Comments
` Properties
` Legal Proceedings
` Mine Safety Disclosures
`
`
`
`Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer
`Purchases of Equity Securities
`
` Selected Financial Data
`Management's Discussion and Analysis of Financial Condition and Results of
`Operations
`
` Quantitative and Qualitative Disclosures About Market Risk
` Financial Statements and Supplementary Data
`Changes in and Disagreements with Accountants on Accounting and Financial
`Disclosure
`
` Controls and Procedures
` Other Information
`
`
`
` Directors, Executive Officers and Corporate Governance
` Executive Compensation
`Security Ownership of Certain Beneficial Owners and Management and Related
`Stockholder Matters
`
` Certain Relationships and Related Transactions, and Director Independence
` Principal Accounting Fees and Services
`
`
`
` Exhibits and Financial Statement Schedules
`
`
`SIGNATURE PAGE
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`Page Numbers
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`"ARCALYST®", "EYLEA®", "ZALTRAP®", "VelocImmune®", "VelociGene®", "VelociMouse®", "VelociMab®", and "VelociSuite®" 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.
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`PART I
`
`ITEM 1. BUSINESS
`This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties relating to future events and the
`future performance of Regeneron Pharmaceuticals, Inc. ("Regeneron," "Company," "we," "us," and "our"), and actual events or results may
`differ materially from these forward-looking statements. Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate,"
`variations of such words, and similar expressions are intended to identify such forward-looking statements, although not all forward-looking
`statements contain these identifying words. These statements concern, and these risks and uncertainties include, among others, the nature,
`timing, and possible success and therapeutic applications of our products, product candidates, and research and clinical programs now
`underway or planned, including without limitation sarilumab, dupilumab, fasinumab, and REGN2222; the likelihood and timing of achieving
`any of our anticipated clinical development milestones; unforeseen safety issues resulting from the administration of products and product
`candidates in patients, including serious complications or side effects in connection with the use of our product candidates in clinical trials;
`the likelihood and timing of possible regulatory approval and commercial launch of our late-stage product candidates and new indications for
`marketed products, including without limitation Praluent® (alirocumab) Injection, sarilumab, dupilumab, fasinumab, and REGN2222;
`ongoing regulatory obligations and oversight impacting our marketed products (such as EYLEA® (aflibercept) Injection and Praluent),
`research and clinical programs, and business, including those relating to patient privacy; determinations by regulatory and administrative
`governmental authorities which may delay or restrict our ability to continue to develop or commercialize our products and product candidates;
`competing drugs and product candidates that may be superior to our products and product candidates; uncertainty of market acceptance and
`commercial success of our products and product candidates; our ability to manufacture and manage supply chains for multiple products and
`product candidates; coverage and reimbursement determinations by third-party payers, including Medicare and Medicaid; unanticipated
`expenses; the costs of developing, producing, and selling products; our ability to meet any of our sales or other financial projections or
`guidance, including without limitation capital expenditures and income tax obligations, and changes to the assumptions underlying those
`projections or guidance; the potential for any license or collaboration agreement, including our agreements with Sanofi and Bayer
`HealthCare LLC, to be cancelled or terminated without any further product success; and risks associated with intellectual property of other
`parties and pending or future litigation relating thereto. These statements are made based on management's current beliefs and judgment, and
`the reader is cautioned not to rely on any such statements. In evaluating such statements, shareholders and potential investors should
`specifically consider the various factors identified under Part I, Item 1A. "Risk Factors," which could cause actual events and results to differ
`materially from those indicated by such forward-looking statements. We do not undertake any obligation to update publicly any forward-
`looking statement, whether as a result of new information, future events, or otherwise.
`General
`
`Regeneron Pharmaceuticals, Inc. is a fully integrated biopharmaceutical company that discovers, invents, develops, manufactures, and
`commercializes medicines for the treatment of serious medical conditions. We commercialize medicines for eye diseases, high low-density
`lipoprotein (LDL) cholesterol, and a rare inflammatory condition and have product candidates in development in other areas of high unmet
`medical need, including oncology, rheumatoid arthritis (RA), asthma, atopic dermatitis, pain, and infectious diseases.
`
`Our significant 2015 business highlights include:
`•
`EYLEA (aflibercept) Injection, which is approved by the U.S. Food and Drug Administration (FDA) for use in retinal indications,
`delivered net sales growth of 54% over 2014, and is now the market-leading, branded anti-VEGF therapy in the United States.
`• We, along with our partner Sanofi, received regulatory approval in the United States and Europe for Praluent (alirocumab) Injection for
`the treatment of uncontrolled LDL-cholesterol in certain patients. Praluent has been launched in the United States and certain European
`countries.
`• We reported positive data from three Phase 3 studies of sarilumab in rheumatoid arthritis and submitted a regulatory application to the
`FDA.
`• We reported positive, pivotal, Phase 2b data for dupilumab in the asthma indication and completed enrollment of three Phase 3 studies
`of dupilumab in atopic dermatitis.
`Two of our antibodies advanced to Phase 3 studies: REGN 2222 for the prevention of Respiratory Syncytial Virus (RSV) infection in
`infants; and fasinumab, an antibody against nerve growth factor (NGF), for osteoarthritis pain.
`• We entered into significant new research and development collaborations: a collaboration with Mitsubishi Tanabe Pharma Corporation
`for fasinumab in certain Asian countries and a broad immuno-oncology collaboration with Sanofi.
`Our initiatives in genomics also advanced, enabling us to sequence exomes at the rate of 100,000 per year.
`
`•
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`•
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`•
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`From a company growth perspective, we hired our 4,000th employee, expanded into two new buildings on our Tarrytown, New York
`campus, continued to expand our bulk drug product manufacturing operations in Rensselaer, New York, and continued building out
`and hiring people for our new Limerick, Ireland commercial manufacturing facility.
`• We were named one of the two top employers in the global biopharmaceutical industry by Science, for the fifth consecutive year.
`Our total revenues were $4,103.7 million in 2015, compared to $2,819.6 million in 2014 and $2,104.7 million in 2013. Our net income was
`$636.1 million, or $5.52 per diluted share, in 2015, compared to $338.1 million, or $2.98 per diluted share, in 2014, and $413.7 million, or $3.72
`per diluted share, in 2013. Refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations -
`Results of Operations" below for further details of our financial results.
`
`We currently have three marketed products:
`
`•
`
`•
`
`•
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`EYLEA (aflibercept) Injection, known in the scientific literature as VEGF Trap-Eye, is available in the United States, European Union
`(EU), Japan, and certain other countries outside the United States for the treatment of neovascular age-related macular degeneration (wet
`AMD), diabetic macular edema (DME), macular edema following retinal vein occlusion (RVO), which includes macular edema
`following central retinal vein occlusion (CRVO) and macular edema following branch retinal vein occlusion (BRVO). EYLEA is also
`available in Japan and the EU for the treatment of myopic choroidal neovascularization (mCNV) and in the United States for the
`treatment of diabetic retinopathy in patients with DME. Bayer HealthCare has additional regulatory applications for EYLEA for
`various indications pending in other countries. We are collaborating with Bayer HealthCare on the global development and
`commercialization of EYLEA outside the United States.
`Praluent (alirocumab) Injection, which is available in the United States where it is indicated as an adjunct to diet and maximally
`tolerated statin therapy for the treatment of adults with heterozygous familial hypercholesterolemia or clinical atherosclerotic
`cardiovascular disease (ASCVD), who require additional lowering of LDL cholesterol. In September 2015, the European Commission
`granted marketing authorization of Praluent for the treatment of adult patients with primary hypercholesterolemia (heterozygous
`familial hypercholesterolemia (HeFH) and non-familial) or mixed dyslipidemia as an adjunct to diet: (a) in combination with a statin, or
`statin with other lipid-lowering therapies in patients unable to reach their LDL-cholesterol goals with the maximally-tolerated dose of a
`statin, or (b) alone or in combination with other lipid-lowering therapies for patients who are statin intolerant, or for whom a statin is
`contraindicated. The effect of Praluent on cardiovascular morbidity and mortality has not been determined. We are collaborating with
`Sanofi on the global development and commercialization of Praluent.
`ARCALYST® (rilonacept) Injection for Subcutaneous Use, which is available in the United States for the treatment of Cryopyrin-
`Associated Periodic Syndromes (CAPS), including Familial Cold Auto-inflammatory Syndrome (FCAS) and Muckle-Wells Syndrome
`(MWS), in adults and children 12 years and older.
`
`In February 2015, we and Sanofi entered into an amended and restated ZALTRAP® agreement (Amended ZALTRAP Agreement). Under the
`terms of the Amended ZALTRAP Agreement, Sanofi is solely responsible for the development and commercialization of ZALTRAP (ziv-
`aflibercept) Injection for Intravenous Infusion for cancer indications worldwide. Sanofi bears the cost of all development and commercialization
`activities and reimburses Regeneron for its costs for any such activities. Sanofi pays us a percentage of aggregate net sales of ZALTRAP during
`each calendar year of between 15% to 30%, depending on the aggregate net sales of ZALTRAP in such calendar year. Refer to "Collaboration
`Agreements - Collaborations with Sanofi - ZALTRAP" below for further details of the Amended ZALTRAP Agreement. ZALTRAP is currently
`available in the United States, EU, and certain other countries for treatment, in combination with 5-fluorouracil, leucovorin, irinotecan
`(FOLFIRI), of patients with metastatic colorectal cancer (mCRC) that is resistant to or has progressed following an oxaliplatin-containing
`regimen.
`
`We have 13 product candidates in clinical development, all of which were discovered in our research laboratories. These consist of a Trap-
`based clinical program and 12 fully human monoclonal antibody product candidates, as summarized below. Each of the antibodies in the table
`below was generated using our VelocImmune® technology.
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`Trap-based Clinical Programs
`
`EYLEA
`In Phase 3 clinical development for the treatment of Neovascular Glaucoma (NVG) (in Japan) in collaboration with Bayer HealthCare. As
`described below, aflibercept is also being studied in combination with (i) an antibody to Platelet Derived Growth Factor Receptor Beta
`(PDGFR-beta), and (ii) an antibody to angiopoietin-2 (Ang2).
`Antibody-based Clinical Programs in Collaboration with Sanofi
`
`Praluent
`Antibody to PCSK9. In Phase 3 clinical development for LDL cholesterol reduction and for the prevention of cardiovascular events. In July
`2015, the FDA approved Praluent as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with heterozygous
`familial hypercholesterolemia or clinical ASCVD, who require additional lowering of LDL cholesterol. In September 2015, the European
`Commission granted marketing authorization for Praluent for the treatment of LDL cholesterol in certain adult patients with
`hypercholesterolemia. The effect of Praluent on cardiovascular morbidity and mortality has not been determined.
`Sarilumab (REGN88)
`Antibody to the interleukin-6 receptor (IL-6R). In clinical development in rheumatoid arthritis (Phase 3) and non-infectious uveitis (Phase 2).
`Dupilumab (REGN668)
`Antibody to the interleukin-4 receptor (IL-4R) alpha subunit. In clinical development in atopic dermatitis in adults (Phase 3), atopic dermatitis
`in pediatric patients (Phase 2), asthma (Phase 3), nasal polyps in patients who also have chronic sinusitis (NPwCS) (Phase 2), and eosinophilic
`esophagitis (EoE) (Phase 2).
`REGN2810
`Antibody to programmed cell death protein 1 (PD-1). Phase 1 clinical study in advanced malignancies initiated in the first quarter of 2015.
`Antibody-based Clinical Program in Collaboration with Bayer HealthCare
`
`REGN2176-3**
`Combination product comprised of an antibody to PDGFR-beta co-formulated with aflibercept for intravitreal injection for use in
`ophthalmology. Phase 2 clinical study for the treatment of wet AMD initiated in the second quarter of 2015. Fast Track designation received
`from the FDA for the treatment of patients with wet AMD.
`Antibody-based Clinical Program in Collaboration with Mitsubishi Tanabe Pharma
`
`Fasinumab (REGN475)*
`Antibody to Nerve Growth Factor (NGF). Phase 2b/3 study (16-weeks) in pain due to osteoarthritis initiated in the second quarter of 2015.
`Antibody-based Clinical Programs Developing Independently
`
`REGN2222*
`Antibody to the Respiratory Syncytial Virus-F (RSV-F) protein. Phase 3 clinical study in RSV initiated in the second quarter of 2015.
`Evinacumab (REGN1500)*
`Antibody to Angptl-3. Phase 2 clinical study for the treatment of dyslipidemia in homozygous familial hypercholesterolemia initiated in the
`first quarter of 2015. Partial clinical hold that excluded women of childbearing potential was lifted by the FDA in the third quarter of 2015.
`REGN1033*
`Antibody to myostatin (GDF8). Phase 2 monotherapy clinical development in skeletal muscle disorders completed. Combination therapy
`plans are in development. In the second quarter of 2015, Sanofi provided notice to Regeneron that it had elected not to continue co-
`development of REGN1033.
`REGN1908-1909*
`Antibody to Feld1 in Phase 1/Phase 2 clinical development against allergic disease.
`REGN1979
`Bispecific antibody against CD20 and CD3. In Phase 1 clinical development for Non-Hodgkin's Lymphoma and Chronic Lymphocytic
`Leukemia.
`Nesvacumab/aflibercept (REGN910-3)**
`Combination product comprised of an antibody to Ang2 co-formulated with aflibercept for intravitreal injection for use in ophthalmology.
`Phase 1 clinical development for the treatment of wet AMD and DME completed.
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`* Sanofi did not opt-in to or elected not to continue to co-develop the product candidate. Under the terms of our agreement, Sanofi is entitled to receive royalties on any future
`sales of the product candidate.
`** Antibodies targeting the PDGF family of receptors and ligands in ophthalmology and all other indications, and antibodies targeting the Ang2 receptor and ligand in
`ophthalmology were previously included in our antibody collaboration with Sanofi. Under the terms of our agreements, Sanofi is entitled to receive potential development
`milestones and royalties on any future sales of the product candidate.
`
`REGN1400, an antibody to ErbB3, REGN1154, an antibody against an undisclosed target, and REGN1193, an antibody to glucagon
`receptor (GCGR), each of which were previously in Phase 1 studies, are no longer in clinical development.
`
`Our core business strategy is to maintain a strong foundation in basic scientific research and discovery-enabling technologies, and to combine
`that foundation with our clinical development, manufacturing, and commercial capabilities. We are executing our long-term objective to build a
`successful, integrated, multi-product biopharmaceutical company that provides patients and medical professionals with innovative options for
`preventing and treating human diseases.
`
`We believe that our ability to develop product candidates is enhanced by the application of our VelociSuite® technology platforms. Our
`discovery platforms are designed to identify specific proteins of therapeutic interest for a particular disease or cell type and validate these targets
`through high-throughput production of genetically modified mice using our VelociGene® technology to understand the role of these proteins in
`normal physiology, as well as in models of disease. Our human monoclonal antibody technology (VelocImmune) and cell line expression
`technologies (VelociMab®) may then be utilized to discover and produce new product candidates directed against the disease target. Our
`antibody product candidates currently in clinical trials were developed using VelocImmune. We continue to invest in the development of
`enabling technologies to assist in our efforts to identify, develop, manufacture, and commercialize new product candidates.
`
`Marketed Products
`
`EYLEA (aflibercept) Injection
`
`We commenced sales of EYLEA in the United States for the treatment of wet AMD in 2011, macular edema following CRVO in 2012, DME
`in the third quarter of 2014, and macular edema following RVO in the fourth quarter of 2014. In addition, in March 2015, the FDA approved
`EYLEA for the treatment of diabetic retinopathy in patients with DME. Outside the United States, Bayer HealthCare commenced sales of
`EYLEA for the treatment of wet AMD in 2012, macular edema secondary to CRVO in 2013, visual impairment due to DME in the third quarter
`of 2014, and mCNV in Japan in the fourth quarter of 2014. In February and June 2015, the European Commission and the Japanese Ministry of
`Health, Labour and Welfare (MHLW), respectively, approved EYLEA for the treatment of macular edema following RVO, which includes
`macular edema following BRVO. In October 2015, the European Commission approved EYLEA for the treatment of visual impairment due to
`mCNV. In the fourth quarter of 2014, Bayer HealthCare submitted a regulatory application in China for EYLEA for the treatment of wet AMD.
`Bayer HealthCare has additional regulatory applications for EYLEA for various indications pending in other countries.
`
`We are collaborating with Bayer HealthCare on the global development and commercialization of EYLEA outside the United States. Bayer
`HealthCare markets, and records revenue from sales of EYLEA outside the United States, where, for countries other than Japan, the companies
`share equally the profits and losses from sales of EYLEA. In Japan, we are entitled to receive a percentage of the sales of EYLEA. We maintain
`exclusive rights to EYLEA in the United States and are entitled to all profits from such sales.
`
`Net product sales of EYLEA in the United States were $2,676.0 million in 2015, compared to $1,736.4 million in 2014 and $1,408.7 million
`in 2013. Bayer HealthCare records revenue from sales of EYLEA outside the United States, which were $1,413.3 million in 2015, compared to
`$1,038.5 million in 2014 and $472.1 million in 2013.
`
`Praluent (alirocumab) Injection
`
`In July 2015, the FDA approved Praluent as an adjunct to diet and maximally tolerated statin therapy for the treatment of adults with
`heterozygous familial hypercholesterolemia or clinical ASCVD, who require additional lowering of LDL cholesterol. In addition, in September
`2015, the European Commission granted marketing authorization of Praluent for the treatment of adult patients with primary
`hypercholesterolemia (HeFH and non-familial) or mixed dyslipidemia as an adjunct to diet: (a) in combination with a statin, or statin with other
`lipid-lowering therapies in patients unable to reach their LDL-cholesterol goals with the maximally-tolerated dose of a statin, or (b) alone or in
`combination with other lipid-lowering therapies for patients who are statin intolerant, or for whom a statin is contraindicated. The effect of
`Praluent on cardiovascular morbidity and mortality has not been determined. We are collaborating with Sanofi on the global development and
`commercialization of Praluent. Under our collaboration agreement, Sanofi records product sales and cost of sales for commercialized products,
`and Regeneron has the right to co-promote such products. We have exercised our option to co-promote Praluent in the United States. We and
`Sanofi share profits and losses from sales of Praluent.
`
`Net product sales of Praluent were $10.5 million in 2015.
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`ARCALYST (rilonacept) Injection for Subcutaneous Use
`
`ARCALYST is available in the United States for the treatment of CAPS in adults and children 12 years and older. CAPS are a group of rare,
`inherited, auto-inflammatory conditions characterized by life-long, recurrent symptoms of rash, fever/chills, joint pain, eye redness/pain, and
`fatigue. Intermittent, disruptive exacerbations or flares can be triggered at any time by exposure to cooling temperatures, stress, exercise, or other
`unknown stimuli.
`
`Net product sales of ARCALYST were $13.5 million in 2015, $14.4 million in 2014, and $17.1 million in 2013.
`
`Trap-based Clinical Programs
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`EYLEA - Ophthalmologic Diseases
`
`Overview
`
`Vascular Endothelial Growth Factor (VEGF) is a naturally occurring protein in the body. Its normal role in a healthy organism is to trigger
`formation of new blood vessels (angiogenesis) supporting the growth of the body's tissues and organs. However, in certain diseases, such as wet
`AMD, it is also associated with the growth of abnormal new blood vessels in the eye, which exhibit abnormal increased permeability that leads
`to edema. Scarring and loss of fine-resolution central vision often results. CRVO is caused by obstruction of the central retinal vein that leads to a
`back-up of blood and fluid in the retina. Release of VEGF contributes to increased vascular permeability in the eye and macular edema. In
`BRVO, a blockage occurs in the blood vessels branching from the main vein draining the retina, resulting in the release of VEGF and consequent
`retinal edema. For centrally involved DME, VEGF-mediated leakage of fluid from blood vessels in the eye results in interference with vision.
`Wet AMD, diabetic retinopathy (which includes DME), and RVO are three of the leading causes of adult blindness in the developed world. In
`these conditions, severe visual loss is caused by neovascular proliferation and/or retinal edema.
`
`EYLEA is a recombinant fusion protein, consisting of portions of human VEGF receptors 1 and 2 extracellular domains fused to the Fc
`portion of human IgG1 and formulated as an iso-osmotic solution for intravitreal administration. EYLEA acts as a soluble decoy receptor that
`binds VEGF-A and placental growth factor (PlGF) and thereby can inhibit the binding and activation of these cognate VEGF receptors. EYLEA
`is specially purified and contains iso-osmotic buffer concentrations, allowing for injection into the eye.
`
`Neovascular Glaucoma
`
`NVG is a secondary glaucoma triggered by the formation of new blood vessels (neovascularization) on the iris and the anterior chamber
`angle. Neovascularization restricts aqueous outflow and consequently elevates intraocular pressure (IOP). NVG is a serious condition that may
`lead to permanent loss of vision, a persistently painful eye, and, especially in the advanced stages, is unlikely to respond to treatment. NVG is
`caused by eye diseases leading to retinal ischemia, mainly CRVO, proliferative diabetic retinopathy (PDR), and ocular ischemic syndrome (OIS).
`
`NVG meets the criteria for an orphan indication in Japan where the estimated number of NVG patients is 30,000 to 40,000. In the second
`quarter of 2015, Bayer HealthCare initiated a Phase 3 study in Japan to assess the efficacy and safety of intravitreal administration of aflibercept
`in comparison to sham treatment on the change in IOP in patients with NVG.
`
`Late-Stage Antibody-based Clinical Programs
`
`Praluent for LDL cholesterol reduction
`
`Overview
`
`Elevated LDL cholesterol ("bad cholesterol") level is a validated risk factor leading to cardiovascular disease. Statins are a class of drugs that
`lower LDL cholesterol (LDL-C) through inhibition of HMG-CoA, an enzyme regulating the early and rate-limiting step in cholesterol
`biosynthesis that ultimately results in an increase in LDL receptors to increase the uptake of plasma LDL lipoproteins. Similar to statins, PCSK9
`impacts the number of available LDL receptors and therefore plays a key role in modulating LDL-C levels in the body. PCSK9 is a secreted
`protein that binds to and induces the destruction of the LDL receptor, thereby interfering with cellular uptake and increasing circulating levels of
`LDL cholesterol. In a landmark study published in The New England Journal of Medicine in March 2006, patients with lower than normal
`PCSK9 levels due to a genetic abnormality not only had significantly lower levels of LDL-C, but also a significant reduction in the risk of
`coronary heart disease (CHD). We used our VelocImmune technology to generate a fully human monoclonal antibody inhibitor of PCSK9, called
`Praluent, that is intended to lower LDL cholesterol.
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`Table of Contents
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`Clinical Programs
`
`10-K
`
`Phase 3 ODYSSEY Program. We and Sanofi initiated the global Phase 3 ODYSSEY program for Praluent in 2012. The ODYSSEY program
`consists of more than 25,000 patients, and includes clinical trials evaluating the effect of Praluent, dosed every two weeks, on lowering LDL
`cholesterol. In addition, the potential of Praluent to demonstrate cardiovascular benefit is being prospectively assessed in the ongoing 18,000-
`patient ODYSSEY OUTCOMES trial, which is fully enrolled and is expected to be completed in 2017. LDL cholesterol reduction is the primary
`efficacy endpoint for initial regulatory filings. Additionally, the ODYSSEY program includes two trials of Praluent dosed every four weeks,
`ODYSSEY CHOICE I and ODYSSEY CHOICE II. Patients in the ODYSSEY CHOICE I trial received Praluent 300 milligrams (mg) (most in
`combination with statins) every four weeks and patients in the CHOICE II trial received Praluent 150 mg monotherapy and in combination with
`non-statin lipid lowering therapy every four weeks.
`
`In 2013, we and Sanofi reported data from the ODYSSEY MONO trial, which evaluated the efficacy and safety of Praluent monotherapy
`versus ezetimibe monotherapy in patients with primary hypercholesterolemia. In 2014, we and