Welcome to the Regeneron Pharmaceuticals First Quarter 2020 Earnings Conference Call. My name is Crystal, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I would now like to turn the conference over to Justin Holko, Vice President of Investor Relations. You may begin.

Thank you, Crystal. Good morning, good afternoon, and good evening to everyone listening around the world. Thank you for your interest in Regeneron Pharmaceuticals, and welcome to the first quarter 2020 conference call. An archive of this webcast will be available on our website. Joining me on the call today are Dr. Leonard Schleifer, Founder, President and Chief Executive Officer; Dr. George Yancopoulos, Co-Founder, President and Chief Scientific Officer; Marion McCourt, Senior Vice President and Head of Commercial; and Bob Landry, Executive Vice President and Chief Financial Officer. After our prepared remarks, we will open the call for Q&A. I would also like to remind you that remarks made on today's call include forward-looking statements about Regeneron. Such statements may include, but are not limited to, those related to Regeneron and its products and business, financial forecast and guidance, development programs and related anticipated milestones, collaborations, finances, regulatory matters, payer coverage and reimbursement issues, intellectual property, pending litigation and other proceedings, and competition. Each forward-looking statement is subject to risks and uncertainties that could cause actual results and events to differ materially from those projected in that statement. 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, including its Form 10-Q for the quarterly period ended March 31, 2020, which has been filed with the SEC today. Regeneron does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, please note that GAAP and non-GAAP measures will be discussed in today's call. Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our financial results press release, which can be accessed on our website. Additional information about those measures is also available on the investor and media section of our website. Once our call concludes, Bob Landry and the IR team will be available to answer further questions. With that, let me turn the call over to our President and Chief Executive Officer, Dr. Len Schleifer. Len?

Thank you, Justin. And thank you to everyone for joining the call. I hope all of you are staying safe and well during this difficult time. We're living in a new reality, the reality of COVID-19. I am incredibly proud of the leadership role Regeneron is taking in the fight against COVID-19. Clearly, this pandemic is unprecedented in our lifetime, for our company, our country, and the world and the world economies. Regeneron has spent decades and billions of dollars developing proprietary technologies that have created medical breakthroughs, such as Dupixent and our novel antibody cocktail for Ebola, which is now under FDA review. These same technologies are now well-purposed for finding a treatment against the SARS-CoV-2 virus. We are making rapid progress and scaling up supply of our novel antibody cocktail, which we expect to be in clinical trials this June. We are optimistic about this approach, which George will describe in greater detail. Also, we are working swiftly with our collaborator Sanofi to find a definitive answer on whether there is a role for Kevzara in helping to alleviate the devastating inflammation that affects patients who are critically afflicted with this virus. We are grateful for the tremendous partnership across industries, governments, and agencies such as the FDA and BARDA, as we unite in the common cause to eradicate this disease. Beyond our therapeutic efforts, we continue to respond to other urgent COVID-related needs. We recently produced and donated viral transport media to New York State for use in 500,000 test kits and have provided financial support to non-profits at the heart of the pandemic response, in New York and beyond. Furthermore, we are sensitive to the rapidly evolving marketplace and working with customers to ensure that patients are able to receive the treatments they need to preserve vision, as well as to treat inflammatory conditions, cancer, and other ailments that persist despite the realities of social distancing. Turning to some brief commentary on the first quarter, where we delivered another strong performance. In the quarter, negative impacts from COVID-19 were minimal. Our core brands EYLEA, Dupixent, and Libtayo drove significant top and bottom line growth, based on demand, while we invested in and advanced our innovative pipeline. In this quarter, EYLEA global net product sales grew 6% to $1.85 billion, including U.S. EYLEA net sales growth of 9% to $1.17 billion. In the last two weeks of March and early April, overall demand and new patient starts were softer due to COVID-19. However, we are encouraged by the rebound in demand in the most recent weeks. Marion will give you more color on this. First quarter Dupixent sales more than doubled compared to last year and are now annualizing at more than $3.4 billion on continued market penetration and new launches in multiple disease settings. While there are early signs of impacts on new patient starts, we expect continued resilience for Dupixent during this COVID-19 period, given the profound efficacy and safety profile. With an anticipated regulatory action in pediatric atopic dermatitis later this month and other data readouts in 2020 and initiation of new Phase III trials assessing Dupixent in several other type two inflammatory diseases, this exceptional medicine continues to be positioned for long-term growth. Importantly, Dupixent is driving continued diversification of our earnings base and enhancing our strong current and long-term financial position. We also announced recently that we have completed the restructuring of our agreement with Sanofi on Praluent, which will lead to immediate accretion and further strengthen our overall portfolio. 2020 has brought urgent new priorities. Even though we are experiencing impacts to trial enrollment and new study starts, we remain on track for several significant clinical milestones particularly in oncology. Recently, we announced that our first-line clinical trial in lung cancer assessing Libtayo was stopped early on an interim analysis due to superior overall survival versus chemotherapy. We will look to submit these data to regulators as soon as possible. We also intend to submit data for the Type one basal cell carcinoma and expect new data from our bispecifics program later this year. Additionally, the long-awaited Phase 3 readout from fasinumab, our anti-nerve growth factor program for osteoarthritis pain, will occur in the coming months. Before handing the call over to George, I want to share the immense pride and gratitude we have for our people working hard at Regeneron during this time. Even in the current environment, our entire business is operating as our people drive important work forward that is essential to our mission to patients and to near and long-term value creation for shareholders. Our ability to do this rests on the talent and strength of our workforce, which in spite of COVID-related disruption maintains incredible commitment, focus, and effort to advance the breadth of Regeneron's work. They are the foundations for moving forward, our mission in normal times and especially now. We are optimistic that Regeneron and our society will prevail through these unprecedented times and we will work tirelessly to that end. Now, I'll turn the call over to George.

Thank you, Len. And since the devastating COVID-19 crisis is foremost on everyone's mind, I will first discuss our efforts in this area. As you all know, our state-of-the-art and proprietary VelociSuite technologies, which we have built over the last few decades, can be very powerful for responding to new targets and pathogens, as we recently proved by rapidly creating an antiviral antibody cocktail as an effective treatment for Ebola. Recall, the FDA recently granted priority review to this treatment for Ebola with the target action date of October 25, 2020, based on the results of the Phase 3 PALM clinical trial conducted in the Congo, which was stopped early because of our Regeneron EB3 antibody cocktail proving superior and preventing death compared to the previous standard of care, the so-called ZMapp antibody as well as to Remdesivir. In terms of COVID-19, while society is awaiting an effective vaccine that could still be a year or two away, we are employing a two-pronged approach that could serve as a useful bridge and/or as an alternative to a vaccine. First and most importantly, we are developing a novel antiviral antibody cocktail just as we did for Ebola. We have already announced that we have utilized our VelociSuite technologies to rapidly generate and select thousands of potent antiviral fully human antibodies from both our genetically humanized Velocimmune mice as well as from convalescent human volunteers, creating what we believe is the largest and deepest collection of potent antiviral antibodies to choose from. We have selected two distinct antibody cocktails from this collection, our initial cocktail as well as the backup. And we have already begun large-scale manufacturing and anticipate initiating clinical trials with the elite cocktail in June. With Ebola, we set the record of nine months from initiating the project to starting human trials. Now, we hope to break that record with five months from project initiation to the clinic. Based on our experience with Ebola and other viruses, we hope that this specifically designed antiviral approach has a significant chance for success in providing both a prophylactic treatment to prevent infection in those at risk as well as for treating those already infected and symptomatic. Our second major COVID-19 approach involves repurposing KEVZARA, our anti-IL-6 receptor antibody approved in rheumatoid arthritis. Based on a small uncontrolled case series from China, there was reason to believe that blocking the IL-6 pathway might address the underlying inflammation leading to acute respiratory distress in so-called severe COVID-19 patients, meaning hospitalized patients needing oxygen support, but not on ventilators, as opposed to so-called critical patients, who largely require ventilators. We initiated an adaptive Phase 2/3 trial to explore KEVZARA in both the severe and critical patient populations. Our initial data from both the Phase 2 and Phase 3 portions of the trial indicated that KEVZARA at least at the doses tested, which paralleled those used in the China reports, did not provide a major benefit for severe patients. On the other hand, the Phase 2 portion of the trial suggested a potential benefit in critical patients. And the Phase 3 trial in this group is ongoing. Additional efforts, both in our program and by our Sanofi partners in Europe and the rest of the world, are further testing both of these populations, including at higher doses. Our results and efforts with KEVZARA highlight the challenges with using repurposed drugs, the inability to rely on uncontrolled and even small controlled trials, and thus the importance of running large well-controlled Phase 3 studies to obtain real answers as to whether a drug has benefit and the quantitative extent of that benefit even in a pandemic setting. It is important to point out that our efforts with COVID-19 are being developed under an ongoing collaboration with BARDA, a division within the U.S. Department of Health and Human Services, and also involve incredibly collaborative relationships with so many critical partners from the FDA to the leadership of New York State to the many hospitals and physicians at the front lines, who make the effort to engage in these trials and the many stricken patients who volunteer to participate. I also want to thank all the individuals at Regeneron who have continued to work tirelessly on these programs despite all the logistical, operational, and health challenges created by the COVID-19 crisis. Moving on from COVID-19, I first want to touch upon our EYLEA programs. Physicians consider safety to be essential in selecting anti-VEGF treatment. Over the last several months, another recently approved anti-VEGF product was recently associated with a serious new vision-threatening safety concern involving occlusive retinal vasculitis in the context of intraocular inflammation. In light of the frequency and serious nature of the safety concern, Regeneron and our partner Bayer conducted a broad review of our clinical trial database as well as our post-marketing global safety database to identify any similar safety events with EYLEA. In the critical trial database from eight Phase III trials involving tens of thousands of injections, there were no reports consistent with the safety concern. Moreover, in the extensive post-marketing experience involving more than 32 million doses of EYLEA sold in more than 100 countries worldwide since its approval more than eight years ago, the rate of any possibly related safety event was less than one out of every 6 million EYLEA doses sold. And such cases were always associated with presumed infectious endophthalmitis. Thus, based on our reviews of the EYLEA clinical trial database and post-marketing surveillance, occlusive retinal vasculitis in the context of intraocular inflammation does not appear to be a safety concern with the use of EYLEA. Next, I want to discuss DUPIXENT. Later this month, we anticipate an FDA decision extending DUPIXENT approval to six to 11-year-old children suffering from atopic dermatitis. DUPIXENT would be the first biological indicator for this pediatric population. We hope this potential approval will continue to reflect the remarkable safety profile of DUPIXENT as evidenced by the absence of a black box warning or any associated serious infection risks which are often seen with immunomodulatory biologics and with JAK inhibitors. We also expect FDA action on our 300-milligram auto-injector, which would allow for an additional dimension of convenience to an already strong profile for the medicine. Additionally, later this year, we anticipate data from our Phase III pediatric asthma trial, the Phase II portion of our eosinophilic esophagitis program, and we remind you that we have pivotal studies in chronic spontaneous urticaria, prurigo nodularis, and bullous pemphigoid, as well as studies in oral immunotherapy with our collaborator Aimmune. We continue to build on DUPIXENT's story which has already changed the lives of so many people suffering from type 2 inflammatory diseases such as asthma, atopic dermatitis, and chronic rhinositis with nasal polyps, with more than 150,000 patients treated globally since launch. Next, I'm excited to share important updates on our immuno-oncology efforts. As you know, most cancer patients are still not successfully addressed with immune therapies leaving us with a major challenge of enhancing responsiveness in tumor settings where immune therapies already have some efficacy such as lung and melanoma, while also trying to extend the benefit to patients with tumors that are currently not highly responsive such as prostate, pancreas, and colon. Having our own effective anti-PD-1 antibody is foundational for our efforts to enhance and extend the benefits of immunotherapy as we had hoped such an antibody could play an important role both as a monotherapy but also in combination with other antibodies and bispecifics derived from our own homegrown pipeline as well as in combination with a number of collaborative agents and vaccines. Defying early optimism, developing effective anti-PD-1 antibodies has proven to be very challenging. It is remarkable that in the decade since the first approval of an immuno-oncology agent, only one PD-1 antibody has been approved as monotherapy in first-line non-small cell lung cancer. Although that therapy has on its own completely changed the paradigm of how lung cancer is treated. At the end of last year, we announced interim results from our first-line non-small cell lung cancer study in so-called PD-L1 high patients, revealing that our PD-1 antibody Libtayo as monotherapy had objective response rates of 42% compared to 22% for chemotherapy, indicating profound clinical activity. Just last week, we announced that the independent data monitoring committee's recommendation led to an early termination of this Libtayo monotherapy trial due to a highly significant improvement in overall survival, with Libtayo decreasing the risk of death by 32.4% compared to the platinum doublet chemotherapy. This result was obtained early despite a third of the patients entering the trial within the past six months, and chemotherapy patients being able to crossover to Libtayo upon disease progression. No new Libtayo safety signal was identified. We are planning to present detailed trial data at a future medical meeting and will complete regulatory submissions in the next few months. And just this morning, we announced that we had identified yet another first-in-class cancer setting where Libtayo as monotherapy exhibited profound and clinically meaningful activity, just as we had previously done for squamous cell carcinoma of the skin or CSCC, where Libtayo is rapidly becoming the standard of care. Our potentially pivotal study in second-line advanced basal cell carcinoma of the skin or BCC demonstrated clinically meaningful response rates of nearly 30% in locally advanced patients who had progressed on prior Hedgehog inhibitor treatment. Impressively, more than 85% of the patients who responded to treatment have experienced durable responses of more than 12 months. We intend to submit data to regulatory authorities in the coming months. Basal cell carcinoma presents another promising opportunity to extend our dermato-oncology portfolio beyond the current squamous cell carcinoma indication. BCC is the most common cancer in the world, while only a very small percentage of cases require systemic therapy, the extremely large incidence of this cancer means that there are still thousands of people with advanced basal cell carcinoma in need of treatment. I'd like to frame the significance of these milestones for cancer patients and for Regeneron. In aggregate, our studies have now demonstrated that Libtayo is a potent and effective PD-1 monotherapy treatment, where we now have the potential, subject to regulatory approval, to offer patients with lung cancer a competitive alternative. In addition, and very unexpectedly to some, we have now been able to identify two new cancer settings where PD-1 monotherapy demonstrates profound clinical activity based on our studies. First, advanced squamous cell carcinoma of the skin, and now advanced basal cell carcinoma of the skin. Moreover, as Libtayo is establishing itself as a leading PD-1 antibody for monotherapy, it allows us to pursue our strategy of using it in combinations to enhance and extend benefit. For example, we are investigating Libtayo in combination studies with our two classes of bispecifics, our CD3 class as well as our custom class. That is, we have already initiated a trial combining Libtayo with our PSMA costim bispecific to try to endow responsiveness in prostate cancer. We have also initiated a trial combining Libtayo with our MUC16 by CD3 bispecific to enhance responsiveness in ovarian cancer. We're also starting trials combining Libtayo with our other checkpoint inhibitors and with other collaborative assets. For example, we have initiated a trial combining Libtayo with our LAG3 antibody to try to enhance responsiveness of first-line melanoma, where we are also combining Libtayo with various collaboration assets and vaccines. I should note that, although all our programs are being impacted by the COVID-19 crisis, and additional future impacts are difficult to predict, our bispecific programs, which have been particularly affected, are ones that we are working very hard on to try to continue to enroll. Our potential pivotal programs for our CD20 by C3 bispecific are enrolling in relapse refractory follicular lymphoma in relapsed refractory diffuse large B-cell lymphoma and in this setting following CAR-T cell therapy failure. We anticipate full enrollment over the next year. And I remind you that we have demonstrated very promising initial efficacy and durability in all of these settings. Similarly, our BCMA by CD3 bispecific for myeloma is continuing to enroll in its proof-of-concept study where it continues to deliver promising activity as is our MUC16 by CD3 bispecific for ovarian carcinoma. All together, these are very exciting times for immuno-oncology here at Regeneron, as we believe we have therapies that are showing important promise as monotherapies as well as the opportunity to combine and match these therapies as is appropriate to enhance and extend the benefit for additional cancer patients in need. Before handing the call over to Marion, let me conclude with a couple of brief updates on other areas of the pipeline. We are on track to complete our regulatory submissions for evinacumab, our ANGPTL3 antibody for homozygous familial hypercholesterolemia patients later this year. Recall, in our Phase III trial, evinacumab reduced LDL or bad cholesterol by an impressive 49% in patients not well controlled with other lipid-lowering treatments including anti-PCSK9. We're also planning an FDA submission of the data package for GARETOSMAB, our Activin A Antibody for fibrodysplasia ossificans progressiva in the second half of 2020, following dramatic results showing a 90% reduction in new bone lesion formation and pending confirmation of these data from the second half of the study. We continue to explore the process of our C5 antibody and the potentially game-changing nature of the combination of this antibody with the siRNA program, which we are performing in combination with Alnylam. We continue to move forward with intent on initiating registration studies over the next 12 months. Finally, the opioid crisis continues and the need for alternative chronic pain solutions remain. We are making progress with fasinumab, our nerve growth factor antibody for osteoarthritis pain. We completed enrollment in our Phase III studies last year, and we are expecting to see data mid-year. With that, I will turn the call over to Marion.

Thank you, George. Our business performance in the first quarter reflects continued healthy demand-driven growth of our core brands, EYLEA, Libtayo, and DUPIXENT. While COVID-19 began to impact our business in the latter half of March, our first-quarter results were strong. I'm going to begin with EYLEA performance. EYLEA had an impressive start to the quarter with continued share gains. Global net sales grew 6% year-over-year to more than $1.85 billion, and U.S. net sales grew 9% to $1.17 billion versus the prior year. COVID-19 began to negatively impact EYLEA sales with a greater impact from the pandemic on patients with diabetic eye disease than on patients with wet AMD. There was a sharp decline in overall demand in the last two weeks of March and the first two weeks of April, followed by a sharp rebound in the most recent two weeks. Overall, in the month of April, demand was approximately 15% lower than the same time last year. We're encouraged by the recent rebound, although it is difficult to predict future COVID-19 impact. Despite these circumstances, we've been extremely impressed with retina specialists' efforts to ensure continuity of patient care. Physicians use EYLEA to preserve the patient's vision because of its breadth of indications, dosing flexibility, convenience, and safety. EYLEA dosing can be extended up to 12 weeks in appropriate patients, and the recently launched pre-filled syringe offers additional efficiency of care. Additionally, we've evolved our efforts to support the retinal community through virtual engagement, as well as providing patient ads to self-monitor vision. We have plans in place to support customers and meeting anticipated higher demand for EYLEA once social distancing measures are relaxed. In summary, we're confident that EYLEA can navigate through and grow beyond COVID-19. Turning to Libtayo. First-quarter global net sales were $75 million. In the U.S., sales reached $62 million, and we continue to extend Libtayo leadership as the number one systemic treatment for advanced cutaneous squamous cell carcinoma or CSCC. We continue to grow Libtayo in CSCC, with nearly 65% of CSCC patients who receive systemic therapy already being treated with an anti-PD-1. In addition to growing the market, we're also capturing more of the therapeutic class demonstrated by nearly 90% of new PD-1 patients with CSCC receiving Libtayo. We're also closely monitoring the impact of COVID-19 on Libtayo. While office visits and chemotherapy administration have declined in general, Libtayo's use remains steady and treatment decisions for eligible patients are being made on a case-by-case basis. Overall, we're proud of our progress with Libtayo. In addition, our team is busy preparing for potential future launches with our collaborator Sanofi in lung cancer and basal cell carcinoma. In 2019, the worldwide anti-PD-1 and PD-L1 market was just over $21 billion. In the U.S. alone, the 2019 market in non-small cell lung cancer was $13 billion, $8 billion of which was first-line, with the vast majority of sales still coming from KEYTRUDA with more than 200,000 new diagnoses of lung cancer in the U.S. each year; oncologists prefer having a choice in determining the most appropriate treatment for patients. Finally, moving to DUPIXENT. Global net sales in the first quarter were $855 million. In the U.S., net sales reached $679 million, representing 124% growth compared to the prior year. We continue to grow prescribing across all indications, including new-to-brand patients. In the first quarter, we did not see a material impact of COVID-19 on DUPIXENT sales. In the month of April, the rate of new patient starts on DUPIXENT was impacted due to COVID-19. DUPIXENT has several unique competitive advantages that assist physicians in today's challenging environment. It can be administered at home, does not require laboratory analysis to initiate most new patients, and DUPIXENT is not an immunosuppressant. Expected approval of the auto-injector in June will provide additional convenience for product administration. Atopic dermatitis remains a significant growth driver for DUPIXENT. We've expanded prescribing across both moderate and severe disease and the eligible treatment population continues to grow. In the first quarter of 2019, DUPIXENT was approved in adolescents, and we look forward to the PDUFA decision for 6 to 11-year-olds targeted towards the end of May. We have seen rapid uptake of DUPIXENT in adolescents since its approval, largely due to physician experience in older populations which provides comfort in its efficacy and safety in these younger patients. In asthma, DUPIXENT continues to outperform other recent biologic launches. We've seen limited volume impact from COVID-19, particularly since medications such as DUPIXENT are viable for patients to maintain respiratory function. While in early days, the asthma DTC campaign is already generating significant patient interest. Finally, our commercial efforts in chronic rhinosinusitis with nasal polyps continue to contribute meaningfully to the brand. Patients have been initiated on DUPIXENT regardless of prior surgery since approval. And during the COVID-19 pandemic, there is an even greater need for DUPIXENT in these patients due to the limited availability of elective nasal polyp surgery. Taken together, we remain committed to realizing the tremendous growth potential of DUPIXENT through expanded indications, age groups, and geographies. In closing, despite the current circumstances, our brands remain resilient. We continue to execute on our strategy and are working diligently to meet the evolving needs of our customers and patients. I'll turn the call over now to Bob.

Thanks, Marion. For the first quarter of 2020, Regeneron delivered solid results on both the top and bottom line, despite COVID-19 beginning to impact our business operations in the latter half of March. Today, I will first briefly discuss the first-quarter results and then conclude with our 2020 guidance. Effective January 1, 2020, we implemented changes to our accounting presentation related to certain reimbursements and other payments from collaborators. As such, our first-quarter 2020 and comparable 2019 financial statements have been prepared under the new accounting presentation. We made these changes to better reflect the nature of the company's revenues earned and costs incurred pursuant to arrangements with collaborators. Importantly, these changes provide a simplified presentation of our financial results. They do not impact income from operations, income taxes, net income, or net income per share. For more information regarding these changes, please refer to the slide presentation in FAQ on the Regeneron Investor Relations website. Turning now to the results. First-quarter 2020 revenues grew 33% year-over-year to $1.83 billion, driven by continued growth of both EYLEA and Libtayo, as well as higher Sanofi collaboration revenues as a result of strong performance from our DUPIXENT franchise. Non-GAAP diluted net income per share grew 48% year-over-year to $6.60 on non-GAAP net income of $771 million. Since Marion discussed our U.S. EYLEA results, I will start with our Bayer and Sanofi collaborations. Starting with the Bayer collaboration, ex-U.S. EYLEA net product sales which are reported to us by Bayer were $682 million, representing growth of 2% on a reported basis compared to the prior year. Total Bayer collaboration revenue was $281 million, an increase of 7%. We recorded $254 million for our share of net profits from EYLEA sales outside the U.S. Total Sanofi collaboration revenue, which under the new accounting presentation consists of our share of antibody profits and reimbursements for the manufacturing of commercial supplies, was $247 million in the first quarter. Our share of the profits from the commercialization of non-IO antibodies was $171 million compared to a loss of $28 million in the prior period, driven by higher DUPIXENT profits. Effective April 1, 2020, we finalized the planned PRALUENT restructuring with Sanofi. In the U.S., Regeneron will have sole responsibility for PRALUENT, and we have begun recording net product sales as of April 1. Outside the U.S., Sanofi will have sole responsibility for PRALUENT and will pay Regeneron a 5% royalty on such net product sales, which we will record in other revenue. As for Kevzara, Regeneron and Sanofi continue to assess potential terms of this restructuring following the recently launched clinical program evaluating KEVZARA in hospitalized patients with COVID-19. Moving to our expense basis starting with R&D. Non-GAAP R&D increased 23% year-over-year to $527 million, driven by advancements in our earlier-stage pipeline, higher headcount, and an increase in clinical manufacturing activities. Next, first-quarter 2020 non-GAAP SG&A expense increased 27% year-over-year to $307 million. The year-over-year increase was driven by higher headcount and commercial investments to support the continued growth of our business. First-quarter 2020 non-GAAP cost of collaboration and contract manufacturing was $139 million compared to $101 million in the first quarter of 2019. The year-over-year increase in COCM was primarily due to manufacturing costs associated with higher global sales of DUPIXENT and manufacturing costs in connection with our BARDA Ebola agreement. Finally, we introduced a new line item called other operating income and expense this quarter. This line item is located within expenses and primarily consists of the recognition of upfront payments and development milestones that were initially deferred and are recognized over time from our collaborators Sanofi, Teva, and Mitsubishi Tanabe. For the first quarter of 2020, we recorded other operating income of $40 million compared to income of $57 million recorded in the first quarter of 2019. Turning now to taxes. The non-GAAP effective tax rate was 9.5% in the first quarter of 2020 compared to 16% in the first quarter of 2019. The year-over-year decline in the non-GAAP effective tax rate was due to increased tax benefits associated with stock option exercises in the first quarter of 2020. Shifting now to cash flow and the balance sheet. For the first quarter of 2020, Regeneron generated $528 million in free cash flow. In the quarter, we repurchased $273 million worth of shares in open market transactions. The pace of share repurchases slowed considerably towards the end of the first quarter of 2020, given the recent share price appreciation. Our fully diluted share count that we report for a given quarter is highly sensitive to the average stock price. If the average stock price for the second quarter is similar to the current stock price levels, we would estimate that our weighted average share count used for calculating non-GAAP EPS for the second quarter will be in the range of 121 million to 123 million shares. Finally, to the balance sheet, we ended the quarter with cash and marketable securities of $7.2 billion in minimal debt. Now, I'd like to spend a few moments to discuss the financial outlook for the remainder of the year. We assume that the COVID-19 impact on our business will peak in the second quarter 2020. We anticipate a recovery as the year progresses, as economies gradually reopen, social distancing guidelines are relaxed, and doctor and hospital visits return to prior levels. From a supply chain and manufacturing perspective, Regeneron has historically maintained high levels of inventory in the event of a prolonged impact on our manufacturing and production capabilities. Currently, we see minimal disruptions to our supply chain and our manufacturing activities, and we have adequate supply of commercial product on hand to meet demand. Our 2020 annual financial guidance reflects our latest assessment of our business in this current environment with limited precision. Certain elements of our spend will be dictated by the continued severity and length of the COVID-19 impact in our efforts associated with KEVZARA and our SARS-CoV-2 antibody cocktail. These factors may materially impact our guidance. We will assess carefully whether further updates to our guidance may be warranted. Now moving to our 2020 financial guidance. And starting with R&D, we forecast our 2020 non-GAAP R&D expenses to be in the range of $1.9 billion to $2.04 billion. We are continuing to invest in our pipeline and research capabilities, which remain critical to the long-term growth of the business. Our oncology pipeline continues to grow, and as conditions allow, we intend to advance programs through development. Additionally, we are funding external partnership obligations, as jointly developed molecules are rapidly advancing. Our R&D guidance also includes the portion related to our COVID-19 activities where we will be reimbursed at least in part by BARDA. Unlike R&D reimbursements from collaborations which are netted in the R&D expense line item under the new accounting presentation, these reimbursements from BARDA will continue to be recorded in other revenue. Next to SG&A, we forecast our 2020 non-GAAP SG&A expenses to be in the range of $1.19 billion to $1.29 billion. We are continuing to invest for product growth now and once the COVID-19 impact abates. For EYLEA, we are continuing to make investments in diabetic eye diseases. For Libtayo, launch preparations are underway for anticipated launches in basal cell and non-small cell lung cancer. Starting this year, we are providing guidance for COGS and COCM. For COGS, we forecast 2020 non-GAAP expenses to be in the range of $295 million to $355 million, primarily comprised of U.S. EYLEA, U.S. Libtayo, and U.S. PRALUENT manufacturing costs in the payment of Sanofi for 50% of the gross margin associated with U.S. Libtayo. For COCM, we forecast 2020 non-GAAP expenses to be in the range of $600 million to $700 million, primarily comprised of global DUPIXENT, global KEVZARA, ex-U.S. EYLEA, ex-U.S. PRALUENT, and Regeneron EB3 manufacturing costs. As a reminder, we are reimbursed for COCM costs, and reimbursements are recognized within the Sanofi and Bayer collaboration revenue lines and other revenues. Reimbursements should closely approximate COCM expenses for quarterly reporting periods, subject to timing and other considerations. For the new line item of operating income and expense, we expect this to be in the range of $175 million to $205 million of income this year. And finally, the tax; we anticipate our 2020 non-GAAP effective tax guidance to be in the range of 12% to 14%. In conclusion, we had a solid start to the year despite initial impacts from COVID-19. Our balance sheet, increasingly diversified commercial portfolio, and robust pipeline enabled Regeneron to withstand the impacts of COVID-19 while making prudent investments in executing on meaningful near-term opportunities to position Regeneron for sustained long-term growth. With that, I'd like to turn the call back to Justin.

Thank you, Bob. Crystal, that concludes our prepared remarks. We'd now like to open the call for Q&A. Just a word that we have more than 20 callers in the queue, so to ensure that we are able to address as many as possible, we will answer one question from each caller before moving to the next. Please go ahead, Crystal.

Your first question comes from the line of Evan Seigerman from Credit Suisse.

Hi, all. Thank you for taking my question, and congrats on the progress this quarter. Thank you also for your efforts in combating the pandemic. So with data from both the frontline lung trial last week and basal cell carcinoma today, can you expand on what's next for your oncology franchise? How do you plan on competing with the standard of care in the frontline lung setting and more broadly across tumor types amenable to IO therapy?

So, George?

And I guess that most importantly, as we noted, the lung field is dominated by leading antibody that has produced the most impressive data. We are very excited that our monotherapy trial has delivered data that looks very impressive in terms of the overall survival endpoint. And we have an ongoing combination trial with chemotherapy as well that we're excited about having it read out over the coming year or so. And so I think that this is going to position us well in such a large opportunity, where physicians and patients are looking for alternatives to have an agent that has such profound activity as a monotherapy. But in addition, we have all these combination programs that I was referring to. We have, we believe, one of the most exciting homegrown pipelines of additional agents that we could combine to not only enhance the activity in these settings where the PD-1 monotherapies are already active, but also to extend to new settings and new indications, such as I mentioned, whether it be prostate cancer or ovarian cancer or others where right now the activity is not what we would want. So I think that we've put ourselves into a pretty exciting position, where we have some of the most exciting agents with identified profound clinical activity as monotherapies, but we now have the opportunity to mix and match these as is appropriate to enhance and extend the activity. So we're very excited about the oncology situation.

Yes. And just to add on the commercial side, it's Len, and maybe Marion can chime in. You know obviously we collaborate with Sanofi where we take the lead in the United States. They take the lead outside the United States, but we work together with them. And this disease is dominated by lung cancer. Maybe Marion, a little bit about the numbers, the incidence, prevalence, and what kind of marketplace we're going into?

Yes. So lung cancer is a disease with a very large incident population of more than 200,000 newly diagnosed patients each year. So, we do think that there's tremendous opportunity and know that oncologists prefer having a choice in determining treatment for their patients. So we're excited about the data and we'll work carefully with Sanofi on launch preparedness, and certainly have built a commercial team that has extensive experience in competitive launches. We look forward to this opportunity if in fact we have an approval for lung and for basal cell.

Thanks, Evan. Next question?

Your next question comes from the line of Geoffrey Porges with SVB Leerink.

Thank you very much and congratulations on both the surprisingly strong quarter, but also all the progress on the pipeline. George, we haven't had a lot of access to talk to you about the COVID programs. But could you just expand a little bit on the backup program what its nature is? And the related question of what do you view as the risk of both ADE and also of the antibodies in some way contributing adversely to the inflammatory syndrome in the tail end of this disease?

Yes. Those are great questions. So what we were able to generate, because we have these very robust platforms, both the ability to get fully human antibodies from our genetically humanized mouse model, as well as from recovering humans, we generated a collection of thousands and thousands of antibodies. Getting many antibodies that really were at the top end historically at the best level of binders and blockers and antiviral neutralizers that you've ever seen based on the literature and the history. And so what we did was, we simply selected several cocktails of the best antibodies where we put them together, and we created our initial cocktail and a backup cocktail just in case for some reason something goes wrong with the initial cocktail. So they're actually quite similar. It's just a different collection of antibodies for the backup as well as for the primary. Now we think that based on the history of treating infectious diseases and viral diseases with highly potent neutralizing antibodies, the risks of things such as antibody-dependent enhancement and so forth are actually quite limited. You actually see these, for example, in certain classes of viruses, the Flaviviruses, the dengue type viruses and so forth in particular, but that's because of the biology of the viruses there. With most other viruses, when you have highly potent neutralizing antibodies, these risks are mitigated. We do have, in addition to our backup collection of antibodies, we do also have our antibody cocktails made with what we call Uber-stealth constant regions, which would completely mitigate against that possibility. But for the current approaches that we're taking, we're going to be going forward with the fully armed antibodies, because we think the risks of ADE with very potent neutralizing antibodies is actually quite low. So I think that the history of antiviral antibodies, our experience the way they work, our own antibodies, and other programs, most notably in Ebola, we think that there's a very significant chance that these specifically designed, very potent neutralizing antibodies will have a significant impact on the disease. We think that there's a great chance that they can be very powerful prophylactic and preventive agents. But we also think that they can treat patients who are already symptomatic with disease. And we don't think that right now there's any evidence that suggests that the antibody response is what's contributing to the inflammatory responses in the lung. And as, of course, has already been seen and described in the disease, the majority of patients do recover, and their recovery is coincident with their producing viral responses. So altogether I think there's a lot of reason to have a lot of hope that this approach really has a chance to make a difference as we said both in prophylactic treatment, but also in treating symptomatic patients.

Thanks, Geoff.

Thanks for taking my question.

Your next question comes from the line of Cory Kasimov from JPMorgan.

Hey, good morning, Leonard. Thanks for taking the questions. Just to follow-up on Geoff's question on the COVID-19 front. George, how are you thinking about the clinical trial designs for your antibody cocktail both from a prophylactic standpoint as well as a therapeutic? And on the latter, do you plan to either go head-to-head or on top of remdesivir if you run initial studies in a hospital setting? Thank you.

Well, we're planning on doing three sets of trials in the prophylactic or prevention setting in people who are at high-risk in early treatment, that is, patients who are not at the level that they would be normally hospitalized. But patients who are identified they're symptomatic. If they do go to an ER, they are sent home, but they don't need oxygen support. However, significant number of them do develop more serious disease and then have to return to the hospital. So the idea would be to stop the disease in those individuals and stop the progression and the need from them going back to the hospital. And then we're also going to go to the hospitalized setting, very similar to what we're doing with KEVZARA and where the Remdesivir data has read out. So certainly, the only setting where it would be on top of an existing standard of care potentially would be in the late treatment setting; we would certainly be going on top of standard care there whether it be Remdesivir or maybe we'll see whether there's data from other agents by that time as well. In the prophylactic setting, there is no need and there's also no other standard of care, and in the same thing in the early treatment. And I would remind you once again that based on our experience in other programs and most notably a good example is the Ebola program, the earlier that one treats, the better one does. I remind you early in the disease for Ebola, which is obviously a much more lethal disease with much higher levels of severe disease and death, we were able to save more than 90% of the patients when we went with early treatment. So I think that there's a lot of reason to think that in this setting, these sorts of antibodies both in the prophylactic setting and in the early treatment setting can have really profound benefits on their own.

Thank you for the question, Cory. Next?

Your next question comes from the line of Tim Anderson from Wolfe Research.

Thank you very much. On your antibody cocktail. I'm wondering if you think Gilead's actions with Remdesivir essentially set the bar for other companies in terms of what they may be expected to do specifically in terms of giving away some portion of initial therapy free at the outset? Thank you.

Len, you want to take that? Len?

Yes, hi. Sorry. It's Len. We've spent all of our energy right now focused on getting the technical success that George described and that we hope to see. And in parallel, we have been working to clear manufacturing capacity in our New York plant so that we can make it at large scale. We hope to be able to have a couple hundred thousand doses by the end of the summer and then continue to manufacture from there. In terms of pricing, donations, and fair values, and all that sort of stuff, that's just got to come down the road a little bit.

Next question.

Your next question comes from the line of Ronny Gal from Bernstein.

Good morning, and thank you for taking my questions. I want to go back to Libtayo non-small cell lung cancer. I hear you about physicians wanting to have a choice in monotherapy between KEYTRUDA and a second product. The question is why should they choose Libtayo over KEYTRUDA? I think you've got a product here, which is just to make the point a few years is the standard of care used extensively. Can you just share with us in your data, is there any elements of the data you're seeing from the trial would suggest that there is any group of patients where physicians should prefer Libtayo over KEYTRUDA; what is your marketing argument here? And before I stopped there, I just want to thank you for all the efforts you're making against COVID-19, just adding to my peers here.

Thanks, Ronny. It's Len. It's way too early for us to be making any comparative statements. We literally just recently got the good news from the data monitoring committee that we met with highly statistical significance, as George described survival. We've got a lot more data to go. We've got a lot more studies to look at. It's not just one study. It's not just the cross-study comparison. There's going to be a lot more that goes into this. And we'll just have to see how this evolves. But the history of the industry typically is that, if there's just a couple of competitors, you have to remember that the size of this market. Last year it was about $22 billion, of which about 70% or 75% was lung cancer. And that was largely driven by Keytruda sales. So there's a pretty big opportunity to have some important alternatives. And you just have to wait, I'm sorry Ronny, to see how this all evolves when we roll this out.

Sure. Thanks, Ronny. Next question.

Your next question comes from the line of Chris Raymond from Piper Sandler.

Yeah. Thanks. Just back to the antibody cocktail, I guess. So George, a lot of folks, I guess close to the FDA and maybe some with a fairly loud voice on these COVID matters just keep talking about at least one of the therapies one of the antibody therapies, that's in development being available as early as this fall. So I guess, maybe just talk about how is that possible from a clinical development standpoint? And especially in light of the program you just described, George, with the three different settings. Obviously, when there's something that's even under an emergency use authorization available, how do you conduct that? Thanks.

Well, yeah. I think that, these are all great questions. We're in unprecedented times. I think that, the urgency and the collaborative spirit between regulators, between medical institutions, between companies, it has never been seen before. And also our commitment to this is something we've sort of done it before. But now we're trying to take it to the next level. So we are planning, as we said in June, to simultaneously initiate trials in the three settings that we're actually talking about. We are thinking of ways to synergize between the three classes of trials that we're talking about. And we are hoping, I mean this is going to depend on a lot of factors, and there's obviously a lot of risk and concerns, whether this can be done since it hasn't ever been done before. But we are really hoping that we'll be able to not only initiate these studies but be able within a month or two to perhaps if these agents are working as well as we might hope they would work, as well as for example some of the precedents set by Ebola suggest that they might work, that we might within that month or two be getting data. If we were to get data within those sort of timeframes, as Len describes, we have already committed at risk to manufacturing the drug supply this could be providing by the end of the summer, hundreds and hundreds of thousands of doses. So you're right. It's never been done before. On the other hand, I don't think we ever had quite a pandemic like this before. And I think that, some companies like ours have really put themselves in a position with the technologies, the commitments, the investments that we've made to put ourselves in a position to maybe help out and make a difference here. And regulators like the FDA, BARDA, everybody is coming together to try to help us in this situation to meet the urgency and meet the dire need that we might have here. And so the hope is yes, it might be possible by the end of the summer or the fall that our antibody treatment could be available. A lot of risks, a lot of concerns, but we are working as hard as we can with so many collaborators to try to turn that into a reality.

So we still have several callers. Sorry, we have several callers still in the queue. So we'll extend for a few more minutes, if we can.

Let me just put a finer point on that. But just in a second. I completely agree with what George said. And I think if you listen carefully to what he was saying is that, because we're doing three different types of studies, the timing on the different studies might be quite different. If you're dealing with people who already have the disease, then you're not waiting for that long period to occur, when you're trying to prevent the disease. And people who already have the disease, the cause of the disease sort of declares itself over a several week to month period. And so you could imagine, depending upon what's going on, how many people are actually showing up at the hospital, how many people are hospitalized, in the ICU, that that part could go a lot faster. But of course, you can imagine that George and the team have got a lot of great strategies, for the early part, to try and find people at high enough risk, which is the hard part in a preventative setting. Sorry next question.

Your next question comes from the line of Terence Flynn from Goldman Sachs.

Hi. Thanks as well from me for your efforts on the COVID front. Maybe another one for George on bispecifics, I was just wondering if you've already generated data from your PSMA bispecific antibody as monotherapy. And if that's what led to your decision to initiate a combo trial with Libtayo? And then the second part of the question relates to your comment, George, about seeing continuing promising activity. I was wondering if that was only on the BCMA bispecific, or has that also covered the MUC16 bispecific? Thank you.

Yes, great questions. I guess, first of all, basically, we think that, the bispecific costims. We've described these in the literature. We have a lot of data on them. On their own, they are designed to essentially have very little or no activity. And only when combined with either a CD3 bispecific or with a PD-1 agent do they then essentially synergize and amplify the benefit or activate the benefit of the other agent. And we've done a lot of work on that. Quite a bit of published work has already been shown on that. And the early data in the clinic are supporting that in that the monotherapy costim was not intended and did not show single-agent activity. We are now in the combination program, where we are hoping to now activate activity by adding the costim to the PD-1. That's how they were designed, that's what we're hoping to see, and that is what we are hoping to be able to generate data that we will be giving you information on in the future. In terms of the promising activity, I think that yes, we have seen robust activity with the BCMA. We have not really reported anything on the MUC16. I can say that we are seeing evidence of activity, and we'll give you more details on that in future times.

Thank you, Terence. Next question?

Your next question comes from the line of Carter Gould from Barclays.

Good morning, and thank you for taking my questions. Congratulations on the Libtayo data sets, and I appreciate all the efforts related to COVID. Focusing back on Libtayo, it seems that much of the discussion is centered on reaffirming the development strategy and validating past efforts. With this new data, especially regarding lung outcomes, does it enhance your focus on exploring more novel combinations or possibly lead to considering external agents and shifting your partnership strategy? Thank you.

I believe this represents a significant milestone for both the field and our company. Keytruda has remained largely unchallenged, especially in lung cancer, which accounts for a majority of the sales in this area. Other companies have struggled to present a comparable agent to Keytruda. While I understand the concerns regarding competition, we have a treatment that is demonstrating exceptional clinical activity as a standalone therapy, especially with our new first-in-class indications that others in the field have overlooked. Our work with cutaneous squamous cell carcinoma and now basal cell carcinoma is positioning Libtayo as a credible monotherapy alternative. As Len mentioned, there are substantial opportunities, like the $8 billion in the first line. History shows that true competitors with significant clinical effectiveness will capture considerable market shares. We believe we are now well-equipped to compete in these monotherapy situations, but our enthusiasm for the combination approach is only increasing. We are diligently seeking the right external collaborators and have already announced several promising partnerships for combination studies. We are equally excited about our internal pipeline, as we have been preparing a range of combination assets for this moment, now that we have a strong PD-1 antibody. Our entire strategy relied on this, and with this molecule proving to be a serious monotherapy competitor, we are even more motivated to build on these combination opportunities developed in our labs over the past few years. We are thrilled to have the capability to not just compete as a monotherapy but to enhance our offerings with various combinations and collaborations. This is truly an exciting time for us and the field, as the immuno-oncology domain, despite its initial promise, has not progressed as rapidly as we had hoped. We are yet to see truly innovative combinations or significant advancements in treating new cancers. We believe we can elevate this field, and having our PD-1 antibody solidifies that opportunity. These are promising times for us, and potentially for the entire field, as we may be on the verge of significant advancements in immuno-oncology after a decade of stagnation.

Crystal, we have time for two, three quick questions.

You can be sure we're getting together with our collaborator Sanofi on this and going to look carefully about how to move this forward and how to compete well with the data we have and other data we want to get.

Crystal, this is time for two more quick ones.

Your next question comes from the line of Geoff Meacham from Bank of America.

Hey, guys. Thanks for the question and for squeezing me in. I want to ask another one on COVID cocktail. Just to follow-up, George, on some of your earlier comments about rolling out efficacy studies next month. I'm assuming that or can I infer that you're bypassing traditional Phase I safety studies and healthies. And then when you think about manufacturing scale up, what's the opportunity to outsource or to partner should you have much higher demand and success obviously in the pivotal study? Thank you very much.

Yes. I think that we have been already in active conversation with regulators exactly on the points that you talk about. And I think these are unprecedented times and I think also when you have the history with these types of agents, it does allow you and it does allow the comfort of the regulators that one could be moving forward very quickly. And so as you might imagine along the lines of the things that you proposed these are exactly the sorts of things that we're talking about with regulators. And we're trying to employ into our designs. In terms of your second part of your question, I think Len already started talking about this point, which is we have made a huge commitment to enable our entire upstate New York manufacturing facility to be devoted to this effort, which on its own could supply hundreds of thousands if not over the course of time maybe even on the order of a million or so doses per month. However, even that might not be sufficient depending on the demand, depending on whether there's a second wave, depending on what happens with vaccines and so forth. So we are actively talking about collaborations with others who are very interested in bringing their resources to the table here too. As we said, there's enormous collaborative spirit that I think we haven't seen before between companies to come together to help each other out, to really make a difference here in this pandemic. And so that opportunity is really out there. We're actively talking with people. And of course, it all depends on whether these antibodies deliver. But if they deliver and depending on the state of the pandemic, if there's more need, I am sure that there will be ways that either we on our own or with major collaborations will be able to supply more to more patients.

Okay. Crystal, last question. Unfortunately, we have a lot of people still in the queue, but this will be our last question.

And your question comes from the line of Yatin Suneja with Guggenheim.

Good morning, everyone. And I also appreciate all the effort on the COVID front. I also would like to compliment Bob for simplifying the accounting, really appreciating a much cleaner guidance that you provided today. So the question is on the EYLEA front. I think Marion, pre-COVID you were anticipating total market supply for prefilled syringe by March. Could you comment on where you are in terms of the supply of PFS? And any impact you saw of PFS on EYLEA performance in 1Q? And also, I'm not sure if there was any inventory dynamic that you commented on earlier today. Thanks.

Sure, let me address your questions. Regarding inventory, we have maintained normal levels and aren't observing anything out of the ordinary. On the topic of prefilled syringes, we consider them an appealing option in the market, and their usage has risen to about 75% of total EYLEA use. We began introducing them in stages towards the end of last year, and they have been positively received. We plan to continue offering both prefilled syringes, which are gaining popularity, and traditional vials. Concerning the impact of COVID, we had a strong first quarter with EYLEA, experiencing a 9% increase in U.S. net sales compared to the previous year. However, we noticed a drop in overall demand during the last two weeks of March, which carried into the first two weeks of April, followed by a significant rebound in the last two weeks. When considering all these factors, April's demand was about 15% lower than the same month last year. It's challenging to forecast the future COVID impact, but we remain very confident in EYLEA's profile and our dedication to the retinal specialist community, along with the favorable clinical and safety profile of EYLEA. We are providing appropriate promotion and support to our offices so that when patient flow returns to normal, we can assist those patients with EYLEA and support our prescribers.

Thank you, everyone. That's going to conclude our call. We appreciate everybody hanging on a little longer today, given all the things that we had to speak to and all the great questions that came in. Bob Landry and the IR team will be available following the call to answer further questions. Thank you.

Stay safe.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.