Regeneron Reports Second Quarter 2008 Financial and Operating Results

TARRYTOWN, N.Y.--(Business Wire)--
Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) today announced
financial and operating results for the second quarter of 2008. The
Company reported a net loss of $18.5 million, or $0.23 per share
(basic and diluted), for the second quarter of 2008 compared with a
net loss of $26.8 million, or $0.41 per share (basic and diluted), for
the second quarter of 2007. The Company reported a net loss of $30.1
million, or $0.38 per share (basic and diluted), for the six months
ended June 30, 2008 compared with a net loss of $56.7 million, or
$0.86 per share (basic and diluted), for the same period in 2007.

At June 30, 2008, cash, restricted cash, and marketable securities
totaled $744.5 million compared with $846.3 million at December 31,
2007. In the second quarter of 2008, the Company repurchased $81.3
million of its convertible senior subordinated notes. At June 30,
2008, $118.7 million of these convertible notes, which mature in
October 2008, remained outstanding.

Current Business Highlights

ARCALYST(R) (rilonacept) - Inflammatory Diseases

In February 2008, the Company received marketing approval from the
U.S. Food and Drug Administration (FDA) for ARCALYST(R) (rilonacept)
Injection for Subcutaneous Use for the treatment of
Cryopyrin-Associated Periodic Syndromes (CAPS), including Familial
Cold Auto-inflammatory Syndrome (FCAS) and Muckle-Wells Syndrome (MWS)
in adults and children 12 and older. In March 2008, ARCALYST became
available for prescription in the United States and the Company began
making shipments to its distributors. ARCALYST, an interleukin-1
(IL-1) blocker, is the only therapy approved for patients with CAPS, a
group of rare, inherited, auto-inflammatory conditions characterized
by life-long, recurrent symptoms of rash, fever/chills, joint pain,
eye redness/pain, and fatigue. Intermittent, disruptive exacerbations
or flares can be triggered at any time by exposure to cooling
temperatures, stress, exercise, or other unknown stimuli. ARCALYST has
also received Orphan Drug designation in the European Union for the
treatment of CAPS.

Since ARCALYST became available for commercial sale, the Company
has been transitioning the patients who participated in the CAPS
pivotal study from clinical study drug to commercial quantities of
ARCALYST. The Company expects this transition process to be completed
this year and currently projects shipments of ARCALYST to its
distributors to total approximately $10 million in 2008.

A Phase 2 safety and efficacy trial of ARCALYST is underway in the
prevention of gout flares induced by the initiation of uric
acid-lowering drug therapy used to control gout, with results expected
in September 2008. The Company is also evaluating the potential use of
ARCALYST(R) (rilonacept) in other indications in which IL-1 may play a
role.

Aflibercept (VEGF Trap) - Oncology

In their collaboration to develop aflibercept for the treatment of
cancer, Regeneron and sanofi-aventis currently are enrolling patients
in four Phase 3 trials that combine aflibercept with standard
chemotherapy regimens. One trial is evaluating aflibercept as a 2nd
line treatment for metastatic colorectal cancer in combination with
FOLFIRI (Folinic Acid (leucovorin), 5-fluorouracil, and irinotecan). A
second trial is evaluating aflibercept as a 1st line treatment for
metastatic pancreatic cancer in combination with gemcitabine. A third
trial is evaluating aflibercept as a 1st line treatment for metastatic
androgen independent prostate cancer in combination with
docetaxel/prednisone. The fourth trial is evaluating aflibercept as a
2nd line treatment for metastatic non-small cell lung cancer in
combination with docetaxel. All four trials are studying the current
standard of chemotherapy care for the cancer being studied with and
without aflibercept. In addition, a Phase 2 study of aflibercept in
1st line metastatic colorectal cancer in combination with Folinic Acid
(leucovorin), 5-fluorouracil, and oxaliplatin is expected to begin
later in 2008.

In May 2008, Regeneron and sanofi-aventis reported results of a
randomized, double-blind, Phase 2 study of 215 women with advanced
ovarian cancer (AOC) who were treated with aflibercept as a
single-agent at a dose of either 2 milligrams per kilogram (mg/kg) or
4 mg/kg every two weeks. The study did not achieve its primary
endpoint of demonstrating that patients in either arm of the study
achieved a RECIST response rate, as assessed by an independent review
committee (IRC), that was statistically significantly greater than 5
percent. Side effects of treatment with aflibercept were typical of
this class of anti-angiogenic agents, with hypertension being the most
common grade 3/4 adverse event. The results were consistent with the
interim data of the same trial reported at the 2007 annual meeting of
the American Society of Clinical Oncology (ASCO).

More than 13 studies are being or will be conducted in conjunction
with the National Cancer Institute (NCI) Cancer Therapy Evaluation
Program (CTEP) evaluating aflibercept as a single agent or in
combination with chemotherapy regimens in a variety of cancer
indications. At the 2008 ASCO meeting, investigators reported
preliminary results of a study of single-agent aflibercept in 48
patients with either relapsed or first recurrence
temozolomide-resistant glioblastoma multiforme or anaplastic glioma.
Responses were achieved in 50 percent of patients with anaplastic
glioma and 30 percent of patients with glioblastoma. Grade 3 adverse
events included fatigue, hypertension, hand-foot syndrome,
lymphopenia, thrombosis, and proteinuria.

VEGF Trap-Eye - Eye Diseases

VEGF Trap-Eye is a specially purified and formulated form of the
VEGF Trap for use in intraocular applications. Regeneron and Bayer
HealthCare initiated a Phase 3 global development program of VEGF
Trap-Eye in the neovascular form of Age-related Macular Degeneration
(wet AMD) in the third quarter of 2007. The first trial, known as VIEW
1 (VEGF Trap: Investigation of Efficacy and Safety in Wet age-related
macular degeneration), is comparing VEGF Trap-Eye and ranibizumab
(Lucentis(R), a registered trademark of Genentech, Inc.), an
anti-angiogenic agent approved for use in wet AMD. The trial is
evaluating dosing intervals of four and eight weeks for VEGF Trap-Eye,
compared with ranibizumab dosed according to its U.S. label every four
weeks over the first year. In May 2008, Bayer HealthCare initiated a
second, similar Phase 3 trial, known as VIEW 2, in the European Union
and other parts of the world outside the U.S.

In April 2008, Regeneron and Bayer HealthCare announced the
32-week endpoint results of a Phase 2 study evaluating VEGF Trap-Eye
in wet AMD, which were presented at the 2008 Association for Research
in Vision and Ophthalmology (ARVO) meeting in Fort Lauderdale,
Florida. The 32-week analysis showed that VEGF Trap-Eye dosed on a PRN
(as-needed) dosing schedule maintained the statistically significant
gain in visual acuity achieved after an initial 12-week fixed-dosing
phase.

Regeneron and Bayer HealthCare are also developing VEGF Trap-Eye
in diabetic macular edema (DME) and plan to initiate a Phase 2 study
in patients with DME.

Monoclonal Antibodies

Regeneron and sanofi-aventis are collaborating on the discovery,
development, and commercialization of fully human monoclonal
antibodies generated by Regeneron using its VelocImmune(R) technology.
The first therapeutic antibody to enter clinical development under the
collaboration is REGN88, an antibody to the interleukin-6 receptor
(IL-6R) that is being evaluated in rheumatoid arthritis. The Company
plans to file Investigational New Drug Applications (INDs) for an
antibody to Delta-like ligand-4 (Dll4) and one additional antibody
product candidate by the end of 2008. The Company and sanofi-aventis
plan to advance two to three new antibodies into clinical development
each year.

Financial Results

Revenue

Regeneron's total revenue increased to $60.7 million in the second
quarter of 2008 from $22.2 million in the same quarter of 2007 and to
$117.0 million for the first six months of 2008 from $38.0 million for
the same period of 2007. Contract research and development revenue in
the first half of 2008 principally related to the Company's
aflibercept and antibody collaborations with sanofi-aventis and the
Company's VEGF Trap-Eye collaboration with Bayer HealthCare. In the
first half of 2007, contract research and development revenue
principally related to the Company's aflibercept collaboration with
sanofi-aventis. Technology licensing revenue related to the Company's
VelocImmune license agreements with AstraZeneca and Astellas.

Regeneron recognized contract research and development revenue of
$12.4 million in the second quarter of 2008 and $26.2 million for the
first six months of 2008 related to the Company's aflibercept
collaboration with sanofi-aventis, compared with $13.5 million and
$25.3 million, respectively, for the same periods of 2007. Contract
research and development revenue from the collaboration consisted of
reimbursement of aflibercept development expenses incurred by the
Company plus recognition of amounts related to $105.0 million of
previously received and deferred non-refundable, up-front payments.
Reimbursement of expenses decreased to $10.3 million in the second
quarter of 2008 from $11.3 million in the comparable quarter of 2007,
and increased to $22.0 million in the first six months of 2008 from
$20.8 million in the same period of 2007. With respect to the $105.0
million of up-front payments from sanofi-aventis, $2.1 million was
recognized in the second quarter of 2008 compared to $2.2 million in
the same quarter of 2007, and $4.2 million was recognized in the first
six months of 2008 compared to $4.5 million in the same period of
2007.

Sanofi-aventis also incurs aflibercept development expenses
directly and these expenses are increasing because of the growing
number of clinical trials sanofi-aventis is overseeing in the oncology
program. During the term of the aflibercept collaboration,
sanofi-aventis pays 100 percent of agreed-upon aflibercept development
expenses incurred by both companies. Following commercialization of an
aflibercept product, Regeneron, from its 50 percent share of
aflibercept profits, will reimburse sanofi-aventis for 50 percent of
aflibercept development expenses previously paid by sanofi-aventis.

Regeneron recognized contract research and development revenue of
$26.2 million in the second quarter of 2008 and $48.1 million in the
first half of 2008 related to the Company's antibody collaboration
with sanofi-aventis. In the second quarter, contract research and
development revenue from the antibody collaboration consisted of $17.3
million for reimbursement of the Company's expenses under the
collaboration's discovery agreement, $6.3 million for reimbursement of
the Company's development expenses, primarily related to REGN88, and
$2.6 million related to an $85.0 million non-refundable, up-front
payment, which was deferred upon receipt in December 2007. In the
first half of 2008, contract research and development revenue from the
antibody collaboration consisted of $32.4 million for reimbursement of
the Company's expenses under the discovery agreement, $10.5 million
for reimbursement of the Company's development expenses, primarily
related to REGN88, and $5.2 million related to the $85.0 million
up-front payment.

In connection with the Company's VEGF Trap-Eye collaboration with
Bayer HealthCare, the Company received a $75.0 million non-refundable,
up-front payment in October 2006 and a $20.0 million milestone payment
in August 2007. Through September 30, 2007 all payments received from
Bayer HealthCare, including the up-front and milestone payments and
cost-sharing reimbursements were fully deferred and included in
deferred revenue. In the fourth quarter of 2007, the Company commenced
recognizing previously deferred payments from Bayer HealthCare and
cost sharing of the Company's VEGF Trap-Eye development expenses in
the Company's Statement of Operations through a cumulative catch-up.
The $75.0 million non-refundable, up-front license payment and $20.0
million milestone payment are being recognized as contract research
and development revenue over the related estimated performance period.
In periods when the Company recognizes VEGF Trap-Eye development
expenses that it incurs under the collaboration, the Company also
recognizes, as contract research and development revenue, the portion
of those VEGF Trap-Eye development expenses that is reimbursable from
Bayer HealthCare. In periods when Bayer HealthCare incurs agreed upon
VEGF Trap-Eye development expenses that benefit the collaboration and
Regeneron, the Company also recognizes, as additional research and
development expense, the portion of Bayer HealthCare's VEGF Trap-Eye
development expenses that the Company is obligated to reimburse.

In the second quarter of 2008, the Company recorded $10.2 million
of contract research and development revenue from Bayer HealthCare,
consisting of $3.3 million related to the $75.0 million up-front
licensing payment and the $20.0 million milestone payment and $6.9
million related to the portion of the Company's second quarter 2008
VEGF Trap-Eye development expenses that is reimbursable from Bayer
HealthCare. In the first half of 2008, the Company recorded $19.2
million of contract research and development revenue from Bayer
HealthCare, consisting of $6.6 million related to the up-front and
milestone payments and $12.6 million related to the portion of the
Company's VEGF Trap-Eye development expenses for the first half of
2008 that is reimbursable from Bayer HealthCare.

Regeneron has entered into non-exclusive license agreements with
AstraZeneca and Astellas that allow those companies to utilize
VelocImmune(R) technology in their internal research programs to
discover human monoclonal antibodies. Each company made a $20.0
million up-front, non-refundable payment in 2007 and agreed to make up
to five additional annual payments of $20.0 million, subject to the
ability to terminate their agreements after making three additional
payments. Upon receipt, these payments are deferred and are recognized
as revenue ratably over approximately the ensuing year of each
agreement. Regeneron will also receive a mid-single-digit royalty on
sales of any antibodies discovered utilizing VelocImmune. In the
second quarter and for the first six months of 2008, the Company
recognized $10.0 million and $20.0 million, respectively, of
technology licensing revenue related to these agreements. In the
second quarter and for the first six months of 2007, the Company
recognized $6.3 million and $8.4 million, respectively, of technology
licensing revenue related to these agreements.

ARCALYST(R) (rilonacept) Product Sales

In March 2008, the Company commenced shipping ARCALYST to its
distributors. During the second quarter and first half of 2008, the
Company shipped $1.6 million and $2.4 million, respectively, of
ARCALYST, which was fully deferred at June 30, 2008 and classified as
deferred revenue in the Company's financial statements.

Expenses

Total operating expenses for the second quarter of 2008 were $80.0
million, 52 percent higher than the same period in 2007, and $152.3
million for the first six months of 2008, 49 percent higher than the
same period in 2007. Average headcount increased to 771 in the second
quarter of 2008 from 618 in the same period of 2007 and increased to
742 for the first half of 2008 from 602 in the same period of 2007,
primarily as a result of the Company's expanding research and
development activities directed toward preclinical and clinical
development of product candidates, including ARCALYST, aflibercept,
VEGF Trap-Eye, and monoclonal antibodies (including REGN88 and the
Dll4 antibody).

Operating expenses included non-cash compensation expense related
to employee stock option and restricted stock awards of $8.2 million
in the second quarter of 2008 and $16.5 million for the first six
months of 2008, compared with $6.9 million and $13.5 million,
respectively, for the same periods of 2007.

Research and development (R&D) expenses increased to $66.6 million
in the second quarter of 2008 from $43.9 million in the comparable
quarter of 2007, and to $127.8 million in the first six months of 2008
from $85.1 million in the same period of 2007. The Company incurred
higher R&D costs primarily related to additional R&D headcount,
clinical development costs for VEGF Trap-Eye and ARCALYST, and costs
related to manufacturing supplies of REGN88, VEGF Trap-Eye, and the
Dll4 antibody.

Selling, general, and administrative expenses increased to $13.4
million in the second quarter of 2008 from $8.9 million in the
comparable quarter of 2007, and to $24.5 million in the first six
months of 2008 from $17.1 million in the same period of 2007. In the
first half of 2008, the Company incurred costs associated with the
launch of ARCALYST. In addition, the Company incurred higher
compensation expense and recruitment costs associated with expanding
the Company's headcount, and higher professional fees related to
various general corporate matters.

Other Income and Expense

Investment income decreased to $4.5 million in the second quarter
of 2008 from $6.8 million in the comparable quarter of 2007 and to
$11.8 million in the first half of 2008 compared to $13.6 million in
the first half of 2007. The decrease in investment income resulted
primarily from lower yields on our cash and marketable securities,
partly offset by higher cash and marketable securities balances in
2008 versus 2007.

In the second quarter of 2008, the Company repurchased $81.3
million in principal amount of its 5.5 percent Convertible Senior
Subordinated Notes due October 17, 2008. In connection with the
repurchased notes, the Company recognized a $0.9 million loss on early
extinguishment of debt.

About Regeneron Pharmaceuticals

Regeneron is a fully integrated biopharmaceutical company that
discovers, develops, and commercializes medicines for the treatment of
serious medical conditions. In addition to ARCALYST(R) (rilonacept)
Injection for Subcutaneous Use, its first commercialized product,
Regeneron has therapeutic candidates in clinical trials for the
potential treatment of cancer, eye diseases, and inflammatory
diseases, and has preclinical programs in other diseases and
disorders. Additional information about Regeneron and recent news
releases are available on Regeneron's web site at www.regeneron.com

This news release discusses historical information and includes
forward-looking statements about Regeneron and its products,
development programs, finances, and business, all of which involve a
number of risks and uncertainties, such as risks associated with
preclinical and clinical development of Regeneron's drug candidates,
determinations by regulatory and administrative governmental
authorities which may delay or restrict Regeneron's ability to
continue to develop or commercialize its product and drug candidates,
competing drugs that are superior to Regeneron's product and drug
candidates, uncertainty of market acceptance of Regeneron's product
and drug candidates, unanticipated expenses, the availability and cost
of capital, the costs of developing, producing, and selling products,
the potential for any collaboration agreement, including Regeneron's
agreements with the sanofi-aventis Group and Bayer HealthCare, to be
canceled or to terminate without any product success, risks associated
with third party intellectual property, and other material risks. A
more complete description of these and other material risks can be
found in Regeneron's filings with the United States Securities and
Exchange Commission (SEC), including its Form 10-K for the year ended
December 31, 2007 and Form 10-Q for the quarter ended March 31, 2008.
Regeneron does not undertake any obligation to update publicly any
forward-looking statement, whether as a result of new information,
future events, or otherwise unless required by law.

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*T
REGENERON PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
(In thousands)

June 30, December 31,
2008 2007
-------- ------------

ASSETS
Cash, restricted cash, and marketable securities $744,493 $846,279
Receivables 32,838 18,320
Property, plant, and equipment, net 64,231 58,304
Other assets 9,663 13,355
-------- ------------

Total assets $851,225 $936,258
======== ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 38,289 $ 39,232
Deferred revenue 243,286 236,759
Notes payable 118,653 200,000
Stockholders' equity 450,997 460,267
-------- ------------

Total liabilities and stockholders'
equity $851,225 $936,258
======== ============
*T

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*T
REGENERON PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)

For the three months For the six months
ended June 30, ended June 30,
2008 2007 2008 2007
---------- --------- --------- ---------

Revenues
Contract research and
development $ 50,653 $ 15,917 $ 97,036 $ 29,562
Technology licensing 10,000 6,278 20,000 8,421
---------- --------- --------- ---------
60,653 22,195 117,036 37,983
---------- --------- --------- ---------

Expenses
Research and development 66,577 43,864 127,847 85,099
Selling, general, and
administrative 13,465 8,935 24,489 17,137
---------- --------- --------- ---------
80,042 52,799 152,336 102,236
---------- --------- --------- ---------

Loss from operations (19,389) (30,604) (35,300) (64,253)
---------- --------- --------- ---------

Other income (expense)
Investment income 4,535 6,841 11,839 13,584
Interest expense (2,674) (3,011) (5,685) (6,022)
Loss on early
extinguishment of debt (931) (931)
---------- --------- --------- ---------
930 3,830 5,223 7,562
---------- --------- --------- ---------

Net loss $(18,459) $(26,774) $(30,077) $(56,691)
========== ========= ========= =========

Net loss per share amounts,
basic and diluted $ (0.23) $ (0.41) $ (0.38) $ (0.86)

Weighted average shares
outstanding, basic and
diluted 78,689 65,950 78,591 65,757
*T

Regeneron Pharmaceuticals, Inc.
Investor Relations:
914-345-7640
invest@regeneron.com
or
Media Relations:
Laura Lindsay, 914-345-7800
laura.lindsay@regeneron.com
or
Lauren Tortorete, 212-845-5609
ltortorete@biosector2.com

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