Item 6. Selected Financial Data

The selected financial data set forth below for the years ended December 31, 2018, 2017, and 2016 and as of December 31, 2018 and 2017 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, 2015 and 2014 and as of December 31, 2016, 2015, and 2014 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 millions, except per share data)		2018				2017				2016				2015				2014
Statement of Operations Data:
Revenues:
Net product sales		$	4,106.2			$	3,718.5			$	3,338.4			$	2,689.5			$	1,750.8
Sanofi and Bayer collaboration revenue		2,187.8				1,815.3				1,403.0				1,339.4				1,036.9
Other revenue		416.8				338.4				119.0				74.8				31.9
		6,710.8				5,872.2				4,860.4				4,103.7				2,819.6
Expenses:
Research and development		2,186.1				2,075.1				2,052.3				1,620.6				1,271.4
Selling, general, and administrative		1,556.2				1,320.4				1,177.7				838.5				519.3
Cost of goods sold		180.0				202.5				194.6				241.7				129.0
Cost of collaboration and contract manufacturing		254.1				194.6				105.1				151.0				76.0
		4,176.4				3,792.6				3,529.7				2,851.8				1,995.7
Income from operations		2,534.4				2,079.6				1,330.7				1,251.9				823.9
Other income (expense), net		19.1				(1.1		)		(0.9		)		(26.8		)		(62.7		)
Income before income taxes		2,553.5				2,078.5				1,329.8				1,225.1				761.2
Income tax expense (1)		(109.1		)		(880.0		)		(434.3		)		(589.0		)		(423.1		)
Net income		$	2,444.4			$	1,198.5			$	895.5			$	636.1			$	338.1
Net income per share - basic		$	22.65			$	11.27			$	8.55			$	6.17			$	3.36
Net income per share - diluted		$	21.29			$	10.34			$	7.70			$	5.52			$	2.98
		As of December 31,
(In millions)		2018				2017				2016				2015				2014
Balance Sheet Data:
Cash, cash equivalents, and marketable securities (current and non-current)		$	4,564.9			$	2,896.0			$	1,902.9			$	1,677.4			$	1,360.6
Total assets		11,734.5				8,764.3				6,973.5				5,609.1				3,837.7
Convertible senior notes (current and non-current)		—				—				—				10.8				146.8
Capital and facility lease obligations (current and non-current)		708.5				703.5				481.1				364.7				312.3
Stockholders' equity		8,757.3				6,144.1				4,449.2				3,654.8				2,550.3

(1) Income taxes for the year ended December 31, 2018 includes the $162.1 million net impact of the Company's sale of non-inventory related assets between foreign subsidiaries. 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. See Note 16 to our Consolidated Financial Statements 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 diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, neuromuscular diseases, infectious diseases, and rare diseases.

As described in Part I, Item 1. "Business," we currently have seven products that have received marketing approval and 21 product candidates in clinical development, all of which were discovered in our research laboratories. Also refer to Part I, Item 1. "Business" for a summary of key events in 2018 and 2019 to date, and plans for the remainder of 2019, related to our clinical programs.

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 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, Kevzara, and Libtayo. 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

During the first quarter of 2018, we adopted Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. Under the terms of the new standard, revenue is measured as the amount of consideration we expect to be entitled to in exchange for transferring promised goods or providing services to a customer, and is recognized when (or as) we satisfy performance obligations under the terms of a contract.

Product Revenue

Product sales consist of U.S. sales of EYLEA, Libtayo, and ARCALYST. We record revenue from product sales upon delivery to our distributors and specialty pharmacies (collectively, our customers). Revenue from product sales is recognized at a point in time when our customer is deemed to have obtained control of the product, which generally occurs upon receipt by our customers.

The amount of revenue we recognize from product sales varies due to rebates, chargebacks, and discounts provided under governmental and other programs, distribution-related fees, and other sales-related deductions. In order to determine the transaction price, we estimate, utilizing the expected value method, the amount of variable consideration that we will be entitled to. This estimate is based upon contracts with customers and government agencies, statutorily-defined discounts applicable to government-funded programs, historical experience, estimated payer mix, 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. Refer to the "Results of Operations - Revenues - Net Product Sales" section below for further details regarding our provisions, and credits/payments, for sales-related deductions.

Collaboration Revenue

We have entered into various agreements related to our activities to research, develop, manufacture, and commercialize product candidates and utilize our technology platforms. We earn collaboration revenue in connection with collaboration agreements to utilize our technology platforms and develop and/or commercialize product candidates. Depending on the terms of the arrangement, we may defer the recognition of all or a portion of the consideration received because the performance obligations are satisfied over time.

Our collaboration agreements may require us to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. In agreements involving multiple goods or services promised to be transferred to a customer, we must assess, at the inception of the contract, whether each promise represents a separate performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation.

At the inception of the contract, the transaction price reflects the amount of consideration we expect to be entitled to in exchange for transferring promised goods or services to our customer. We review our estimate of the transaction price each period, and make revisions to such estimates as necessary. In arrangements where we satisfy performance obligation(s) during the development phase over time, we recognize collaboration revenue over time typically using an input method on the basis of our research and development costs incurred relative to the total expected cost which determines the extent of our progress toward completion. Due to the variability in the scope of activities and length of time necessary to develop a drug product, potential delays in development programs, changes to development plans and budgets as programs progress, including if we and our collaborators decide to expand or contract our clinical plans for a drug candidate in various disease indications, and uncertainty in the ultimate requirements to obtain governmental approval for commercialization, revisions to our estimates are likely to occur periodically, and could result in material changes to the amount of revenue recognized each year in the future.

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 certain of our collaboration agreements, product sales and cost of sales may be recorded by our collaborators as they are deemed to be the principal in the transaction. We share in any profits or losses arising from the commercialization of such products, and record our share of the variable consideration, representing net product sales less cost of goods sold and shared commercialization and other expenses, as collaboration revenue in the period in which such underlying sales occur and costs are incurred by the collaborator. 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.

In arrangements where the collaborator records product sales, we may be obligated to use commercially reasonable efforts to supply commercial product to our collaborators, and may be reimbursed for our manufacturing costs as commercial product is shipped to our collaborators; however, recognition of such cost reimbursements as collaboration revenue is deferred until the product is sold by our collaborators to third-party customers.

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 noncancelable 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, restricted stock awards, and restricted stock units 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, including deferred tax assets and liabilities for expected amounts of global intangible low-taxed income (GILTI) inclusions. 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. 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

	Year Ended December 31,
(In millions, except per share data)	2018				2017				2016
Revenues	$	6,710.8			$	5,872.2			$	4,860.4
Operating expenses	(4,176.4		)		(3,792.6		)		(3,529.7		)
Other income (expense), net	19.1				(1.1		)		(0.9		)
Income before income taxes	2,553.5				2,078.5				1,329.8
Income tax expense	(109.1		)		(880.0		)		(434.3		)
Net income	$	2,444.4			$	1,198.5			$	895.5
Net income per share - diluted	$	21.29			$	10.34			$	7.70

Revenues

	Year Ended December 31,												Increase (Decrease)
(In millions)	2018				2017				2016				2018 vs. 2017				2017 vs. 2016
Net product sales in the United States:
EYLEA	$	4,076.7			$	3,701.9			$	3,323.1			$	374.8			$	378.8
Libtayo	14.8				—				—				14.8				—
ARCALYST	14.7				16.6				15.3				(1.9		)		1.3
Sanofi and Bayer collaboration revenue:
Sanofi	1,111.1				877.2				658.7				233.9				218.5
Bayer	1,076.7				938.1				744.3				138.6				193.8
Other revenue	416.8				338.4				119.0				78.4				219.4
Total revenues	$	6,710.8			$	5,872.2			$	4,860.4			$	838.6			$	1,011.8

Net Product Sales

Net product sales of EYLEA in the United States increased in 2018 compared to 2017 and 2016 due to higher sales volume, partly offset by an increase in sales-related deductions primarily due to payer sales mix and new rebate and discount programs. In addition, on September 28, 2018, the FDA approved Libtayo for the treatment of patients with metastatic or locally advanced CSCC. The following table summarizes the provisions, and credits/payments, for sales-related deductions.

(In millions)	Rebates, Chargebacks, and Discounts				Distribution- Related Fees				Other Sales- Related Deductions				Total
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
Provisions	223.4				211.0				44.5				478.9
Credits/payments	(212.2		)		(203.1		)		(57.5		)		(472.8		)
Balance as of December 31, 2018	$	41.1			$	42.0			$	8.3			$	91.4

Sanofi Collaboration Revenue

		Year Ended December 31,
(In millions)		2018				2017				2016
Antibody:
Reimbursement of Regeneron research and development expenses - Discovery Agreement		—				$	130.0			$	130.0
Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement		$	265.3			378.4				434.9
Reimbursement of Regeneron commercialization-related expenses		417.2				368.8				305.9
Regeneron's share of losses in connection with commercialization of antibodies		(227.0		)		(442.6		)		(459.0		)
Other		103.5				119.1				28.4
Total Antibody		559.0				553.7				440.2
Immuno-oncology:
Reimbursement of Regeneron research and development expenses - Discovery Agreement		154.4				138.8				86.5
Reimbursement of Regeneron research and development expenses - License and Collaboration Agreement		157.4				101.2				52.0
Reimbursement of Regeneron commercialization-related expenses		8.9				7.0				—
Other		231.4				76.5				80.0
Total Immuno-oncology		552.1				323.5				218.5
Total Sanofi collaboration revenue		$	1,111.1			$	877.2			$	658.7

Antibodies

The lower reimbursement of antibody research and development costs in 2018 compared to 2017 and 2016 was partly due to the Company's Discovery and Preclinical Development Agreement with Sanofi ending on December 31, 2017 without any extension and, therefore, no further funding from Sanofi under the Antibody Discovery Agreement after 2017. In addition, the lower reimbursement of antibody research and development costs during 2018 compared to 2017 was primarily related to the timing of recognition of revenue related to clinical manufacturing for Dupixent and a lower proportion of development reimbursements for Dupixent that Sanofi is required to fund under our License and Collaboration Agreement (for example, following receipt of positive Phase 3 results or U.S. regulatory approval). The lower reimbursement of antibody research and development costs under our License and Collaboration Agreement in 2017, compared to 2016, was also primarily due to a lower proportion of development reimbursements for Dupixent as described above.

In 2017, the FDA and the European Commission approved Dupixent for the treatment of adult patients with moderate-to-severe atopic dermatitis. In October 2018, the FDA also approved Dupixent as an add-on maintenance therapy in patients with moderate-to-severe asthma aged 12 years and older. In 2017, the FDA and the European Commission approved Kevzara for the treatment of rheumatoid arthritis in adult patients.

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

During 2018, 2017, and 2016, we and Sanofi shared commercial expenses related to Praluent, Kevzara, and Dupixent in accordance with the companies' License and Collaboration Agreement. As such, during the same periods in which we recorded reimbursements from Sanofi related to our commercialization expenses, we also recorded our share of combined losses in connection with the companies commercializing Praluent, Kevzara, and Dupixent within Sanofi collaboration revenue. During 2018, Sanofi collaboration revenues in connection with commercialization of antibodies were primarily impacted, compared to 2017, by our share of higher net sales of Dupixent (as the product was launched at the end of March 2017), and, to a lesser extent, Praluent and Kevzara. These increases in collaboration revenue were partly offset by an increase in the collaborations' Dupixent commercialization expenses for atopic dermatitis and the launch in asthma. In 2017, Sanofi collaboration revenues in connection with commercialization of antibodies were positively impacted, compared to 2016, by higher sales of collaboration antibody products, 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. See Part 1, Item 1. "Business - Marketed Products" for a summary of global net product sales recorded by Sanofi in connection with our Antibody License and Collaboration Agreement.

Other Sanofi antibody revenue in the table above primarily includes reimbursement of commercial supplies which were manufactured by the Company, and, in 2017, 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.

Immuno-Oncology

Sanofi's reimbursement of immuno-oncology research and development costs under our IO License and Collaboration Agreement increased in 2018, compared to 2017 and 2016, due to an increase in clinical development activities for Libtayo. Reimbursement of Regeneron immuno-oncology commercialization-related expenses represents reimbursement of internal and external costs incurred by Regeneron in connection with commercializing Libtayo outside the United States.

Other Sanofi immuno-oncology revenue primarily includes recognition of a portion of the deferred revenue from $640.0 million of up-front payments received in 2015 in connection with the execution of the IO Collaboration agreements. This remaining portion of deferred revenue from the up-front payments is expected to be recognized as revenue over the remaining period the Company is obligated to satisfy its performance obligation in connection with performing development activities.

In 2018, we recorded cumulative catch-up adjustments to revenue of $135.0 million (included in other Sanofi immuno-oncology revenue in the table above) arising from changes in the estimate of the stage of completion of the collaborations' immuno-oncology programs, primarily in connection with the recent Amended IO Discovery Agreement (see Note 3 to our Consolidated Financial Statements).

Bayer Collaboration Revenue

		Year Ended December 31,
(In millions)		2018				2017				2016
Regeneron's net profit in connection with commercialization of EYLEA outside the United States		$	992.3			$	802.3			$	649.2
Reimbursement of Regeneron development expenses		10.8				31.1				27.3
Other		73.6				104.7				67.8
Total Bayer collaboration revenue		$	1,076.7			$	938.1			$	744.3

Regeneron's net profit in connection with commercialization of EYLEA outside the United States is summarized below:

		Year Ended December 31,
(In millions)		2018				2017				2016
Net product sales outside the United States		$	2,668.9			$	2,226.9			$	1,872.3
Regeneron's share of collaboration profit from sales outside the United States		$	1,045.9			$	856.1			$	703.3
Reimbursement of development expenses incurred by Bayer in accordance with Regeneron's payment obligation		(53.6		)		(53.8		)		(54.1		)
Regeneron's net profit in connection with commercialization of EYLEA outside the United States		$	992.3			$	802.3			$	649.2

Bayer records revenue from sales of EYLEA outside the United States. Bayer provides us with an estimate of our share of the profit, including the percentage of sales in Japan that we earned, from commercialization of EYLEA outside the United States for the most recent fiscal quarter.

Other Bayer revenue in the table above primarily includes reimbursement of commercial supplies which were manufactured by the Company. In 2016, we entered into an agreement with Bayer governing the joint development and commercialization outside the United States of an antibody product candidate to angiopoietin-2 (Ang2), REGN910-3, for the treatment of ocular diseases or disorders. In 2017, we reported that results from two Phase 2 studies of REGN910-3 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 the remaining amount of deferred revenue from the up-front payment received from Bayer.

Other Revenue

		Year Ended December 31,
(In millions)		2018				2017				2016
Teva collaboration revenue:
Reimbursement of Regeneron research and development expenses		$	129.5			$	115.1			$	24.2
Other		115.1				106.4				13.7
Total Teva collaboration revenue		244.6				221.5				37.9
Other revenue		172.2				116.9				81.1
Total other revenue		$	416.8			$	338.4			$	119.0

In 2016, we and Teva entered into a collaboration agreement to develop and commercialize fasinumab. In 2017, we recognized as revenue substantive development milestones of $25.0 million and $35.0 million from Teva, which are included in other Teva collaboration revenue in the table above.

In addition to Teva collaboration revenue, "Total other revenue" in the table above includes:

•	Recognition of a portion of deferred revenue from up-front and other payments received from MTPC, including a portion related to the achievement of a $20.0 million development milestone in the third quarter of 2018, and, in 2017, recognition of a substantive development milestone of $30.0 million from MTPC, in connection with our fasinumab collaboration.

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

•	Recognition of revenue related to the $165.0 million up-front payment we received in August 2010, which was deferred upon receipt and was being recognized as revenue through mid-2018, in connection with the VelocImmune license agreement with Astellas. In accordance with the terms of the license agreement, Astellas terminated the agreement effective June 2018.

•	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.

•	Recognition of revenue in connection with our agreement with BARDA to develop, test, and manufacture an antibody therapy (REGN3470-3471-3479) for the treatment of Ebola virus infection.

•	Recognition of revenue in connection with sequencing of samples by the RGC for its customers.

The $416.8 million in total other revenue for 2018 also includes the impact of adopting ASC 606, Revenue from Contracts with Customers, in 2018 as the new standard has resulted in certain changes to the timing of revenue recognition related to our collaboration

agreements. Prior period amounts have not been adjusted in connection with the adoption of this standard. See Note 1 to our Consolidated Financial Statements.

Expenses

		Year Ended December 31,												Increase (Decrease)
(In millions, except headcount data)		2018				2017				2016				2018 vs. 2017				2017 vs. 2016
Research and development		$	2,186.1			$	2,075.1			$	2,052.3			$	111.0			$	22.8
Selling, general, and administrative		1,556.2				1,320.4				1,177.7				235.8				142.7
Cost of goods sold		180.0				202.5				194.6				(22.5		)		7.9
Cost of collaboration and contract manufacturing		254.1				194.6				105.1				59.5				89.5
Total operating expenses		$	4,176.4			$	3,792.6			$	3,529.7			$	383.8			$	262.9
Average headcount		6,906				5,780				4,927				1,126				853

Our average headcount in 2018 increased compared to 2017 principally in connection with expanding our manufacturing activities and, to a lesser extent, increased research and development activities and the launches of Libtayo and Dupixent for asthma in the United States. Average headcount in 2017 increased compared to 2016 principally in connection with expanding our manufacturing activities.

Operating expenses in 2018, 2017, and 2016 included a total of $427.4 million, $507.3 million, and $559.9 million, respectively, of non-cash compensation expense related to employee stock options and restricted stock. The decrease in total non-cash compensation expense in 2018, compared to 2017, is largely attributable to a revision in our estimate of the number of stock options that are expected to be forfeited, partly offset by the immediate recognition of non-cash compensation expense in connection with annual employee grants made in December 2018 to certain retirement-eligible employees. As of December 31, 2018, unrecognized non-cash compensation expense related to outstanding stock options and unvested restricted stock was $702.6 million and $124.4 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 4.6 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.

		Year Ended December 31,												Increase (Decrease)
(In millions)		2018				2017*				2016*				2018 vs. 2017				2017 vs. 2016
Direct research and development expenses:
Dupixent (dupilumab)		$	127.3			$	199.9			$	221.6			$	(72.6	)		$	(21.7	)
Libtayo (cemiplimab)		193.6				114.2				40.5				79.4				73.7
Fasinumab		199.9				153.8				110.4				46.1				43.4
Praluent (alirocumab)		64.7				84.9				85.6				(20.2		)		(0.7		)
Other product candidates in clinical development and other research programs		293.2				288.6				391.3				4.6				(102.7		)
Total direct research and development expenses		878.7				841.4				849.4				37.3				(8.0		)
Indirect research and development expenses:
Payroll and benefits		606.7				578.5				556.1				28.2				22.4
Clinical manufacturing costs		358.6				388.2				404.9				(29.6		)		(16.7		)
Lab supplies, licensing, and other research and development costs		95.4				62.9				51.6				32.5				11.3
Occupancy and other operating costs		246.7				204.1				190.3				42.6				13.8
Total indirect research and development expenses		1,307.4				1,233.7				1,202.9				73.7				30.8
Total research and development expenses		$	2,186.1			$	2,075.1			$	2,052.3			$	111.0			$	22.8
* 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 2016 included the $75.0 million up-front payment made in connection with the license and collaboration agreement with Intellia. Research and development expenses included non-cash compensation expense of $229.0 million, $271.9 million, and $313.0 million in 2018, 2017, and 2016, respectively.

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." There is also variability in the duration and costs necessary to develop a pharmaceutical product, potential opportunities and/or uncertainties related to future indications to be studied, and the estimated cost and scope of the projects. 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. 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 2018, compared to 2017, primarily due to higher headcount and headcount-related costs, higher contributions to independent not-for-profit patient assistance organizations, an increase in commercialization-related expenses for Dupixent, and, to a lesser extent, Libtayo, and an accrual for loss contingencies associated with ongoing litigation. 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 Libtayo, partly offset by lower commercialization-related expenses associated with Praluent, and (ii) higher headcount and headcount-related costs. Selling, general, and administrative expenses also included $169.2 million, $208.4 million, and $231.2 million of non-cash compensation expense in 2018, 2017, and 2016, respectively.

Cost of Goods Sold

Cost of goods sold decreased slightly in 2018, compared to 2017, principally due to a decrease in period costs for our Limerick manufacturing facility as a result of higher commercial manufacturing activities. 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 Collaboration and Contract Manufacturing

Cost of collaboration and contract manufacturing primarily includes costs we incur in connection with producing commercial drug supplies for Sanofi and Bayer. The increase in cost of collaboration and contract manufacturing in 2018, compared to 2017, was impacted primarily due to the recognition of manufacturing costs associated with higher sales of Sanofi collaboration antibodies. These increases were partly offset by lower expenses recorded in connection with validating our Limerick manufacturing facility and lower inventory write-offs and reserves.

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 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 in 2016.

Other Income (Expense)

Other income (expense), net, in 2018 increased compared to 2017 primarily due to increased interest income earned on available-for-sale debt securities due to higher average investment balances and rising interest rates. In addition, other expenses in 2017 included 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. The increase in other income in 2018 was partly offset by the recognition of unrealized losses on equity securities. In the first quarter of 2018, we adopted Accounting Standards Update (ASU) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires us to measure equity investments at fair value with changes in fair value recognized in net income; previously, such changes in fair value were recognized in Other comprehensive income (loss).

Income Taxes

		Year Ended December 31,
(In millions, except effective tax rate)		2018				2017				2016
Income tax expense		$	(109.1	)		$	(880.0	)		$	(434.3	)
Effective tax rate		4.3		%		42.3		%		32.7		%

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 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 (GILTI)), allowing for a foreign-derived intangible income deduction and 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 rate. The provisional charge recorded in the fourth quarter of 2017 was an estimate and was subject to further analysis, interpretation, and clarification of the Act. During 2018, we recorded an income tax benefit of $68.0 million as a final adjustment to the provisional amount recorded as of December 31, 2017.

Our effective tax rate for 2018 was positively impacted, compared to the U.S. federal statutory rate, primarily by the sale of non-inventory related assets between foreign subsidiaries (for which we recorded a $162.1 million net income tax benefit), and, to a lesser extent, the federal tax credit for research activities, stock-based compensation, income earned in foreign jurisdictions with tax rates lower than the U.S. federal statutory rate, and tax planning in connection with the Act. The 2017 effective tax rate was negatively impacted by the provisional charge recorded as a result of the Act being signed into law (as described above), and was partly offset by the tax benefit associated with stock-based compensation. 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.

Liquidity and Capital Resources

Our financial condition is summarized as follows:

	As of December 31,								Increase
(In millions)	2018				2017				(Decrease)
Financial assets:
Cash and cash equivalents	$	1,467.7			$	812.7			$	655.0
Marketable securities - current	1,342.2				596.8				745.4
Marketable securities - noncurrent	1,755.0				1,486.5				268.5
	$	4,564.9			$	2,896.0			$	1,668.9
Working capital:
Current assets	$	6,447.6			$	4,335.0			$	2,112.6
Current liabilities	1,442.8				1,135.5				307.3
	$	5,004.8			$	3,199.5			$	1,805.3

As of December 31, 2018, we also had borrowing availability of $750.0 million under a revolving credit facility (see further description under "Credit Facility" below).

In addition, and as described in Part 1, Item 1. "Business - Collaborations - Collaborations with Sanofi," we and Sanofi recently entered into an Amended IO Discovery Agreement, pursuant to which Sanofi made a payment of $461.9 million to us in the first quarter of 2019.

Sources and Uses of Cash for the Years Ended December 31, 2018, 2017, and 2016

		Year Ended December 31,												Increase (Decrease)
(In millions)		2018				2017				2016				2018 vs. 2017				2017 vs. 2016
Cash flows provided by operating activities		$	2,195.1			$	1,307.1			$	1,485.9			$	888.0			$	(178.8	)
Cash flows used in investing activities		$	(1,463.0	)		$	(1,005.2	)		$	(1,046.8	)		$	(457.8	)		$	41.6
Cash flows used in financing activities		$	(77.1	)		$	(24.4	)		$	(700.5	)		$	(52.7	)		$	676.1

Cash Flows from Operating Activities

2018. Our net income of $2,444.4 million in 2018 included (i) non-cash compensation expense of $427.4 million, (ii) the recognition of cumulative catch-up adjustments of $135.0 million within revenue primarily in connection with the Amended IO Discovery Agreement, and (iii) other non-cash items, including $75.8 million in connection with Sanofi satisfying its Libtayo development funding obligation in shares of Regeneron stock (see "Sanofi Funding of Certain Development Costs" below) and $41.9 million related to unrealized losses (net) on equity securities. Deferred tax assets as of December 31, 2018 increased by $140.0 million, compared to December 31, 2017, primarily due to the impact of the Company's sale of non-inventory related assets between foreign subsidiaries.

2019. Our net income of $1,198.5 million 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 in "Results of Operations - Income Taxes") and additional tax depreciation, partly offset by an increase in deferred tax assets related to stock-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 Ang2 agreement; see "Results of Operations - Revenues" section above for further details.

2020. Our net income of $895.5 million 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 stock-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.

Cash Flows from Investing Activities

Capital expenditures were $383.1 million, $272.6 million, and $511.9 million in 2018, 2017, and 2016, respectively. Capital expenditures increased in 2018, compared to 2017, primarily due to higher capital expenditures in connection with renovations and additions at our Limerick, Ireland and Rensselaer, New York manufacturing facilities, and laboratory expansion and renovations at our Tarrytown, New York facilities.

We expect to incur capital expenditures of $410 million to $490 million in 2019 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, we paid an aggregate amount of $643.4 million to warrant holders to reduce the maximum number of shares of Common Stock issuable upon exercise of the warrants.

Credit Facility

In December 2018, 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), and contemporaneously terminated our then-existing credit agreement (the Prior Credit Agreement). The Credit Agreement was entered into on terms substantially similar to those of the Prior Credit Agreement. No borrowings were outstanding under the Prior Credit Agreement at the time of its termination.

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 $50.0 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 December 2023, 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, 2018.

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, 2018.

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 Libtayo and allocating additional funds to certain proposed activities relating to dupilumab and REGN3500. Pursuant to the Letter Agreement, we have agreed to allow Sanofi to satisfy in whole or in part its funding obligations with respect to Libtayo development and/or Dupilumab/REGN3500 Eligible Investments by selling up to an aggregate of 1,400,000 shares (of which 1,173,847 shares remain available to be sold as of December 31, 2018) 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 Libtayo 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.

During 2018, Sanofi elected to sell, and we elected to purchase (by issuing a credit towards the amount owed by Sanofi), 215,387 shares of the Company's Common Stock to satisfy Sanofi's funding obligation related to Libtayo development costs. Consequently,

we recorded $75.8 million related to the shares received as Treasury Stock during 2018. In addition, during 2018, Sanofi elected to sell, and we elected to purchase (in cash), 10,766 shares of the Company's Common Stock in connection with Sanofi's funding obligation for Dupilumab/REGN3500 Eligible Investments. Consequently, we recorded the cost of the shares received, or $4.4 million, as Treasury Stock during 2018.

Tarrytown, New York Leases

We lease laboratory and office facilities in Tarrytown, New York (the Facility). In 2016, we entered into a Purchase Agreement with the then lessor, pursuant to which we agreed to purchase the Facility for a purchase price of $720.0 million. In March 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), which provided for lease financing in connection with the acquisition by BAL of the Facility and our lease of the Facility from BAL. In March 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.

Concurrent with entering into the Participation Agreement, we also entered into a lease agreement (the Lease) for the Facility with BAL for a five-year term. 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, 2018.

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 I, 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, 2018.

						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)		$	1,794.2			$	936.9			$	649.8			$	180.1			$	27.4
Capital and facility lease obligations (2)		89.7				26.4				56.3				7.0				—
Operating leases		25.4				10.4				7.2				3.7				4.1
Total contractual obligations		$	1,909.3			$	973.7			$	713.3			$	190.8			$	31.5
(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 $189.5 million at December 31, 2018, 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.

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, Kevzara, and Libtayo. 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, and regulatory approval of additional product candidates.

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, 2018, our contingent reimbursement obligation to Bayer for EYLEA was approximately $265 million and our contingent reimbursement obligation to Sanofi in connection with the companies' Antibody Collaboration and IO Collaboration was approximately $2.786 billion and $58 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, and Kevzara 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.