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Press Release: Regeneron Reports Fourth Quarter -4-

· 02/05/2021 06:30
Projected Range ($ in millions) Low High GAAP R&D $ 3,000 $3,175 R&D: Non-cash share-based compensation expense (300) (325) Non-GAAP R&D $ 2,700 $2,850 GAAP SG&A $ 1,700 $1,850 SG&A: Non-cash share-based compensation expense (200) (220) Non-GAAP SG&A $ 1,500 $1,630 GAAP gross margin on net product sales 86% 88% Non-cash share-based compensation expense 1% 1% Non-GAAP gross margin on net product sales 87% 89% GAAP ETR 11% 13% Income tax effect of GAAP to non-GAAP reconciling items and other 1% 1% Non-GAAP ETR 12% 14% (1) This press release uses non-GAAP R&D, non-GAAP SG&A, non-GAAP gross margin on net product sales, non-GAAP other income (expense) net, non-GAAP effective tax rate, non-GAAP net income, non-GAAP net income per share, and free cash flow, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are computed by excluding certain non-cash and/or other items from the related GAAP financial measure. The Company also includes a non-GAAP adjustment for the estimated income tax effect of reconciling items. The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate from period to period based on factors that are not within the Company's control (such as the Company's stock price on the dates share-based grants are issued or changes in the fair value of the Company's investments in equity securities) or items that are not associated with normal, recurring operations (such as restructuring-related expenses, including employee separation costs). Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. With respect to free cash flows, the Company believes that this non-GAAP measure provides a further measure of the Company's operations' ability to generate cash flows. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company's core business operations. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company's non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by Regeneron should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of the Company's historical GAAP to non-GAAP results is included in Table 3 of this press release. (2) The Company's collaborators provide it with estimates of the collaborators' respective sales and the Company's share of the profits or losses from commercialization of products for the most recent fiscal quarter. The Company's estimates for such quarter are reconciled to actual results in the subsequent fiscal quarter, and the Company's share of the profit or loss is adjusted on a prospective basis accordingly, if necessary. (3) The Company's 2021 financial guidance does not assume the completion of any significant business development transactions not completed as of the date of this press release. (4) Applicable amounts previously reported for the three months and year ended December 31, 2019 and as of December 31, 2019 have been revised to reflect a change in presentation of cost reimbursements from collaborators who are not deemed to be the Company's customers from collaboration revenue to a reduction of the corresponding operating expense. The Company also changed the presentation of amounts recognized in connection with up-front and development milestone payments received from collaboration revenue to other operating income, as well as the presentation of the corresponding balance sheet accounts. The revisions were reclassifications only and had no impact on the Company's previously reported GAAP and non-GAAP net income and net income per share. Refer to the Company's Form 10-Q for the quarterly period ended September 30, 2020 (Note 1 of the Notes to Condensed Consolidated Financial Statements) for further details. (5) Gross margin on net product sales represents gross profit expressed as a percentage of total net product sales recorded by the Company. Gross profit is calculated as net product sales less cost of goods sold. (6) Corresponding reimbursements from collaborators and others for manufacturing of commercial supplies is recorded within revenues.GAAP Non-GAAP(1) $2.700 $3.000 billion--$3.175 billion--$2.850 R&D billion billion $1.500 $1.700 billion--$1.850 billion--$1.630 SG&A billion billion Gross margin on net product sales(5) 86%--88% 87%--89% COCM(6) $670 million--$750 million * Other operating ($150) million--($175) (income) expense, net million * Capital expenditures $600 million--$680 million * Effective tax rate (ETR) 11--13% 12--14% * GAAP and non-GAAP amounts are equivalent as no non-GAAP adjustments have been or are expected to be recorded.

Net cash provided by operating activities in the fourth quarter of 2020 was $1.231 billion, compared to $787 million in the fourth quarter of 2019, resulting in $1.070 billion in free cash flow for the fourth quarter of 2020, compared to $648 million for the fourth quarter of 2019. Net cash provided by operating activities for the full year 2020 was $2.618 billion, compared to $2.430 billion in net cash provided by operating activities for the full year 2019, resulting in $2.004 billion in free cash flow for the full year 2020, compared to $2.000 billion for the full year 2019.

2021 Financial Guidance(3)

The Company's full year 2021 financial guidance consists of the following components:

A reconciliation of full year 2021 GAAP to Non-GAAP financial guidance is included below:

Conference Call Information

Regeneron will host a conference call and simultaneous webcast to discuss its fourth quarter and full year 2020 financial and operating results on Friday, February 5, 2021, at 8:30 AM. To access this call, dial (888) 660-6127 (U.S.) or (973) 890-8355 (International), conference ID 1580376. A link to the webcast may be accessed from the "Investors and Media" page of Regeneron's website at www.regeneron.com. A replay of the conference call and webcast will be archived on the Company's website and will be available for at least 30 days.

About Regeneron Pharmaceuticals, Inc.

Regeneron is a leading biotechnology company that invents life-transforming medicines for people with serious diseases. Founded and led for over 30 years by physician-scientists, Regeneron's unique ability to repeatedly and consistently translate science into medicine has led to eight FDA-approved treatments and numerous product candidates in development, almost all of which were homegrown in Regeneron's laboratories. Regeneron's medicines and pipeline are designed to help patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, infectious diseases, and rare diseases.

Regeneron is accelerating and improving the traditional drug development process through its proprietary VelociSuite(R) technologies, such as VelocImmune(R) , which uses unique genetically-humanized mice to produce optimized fully-human antibodies and bispecific antibodies, and through ambitious research initiatives such as the Regeneron Genetics Center(R) , which is conducting one of the largest genetics sequencing efforts in the world.

For additional information about the Company, please visit www.regeneron.com or follow @Regeneron on Twitter.

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February 05, 2021 06:30 ET (11:30 GMT)