Table of Contents
`
`these generic applicants are able to compete for this contract for 2011, we would not expect the Brazilian government to purchase any of
`our HIV products in 2011.
`
`In addition, concerns over the cost and availability of Tamiflu related to a potential avian flu and H1N1 influenza pandemic have
`generated international discussions over compulsory licensing of our Tamiflu patents. For example, the Canadian government may
`allow Canadian manufacturers to manufacture and export the active mgredient in Tamiflu to eligible developing and least developed
`countries under Canada’s Access to Medicines Regime. Furthermore, Roche has issued voluntary licenses to permit third-party
`manufacturing of Tamiflu. For example, Roche has granted a sublicense to Shanghai Pharmaceutical (Group) Co., Ltd. for China and a
`sublicense to India’s Hetero Drugs Limited for India and certain developing countries. Should one or more compulsory licenses be issued
`permitting generic manufacturing to override our Tamiflu patents, or should Rocheissue additional voluntarylicenses to permit third-party
`manufacturing of Tamiflu, those developments could reduce royalties we receive from Roche’s sales of Tamiflu. Certain countries do not
`permit enforcementof our patents, and third-party manufacturers are able to sell generic versions of our products in those countries.
`Compulsory licenses orsales of generic versions of our products could significantly reduce oursales and adversely affect our results of
`operations, particularly if generic versions of our products are imported into territories where we have existing commercial sales.
`
`
`
`Employees
`
`Asof January 31, 2011, we had approximately 4,000 full-time employees. We believe we have goodrelations with our employccs.
`
`Environment, Health and Safety
`
`Weseek to comply with all applicable statutory and administrative requirements concerning environmental quality and worker health
`and safety. We have made, and will continue to make, expenditures for environmental compliance and protection. Such expenditures have
`not had, and are not expected to have, a material effect on our capital expenditures, results of operations or competitive position.
`
`Weare voluntarily assessing our greenhouse gas emissions, and have begunto take action to reduce such emissions, for example
`through establishing employee commuter programs and evaluating the energy efficiency of our buildings. Various laws and regulations
`have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. For
`example, the California Air Resources Boardis in the process of drafting regulations to meet state emissions targets. Based on current
`information and subject to the finalization of the proposed regulations, we believe that our primary risk related to climate changeis the risk
`of increased energy costs. However, becatse we are not an energy intensive business, we do notanticipate being subject to a cap and trade
`system or any other mitigation measures that would likely be material to our capital expenditures, results of operations or competitive
`position.
`
`Weare also subject to other federal, state and local regulations regarding workplace safety and protection of the environment. We use
`hazardous materials, chemicals, viruses and various radioactive compounds in our R&Dactivities and cannot eliminate the risk of
`accidental contamination or injury from these materials. Certain misuse or accidents involving these materials could lead to significant
`litigation,fines and penalties.
`
`Other Information
`
`We are subject to the information requirements of the Exchange Act. Therefore, we file periodic reports, proxy statements and other
`information with the SEC. Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room
`of the SEC at 100 F Street, NE, Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330, by sending an electronic message to
`
`
`the SEC at publicinfo@sec.govor by sending a fax to the SEC at 1-202-777-1027. In addition, the SEC maintains a website
`(www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically.
`
`2)
`
`REG_NDNY00000031
`Regeneron Exhibit 1227.028
`Regeneron Exhibit 1227.028
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`The mailing address of our headquarters 1s 333 Lakeside Drive, Foster City, California 94404, and ourtelephone numberatthat
`location is 650-574-3000. Our website 1s www.gilead.com. Through a link on the “Investors” section of our website (under “SEC Filings”
`in the “Financial Information” section), we make available the following filings as soon as reasonably practicable after they are
`
`electronically filed with or furnished to the SEC: our Annual Reports on Form 10-K; Quarterly Reports on Form 10-Q; Current Reports on
`Form 8-K; and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. All suchfilings
`are available free of charge upon request.
`
`ITEM 1A. RISK FACTORS
`
`In evaluating our business, you should carefully consider the following risks in addition to the other information in this Annual
`Report on Form 10-K. A manifestationofanyofthe following risks could materially and adversely affect our business, results of
`operations andfinancial condition. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of
`1995. It is not possible to predict or identify all suchfactors and, therefore, vou should not considerthe following risks to be a complete
`statementofall the potential risks or uncertainties that we face.
`
`A substantial portion of our revenuesis derived from sales of our HIV products, particularly Atripla and Truvada. If we are
`unable to maintain or continue increasing sales of these products, our results of operations may be adverselyaffected.
`
`We are currently dependent onsales of our products for the treatment of HIV infection, particularly Atripla and Truvada, to support
`our existing operations. Our HIV products contain tenofovir disoproxil fumarate and/or emtricitabine, which belongto the nucleoside class
`of antiviral therapeutics. Were the treatment paradigm for HIV to change, causing nucleoside-based therapeutics to fall out of favor, orif
`we were unable to continue increasing our HIV productsales, our results of operations wouldlikely suffer and we would likely need to
`scale back our operations, including our spending on research and development (R&D)efforts. For the year ended December31, 2010,
`Atripla and Truvada productsales together were $5.58 billion, or 70% of ourtotal revenues. We maynot beable to sustain the growth rate
`of sales of our HIV products, especially Atripla and Truvada, for any number of reasons including, but not limitedto, the following:
`
`.
`
`Asour HIV products are used over a longer period oftime 1n many patients and in combination with other products, and
`additional studies are conducted, new issues with respect to safety, resistance and interactions with other drugs may arse, which
`could cause us to provide additional warnings or contraindications on our labels, narrow our approved indicationsor halt sales
`ofa product, each of which could reduce our revenues.
`
`*—As our HIV products mature, private insurers and government retmbursers often reduce the amount they will reimburse patients
`for these products, which increases pressure on usto reduceprices.
`
`«—A large part of the market for our HIV products consists of patients who are already taking other HIV drugs. If we are not
`successful m encouraging physicians to change paticnts’ regimens to include our HIV products, the sales of our HIV products
`will be limited.
`
`*
`
`As generic HIV products are introduced into major markets, ourability to maintain pricing and market share maybe affected.
`
`If we fail to commercialize new products or expandthe indications for existing products, our prospects for future revenues may be
`adversely affected.
`
`If we do not introduce new products to market or mercase sales of our existing products, we will not be able to increase or maintain
`our total revenues and continue to expand our R&D efforts. Drug developmentis inherently risky and many product candidates fail during
`the drug developmentprocess. For example, in April 2010, we announced our decision to terminate our Phase 2b clinical trial of GS 9450
`for the treatmentof chronic
`
`28
`
`REG_NDNY00000032
`Regeneron Exhibit 1227.029
`Regeneron Exhibit 1227.029
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`hepatitis C. In January 2011, we announced our decision to terminate our Phase 3 clinical trial of ambrisentan inpatients with idiopathic
`pulmonary fibrosis. In addition, in January 2011, we received a “refuse to file” notification from the U.S. Food and Drug Administration
`(FDA) regarding our new drug application (NDA)forthe single-tablet regimen of Truvada and Tibotec Pharmaceuticals’ investigational
`TMC278 for the treatment of HIV-1 infection in adults. The FDA requested additional information with respect to the Chemistry,
`Manufacturing and Controls section of the NDA.In February 2011, we re-filed our new drug application, which included the requested
`information, and are awaiting the FDA’s response as to whetherit is substantially complete to permit a substantive review. If the FDA
`remains unsatisfied with the completeness of our application, our NDA may not be approved orourtimeline for obtaining regulatory
`approval for the product, if granted, may be further delayed.
`
`A portion of our pre-tax incomeis derived from royalty revenue recognized from sales of Tamiflu by Roche. If sales of Tamiflu
`were to decrease, our pre-tax income will be disproportionately and adversely affected.
`
`F, Hoffmann-La Roche Lid (together with Hoffmann-La Roche Inc., Roche) markets Tamiflu worldwide forthe treatment and
`prevention of influenza under a royalty-paying collaborative agreement with us. We recognized $386.5 million in royalty revenue for the
`year ended December 31, 2010 related to royalties received [rom sales of Tamiflu by Roche. Although such royally revenue represented
`approximately 5% of our total revenues in 2010, it represented approximately 10% of our pre-tax income during the period. Roche’s
`‘Tamiflu sales have unpredictable variability due to their strong relauionship with global pandemic planning efforts. Tamiflu royallies
`increased sharply in 2009 andthefirst quarter of 2010 primarilyas a result of pandemic planning initiatives worldwide. Tamiflu royalties
`declined sharply in the second quarter of 2010 due to the fulfillment of many of the existing pandemic orders from governments and
`corporations. Based on Roche’s reported sales of Tamiflu for the three months ended December 31, 2010, we expect Tamiflu royalties to
`be approximately $13.3 million in the first quarter of 2011. We recognize royalties on Tamiflu sales by Rochein the quarter following the
`quarter in which Tamiflu 1s sold. As sales of Tamiflu decrease, our royalty revenues will decrease and our pre-tax income will decrease
`disproportionately. Any such decrease could be material and could adversely impact our operating results.
`
`Ourresults of operations will be adversely affected by current and potential future healthcare reforms.
`
`Legislative and regulatory changes to governmentprescription drug procurement and reimbursement programsoccurrelatively
`frequently in the United States and forcign jurisdictions. In March 2010, healthcare reform Icgislation was adopted in the United States. As
`a result, we are required to further rebate or discount products reimbursed or paid for by various public payers, including Medicaid and
`other entities eligible to purchase discounted products through the 340B Drug Pricing Program under the Public Health Service Act, such
`as ADAPs. The discounts, rebates and fees in the legislation that impacted us include:
`
`*—effective January 1, 2010, our minimumbase rebate amount owed to Medicaid on products reimbursed by Medicaid has been
`
`increased by 8%, and the discounts or rebates we owe to ADAPs and other Public Health Service entities which reimburse or
`purchase our products have also been increased by 8%;
`
`
`
`.
`
`.
`
`*
`
`ctfective March 23, 2010, we are required to extend rebates to paticnts reccrving our products through Medicaid managed care
`organizations;
`
`effective January 1, 2011, we are required to provide a 50% discount on products sold to patients while they are in the Medicare
`Part D “donut hole;” and
`
`effective 2011, we, along with other pharmaceutical manufacturers of branded drug products, are required to pay a portion of a
`new industry fee (also known as the pharmaccutical excise tax), calculated based on sclect governmentsales during the 2010
`calendar year as a percentage of total industry governmentsales.
`
`For 2011, excluding the impact of the new pharmaceutical excise tax, we estimate that the impact of healthcare reform on product
`sales will be approximately 5-6% ofour U.S. net product sales.
`
`REG_NDNY00000033
`Regeneron Exhibit 1227.030
`Regeneron Exhibit 1227.030
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`Manyofthe specific determinations necessary to mplement the healthcare reformlegislation have yet to be decided and
`communicated by the federal government. For example, we do not know how many or howquicklypatients receiving our product under
`the Medicare Part D programwill reach the “donut hole” or howdetails of the pharmaceutical excise tax will be calculated and reflected in
`our financial results. Based on the information that we have to date, we estimate the 2011 impact of the pharmaceutical excise tax to be
`between $30-50 million, which will be classified as selling, general and administrative (SG&A) expense. The excisetax 1s not tax
`deductible. In calculating the anticipated financial impacts of healthcare reform described above, we made several estimates and
`assumptions with respect to our expected payer mix and how the reforms will be implemented.
`
`Further, even though not addressed in the healthcare reform legislation, discussions continue at the federal level on legislation that
`would either allow or require the federal governmentto directly negotiate price concessions from pharmaceutical manufacturers or set
`nmunimum requirements for Medicare Part D pricing.
`
`In addition, state Medicaid programscould request additional supplemental rebates on our products as a result of the increase in the
`federal base Medicaid rebate. Private insurers could also use the enactment of these increased rebates to exert pricing pressure on our
`products, and to the extent that private insurers or managed care programs follow Medicaid coverage and payment developments, the
`adverse effects may be magnified by private insurers adopting lower payment schedules.
`
`Ourexisting products are subject to reimbursement from government agencies and other third parties. Pharmaceutical pricing
`and reimbursement pressures may reduceprofitability.
`
`Successful commercialization of our products depends, in part, on the availability of governmental and third-party payer
`reimbursementfor the cost of such products and related treatments. Government health administration authorities, private health insurers
`and other organizations generally provide rembursement. In the United States, the European Union and other significant or potentially
`significant markets tor our products and product candidates, government authoritics and third-party paycrs are inercasingly attempting to
`limit or regulate the price of medical products and services, particularly for newand innovative products and therapies, which has resulted
`in lower average sclling prices. For example, a significant portion of our sales of the majority of our products are subject to significant
`discounts from list price and rebate obligations. In addition, state ADAPs, which purchase a significant portion of our HIV products,rely
`on federal, supplemental federal and state funding to help fund purchases of our products. If federal and state funds are not available in
`amounts sufficient to support the numberof patients that rely on ADAPs,as one state is currently experiencing, sales of our HIV products
`could be negatively impacted which would reduce our revenues. Further, the increased emphasis on managed healthcare in the United
`States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product
`pricing, reimbursement and usage, which may adversely affect our product sales and profitability. These pressures can arise from rules and
`practices of managed care groups, judicial decisions and governmental laws and regulations relaled to Medicare, Medicaid and healthcare
`reform, pharmaceutical reimbursementpolicies and pricing in general.
`
`In Europe, the success of our commercialized products, and any othcr product candidates we may develop, will depend largely on
`obtaining and maintaining government reimbursement, because in many European countriespatients are unlikely to use prescription drugs
`that are not reimbursed by their governments. In addition, negotiating priccs with governmental authoritics can delay commercialization
`by 12 months or more. Reimbursementpolicies may adversely affect our ability to sell our products on a profitable basis. In many
`international markets, governments control the prices of prescription pharmaceuticals, including through the implementation of reference
`pricing, price cuts, rebates, revenue-related taxes and profit control, and they expect prices of prescripuion pharmaceuticals to decline over
`the life of the product or as volumesincrease.
`
`
`Recently, many countrics in the European Union have increased the amount of discounts required on our products, and these cfforts
`could continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced
`
`by many countries in the European Union. For example, in
`
`30
`
`REG_NDNY00000034
`Regeneron Exhibit 1227.031
`Regeneron Exhibit 1227.031
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`June 2010, Spain imposed an incremental discount on all branded drugs and in August 2010, Germany increased the rebate on prescription
`pharmaceuticals. Other countries have recently imposed or could impose similar discounts on our products. As generic drugs come to
`market, we may face price decreases for our products in some countries in the European Union.
`
`Approximately 44% of our product sales occur outside the United States, and currency fluctuations and hedging expenses may
`cause our earnings to fluctuate, which could adversely affect our stock price.
`
`Becausea signiticant percentage of our product salcs are denominated in forcign currencies, primarily the Euro, we face exposure to
`adverse movements in foreign currency exchange rates. When the U.S. dollar strengthens against these foreign currencies, the relative
`valuc of sales made in the respective forcign currency decreases. Conversely, when the U.S. dollar weakens against these currencies, the
`relative value of such sales increases. Overall, we are a net receiver of foreign currencies and, therefore, benefit from a weaker U.S. dollar
`and are adverselyaffected by a stronger U.S. dollar relative to those foreign currencies in which wetransact significant amounts of
`business.
`
`We use foreign currency exchange forward and option contracts to hedge a percentage of our forecasted international sales, primarily
`those denominated in the Euro. We also hedge certain monetary assets and liabilities denominated in foreign currencies, which reduces but
`does not eliminate our exposure to currencyfluctuations between the date a transaction is recorded and the date that cash is collected or
`paid. We cannot predict future fluctuations in the foreign currency exchangerate of the U.S. dollar. [f the U.S. dollar appreciates
`significantly against certain currencies and our hedging program doesnotsufficiently offset the effects of such appreciation, our results of
`operations will be adversely affected and our stock price may decline.
`
`Additionally, the expenses that we recognize in relation to our hedging activities can also cause our earningsto fluctuate. ‘The level of
`hedging expenses that we recognize in a particular period 1s impacted by the changesin interest rate spreads between the foreign
`currencies that we hedge and the U.S. dollar.
`
`Ourinability to accurately estimate demand for our products, as well as sales fluctuations as a result of inventorylevels held by
`wholesalers, pharmacies and non-retail customers makeit difficult for us to accurately forecast sales and may cause our earnings
`to fluctuate, which could adversely affect our financial results and our stock price.
`
`In 2010, approximately 82% of our product sales in the United States were to three wholesalers, Cardinal Health, Inc., McKesson
`Corp. and AmerisourceBergen Corp. The U.S. wholesalers with whom we have entered into inventory management agreements make
`estimates to determine end user demand and maynot be completely effective in matching their inventory levels to actual end user demand.
`As aresult, changes in inventory levels held by those wholesalers can cause our operating results to fluctuate unexpectedly if our sales to
`these wholesalers do not match end user demand.In addition, inventory is held at retail pharmacies and other non-wholesale locations with
`whom we have no inventory management agreements and no control over buying patterns. Adverse changes in economic conditions or
`other factors may cause retail pharmacies to reduce their mventories of our products, which would reduce their orders from wholesalers
`and, consequently, the wholesalers’ orders from us, even 1f end user demand has not changed. For example, during the second quarter of
`2009, the wholesalers increased their inventory levels for Atripla and lruvada, while inventory levels for Viread decreased. In the third
`quarter of 2009, the wholesalers drew down on their inventory such that inventory levels for Atripla and Truvadaat the end ofthe third
`quarter of 2009 were more consistent with the levels held during the first quarter of 2009. As inventory in the distribution channel
`fluctuates from quarter to quarter, we may continue to see fluctuations in our earnings and a mismatch between prescription demand for
`our products and our revenucs.
`
`Tn addition, the non-retail sector in the United States, which includes governmentinstitutions, including state ADAPs, correctional
`facilities and large health maintenance organizations, tends to be even less consistent
`
`31
`
`REG_NDNY00000035
`Regeneron Exhibit 1227.032
`Regeneron Exhibit 1227.032
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`in terms of buying patterns and often causes quarter over quarter fluctuations that do not necessarily mirror patient demand. For example,
`in the first quarter of 2010, non-retail purchases, driven by certain state ADAPs, were lower as a percentage of their federal ADAPfiscal
`year purchases compared to the first quarters of 2008 and 2009. We believe this decrease was driven by higher purchasing patterns
`observed during the last three quarters of 2009 as compared to the same period in 2008. The annual grant cycles for federal and state
`ADAP funds may cause ADAPpurchasing patterns to not reflect patient demand, and we expect to continue to experience fluctuations in
`the purchasing patterns of our non-retail customers which mayresult in fluctuations in our product sales, revenues and earnings in the
`future.
`
`In light of the global economic downturn and budget crises faced by many Europe countnes, we have observed variations in
`purchasing patterns induced by cost containment measures in Europe. We believe these measures have caused some purchasers to reduce
`inventory of our products in the distribution channels, and in some cases, even at the patient level, which has decreased our revenues and
`caused fluctuations in our product sales and earnings. We may continueto see this trend in the future.
`
`Weface significant competition.
`
`We face significant competition from large pharmaceutical and biotechnology companies, most of whom have substantially greater
`resources than we do. In addition, our competitors have more products and have operatedin thefields in which we compete for longer than
`we have. Our HIV products compete primarily with products from the joint venture cstablished by GSK and Pfizer which markets tixed-
`dose combination products that compete with Atripla and Truvada.
`
`For example, lamivudine, marketed by this joint venture, is competitive with emtricitabine, the active pharmaceutical ingredient of
`Emtriva and a component of both Atripla and ‘Iruvada. In May 2010, the compound patent covering Eprvir (lamivudine)itself expired in
`the United States and we expect to see generic lamivudine in the United States in the near future. Generic lamivudine has been available in
`Spain since March 2010. We expect that generic versions of lamrvudine will be launched in other countrics within the European Union as
`early as thefirst quarter of 2011.
`
`
`For Hepsera and Viread for treatment of chronic hepatitis B, we compete primarily with products produced by GSK, BMS and
`Novartis Pharmaceuticals Corporation (Novartis) in the United States, the Muropean Union and China. For AmBisome, we compete
`primarily with products produced by Merck and Pfizer. In addition, we are aware of at least two lipid formulations that claim similarity to
`AmBisome becoming available outside of the United States, including the possible entry of one such formulation in Greece. These
`formulations may reduce market demand for AmBisome. Furthermore, the manufacture of lipid formulations of amphotericin B is very
`complex and if any of these formulations are found to be unsafe, sales of AmBisome maybe negatively impacted by association. Letairis
`competes directly with a product produced by Actelion Pharmaceuticals US, Inc. (Actelion) and indirectly with pulmonary arterial
`hypertension products from United ‘Therapeutics Corporation and Pfizer. Ranexa competes predominantly with generic compounds from
`three distinct classes of drugs, beta-blockers, calctum channel blockers and long-acting nitrates for the treatment of chronic angina in the
`United States. Cayston competes with a product marketed by Novartis. l'amitlu competes with products sold by GSK and gencric
`competitors.
`
`In addition, a number of companies are pursuing the developmentof technologies which are competitive with our existing products
`or research programs. ‘hese competing companies include specialized pharmaceutical firms and large pharmaceutical companiesacting
`either independently or together with other pharmaceutical companies. Furthermore, academicinstitutions, government agencies and other
`public and private organizations conducting rescarch may scck patent protection and may establish collaborative arrangements for
`competitive products or programs.
`
`32
`
`REG_NDNY00000036
`Regeneron Exhibit 1227.033
`Regeneron Exhibit 1227.033
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`If significant safety issues arise for our marketed products or our product candidates, our future sales maybe reduced, which
`would adverselyaffect our results of operations.
`
`The data supporting the marketing approvals for our products and forming the basis for the safety warningsin our product labels
`were obtained in controlled clinical trials of limited duration and, in somecases, from post-approval use. As our products are used over
`longer periods of time by manypatients with underlying health problems, taking numerous other medicines, we expect to continue to find
`new issues such as safety, resistance or drug interaction issues, which may require us to provide additional warnings or contraindications
`on our labels or narrow our approved indications, each of which could reduce the market acceptance of these products.
`
`Our product Letairis, which was approved by the FDA in June 2007, 1s a memberofa class of compoundscalled endothelin receptor
`antagonists (/RAs) which pose specific risks, including seriousrisks ofliver injury and birth defects. Because ofthese risks, [etairis 1s
`available only through the Letairis Education and Access Program (LEAP), a restricted distribution program intended to help physicians
`and patients learn about the risks associated with the product and assure appropriate use ofthe product. As the product 1s used by
`additional patients, we may discover new risks associated with Letairis which may result in changes to the distribution program and
`additional restrictions on the use of Letairis which may decrease demandfor the product.
`
`If serious safety, resistance or drug interaction issues arise with our marketed products, sales of these products could be limited or
`halted by us or by regulatory authorities and our results of operations would be adversely affected.
`
`Ouroperations depend on compliance with complex FDA and comparable international regulations. Failure to obtain broad
`approvals on a timely basis or to maintain compliance could delay or halt commercialization of our products.
`
`The products we develop must be approved for marketing and sale by regulatory authontes and, once approved, are subjectto
`extensive regulation by the FDA, the European Medicines Agency and comparable regulatory agencies in other countries. We are
`
`continumg clinical trials for Atripla, Truvada, Viread, Hepsera, Emtriva, AmBisome, Letairis, Ranexa and Cayston for currently approved
`and additional uses. We anticipate that we will file for marketing approval im additional countries and for additional indications and
`products over the next several years. These products may fail to recetve such marketing approvals on a timely basis, orat all.
`
`Further, our marketed products and how we manufacture and sell these products are subject to extensive regulation and review.
`Discovery of previously unknown problems with our marketed products or problems with our manufacturing or promotional activities may
`result in restrictions on our products, including withdrawal ofthe products fromthe market. If we fail to comply with applicable regulatory
`requirements, we could be subject to penalties including fines, suspensions of regulatory approvals, productrecalls, seizure of products
`and criminal prosecution. For example, on September 24, 2010, our San Dimas manufacturing facility recerved a Warning Letter from the
`FDA.See the Risk Factor entitled “Manufacturing problems could delay product shipments and regulatory approvals, which may
`adversely affect our results of operations.”
`
`On September 27, 2007, President Bush signed into law the Food and Drug Administration Amendments Act of 2007, which
`significantly expanded the FDA’s authority, including, amongother things,to:
`
`
`
`*
`
`s
`
`*
`
`require sponsors of marketed products to conduct post-approval clinical studies to assess a knownseriousrisk, signals of
`serioustisk or to identify an unexpected seriousrisk;
`
`mandate labeling changes to products, at any point in a product’s lifecycle, based on new safety information; and
`
`require sponsors to implement a Risk Evaluation and Mitigation Strategy for a product which could include a medication guide,
`patient package insert, a communicationplan to healthcare providers or
`
`33
`
`REG_NDNY00000037
`Regeneron Exhibit 1227.034
`Regeneron Exhibit 1227.034
`Regeneron v. Novartis
`Regeneronv. Novartis
`IPR2021-00816
`IPR2021-00816
`
`

`

`Table of Contents
`
`other elements as the FDA deemsare necessary to assure safe use of the drug, which could include imposing certainrestrictions
`on distribution or use of a product.
`
`Failure to comply with these or other requirements, if imposed on a sponsor by the FDA, could result in significant civil monctary
`penalties and our operating results may be adversely affected.
`
`Theresults and anticipated timelines of our clinical trials are uncertain and may not support continued developmentof a product
`pipeline, which would adverselyaffect our prospects for future revenue growth.
`
`We are required to demonstrate the safety and efficacy of products that we develop for each intended use through extensive
`preclinical studies and clinical trials. The results from preclinical and earlyclinical studies do not always accurately predict results in