Item 6. Selected Financial Data

The selected financial data set forth below for the years ended December 31, 2017, 2016, and 2015 and as of December 31, 2017 and 2016 are derived from and should be read in conjunction with our audited financial statements, including the notes thereto, included elsewhere in this report. The selected financial data for the years ended December 31, 2014 and 2013 and as of December 31, 2015, 2014, and 2013 are derived from our audited financial statements not included in this report. Certain prior year amounts have been reclassified to conform to the current year's presentation.

		Year Ended December 31,
(In thousands, except per share data)		2017				2016				2015				2014				2013
Statement of Operations Data:
Revenues:
Net product sales		$	3,718,463			$	3,338,390			$	2,689,478			$	1,750,762			$	1,425,839
Sanofi and Bayer collaboration revenue		1,815,245				1,402,935				1,339,361				1,036,854				650,400
Other revenue		338,519				119,102				74,889				31,941				28,506
		5,872,227				4,860,427				4,103,728				2,819,557				2,104,745
Expenses:
Research and development		2,075,142				2,052,295				1,620,577				1,271,353				859,947
Selling, general, and administrative		1,320,433				1,177,697				838,526				519,267				346,393
Cost of goods sold		202,507				194,624				241,702				129,030				118,048
Cost of collaboration and contract manufacturing		194,554				105,070				151,007				75,988				37,307
		3,792,636				3,529,686				2,851,812				1,995,638				1,361,695
Income from operations		2,079,591				1,330,741				1,251,916				823,919				743,050
Other income (expense), net		(1,080		)		(926		)		(26,819		)		(62,684		)		(46,668		)
Income before income taxes		2,078,511				1,329,815				1,225,097				761,235				696,382
Income tax expense (1)		(880,000		)		(434,293		)		(589,041		)		(423,109		)		(282,644		)
Net income		$	1,198,511			$	895,522			$	636,056			$	338,126			$	413,738
Net income per share - basic		$	11.27			$	8.55			$	6.17			$	3.36			$	4.23
Net income per share - diluted		$	10.34			$	7.70			$	5.52			$	2.98			$	3.72
		As of December 31,
(In thousands)		2017				2016				2015				2014				2013
Balance Sheet Data:
Cash, cash equivalents, and marketable securities (current and non-current)		$	2,896,074			$	1,902,944			$	1,677,385			$	1,360,634			$	1,083,875
Total assets		8,764,286				6,973,466				5,609,132				3,837,672				2,950,130
Convertible senior notes (current and non-current)		—				—				10,802				146,773				320,315
Capital and facility lease obligations (current and non-current)		703,453				481,126				364,708				312,291				185,323
Stockholders' equity		6,144,078				4,449,245				3,654,837				2,550,251				1,964,716

(1) As a result of the Tax Cuts and Jobs Act being signed into law in December 2017, income taxes for the year ended December 31, 2017 included a charge of $326.2 million related to the re-measurement of our U.S. net deferred tax assets at the lower enacted corporate tax rate. Refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Income Taxes" below for further details.

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report.

Overview

We are a fully integrated biotechnology company that discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious diseases. Our commercialized medicines and product candidates in development are designed to help patients with eye disease, allergic and inflammatory diseases, heart disease, pain, cancer, and infectious and other serious medical conditions.

As described in Part I, Item 1. "Business - General," and "Business - Marketed Products," we currently have six products that have received marketing approval: EYLEA (aflibercept) Injection, Dupixent (dupilumab) Injection, Praluent (alirocumab) Injection, Kevzara (sarilumab) Solution for Subcutaneous Injection, ARCALYST (rilonacept) Injection for Subcutaneous Use, and ZALTRAP (ziv-aflibercept) Injection for Intravenous Infusion. We also have 15 product candidates in clinical development, all of which were discovered in our research laboratories. These consist of a Trap-based clinical program and 14 fully human antibody product candidates, as summarized in Part I, Item 1. "Business - General."

The planning, execution, and results of our clinical programs are significant factors that can affect our operating and financial results. In our clinical programs, key events in 2017 and 2018 to date were, and plans for the remainder of 2018 are, as follows:

Trap-based Clinical Program:
		2017 and 2018 Events to Date		2018 Plans
EYLEA	Ÿ	Bayer received regulatory approval for EYLEA for various indications and continued to pursue regulatory applications for marketing approval in additional countries	Ÿ	FDA decision on sBLA for every 12-week dosing interval in wet AMD
	Ÿ	Submit sBLA for pre-filled syringe
Ÿ	Completed patient enrollment in Phase 3 study for the treatment of NPDR in patients without DME	Ÿ	Bayer to submit for additional regulatory approvals outside the United States for various indications
	Ÿ	sBLA for every 12-week dosing interval in wet AMD filed with FDA, with a target action date of August 11, 2018	Ÿ	Regulatory agency decisions on applications outside the United States for various indications, including wet AMD and DME in China
			Ÿ	Report data from Phase 3 PANORAMA study for the treatment of NPDR in patients without DME, and submit sBLA

Antibody-based Clinical Programs:
		2017 and 2018 Events to Date		2018 Plans
Dupixent (dupilumab; IL-4R Antibody)	Ÿ	Presented detailed results from one-year Phase 3 CHRONOS study at the Annual Meeting of the American Academy of Dermatology	Ÿ	Submit for additional regulatory approvals in atopic dermatitis outside the United States
	Ÿ	FDA approved Dupixent for the treatment of adults with moderate-to-severe atopic dermatitis	Ÿ	Regulatory agency decisions on atopic dermatitis applications outside the United States
	Ÿ	Initiated Phase 3 studies in adolescent patients (12–17 years of age) and pediatric patients (6–11 years of age) with atopic dermatitis	Ÿ	Report data from Phase 3 study in adolescent patients (12–17 years of age) with atopic dermatitis
	Ÿ	Initiated Phase 2/3 study in pediatric patients (6 months–5 years of age) with severe atopic dermatitis	Ÿ	FDA filing and decision on sBLA for asthma in adult/adolescent patients
	Ÿ	Regulatory applications submitted for atopic dermatitis in various jurisdictions outside the United States	Ÿ	Submit for EU and Japan regulatory approval in asthma in adult/adolescent patients
	Ÿ	Reported positive results from the LIBERTY AD CAFÉ study in atopic dermatitis	Ÿ	Report data from Phase 3 studies in nasal polyps
	Ÿ	European Commission granted marketing approval for Dupixent for the treatment of adults with moderate-to-severe atopic dermatitis	Ÿ	Initiate Phase 3 study in eosinophilic esophagitis
		Ÿ	Initiate Phase 2 study in peanut allergy
	Ÿ	MHLW in Japan approved Dupixent for the treatment of atopic dermatitis in adults not adequately controlled with existing therapies	Ÿ	Initiate Phase 2 study as an adjunct to immunotherapy for grass allergy
	Ÿ	Initiated Phase 3 study in pediatric patients (6–11 years of age) with asthma	Ÿ	Initiate Phase 3 program in chronic obstructive pulmonary disease (COPD)
	Ÿ	Reported positive top-line results from Phase 3 LIBERTY ASTHMA QUEST study	Ÿ	Initiate clinical program evaluating co-morbid allergic conditions
	Ÿ	Reported positive top-line results from Phase 3 LIBERTY ASTHMA VENTURE study
	Ÿ	Submitted sBLA for asthma for patients aged 12 and over
	Ÿ	Reported positive results from Phase 2 study in EoE
	Ÿ	FDA granted orphan drug designation for the treatment of EoE
	Ÿ	Completed patient enrollment in Phase 3 study in nasal polyps
Praluent (PCSK9 Antibody)	Ÿ	Permanent injunction barring commercialization of Praluent in the United States suspended on February 8, 2017 and vacated on October 5, 2017	Ÿ	Report results from ODYSSEY OUTCOMES study
		Ÿ	Submit for additional regulatory approvals outside the United States
	Ÿ	FDA approved sBLA for monthly dosing regimen	Ÿ	Regulatory agency decisions on applications outside the United States
	Ÿ	FDA granted orphan drug designation for treatment of HoFH	Ÿ	FDA decision on sBLA for use with apheresis
	Ÿ	Reported positive results from two Phase 3b/4 studies in patients with diabetes	Ÿ	Initiate Phase 3 pediatric studies in HoFH and HeFH

Antibody-based Clinical Programs (continued):
		2017 and 2018 Events to Date		2018 Plans
	Ÿ	ODYSSEY study data presented at the European Society of Cardiology (ESC) Congress
	Ÿ	Initiated Phase 3 study in HoFH
	Ÿ	sBLA for use with apheresis filed with FDA, with a target action date of August 24, 2018
Kevzara (sarilumab; IL-6R Antibody)	Ÿ	Regulatory applications submitted in various jurisdictions outside the United States	Ÿ	Submit for additional regulatory approvals outside of the United States
	Ÿ	Health Canada approved Kevzara for the treatment of adult patients with RA	Ÿ	Regulatory agency decisions on applications outside the United States
	Ÿ	Resubmitted BLA and FDA accepted for review	Ÿ	Continue patient enrollment in Phase 2 study in pcJIA
	Ÿ	FDA approved Kevzara for the treatment of adult patients with RA	Ÿ	Initiate Phase 3 study in giant cell arteritis
	Ÿ	European Commission granted marketing authorization for Kevzara for the treatment of adult patients with RA	Ÿ	Initiate Phase 3 study in polymyalgia rheumatica
	Ÿ	MHLW in Japan approved Kevzara for the treatment of adult patients with RA
Suptavumab (RSV-F Antibody)	Ÿ	Completed patient enrollment in Phase 3 study
	Ÿ	Reported results from Phase 3 study, and discontinued further clinical development
Cemiplimab (REGN2810; PD-1 Antibody)	Ÿ	Continued patient enrollment in Phase 1 and Phase 2 studies	Ÿ	Complete rolling submission of BLA for CSCC and FDA decision on BLA
	Ÿ	Reported positive preliminary results from Phase 1 study in patients with advanced CSCC	Ÿ	Submit for regulatory approval in CSCC in the EU
	Ÿ	FDA granted Breakthrough Therapy designation for the treatment of adults with metastatic CSCC and adults with locally advanced and unresectable CSCC	Ÿ	Initiate additional studies in non-small cell lung cancer and various other indications
		Ÿ	Continue patient enrollment in various studies
	Ÿ	Reported positive top-line results from pivotal Phase 2 CSCC study
	Ÿ	Commenced rolling submission of BLA for CSCC
	Ÿ	Initiated Phase 3 study in first-line treatment for non-small cell lung cancer
	Ÿ	Initiated potentially pivotal Phase 2 study in BCC
	Ÿ	Initiated Phase 3 study in cervical cancer
Fasinumab (NGF Antibody)	Ÿ	Continued patient enrollment in Phase 3 long-term safety study in osteoarthritis	Ÿ	Continue patient enrollment in Phase 3 osteoarthritis studies
	Ÿ	Initiated Phase 3 efficacy studies in osteoarthritis	Ÿ	Report data from first Phase 3 efficacy study in osteoarthritis
	Ÿ	Initiated Phase 3 study in chronic low back pain in patients with concomitant osteoarthritis of the knee and hip	Ÿ	Advance Phase 3 program in chronic low back pain

Antibody-based Clinical Programs (continued):
		2017 and 2018 Events to Date		2018 Plans
Evinacumab (ANGPTL3 Antibody)	Ÿ	FDA granted Breakthrough Therapy designation for the treatment of hypercholesterolemia in patients with HoFH	Ÿ	Initiate Phase 2 study in severe hypertriglyceridemia
	Ÿ	Reported positive Phase 2 results at medical conferences
	Ÿ	Data and analysis from genetics, preclinical, and clinical study published in the New England Journal of Medicine
	Ÿ	Initiated Phase 2 study in refractory hypercholesterolemia (both HeFH and non-FH)
	Ÿ	Initiated Phase 3 study in HoFH
Nesvacumab/aflibercept (Ang2 Antibody co-formulated with aflibercept)	Ÿ	Completed patient enrollment in Phase 2 ONYX study in wet AMD
	Ÿ	Reported results from Phase 2 ONYX and RUBY studies, which did not provide sufficient differentiation to warrant Phase 3 studies
Trevogrumab (GDF8 Antibody)	Ÿ	Initiated Phase 1 combination therapy study with REGN2477	Ÿ	Complete Phase 1 combination study and report results
	Ÿ	Completed patient enrollment in Phase 1 combination therapy study
REGN1908-1909 (Feld1 Antibody)			Ÿ	Continue early stage development
REGN1979 (CD20 and CD3 Antibody)	Ÿ	Continued patient enrollment in Phase 1 study	Ÿ	Continue evaluation in non-Hodgkin lymphomas
	Ÿ	FDA granted orphan drug designation in diffuse large B-cell lymphoma
REGN3470-3471-3479 (Multi-antibody therapy to Ebola virus)	Ÿ	Completed Phase 1 study in healthy volunteers	Ÿ	Initiate additional healthy volunteer study
REGN2477 (Activin A Antibody)	Ÿ	FDA granted orphan drug designation for the treatment of FOP	Ÿ	Initiate Phase 2 study in patients with FOP
	Ÿ	FDA granted Fast Track designation for the prevention and treatment of heterotopic ossification in patients with FOP
REGN3500 (IL-33 Antibody)	Ÿ	Initiated Phase 1 studies in patients with asthma	Ÿ	Initiate Phase 2 programs in asthma, COPD, and atopic dermatitis
	Ÿ	Completed Phase 1 study in healthy volunteers
REGN3767 (LAG-3 Antibody)	Ÿ	Continued patient enrollment in Phase 1 study	Ÿ	Open monotherapy expansion cohorts as well as in combination with cemiplimab in multiple indications
REGN3918 (C5 Antibody)	Ÿ	Initiated Phase 1 study in healthy volunteers	Ÿ	Complete Phase 1 study in healthy volunteers

Developing and commercializing new medicines entails significant risk and expense. Before significant revenues from the commercialization of our antibody candidates or new indications for our marketed products can be realized, we (or our collaborators) must overcome a number of hurdles which include successfully completing research and development and obtaining regulatory approval from the FDA and regulatory authorities in other countries. In addition, the biotechnology and pharmaceutical industries are rapidly evolving and highly competitive, and new developments may render our products and technologies uncompetitive or obsolete.

Our ability to continue to generate profits and to generate positive cash flow from operations over the next several years depends significantly on our continued success in commercializing EYLEA. We expect to continue to incur substantial expenses related to our research and development activities, a significant portion of which we expect to be reimbursed by our collaborators. Also, our research and development activities outside our collaborations, the costs of which are not reimbursed, are expected to expand and require additional resources. We also expect to incur substantial costs related to the commercialization of EYLEA, Dupixent, Praluent, and Kevzara, as well as preparation for potential commercialization of cemiplimab and other indications of dupilumab. Our financial results may fluctuate from quarter to quarter and will depend on, among other factors, the net sales of our marketed products, the scope and progress of our research and development efforts, the timing of certain expenses, the continuation of our collaborations, in particular with Sanofi and Bayer, including our share of collaboration profits or losses from sales of commercialized products and the amount of reimbursement of our research and development expenses that we receive from collaborators, and the amount of income tax expense we incur, which is partly dependent on the profits or losses we earn in each of the countries in which we operate. We cannot predict whether or when new products or new indications for marketed products will receive regulatory approval or, if any such approval is received, whether we will be able to successfully commercialize such product(s) and whether or when they may become profitable.

Critical Accounting Policies and Use of Estimates

A summary of the significant accounting policies that impact us is provided in Note 1 to our Consolidated Financial Statements. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:

•	it requires an assumption (or assumptions) regarding a future outcome; and

•	changes in the estimate or the use of different assumptions to prepare the estimate could have a material effect on our results of operations or financial condition.

Management believes the current assumptions used to estimate amounts reflected in our Consolidated Financial Statements are appropriate. However, if actual experience differs from the assumptions used in estimating amounts reflected in our Consolidated Financial Statements, the resulting changes could have a material adverse effect on our results of operations, and in certain situations, could have a material adverse effect on our liquidity and financial condition. The critical accounting estimates that impact our Consolidated Financial Statements are described below.

Revenue Recognition

Product Revenue

Product sales consist of U.S. sales of EYLEA and ARCALYST. Revenue from product sales is recognized when persuasive evidence of an arrangement exists, title to product and associated risk of loss have passed to the customer, the price is fixed or determinable, collection from the customer is reasonably assured, we have no further performance obligations, and returns can be reasonably estimated. We record revenue from product sales upon delivery to our distributors and specialty pharmacies (collectively, our customers).

Revenue from product sales is recorded net of applicable provisions for rebates and chargebacks under governmental and other programs, such as Medicaid and Veterans' Administration (VA), distribution-related fees, and other sales-related deductions. We estimate reductions to product sales based upon contracts with customers and government agencies, statutorily-defined discounts applicable to government-funded programs, historical experience, estimated payer mix, inventory levels in the distribution channel, shelf life of the product, and other relevant factors. Calculating these provisions involves estimates and judgments. We review our estimates of rebates, chargebacks, and other applicable provisions each period and record any necessary adjustments in the current period's net product sales. The following table summarizes the provisions, and credits/payments, for sales-related deductions.

(In millions)	Rebates & Chargebacks				Distribution- Related Fees				Other Sales- Related Deductions				Total
Balance as of December 31, 2014	$	3.1			$	21.2			$	0.5			$	24.8
Provisions	61.1				122.5				9.6				193.2
Credits/payments	(57.8		)		(95.3		)		(9.6		)		(162.7		)
Balance as of December 31, 2015	6.4				48.4				0.5				55.3
Provisions	93.4				154.4				30.4				278.2
Credits/payments	(87.1		)		(173.3		)		(27.3		)		(287.7		)
Balance as of December 31, 2016	12.7				29.5				3.6				45.8
Provisions	167.8				194.1				46.4				408.3
Credits/payments	(150.6		)		(189.5		)		(28.7		)		(368.8		)
Balance as of December 31, 2017	$	29.9			$	34.1			$	21.3			$	85.3

Collaboration Revenue

We earn collaboration revenue in connection with collaboration agreements to develop and commercialize product candidates and utilize our technology platforms. These arrangements may require us to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. The terms of these agreements typically include that consideration be provided to us in the form of non-refundable up-front payments, research progress (milestone) payments, payments for development and commercialization activities, and sharing of profits or losses arising from the commercialization of products. In arrangements involving multiple deliverables, we must determine whether each deliverable qualifies as a separate unit of accounting, whether the deliverables have value to the collaborator on a standalone basis, and how the consideration should be allocated to each separate unit of accounting based on the relative selling price of each deliverable. Payments which are based on achieving a specific substantive performance milestone, involving a degree of risk, are recognized as revenue when the milestone is achieved and the related payment is due and non-refundable, provided there is no future service obligation associated with that milestone. In determining whether a payment is deemed to be a substantive performance milestone, we take into consideration (i) the enhancement in value to the related development product candidate, (ii) our performance and the relative level of effort required to achieve the milestone, (iii) whether the milestone relates solely to past performance, and (iv) whether the milestone payment is considered reasonable relative to all of the deliverables and payment terms. Payments for achieving milestones which are not considered substantive are deferred and recognized over the related performance period.

In connection with non-refundable licensing payments, our performance period estimates are principally based on projections of the scope, progress, and results of our research and development activities. Due to the variability in the scope of activities and length of time necessary to develop a drug product, changes to development plans as programs progress, and uncertainty in the ultimate requirements to obtain governmental approval for commercialization, revisions to performance period estimates are likely to occur periodically, and could result in material changes to the amount of revenue recognized each year in the future. In addition, our estimated performance periods may change if development programs encounter delays, or we and our collaborators decide to expand or contract our clinical plans for a drug candidate in various disease indications.

When we are entitled to reimbursement of all or a portion of the research and development expenses that we incur under a collaboration, we record those reimbursable amounts as collaboration revenue proportionately as we recognize our expenses. If the collaboration is a cost-sharing arrangement in which both we and our collaborator perform development work and share costs, we also recognize, as research and development expense in the period when our collaborator incurs development expenses, the portion of the collaborator's development expenses that we are obligated to reimburse. Our collaborators provide us with estimated development expenses for the most recent fiscal quarter. Our collaborators' estimates are reconciled to their actual expenses for such quarter in the subsequent fiscal quarter, and our portion of our collaborators' development expenses that we are obligated to reimburse is adjusted on a prospective basis accordingly, as necessary.

Under our collaboration agreements, product sales and cost of sales for products which are currently approved are recorded by our collaborators. We share in any profits or losses arising from the commercialization of such products. Our collaborator provides us with our estimated share of the profits or losses from commercialization of such products for the most recent fiscal quarter. Our collaborators' estimates of profits or losses for such quarter are reconciled to actual profits or losses in the subsequent fiscal quarter, and our share of the profit or loss is adjusted on a prospective basis accordingly, as necessary.

Clinical Trial Expenses

Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. We outsource a substantial portion of our clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist us with the execution of our clinical studies. For each clinical trial that we conduct, certain clinical trial costs are expensed immediately, while others are expensed over time based on the expected total number of patients in the trial, the rate at which patients enter the trial, and/or the period over which clinical investigators or CROs are expected to provide services.

Clinical activities which relate principally to clinical sites and other administrative functions to manage our clinical trials are performed primarily by CROs. CROs typically perform most of the start-up activities for our trials, including document preparation, site identification, screening and preparation, pre-study visits, training, and program management. On a budgeted basis, these start-up costs are typically 10% to 20% of the total contract value. On an actual basis, this percentage range can be significantly wider, as many of our contracts with CROs are either expanded or reduced in scope compared to the original budget, while start-up costs for the particular trial may not change materially. These start-up costs usually occur within a few months after the contract has been executed and are event-driven in nature. The remaining activities and related costs, such as patient monitoring and administration, generally occur ratably throughout the life of the individual contract or study. In the event of early termination of a clinical trial, we accrue and recognize expenses in an amount based on our estimate of the remaining non-cancelable obligations associated with the winding down of the clinical trial and/or penalties.

For clinical study sites, where payments are made periodically on a per-patient basis to the institutions performing the clinical study, we accrue expenses on an estimated cost-per-patient basis, based on subject enrollment and activity in each quarter. The amount of clinical study expense recognized in a quarter may vary from period to period based on the duration and progress of the study, the activities to be performed by the sites each quarter, the required level of patient enrollment, the rate at which patients actually enroll in and drop-out of the clinical study, and the number of sites involved in the study. Clinical trials that bear the greatest risk of change in estimates are typically those that have a significant number of sites, require a large number of patients, have complex patient screening requirements, and span multiple years. During the course of a trial, we adjust our rate of clinical expense recognition if actual results differ from our estimates. Our estimates and assumptions for clinical expense recognition could differ significantly from our actual results, which could cause material increases or decreases in research and development expenses in future periods when the actual results become known.

Stock-based Compensation

We recognize stock-based compensation expense for grants of stock option and restricted stock awards under our long-term incentive plans to employees and non-employee members of our board of directors based on the grant-date fair value of those awards. The grant-date fair value of an award is generally recognized as compensation expense over the award's requisite service period.

We use the Black-Scholes model to compute the estimated fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of our Common Stock price, (ii) the periods of time over which employees and members of our board of directors are expected to hold their options prior to exercise (expected lives), (iii) expected dividend yield on our Common Stock, and (iv) risk-free interest rates, which are based on quoted U.S. Treasury rates for securities with maturities approximating the options' expected lives. Expected volatility has been estimated based on actual movements in our stock price over the most recent historical periods equivalent to the options' expected lives. Expected lives are principally based on our historical exercise experience with previously issued employee and board of directors option grants. The expected dividend yield is zero as we have never paid dividends and do not currently anticipate paying any in the foreseeable future. Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited. This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The assumptions used in computing the fair value of stock option awards reflect our best estimates but involve uncertainties related to market and other conditions, many of which are outside of our control. Changes in any of these assumptions may materially affect the fair value of stock option awards granted and the amount of stock-based compensation recognized in future periods.

Income Taxes

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts ("temporary differences") at enacted tax rates in effect for the years in which the differences are expected to reverse. A valuation allowance is established for deferred tax assets for which it is more likely than not that some portion or all of the deferred tax assets will not be realized. We periodically re-assess the need for a valuation allowance against our deferred tax assets based on various factors including our historical earnings experience by taxing jurisdiction, forecasts of future operating results, and utilization of net operating losses and tax credits prior to their expiration. Significant judgment is required in making this assessment.

Uncertain tax positions, for which management's assessment is that there is more than a 50% probability of sustaining the position upon challenge by a taxing authority based upon its technical merits, are subjected to certain recognition and measurement criteria. Significant judgment is required in making this assessment, and, therefore, we re-evaluate uncertain tax positions and consider various factors, including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, and changes in facts or circumstances related to a tax position. We adjust the level of the liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the uncertain positions.

Inventories

We capitalize inventory costs associated with our products prior to regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The determination to capitalize inventory costs is based on various factors, including status and expectations of the regulatory approval process, any known safety or efficacy concerns, potential labeling restrictions, and any other impediments to obtaining regulatory approval.

We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and write-down such inventories as appropriate. In addition, our products are subject to strict quality control and monitoring which we perform throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to cost of goods sold to write down such unmarketable inventory to its estimated realizable value.

Contingencies

We accrue, based on management's judgment, for an estimated loss when the potential loss from claims or legal proceedings is considered probable and the amount can be reasonably estimated. As additional information becomes available, or based on specific events such as the outcome of litigation or settlement of claims, we reassess the potential liability related to pending claims and litigation, and may change our estimates.

Results of Operations

Net Income

Net Income	Year Ended December 31,
(In millions)	2017				2016				2015
Revenues	$	5,872.2			$	4,860.4			$	4,103.7
Operating expenses	(3,792.6		)		(3,529.7		)		(2,851.8		)
Other income (expense), net	(1.1		)		(0.9		)		(26.8		)
Income before income taxes	2,078.5				1,329.8				1,225.1
Income tax expense	(880.0		)		(434.3		)		(589.0		)
Net income	$	1,198.5			$	895.5			$	636.1
Net income per share - diluted	$	10.34			$	7.70			$	5.52

Revenues

Revenues	Year Ended December 31,
(In millions)	2017				2016				2015
Net product sales in the United States:
EYLEA	$	3,701.9			$	3,323.1			$	2,676.0
ARCALYST	16.5				15.3				13.5
Sanofi and Bayer collaboration revenue:
Sanofi	877.2				658.7				758.9
Bayer	938.1				744.3				580.5
Other revenue	338.5				119.0				74.8
Total revenues	$	5,872.2			$	4,860.4			$	4,103.7

Net Product Sales

Net product sales of EYLEA in the United States increased in 2017 compared to 2016 and 2015 due to higher sales volume, partly offset by an increase in sales-related deductions primarily due to payer sales mix and new rebate programs.

Sanofi Collaboration Revenue

Sanofi Collaboration Revenue		Year Ended December 31,
(In millions)		2017				2016				2015
Antibody:
Reimbursement of Regeneron research and development expenses - Discovery Agreement		$	130.0			$	130.0			$	145.0
Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement		378.4				434.9				590.4
Reimbursement of Regeneron commercialization-related expenses		368.8				305.9				155.3
Regeneron's share of losses in connection with commercialization of antibodies		(442.6		)		(459.0		)		(240.0		)
Other		119.1				28.4				12.3
Total Antibody		553.7				440.2				663.0
Immuno-oncology:
Reimbursement of Regeneron research and development expenses - Discovery Agreement		138.8				86.5				29.2
Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement		101.2				52.0				10.8
Other		83.5				80.0				40.0
Total Immuno-oncology		323.5				218.5				80.0
ZALTRAP:
Reimbursement of Regeneron research and development expenses		—				—				0.7
Other		—				—				15.2
Total ZALTRAP		—				—				15.9
Total Sanofi collaboration revenue		$	877.2			$	658.7			$	758.9

The lower reimbursement of antibody research and development costs under our License and Collaboration Agreement in 2017 compared to 2016 was primarily due to decreased reimbursement levels for Dupixent (dupilumab) subsequent to the receipt of the first positive Phase 3 trial results, and U.S. regulatory approval for, atopic dermatitis, in accordance with the terms of our collaboration agreement. The lower reimbursement of research and development costs under our License and Collaboration Agreement in 2016 compared to 2015 was primarily due to decreased collaboration development activities for Praluent, dupilumab, and REGN2222.

Reimbursement of Regeneron commercialization-related expenses represents reimbursement of internal and external costs in connection with commercializing Praluent, Kevzara, and Dupixent.

In accordance with the companies' License and Collaboration Agreement, we and Sanofi began sharing commercial expenses related to Praluent and Kevzara in 2014 and Dupixent in 2016. As such, during the same periods in which we recorded reimbursements from Sanofi related to our commercialization expenses, we also recorded our share of losses in connection with the companies commercializing Praluent, Kevzara, and Dupixent within Sanofi collaboration revenue. In 2017, Sanofi collaboration revenues in connection with commercialization of antibodies were positively impacted, compared to 2016, by higher sales of collaboration antibody products (see table below), higher reimbursements of Dupixent commercialization-related expenses, and a decrease in the collaborations' Praluent commercialization expenses, which were partially offset by an increase in the collaborations' Kevzara commercialization expenses. In 2016, Sanofi collaboration revenues were negatively impacted, compared to 2015, by higher commercialization expenses in connection with the launch of Praluent, and higher expenses in connection with preparing to commercialize Kevzara and Dupixent.

The following table summarizes global net product sales recorded by Sanofi:

		Year Ended December 31,
(In millions)		2017				2016				2015
Praluent in the United States		$	131.4			$	94.4			$	9.5
Praluent outside of the United States		63.3				21.9				1.0
Praluent global		194.7				116.3				10.5
Dupixent		256.5				—				—
Kevzara		13.3				—				—

In March 2017, the FDA approved Dupixent for the treatment of adult patients with moderate-to-severe atopic dermatitis, and in September 2017, the European Commission granted marketing authorization for Dupixent for use in adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy. In May 2017, the FDA approved Kevzara for the treatment of rheumatoid arthritis in adult patients, and in June 2017, the European Commission granted marketing authorization for Kevzara for the treatment of rheumatoid arthritis in adult patients. The sales of Dupixent and Kevzara in 2017 primarily consist of U.S. sales.

During 2017, other Sanofi antibody revenue included (i) reimbursements by Sanofi in connection with commercial manufacturing activities under the terms of our collaboration agreement and (ii) an acceleration of the recognition of deferred revenue from an $85.0 million up-front payment and other payments in connection with Sanofi's decision to end our Antibody Discovery Agreement on December 31, 2017 without any extension.

In July 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. Sanofi's reimbursement of immuno-oncology research and development costs under our IO Discovery Agreement increased in 2017, compared to 2016 and 2015, primarily due to an increase in pre-clinical research activities for additional product candidates. Sanofi's reimbursement of immuno-oncology research and development costs under our IO License and Collaboration Agreement increased in 2017, compared to 2016 and 2015, as we advanced the cemiplimab clinical program into late-stage clinical development.

Other Sanofi immuno-oncology revenue includes recognition of deferred revenue from $640.0 million of up-front payments received in 2015 in connection with the execution of the IO Collaboration agreements.

In February 2015, we entered into an Amended ZALTRAP Agreement with Sanofi which amended and restated the ZALTRAP Collaboration Agreement. Under the Amended ZALTRAP Agreement, Sanofi is solely responsible for the development and commercialization of ZALTRAP. As a result, in the first quarter of 2015, we recognized $14.9 million of collaboration revenue, which was previously recorded as deferred revenue under the original ZALTRAP collaboration agreement, related to (i) amounts that were previously reimbursed by Sanofi for manufacturing commercial supplies of ZALTRAP since our risk of inventory loss no longer existed, and (ii) the unamortized portion of up-front payments from Sanofi as we had no further performance obligations.

Bayer Collaboration Revenue

Bayer Collaboration Revenue		Year Ended December 31,
(In millions)		2017				2016				2015
EYLEA:
Regeneron's net profit in connection with commercialization of EYLEA outside the United States		$	802.3			$	649.2			$	466.7
Sales milestones		—				—				15.0
Reimbursement of Regeneron EYLEA development expenses		13.3				9.0				8.9
Other		58.7				52.6				69.4
Total EYLEA		874.3				710.8				560.0
Ang2 antibody and PDGFR-beta antibody:
Reimbursement of development expenses		17.8				18.3				10.1
Other		46.0				15.2				10.4
Total Ang2 antibody and PDGFR-beta antibody		63.8				33.5				20.5
Total Bayer collaboration revenue		$	938.1			$	744.3			$	580.5

Bayer records revenue from sales of EYLEA outside the United States. Regeneron's net profit in connection with commercialization of EYLEA outside the United States is summarized below.

Regeneron's Net Profit from EYLEA Sales Outside the United States		Year Ended December 31,
(In millions)		2017				2016				2015
Net product sales outside the United States		$	2,226.9			$	1,872.3			$	1,413.3
Regeneron's share of collaboration profit from sales outside the United States		856.1				703.3				521.8
Reimbursement of EYLEA development expenses incurred by Bayer in accordance with Regeneron's payment obligation		(53.8		)		(54.1		)		(55.1		)
Regeneron's net profit in connection with commercialization of EYLEA outside the United States		$	802.3			$	649.2			$	466.7

In 2015, we earned our final $15.0 million sales milestone from Bayer, upon total aggregate net sales of specific commercial supplies of EYLEA outside the United States exceeding $200.0 million over a twelve-month period.

Other EYLEA revenue primarily consists of reimbursement of other Regeneron EYLEA expenses, including reimbursements for producing EYLEA commercial supplies for Bayer. In addition, other EYLEA revenue in the first five months of 2016 and for the full year 2015 includes Bayer's share of royalties payable to Genentech pursuant to a license and settlement agreement in connection with sales of EYLEA outside the United States; the obligation to pay Genentech royalties on such sales ended in May 2016. Other EYLEA revenue also includes recognition of deferred revenue related to the 2006 EYLEA up-front and 2007 non-substantive milestone payments from Bayer.

In March 2016, we entered into an agreement with Bayer governing the joint development and commercialization outside the United States of nesvacumab, an antibody product candidate to Ang2, including in combination with aflibercept, for the treatment of ocular diseases or disorders. In connection with the agreement, Bayer made a $50.0 million non-refundable up-front payment to us, which was recorded as deferred revenue and was being recognized as revenue over the related performance period. Bayer is also obligated to pay 25% of global development costs and 50% of development costs exclusively for the territory outside the United States. In the fourth quarter of 2017, we reported that results from two nesvacumab Phase 2 studies did not provide sufficient differentiation to warrant Phase 3 development; therefore, we recognized $37.4 million of revenue related to the acceleration of the recognition of deferred revenue from the up-front payment received from Bayer.

In 2014, we entered into a PDGFR-beta antibody collaboration agreement with Bayer. Bayer collaboration revenue also includes reimbursement of PDGFR-beta antibody development expenses related to Bayer's obligation to pay 25% of global development costs and 50% of development costs exclusively for the territory outside the United States. We discontinued clinical development of PDGFR-beta antibody in the first quarter of 2017.

Other Revenue

Other Revenue		Year Ended December 31,
(In millions)		2017				2016				2015
Teva collaboration revenue:
Reimbursement of Regeneron research and development expenses		$	115.1			$	24.2			—
Substantive development milestones		60.0				—				—
Other		46.4				13.7				—
Total Teva collaboration revenue		221.5				37.9				—
Other revenue		117.0				81.2				$	74.9
Total other revenue		$	338.5			$	119.1			$	74.9

In September 2016, we and Teva entered into a collaboration agreement to develop and commercialize fasinumab. In 2017, we earned, and recognized as revenue, development milestones of $25.0 million and $35.0 million from Teva. Other Teva collaboration revenue includes recognition of a portion of deferred revenue from a $250.0 million up-front payment.

In 2017, we earned, and recognized as revenue, a $30.0 million development milestone from MTPC. In addition, in 2017, MTPC made additional payments totaling $25.0 million related to development milestones achieved by MTPC, which were recorded as deferred revenue and are being recognized as revenue over the same performance period as the up-front payment. The revenue recognized in connection with the MTPC milestones are included in Other revenue in the table above.

In addition to revenues earned in connection with our agreement with MTPC, "Other revenue" in the table above includes:

•	Under the terms of the Amended ZALTRAP Agreement, Sanofi's reimbursement for manufacturing commercial supplies of ZALTRAP and a percentage of aggregate net sales of ZALTRAP.

•

Recognition of revenue related to amortization of the $165.0 million up-front payment we received in August 2010, which was deferred upon receipt and is being recognized as revenue through mid-2018, in connection with the VelocImmune license agreement with Astellas. In addition, Astellas will make a $130.0 million second payment to us in June 2018 unless the license agreement has been terminated prior to that date. Astellas has the right to terminate the agreement at any time by providing 90 days' advance written notice.

•	Royalties in connection with a June 2009 agreement with Novartis, under which we receive royalties on worldwide sales of Novartis' Ilaris® (canakinumab). The royalty rates in the agreement start at 4% and reach 15% when annual sales exceed $1.5 billion, and we are entitled to royalties until Novartis ceases sale of products subject to royalty.

Expenses

		Year Ended December 31,												Increase (Decrease)
(In millions)		2017				2016				2015				2017 vs. 2016				2016 vs. 2015
Research and development		$	2,075.1			$	2,052.3			$	1,620.6			$	22.8			$	431.7
Selling, general, and administrative		1,320.4				1,177.7				838.5				142.7				339.2
Cost of goods sold		202.5				194.6				241.7				7.9				(47.1		)
Cost of collaboration and contract manufacturing		194.6				105.1				151.0				89.5				(45.9		)
Total operating expenses		$	3,792.6			$	3,529.7			$	2,851.8			$	262.9			$	677.9
Average headcount		5,780				4,927				3,713				853				1,214

Our average headcount in 2017 increased compared to 2016 principally in connection with expanding our manufacturing activities. Average headcount in 2016 increased compared to 2015 principally in connection with expanding our research and development, manufacturing, and commercialization activities.

Operating expenses in 2017, 2016, and 2015 included a total of $507.3 million, $559.9 million, and $459.0 million, respectively, of non-cash compensation expense related to employee stock options and restricted stock. As of December 31, 2017, unrecognized non-cash compensation expense related to outstanding stock options and unvested restricted stock was $816.6 million and $34.9 million, respectively. We expect to recognize this non-cash compensation expense related to stock options and restricted stock over weighted-average periods of 1.9 years and 4.0 years, respectively.

Research and Development Expenses

The following table summarizes our estimates of direct research and development expenses by clinical development program and other significant categories of research and development expenses. Direct research and development expenses are comprised primarily of costs paid to third parties for clinical and product development activities, including costs related to preclinical research activities, clinical trials, drug filling, packaging, and labeling, and the portion of research and development expenses incurred by our collaborators that we are obligated to reimburse. Indirect research and development expenses have not been allocated directly to each program, and primarily consist of costs to compensate personnel, overhead and infrastructure costs to maintain our facilities, costs to manufacture bulk drug product (including pre-launch commercial supplies which were not capitalized as inventory) at our manufacturing facilities, and other costs related to activities that benefit multiple projects.

Research and Development Expenses		Year Ended December 31,												Increase (Decrease)
(In millions)		2017				2016*				2015*				2017 vs. 2016				2016 vs. 2015
Direct research and development expenses:
Dupilumab		$	199.9			$	221.6			$	227.8			$	(21.7	)		$	(6.2	)
Cemiplimab		114.2				40.5				11.5				73.7				29.0
Fasinumab		153.8				110.4				31.2				43.4				79.2
Praluent		84.9				85.6				108.9				(0.7		)		(23.3		)
Suptavumab		27.7				25.9				16.8				1.8				9.1
Sarilumab		9.4				20.5				31.4				(11.1		)		(10.9		)
Other product candidates in clinical development and other research programs		251.5				344.9				223.3				(93.4		)		121.6
Total direct research and development expenses		841.4				849.4				650.9				(8.0		)		198.5
Indirect research and development expenses:
Payroll and benefits		578.5				556.1				463.4				22.4				92.7
Clinical manufacturing costs		388.2				404.9				327.1				(16.7		)		77.8
Research, licensing, and other development costs		62.9				51.6				35.0				11.3				16.6
Occupancy and other operating costs		204.1				190.3				144.2				13.8				46.1
Total indirect research and development expenses		1,233.7				1,202.9				969.7				30.8				233.2
Total research and development expenses		$	2,075.1			$	2,052.3			$	1,620.6			$	22.8			$	431.7
* Certain prior year amounts have been reclassified to conform to the current year's presentation.

"Direct research and development expenses - Other product candidates in clinical development and other research programs" in 2017 included a $25.0 million up-front payment made in connection with a November 2017 agreement with Decibel Therapeutics, and in 2016 included the $75.0 million and $25.0 million up-front payments made in connection with the license and collaboration agreements with Intellia and Adicet, respectively. Clinical manufacturing costs increased in 2016, compared to 2015, primarily due to costs related to manufacturing additional drug supplies of dupilumab, fasinumab, and cemiplimab, partly offset by lower costs related to manufacturing less clinical supplies of Praluent. Research and development expenses included Non-Cash Compensation Expense of $271.9 million in 2017, $313.0 million in 2016, and $255.7 million in 2015.

There are numerous uncertainties associated with drug development, including uncertainties related to safety and efficacy data from each phase of drug development, uncertainties related to the enrollment and performance of clinical trials, changes in regulatory requirements, changes in the competitive landscape affecting a product candidate, and other risks and uncertainties described in Part I, Item 1A, "Risk Factors." The lengthy process of seeking FDA approvals, and subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any failure by us to obtain, or delay in obtaining, regulatory approvals could materially adversely affect our business. As a result of the variability in the duration and costs necessary to develop a pharmaceutical product, potential opportunities and/or uncertainties related to future indications to be studied, the estimated cost and scope of the projects, and our ultimate ability to obtain governmental approval for commercialization, we have not provided estimates of the total cost to bring our product candidates to market. Similarly, we are unable to reasonably estimate if our product candidates in clinical development will generate material product revenues and net cash inflows.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased in 2017, compared to 2016, primarily due to (i) an increase in commercialization-related expenses associated with Dupixent and EYLEA, and, to a lesser extent, Kevzara and cemiplimab, partly offset by lower commercialization-related expenses associated with Praluent, and (ii) higher headcount and headcount-related costs. Selling, general, and administrative expenses increased in 2016 compared to 2015 primarily due to (i) higher commercialization-related expenses associated with Praluent and higher commercialization-related expenses in connection with preparing to launch sarilumab and dupilumab, (ii) higher contributions to not-for-profit organizations, including donations to independent not-for-profit patient assistance organizations, and (iii) higher headcount and headcount-related costs. Selling, general, and administrative expenses also included $208.4 million, $231.2 million, and $193.0 million of Non-cash Compensation Expense in 2017, 2016, and 2015, respectively.

Cost of Goods Sold

Cost of goods sold increased slightly in 2017, compared to 2016, principally due to an increase in start-up costs for our Limerick manufacturing facility, offset due to the fact that, effective May 2016, we were no longer obligated to pay royalties to Genentech based on U.S. sales of EYLEA. Cost of goods sold decreased in 2016, compared to 2015, principally due to the fact that, effective May 2016, we are no longer obligated to pay royalties to Genentech based on U.S. sales of EYLEA; this decrease was partly offset by an increase in Limerick start-up costs and an increase in U.S. EYLEA net sales.

Cost of Collaboration and Contract Manufacturing

Cost of collaboration and contract manufacturing increased in 2017, compared to 2016, primarily due to costs we incurred in connection with validating our Limerick manufacturing commercial facility related to products that are in collaboration with Sanofi, partly offset by the fact that 2016 included royalties payable to Genentech based on sales of EYLEA outside the United States (which ended in May 2016). Cost of collaboration and contract manufacturing was also adversely impacted by inventory write-offs and reserves totaling $57.2 million in 2017 primarily related to product that no longer met quality specifications, compared to $11.2 million and $23.5 million in 2016 and 2015, respectively.

Cost of collaboration and contract manufacturing decreased in 2016, compared to 2015, primarily due to lower royalties since our obligation to pay Genentech based on sales of EYLEA outside the United States ended in May 2016.

Other Income and Expense

Other expenses in 2017 include the recognition of a $30.1 million loss on debt extinguishment related to the 2017 Tarrytown lease transaction. See Note 12 to our Consolidated Financial Statements. This expense was largely offset by investment income earned from our marketable securities in 2017.

Other expenses in 2016 and 2015 included the recognition of a $0.5 million and $18.9 million loss, respectively, in connection with convertible notes which were surrendered for conversion during the respective periods. Other expenses in 2016 also included a $9.8 million other-than-temporary impairment charge related to an investment in an equity security.

Income Taxes

		Year Ended December 31,
(In millions)		2017				2016				2015
Income tax expense		$	880.0			$	434.3			$	589.0
Effective tax rate		42.3		%		32.7		%		48.1		%

On December 22, 2017, the bill known as the "Tax Cuts and Jobs Act" (the Act) was signed into law. The Act, which became effective with respect to most of its provisions as of January 1, 2018, includes a number of provisions that are expected to impact us, including reducing the U.S. federal corporate income tax rate from 35% to 21%, changing the taxation of foreign earnings (including taxation of certain global intangible low-taxed income), allowing immediate expensing of the cost for qualified assets, repealing the deduction for domestic manufacturing, and imposing further limitations on the deductibility of executive compensation. Changes in tax rates and tax laws are accounted for in the period of enactment. Therefore, as a result of the Act being signed into law, we recognized a provisional charge of $326.2 million in the fourth quarter of 2017 related to the re-measurement of our U.S. net deferred tax assets at the lower enacted corporate tax rates. The 2017 effective tax rate was negatively impacted by this charge, and was partly offset by the tax benefit associated with stock-based compensation. The provisional charge recorded in the fourth quarter of 2017 is an estimate and subject to further analysis, interpretation, and clarification of the Act, which could result in changes to this estimate during 2018.

The 2016 effective tax rate was positively impacted, compared to the U.S. federal statutory rate, by the tax benefit associated with stock-based compensation, partly offset by the negative impact of losses incurred in foreign jurisdictions with rates lower than the U.S. federal statutory rate. As described in Note 1 and Note 16 of our Consolidated Financial Statements, during 2016 we adopted Accounting Standards Update 2016-09, which requires an entity to recognize all excess tax benefits and tax deficiencies in connection with stock-based compensation as income tax expense or benefit in the income statement (previously, excess tax benefits were recognized in additional paid-in capital).

The 2015 effective tax rate was negatively impacted, compared to the U.S. federal statutory rate, by losses incurred in foreign jurisdictions with rates lower than the U.S. federal statutory rate, partly offset by the positive impact of the domestic manufacturing deduction.

Liquidity and Capital Resources

Our financial condition is summarized as follows:

	As of December 31,								Increase
(In millions)	2017				2016				(Decrease)
Financial assets:
Cash and cash equivalents	$	812.7			$	535.2			$	277.5
Marketable securities - current	596.8				503.5				93.3
Marketable securities - non-current	1,486.5				864.2				622.3
	$	2,896.0			$	1,902.9			$	993.1
Working capital:
Current assets	$	4,335.0			$	3,180.2			$	1,154.8
Current liabilities	1,135.5				1,241.5				(106.0		)
	$	3,199.5			$	1,938.7			$	1,260.8

Additionally, as of December 31, 2017, we had borrowing availability of $750.0 million under a revolving credit facility (see further description under "Credit Facility" below).

Sources and Uses of Cash for the Years Ended December 31, 2017, 2016, and 2015

		Year Ended December 31,												Increase (Decrease)
(In millions)		2017				2016				2015				2017 vs. 2016				2016 vs. 2015
Cash flows provided by operating activities		$	1,307.1			$	1,473.4			$	1,330.8			$	(166.3	)		$	142.6
Cash flows used in investing activities		(1,005.2		)		(1,046.9		)		(907.6		)		41.7				$	(139.3	)
Cash flows used in financing activities		(24.4		)		(700.4		)		(262.8		)		676.0				$	(437.6	)

Cash Flows from Operating Activities

2017. Our net income in 2017 included Non-cash Compensation Expense of $507.3 million. Deferred tax assets as of December 31, 2017 decreased by $318.8 million, compared to December 31, 2016, primarily due to the re-measurement of our U.S. net deferred tax assets at the lower enacted corporate tax rates pursuant to the Act (as described above) and additional tax depreciation, partly offset by an increase in deferred tax assets related to share-based compensation. Cash flows from operating activities for the year ended December 31, 2017 were negatively impacted by $926.5 million in connection with changes in other assets and liabilities. Included in such change was a decrease in deferred revenue by $113.1 million compared to December 31, 2016, partly due to the acceleration of the recognition of deferred revenue in connection with the Sanofi Antibody Discovery Agreement and the Bayer nesvacumab agreement; see "Results of Operations" section above for further details.

2018. Our net income in 2016 included Non-cash Compensation Expense of $559.9 million. Deferred tax assets as of December 31, 2016 increased by $360.1 million, compared to December 31, 2015, primarily due to an increase in share-based compensation, the tax basis of intangible assets, and deferred revenue. Deferred revenue increased by $244.3 million as of December 31, 2016, compared to December 31, 2015, primarily due to $250.0 million and $60.0 million of payments received during 2016 from Teva and Mitsubishi, respectively, in connection with the companies' respective fasinumab collaborations, and the $50.0 million up-front payment from Bayer in connection with the companies' Ang2 collaboration, partly offset primarily by the amortization of these 2016 payments and past up-front payments from Sanofi. Accounts payable, accrued expenses, and other liabilities increased by $254.0 million as of December 31, 2016, compared to December 31, 2015, primarily due to higher tax related liabilities.

2019. Our net income in 2015 included Non-cash Compensation Expense of $459.0 million. Deferred tax assets as of December 31, 2015 increased by $121.6 million, compared to December 31, 2014, primarily due to an increase in share-based compensation, partly offset by a reduction in our deferred tax assets related to fixed assets and deferred revenue. Deferred revenue increased by $608.9 million as of December 31, 2015, compared to December 31, 2014, primarily due to $640.0 million of up-front payments received from Sanofi in connection with the companies' IO Collaboration, partly offset by related amortization which commenced in the third quarter of 2015.

Cash Flows from Investing Activities

Capital expenditures were $272.6 million, $511.9 million, and $677.9 million in 2017, 2016, and 2015, respectively. Capital expenditures decreased in 2017, compared to 2016, in part due to less capital expenditures in connection with renovations and additions at our Limerick, Ireland and Rensselaer, New York manufacturing facilities. Capital expenditures decreased in 2016, compared to 2015, primarily due to less capital expenditures in connection with renovations of our Limerick, Ireland manufacturing facility and 2015 included the acquisition of an approximate 100-acre parcel of undeveloped land adjacent to our current Tarrytown, New York location for an aggregate purchase price of $73.0 million.

We expect to incur capital expenditures of $420 million to $500 million in 2018 primarily in connection with expanding a portion of our manufacturing facilities at our Rensselaer, New York facility, continued renovations and expansion of our Limerick, Ireland facility, and laboratory expansion and renovations at our Tarrytown, New York facilities.

Cash Flows from Financing Activities

In 2017, proceeds in connection with capital and facility lease obligations relate to our receipt of $57.0 million in connection with the March 2017 lease transaction as described below under "Tarrytown, New York Leases". In 2016 and 2015, $12.9 million and $166.5 million principal amount of our Notes, respectively, that was previously surrendered for conversion was settled in cash. Also during 2016 and 2015, we paid an aggregate amount of $643.4 million and $573.5 million, respectively, to warrant holders to reduce the maximum number of shares of Common Stock issuable upon exercise of the warrants. In 2015, cash flows from financing activities included $405.3 million due to utilization of excess tax benefits in connection with stock option exercises, which offset cash tax obligations. In 2016, we elected to adopt Accounting Standards Update 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting; consequently, we began to record excess tax benefits as an operating activity in the statement of cash flows.

Credit Facility

In March 2015, we entered into an agreement with a syndicate of lenders (the Credit Agreement) which provides for a $750.0 million senior unsecured five-year revolving credit facility (the Credit Facility). The Credit Agreement includes an option for us to elect to increase the commitments under the Credit Facility and/or to enter into one or more tranches of term loans in the aggregate principal amount of up to $250.0 million subject to the consent of the lenders providing the additional commitments or term loans, as applicable, and certain other conditions. Proceeds of the loans under the Credit Facility may be used to finance working capital needs, and for general corporate or other lawful purposes, of Regeneron and its subsidiaries. The Credit Agreement also provides a $100.0 million sublimit for letters of credit. The Credit Agreement includes an option for us to elect to extend the maturity date of the Credit Facility beyond March 2020, subject to the consent of the extending lenders and certain other conditions. Amounts borrowed under the Credit Facility may be prepaid, and the commitments under the Credit Facility may be terminated, at any time without premium or penalty. We had no borrowings outstanding under the Credit Facility as of December 31, 2017.

The Credit Agreement contains financial and operating covenants. Financial covenants include a maximum total leverage ratio and a minimum interest expense coverage ratio. We were in compliance with all covenants of the Credit Facility as of December 31, 2017.

Sanofi Funding of Certain Development Costs

As described in Part 1, Item 1. "Business - Collaborations - Collaborations with Sanofi," effective January 7, 2018, we and Sanofi entered into a Letter Agreement in connection with, among other matters, increasing the development budget amount for cemiplimab and allocating additional funds to certain proposed activities relating to the development of dupilumab and REGN3500 and non-approval trials of dupilumab. Pursuant to the Letter Agreement, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to cemiplimab development and/or Dupilumab/REGN3500 Eligible Investments by selling up to 1,400,000 shares of our Common Stock directly or indirectly owned by Sanofi through September 30, 2020. If Sanofi desires to sell shares of our Common Stock during the term of the Letter Agreement to satisfy a portion or all of its funding obligations for the cemiplimab development and/or Dupilumab/REGN3500 Eligible Investments, we may elect to purchase, in whole or in part, such shares from Sanofi. If we do not elect to purchase such shares, Sanofi may sell the applicable number of shares (subject to certain daily and quarterly limits) in one or more open-market transactions.

Tarrytown, New York Leases

We lease laboratory and office facilities in Tarrytown, New York. On December 30, 2016, we entered into a Purchase Agreement with BMR-Landmark at Eastview LLC and BMR-Landmark at Eastview IV LLC (collectively, BMR), pursuant to which we agreed to purchase BMR's Tarrytown, New York facilities (the Facility) for a purchase price of $720.0 million. We occupy a significant portion of the Facility, with the remaining rentable area under leases to third-party tenants. In accordance with the terms of the Purchase Agreement, we paid $57.0 million toward the purchase price to BMR in December 2016.

On March 3, 2017, we entered into a Participation Agreement with Banc of America Leasing & Capital LLC (BAL), as lessor, and a syndicate of lenders (collectively, the Participants). The Participation Agreement provided for lease financing in connection with the acquisition by BAL of the Facility and our lease of the Facility from BAL. On March 3, 2017, we assigned our right to take title to the Facility under the Purchase Agreement to BAL, and the Participants advanced $720.0 million, which was used by BAL to finance the purchase price for the Facility and to reimburse us for the $57.0 million payment we made to BMR in December 2016.

On March 3, 2017, we also entered into a lease agreement (the Lease) with BAL, pursuant to which we have leased the Facility from BAL for a five-year term. As a result of entering into the lease agreement, certain parts of the Facility became subleased from us by existing third-party tenants. The Lease requires us to pay all maintenance, insurance, taxes, and other costs arising out of the use of the Facility. We are also required to make monthly payments of basic rent during the term of the Lease in an amount equal to a variable rate per annum based on the one-month London Interbank Offered Rate (LIBOR), plus an applicable margin that varies with our debt rating and total leverage ratio.

The Participation Agreement and the Lease include an option for us to elect to extend the maturity date of the Participation Agreement and the term of the Lease for an additional five-year period, subject to the consent of all the Participants and certain other conditions. We also have the option prior to the end of the term of the Lease to (a) purchase the Facility by paying an amount equal to the outstanding principal amount of the Participants' advances under the Participation Agreement, all accrued and unpaid interest and yield thereon, and all other outstanding amounts under the Participation Agreement, the Lease, and certain related documents or (b) sell the Facility to a third party on behalf of BAL. The advances under the Participation Agreement mature, and all amounts outstanding thereunder will become due and payable in full at the end of the term of the Lease.

The Participation Agreement and the Lease contain financial and operating covenants, which are substantially similar to the covenants set forth in our Credit Facility. We were in compliance with all covenants of the Participation Agreement and the Lease as of December 31, 2017.

Funding Requirements

The amount required to fund operations will depend on various factors, including revenues from net product sales, the potential regulatory approval and commercialization of our product candidates and the timing thereof, the status of competitive products, the success of our research and development programs, the potential future need to expand our professional and support staff and facilities, the status of patents and other intellectual property rights (and future litigation related thereto), the delay or failure of a clinical trial of any of our potential drug candidates, and the continuation, extent, and success of our collaborations (in particular those with Sanofi and Bayer). We believe that our existing capital resources, borrowing availability under our revolving credit facility, funds generated by anticipated EYLEA net product sales, and, as described above under Part 1, Item 1. "Business - Collaborations," funding for reimbursement of research and development costs that we are entitled to receive under our collaboration agreements, will enable us to meet our projected operating needs for the foreseeable future.

The following table summarizes our contractual obligations as of December 31, 2017.

						Payments Due by Period
(In millions)		Total				Less than one year				1 to 3 years				3 to 5 years				Greater than 5 years
Purchase and other obligations (1)		$	1,404.3			$	816.9			$	485.9			$	62.8			$	38.7
Capital and facility lease obligations (2)		105.7				21.1				50.1				34.5				—
Operating leases		21.9				9.0				7.0				4.4				1.5
Total contractual obligations		$	1,531.9			$	847.0			$	543.0			$	101.7			$	40.2

(1)	Purchase and other obligations primarily relate to research and development commitments, including those related to clinical trials, and capital expenditures. Our obligation to pay certain of these amounts may increase or be reduced based on relevant future events.

(2)	Represents rent payments with respect to capital lease and facility lease obligations in connection with our property leases in Tarrytown, New York, as described under "Tarrytown, New York Leases" above and Note 12 to our Consolidated Financial Statements. Amounts in the table above exclude the purchase price we would be obligated to pay if we were to exercise our option to purchase the Facility.

Liabilities for unrecognized tax benefits, totaling $146.2 million at December 31, 2017, are not included in the table of contractual obligations above as, due to their nature, there is a high degree of uncertainty regarding the period of potential future cash settlement with taxing authorities. See Note 16 to our Consolidated Financial Statements.

We expect continued increases in our expenditures, particularly in connection with our research and development activities (including preclinical and clinical programs). The amount of funding that will be required for our clinical programs depends upon the results of our research and preclinical programs and early-stage clinical trials, regulatory requirements, the duration and results of clinical trials underway and of additional clinical trials that we decide to initiate, and the various factors that affect the cost of each trial. Under certain collaboration agreements, the amount of funding for reimbursement of research and development costs that we are entitled to receive is capped at a specified amount; therefore, we may elect to independently fund certain research and development costs in excess of such capped amounts. Pursuant to the Antibody Discovery Agreement, as amended, Sanofi was

responsible for funding up to $130.0 million of our antibody discovery activities in 2017. Our Antibody Discovery Agreement with Sanofi ended on December 31, 2017 and, therefore, there will be no funding from Sanofi under the Antibody Discovery Agreement beyond 2017.

Clinical trial costs are dependent, among other things, on the size and duration of trials (for example, we have several ongoing late-stage clinical trials which are large and for which we expect to incur significant costs), fees charged for services provided by clinical trial investigators and other third parties, the costs for manufacturing the product candidate for use in the trials, and for supplies, laboratory tests, and other expenses.

We anticipate continuing to incur substantial commercialization costs for EYLEA, Dupixent, Praluent, and Kevzara, as well as in connection with our late-stage antibody product candidates, including cemiplimab. Commercialization costs over the next few years will depend on, among other things, the market potential for product candidates, whether commercialization costs are shared with a collaborator, regulatory approval of additional product candidates, and whether we may be required to pay additional royalties or share the profits from sales of products pursuant to our license or collaboration agreements or otherwise.

We expect that expenses related to the filing, prosecution, defense, and enforcement of patents and other intellectual property will be substantial.

We enter into research collaboration and licensing agreements that may require us to pay (i) amounts upon the achievement of various development and commercial milestones, which, in the aggregate, could be significant, and/or (ii) royalties calculated based on a percentage of net product sales. The payment of these amounts, however, is contingent upon the occurrence of various future events, which have a high degree of uncertainty of occurring and for which the specific timing cannot be predicted. Because of these factors, such payments are not included in the table of contractual obligations above. See Note 3 and Note 12 to our Consolidated Financial Statements.

Under our Antibody and IO Collaborations with Sanofi and our collaboration with Bayer for EYLEA outside the United States, we and our collaborator share profits and losses in connection with commercialization of drug products. Profits or losses under each collaboration are measured by calculating net sales less cost of goods sold and shared commercialization and other expenses. If the applicable collaboration is profitable, we have contingent contractual obligations to reimburse Sanofi and Bayer for a defined percentage (generally 50%) of agreed-upon development expenses funded by Sanofi and Bayer. These reimbursements would be deducted each quarter, in accordance with a formula, from our share of the collaboration profits (and, for our EYLEA collaboration with Bayer, inclusive of our percentage on product sales in Japan) otherwise payable to us, unless, in the case of EYLEA, we elect to reimburse these expenses at a faster rate. As of December 31, 2017, our contingent reimbursement obligation to Bayer for EYLEA was approximately $251 million and our contingent reimbursement obligation to Sanofi in connection with the companies' Antibody Collaboration and IO Collaboration was approximately $2,558 million and $22 million, respectively. Therefore, we expect that, for the foreseeable future, a portion of our share of profits from sales of EYLEA outside the United States and a portion of our share of profits, if any, from sales of Dupixent, Praluent, Kevzara, and cemiplimab (if approved) will be used to reimburse our collaborator for these obligations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are currently material or reasonably likely to be material to our consolidated financial position or results of operations.

Future Impact of Recently Issued Accounting Standards

See Note 1 to our Consolidated Financial Statements for a summary of recently issued accounting standards.