Important disclosures appear on the last page of this report.

The Henry Fund

Henry B. Tippie School of Business Elisa Suarez Gil [elisa-suarezgil@uiowa.edu] Regeneron Pharmaceuticals, Inc. (REGN) November 15, 2019

Healthcare – Biotechnology Stock Rating Buy

Investment Thesis Target Price $450-460 We recommend a BUY on Regeneron Pharmaceuticals, Inc. with a target price of $450-460, which represents an upside of 30-33% to the current price. The stock stood out to us as being undervalued by the market but with potential to overperform in the next year. A recent launch in the immune-oncology area is bringing momentum to earnings growth and we believe the company is well positioned within the biological industry thanks to its proprietary technology and scientific knowledge. Drivers of Thesis • Strong pipeline — there are 21 product candidates under development

and 11 of those are in Phase 3 of clinical trials. We are specially excited about Libtayo, which was launched at the end of FY 2018, and it on its way to generate over $160 million in FY 2019. We see a great potential for this drug to grow indications by itself and in combination with other biologicals.

• Financial strength — the company has a strong balance sheet with enough liquidity to cover near term obligations as implied by a debt ratio of 0.06. The company generates sufficient cash to fund costly research and development activities and, at the same time, give money back to shareholders. REGN just announced a share repurchase program of $1 billion.

• Cheap valuation — with a P/E NTM ratio of 13.33x and an EV/EBITDA NTM ratio of 10.14x we believe the company is trading at cheap multiples. This is a good time to add the stock to our portfolio.

Risks to Thesis • Heavily dependent on EYLEA — 75% of total revenues in FY2018 were

generated from this drug. Considering drug patents are set to expire between 2023-2032 in the U.S. and 2020-2027 in European countries, the company will have to make up lost sales from patent expiration with other sources of revenue. A failure to capitalize in other products would change our future outlook.

Henry Fund DCF $515.07 Henry Fund DDM $414.19 Relative Multiple $456.48 Price Data Current Price $344.83 52wk Range $271.37-442.00 Consensus 1yr Target $385.48 Key Statistics Market Cap (B) $37.61 Shares Outstanding (M) 109.32 Institutional Ownership 69.00% Three Year Beta 1.08 Dividend Yield 0.00% Est. 5yr Growth 9.01% Price/Earnings (TTM) 18.65 Price/Earnings (NTM) 13.33 Price/Sales (NTM) 4.62 Price/Book (NTM) 2.56 Profitability Operating Margin 37.77% Net Margin 36.42% Return on Assets (TTM) 23.79% Return on Equity (TTM) 32.81%

Source: FactSet

Earnings Estimates Year 2016 2017 2018 2019E 2020E 2021E

Consensus HF EPS

$8.55 $8.55

$11.27 $11.27

$22.65 $22.65

$17.61 $17.91

$21.96 $22.59

$22.41 $24.79

Growth 31.82% 100.98% -20.93% 26.13% 9.74%

12 Month Performance Company Description

Regeneron Pharmaceuticals Inc. (REGN) is a biotechnology company led by physician-scientists that invents medicines for the treatment of serious medical conditions. The company currently markets 6 medicines and has over 20 products in development. Those medicines are designed to help patients with eye disease, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, infectious diseases, pain and rare diseases. The company was founded in 1988 and is headquartered in Tarrytown, New York.

18.7

32.8

10.1

53.4

4.1

24.2

15.6 16.411.9

0

10

20

30

40

50

60

P/E (NTM) ROE EV/EBITDA (NTM)

REGN Industry Sector

-30%

-20%

-10%

0%

10%

20%

30%

N D J F M A M J J A S O

REGN S&P 500

Source: Finance Yahoo

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EXECUTIVE SUMMARY

Regeneron Pharmaceutical, Inc. (REGN) operates in the biotechnology field within the healthcare sector. The industry is subject to technological and scientific advances that constantly shape the industry. We feel bullish towards genetic engineering as it has opened the door to finding new ways of treating diseases and allowing for personalized care. Companies in this sector will continue to spend large amounts of money into research and development in order to find breakthrough therapies. On the other hand, we acknowledge several initiatives to lower the prices of branded drugs as mentioned by the current administration. Such measures would be highly disruptive to the industry and impose a big threat to our investment recommendation.

We recommend a BUY on Regeneron Pharmaceuticals, Inc. with a target price range of $450-460. This represents an upside of 30%-33% to the closing price of $344.83 on November 15th, 2019. The market is pricing the company differently because of uncertainty regarding drug cost controls and the fear of approaching patent expirations for EYLEA. However, we believe that the market is underappreciating REGN’s pipeline and its ability to bring new breakthrough creations to market. We especially feel bullish on the immuno-oncology field with the commercialization of Libtayo and future combinations with other bispecific.

COMPANY DESCRIPTION

Regeneron Pharmaceuticals Inc. is a biotechnology company that discovers and develops drugs using proprietary technology. They currently have approval to market 7 products in various geographic regions including the United States, Europe and Japan. The company operates through collaboration agreements whereby sales and expenses of certain drugs are shared with other companies. The graph below depicts a breakdown of REGN’s revenues for the most recent fiscal year. Net product sales include revenue from U.S. sales of EYLEA, Libtayo and ARCALYST. Sanofi collaboration revenue is comprised of reimbursement of REGN research and development expenses as well as the reimbursement if REGN commercialization expenses in relation to Praluent, Kevzara, Dupixent and Libtayo. Similarly, Bayer collaboration revenue includes reimbursement of REGN

development expenses plus REGN net profit in connection with the commercialization of EYLEA outside the United States2. Finally, other revenue is mainly comprised of the reimbursement of REGN research and development expenses in relation to a collaboration agreement with Teva to develop and commercialize fasinumab.

Source: REGN 10-K

Medicines

EYLEA

Indicated for the treatment of patients with neovascular wet age-related macular degeneration (AMD), macular edema following retinal vein occlusion (RVO), diabetic macular edema (DME) and diabetic retinopathy (DR). Drug patents are set to expire between 2023-2032 in the U.S. and 2020-2027 in European countries.

Even though the market for this type of drug is very competitive, EYLEA has managed to gain market share from its closest competitor Lucentis (Genentech/Novartis). Based on Medicare user’s, EYLEA is used twice as much as Lucentis for wet AMD and three times as much for DME and DR3.

$4,106 $1,111

$1,077

$417

Revenues 2018 ($M)

Net product sales Sanofi Collaboration

Bayer Collaboration Other Revenue

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Source: BioPharma Dive, data from companies

However, brolucizumab (Novartis) was approved by the FDA last month and based on clinical trials the drug stacks up well against EYLEA in its primary endpoints and even surpassed it in several secondary endpoints, including reducing retinal fluid and central subfield thickness. We will have to monitor the performance of this drug as it poses a threat to the market share of EYLEA and its future sales.

DUPIXENT

Indicated for the treatment of Type 2 inflammatory diseases and currently approved for moderate to severe atopic dermatitis (ages 12+), asthma (ages 12+) and chronic rhinosinusitis with nasal polyposis (ages 18+).

Recent indications that increase customer base for the drug include:

FDA approval for moderate to severe atopic dermatitis in adolescents (ages 12+) and chronic rhinosinusitis with nasal polyps (ages 18+).

European Commission approval for severe asthma (ages 12+), moderate to severe atopic dermatitis (ages 12+) and severe chronic rhinosinusitis with nasal polyps (ages 18+).

We see strong potential for Dupixent to grow indications in the near future due to the nature of the drug as it targets the broad spectrum of Type 2 inflammatory diseases. The Company and Sanofi plan to initiate Phase 3 studies in bullous pemphigoid, prurigo nodularis, chronic spontaneous urticaria1 and currently have four indications in Phase 3 studies, two indications in Phase 2 and one in regulatory review2.

Dupixent is the only approved biologic for atopic dermatitis and faces competition with traditional treatments. It is also the most versatile drug in terms of application which we consider a big competitive edge over other drugs. We believe that barriers to higher adoption include high price and insurance hurdles. However, considering patents for Dupixent are currently set to expire between 2027-2034 for the U.S. and 2029-2030 for European countries, we believe the company will enjoy market status for quite some time until new biologics come into play.

PRALUENT

Indicated to reduce the risk of myocardial infarction, stroke and unstable angina requiring hospitalization in adults with cardiovascular disease by blocking a protein that contributes to high levels of bad cholesterol. Patents in the U.S are set to expire between 2029 and 2031 while patents in European countries will expire between 2029 and 2030.

The adoption of Praluent and its closest competitor Repatha (Amgen) has been slow due to high costs compared to other therapies, like statins, to reduce bad cholesterol. Despite the sluggish uptake, we believe that recent measures to make Praluent more easily accessible coupled with strong clinical data and increased indications will allow the drug to capture more market share.

In May 2018, Regeneron made an agreement with Express Scripts to lower the net price of Praluent for the U.S. PBM’s plan members to the range of $4,460-$7,975 per year. This agreement was motivated by ICER (Institute for Clinical and Economic Review) consideration of Praluent as cost-effective for higher-risk patients with cholesterol levels of LDL ≥100 mg/dL, despite intensive statin therapy4. In return, Express Scripts gave Praluent exclusive formulary status for US plans enrolled in its Cholesterol Care Value program, while simplifying markedly the documentation required from physicians to secure insurance coverage for the drug. In February 2019, Sanofi and Regeneron went further and cut the U.S. list price of Praluent by 60% to $5,850 per year.

KEVZARA

Indicated for the treatment of patients with moderately to severe rheumatoid arthritis (RA) who have had an

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inadequate response or intolerance to one or more disease-modifying antirheumatic drugs (DMARDs). There are currently two clinical trials on Phase 3 and other two in Phase 2 that could increase future indications for this drug including polymyalgia rheumatica and giant cell arteritis. Patents in the U.S are set to expire between 2027 and 2031 while patents in Europe will expire between 2027 and 2032.

Kevzara is an interleukin inhibitor but faces competition from anti-TNFs drugs such as Humira (AbbVie) and Enbrel (Amgen) as well as the other interleukin inhibitor in the market Actemra (Genentech). Current line of care for RA starts with DMARDs and if remission or low disease activity is not reached then a biologic drug is added (either anti-TNFs or interleukin inhibitor). Nonetheless, anti-TNF inhibitors seem to be favored as first-line biologics for the treatment of RA since rheumatologists have used them for 20 years following the approval of Enbrel in 19989. In order to attract more market share, the drug is priced at a discount in comparison with the two anti-TNFs most widely used. Annual cost for Kevzara is at $39,000 compared to $53,000 for competitors. We acknowledge that Kevzara operates in a highly competitive market where the threat of biosimilars approaches. For this reason, we do not foresee Kevzara becoming a blockbuster. However, its superiority to Actemra in terms of safety and the price discount makes us believe that the drug has room to grow.

LIBTAYO

Indicated for the treatment of metastatic or locally advanced cutaneous squamous cell carcinoma (CSCC), also known as skin cancer. It is important to highlight that prior to Libtayo there were no options for treatment for those patients where the cancer had spread to deeper layers of the skin. Over the 12 months that Libtayo has been in the market, the drug has generated a total of $131 million. This past July, the drug obtained marketing approval by the European Commission thus adding to the already approved markets of U.S, Canada and Brazil. As the table below shows, Libtayo is being studied as treatment for other types of cancer.

Phase 1 Solid tumors and advanced hematologic malignancies

Phase 2 Metastatic or locally advanced CSCC Basal cell carcinoma

Phase 3 First-line non-small cell lung cancer Second-line cervical cancer

Source: REGN 10-K

There are currently five other approved drugs in the category of PD-1 inhibitors and PD-L1 inhibitors to treat cancer. For lung cancer, Libtayo will face strong competition with market leading Keytruda (Merck). According to the most recent update on Phase 3 clinical trials, Libtayo is showing comparable survival rates as Keytruda thus signaling that the drug could make strong competition to Keytruda.

ARCALYST

This injection is used to treat adults and children (ages 12+) with Cryopyrin-Associated Periodic Syndromes, including Familial Cold Autoinflammatory Syndrome and Muckle-Wells Syndrome. It is only approved for marketing in the United States. The launch of this drug back in 2008 was a major advance in the treatment of this rare disease. However, it is estimated that there are 1–2 cases for every 1 million people in the U.S.8 which makes a small pool of prospective clients. In addition, competition from Ilaris (Novartis) is strong as it provides less frequent doses and can be used in patients aged 4 years and older. Interestingly, Novartis pays REGN royalties on worldwide sales of Ilaris based on a rate of 4%-15% of total sales when those exceed $1.5 billion2.

ZALTRAP

Sanofi is solely responsible for the development and commercialization of this drug and REGN receives a percentage of aggregate net sales of ZALTRAP which is included in other revenue. The drug is indicated for the treatment of metastatic colorectal cancer.

Clinical development

Despite the risks and uncertainties associated with the development of new drugs, we feel optimistic about REGN ability to create successful drugs. This feeling is fueled by the growing number of collaborations agreements which indicates that other healthcare firms believe in REGN’s proprietary technology and want to have access to it. The company currently has 21 product candidates discovered in their laboratories. The tables below reflect the drugs

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under development that have not been mentioned previously mentioned in the report.

Clinical Program Phase 1 Trevogrumab Muscle-wasting diseases (in

combination with garetosmab) REGN1908-1909 Cat allergy REGN1979 Certain B-cell malignancies(a) REGN-EB3 Ebola virus infection(a) REGN3048-3051 MERS virus infection REGN3767 Advanced cancers Pozelimab Paroxysmal nocturnal

hemoglobinuria REGN 4461 Lipodystrophy and obesity REGN4018 Platinum-resistant ovarian cancer REGN5069 Pain REGN5458 Multiple myeloma

Source: REGN 10-K

Clinical Program Phase 2 Dupixent Grass allergy and peanut allergy Kevzara Polyarticular-course juvenile

idiopathic arthritis Systemic juvenile idiopathic arthritis

Evinacumab Refractory hypercholesterolemia Severe hypertriglyceridemia

Garetosmab Fibrodysplasia ossificans progressive(a)(c)

REGN3500 Asthma Chronic obstructive pulmonary disease Atopic dermatitis

Source: REGN 10-K

Clinical Program Phase 3 EYLEA Non-proliferative diabetic

retinopathy in patients without DME Dupixent Atopic dermatitis (6-11 years)(b)

Atopic dermatitis (5 months-5 years)(b)

Asthma (6-11 years) Eosinophilic esophagitis(a)

Praluent Homozygous familial hypercholesterolemia(a) Heterozygous familial hypercholesterolemia in pediatrics

Kevzara Polymyalgia rheumatica Giant cell arteritis

Fasinumab Osteoarthritis of knee and hip(c)

Evinacumab Homozygous familial hypercholesterolemia(a)(b)

Source: REGN 10-K

(a) U.S FDA granted orphan drug designation (b) FDA granted breakthrough therapy designation (c) FDA granted fast track designation

We would like to highlight the success of REGN-EB3 in treating Ebola in the recent outbreak that took place in the Democratic Republic of Congo. In the study, 29% of patients given REGN-EB3 died, compared with 49% of those treated with ZMapp (until these results the standard of care) and 53% on remdesivir, which was developed by Gilead Sciences14. When administered early, Regeneron’s drug showed an impressive 94% survival rate. These results reiterate Regeneron’s scientific knowledge and their potential to create breakthrough drugs by leveraging on their technology.

Company Analysis

Regeneron Pharmaceuticals makes money by creating and commercializing drugs based on protein therapeutics. The company focuses in developing drugs either independently or in conjunction with other companies through collaboration agreements. The terms of these agreements can vary but typically include consideration to be provided to the company in the form of non-refundable up-front payments, development milestones, reimbursements for development and commercialization activities, sales milestones, and sharing of profits or losses arising from the commercialization of products2.

Most of REGN’s drugs target unmet medical needs. As a result, the company will face failures in the process of finding biologics that do work. There is an inherent risk that comes with wanting to find a cure to a disease we currently deem as incurable. Despite those barriers, REGN has been able to provide breakthrough therapies thanks to their technology platforms and we place strong confidence in their ability to maintain their position in this field.

We acknowledge that pricing is a sensitive issue and that there are several pharmaceutical companies under scrutiny for generating billions of dollars by marketing drugs at insane prices. In the case of REGN, prices are in line with competitors and even at a discount sometimes. We like this positioning as it allows them to capture market

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share and, at the same time, cover their research and development expenses.

Another competitive advantage for REGN is the fact that the current Chief Executive Officer (Leonard Schleifer, M.D. Ph.D.) and Chief Scientific Officer (George Yancopoulos, M.D. Ph.D.) are also the founders of the company and highly respected scientists. We believe this will allow REGN to attract other qualified scientists which in turn translates in better performance and long-term survival.

RECENT DEVELOPMENTS

3rd Quarter Fiscal Year 2019

Regeneron delivered double digit growth on both top and bottom lines driven by strong performance from EYLEA and DUPIXENT and increased profitability in the Sanofi collaboration. Total sales came at $2,048.4 million versus $1,986.2 million estimates, whereas actual EPS came at $5.86 vs EPS expectations of $5.71. In addition, the company announced a $1.0 billion repurchase program with no time limit.

Total revenues increased by 23% to $2,048 million compared to the same period the prior year. Net product sales were $1,238 million for the quarter compared to $1,025 the year before. The change was driven by 16% increase in U.S EYLEA sales to $1,187 million. In addition, Dupixent (included in Sanofi collaboration) grew 141% to $633 million versus third quarter of 2018.

Shares of the company went up 6.93% for the day after strong third quarter results and the positive update on Phase 3 non-small cell lung cancer (NSCLC) trials of Libtayo.

Collaboration Agreements

As mentioned earlier, Regeneron Pharmaceuticals business model involves establishing collaboration agreements with other healthcare companies in order to leverage resources. We deem recent agreements as a positive sign for the company as it allows them to grow and develop new sources of revenue. Some recent collaborations include the following:

On November 6th, 2019, REGN and Vyriad, Inc announced a research collaboration agreement focused on the

development of virus-based treatments for cancer. The agreement includes a Phase 2 clinical study, slated to begin in 2020, evaluating Libtayo in combination with Vyriad's oncolytic virus Voyager-V1 in multiple types of cancer, including melanoma, lung, liver and endometrial cancers5. In addition, Vyriad will have access to REGN’s technologies for 5 years to jointly design virus treatments in the oncology field. Under the agreement, Vyriad will receive an upfront payment and Regeneron will make an equity investment in the company. Regeneron will have an exclusive option to license Voyager-V1 and other collaboration products. Vyriad is eligible to receive additional payments based on the achievement of specified development and commercial milestones, as well as royalties on net sales of potential future VSV-based collaboration products. During the five-year collaboration term, Vyriad will work exclusively with Regeneron to research and develop VSV technologies.

The company entered into a collaboration agreement with Alnylan Pharmaceuticals to discover, develop and commercialize RNAi (interference) therapeutics focused on ocular and central nervous system (CNS) diseases. Regeneron will lead development and commercialization for all programs targeting eye diseases, with Alnylam entitled to potential milestone and royalty payments. The companies will jointly advance and alternate leadership on CNS programs, with the lead party retaining global development and commercial responsibility. For CNS programs, both companies will have the option at candidate selection to participate equally in potential future profits of programs led by the other party13.

We like both agreements as it allows Regeneron to strengthen the oncology business and expand into the emerging RNAi technologies. An active profile in collaboration agreements where other companies request access to REGN’s technologies also reinforces our view that REGN has first-class scientific knowledge. We believe this is an essential feature for the long-term survival of the firm.

INDUSTRY TRENDS

Immunotherapy

Technological and scientific advances in the medical field has allowed for the discovery of more effective therapies

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that can improve patient outcomes. This is especially the case in the field of cancer treatment. Immunotherapy is treatment that uses living organisms to help your immune system fight cancer. The global cancer immunotherapy market is expected to rise at 12.5% CAGR by 20237. Growth in this market is fueled by the growing incidence of cancer across the world, side effects of traditional therapies and increased efficiency of immunotherapy.

As many other biopharma firms, Regeneron has entered this competitive industry to benefit from its growing demand. We are excited about the role of Libtayo in this field and the possibility of combination treatments that REGN is currently investigating in order to provide more effective treatments to what is presently available.

The biggest opportunity in this space is lung cancer and, as mentioned before, Keytruda (Merck), which has been in the market for four years, enjoys a dominant position. Regeneron wants to enter the market and compete with Keytruda as there is still a lot of room for improvement. Their product is currently on Phase 3 of clinical trials and interim data indicates 42% response rate versus 22% for patients treated with chemotherapy10. The market reacted very positively to this data as the stock went up 7% for the day after the news were released. We will closely monitor the progress of these clinical trials.

Biosimilars

Biosimilars are biological products that are proved to be highly similar (in terms of safety, purity and potency) to an FDA-approved biological product. In other words, biosimilars must show no clinically meaningful differences between the biosimilar product and the reference product. There are currently 25 biosimilars approved for marketing in the United States11. However, a biosimilar designation does not imply that the medication can be used as a substitute for the reference product at the pharmacy level. The interchangeable FDA designation requires additional clinical data. As of today, the FDA has not yet approved the first interchangeable biosimilar.

Unlike the market for generic drugs, biosimilars face more barriers to entry the market and compete with branded biologics. Most of these barriers arise from the fact that manufacturing biologics and storing them is a complex and expensive process. Biologics are manufactured from living organisms by programming cell lines to produce the

desired therapeutic substances. For this reason, biologic drugs are much more difficult to replicate than traditional drugs. Despite the slow uptake of biosimilars, we believe they have the potential to disrupt the competitive landscape by providing cheaper alternatives of care.

MARKETS AND COMPETITION

There are different factors that affect the performance and long-term viability of companies in this space. Those factors include efficacy, frequency of doses, price and patent positioning. In addition, timing plays a big role in determining market share. All other things equal, first comers enjoy superior market share as physicians’ get use to use one line of treatment and they become reluctant to switching if there are no benefits added. We conclude that trust in one drug to address a disease efficiently with the least side effects as possible is what separates successful drugs from others.

The industry is at a growth stage fueled by technological advancement, aging demographics that are at a higher risk of development diseases and the rise of R&D spending, especially in emerging markets. Companies in this space compete in terms of innovation, patent protection and strong financial stability to fund research activities. We see that competition is high and the market is highly fragmented with a few big pharma names in the space but also smaller companies that specialize in unique techniques and applications. We have identified a list of companies that compete more closely with Regeneron’s products and techniques in order to carry out our peer analysis. These companies include Amgen Inc. (AMGN), Novartis AG (NVS), Vertex Pharmaceuticals (VRTX), Pfizer Inc. (PFE) and Alexion Pharmaceuticals (ALXN).

Market Cap ($B)

Sales ($M) R&D as % of Sales

REGN 37.8 6,711 32.58% AMGN 133.4 23,747 15.74% NVS 206.2 51,900 17.48% VRTX 55.3 3,047 46.48% PFE 208.4 53,647 14.92% ALXN 24.5 4,131 17.68%

Source: FactSet

Among its competitors, REGN stands towards the low end in terms of market share and total sales generated in fiscal year 2018. They are significantly smaller when compared

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to big pharma names such as Amgen, Novartis and Pfizer. In terms of research and development activities, REGN deploys a bigger portion of its sales to this activity with only Vertex Pharmaceuticals ahead of them. This makes sense as one of REGN’s competitive advantage is their scientific knowledge and we like to see that they prioritize investing in their research to continue growing.

P/E NTM EV/EBITDA NTM

Debt/EBITDA LTM

REGN 13.39 10.14 0.26 AMGN 14.28 10.84 2.76 NVS 16.07 13.29 2.12 VRTX 32.89 24.32 0.80 PFE 13.75 11.29 1.93 ALXN 9.85 25.01 1.59

Source: FactSet

Regeneron looks cheaper in terms of P/E NTM and EV/EBITDA NTM ratios when compared to its peers. We also observe that REGN is in good financial health with the lowest Debt/EBITDA LTM ratio among the peers.

ECONOMIC OUTLOOK

Drug prices

Drugs prices in the U.S. are significantly higher compared to other developed countries. As we observe in the graph below, individuals pay a higher amount for their drugs in the United States than in the other 9 developed countries. Even though drug expenditures per capita depend on other factors such as volume of drugs consumed and type of drugs. Based on the Commonwealth study, differences in volume drug utilization among these countries is not statistically significant6. In addition, the U.S shows the second to highest use of generics as percentage of total pharmaceutical market when compared to the other countries in consideration6. We consider the data below to be provide a fair representation of drug prices in different countries and conclude that prices in the U.S. are significantly higher than in other high-income countries.

Source: The Commonwealth Fund

As a result, the current administration has expressed intentions to lower the burden of drug prices for patients. Some proposals include setting the price Medicare pays for certain drugs based on their cost in other countries or including list prices in television ads. The latter one was overturned by a federal judge. The drug pricing rhetoric has negatively affected all drug companies in the United States. We believe that these talks will remain a hot topic in the near future as the next election approaches. For this reason, we acknowledge REGN’s stock faces a risk of not outperforming the S&P 500 in the next year.

Health Insurance Coverage

In 2018, the number of people with health insurance coverage decreased 60 basis points when compared to 2017. The percentage of people with health insurance coverage for all or part of 2018 was 91.5 percent while the rate in 2017 was 92.1%. Conversely, 8.5% of people, or 27.5 million, did not have health insurance at any point during 2018 compared to 7.9% or 25.6 million in 201712. The graph below provides a thorough breakdown of health care coverage by type as of March 2019.

$351

$401

$417

$427

$497

$553

$669

$686

$783

$1,011

Sweden

Norway

Netherlands

Australia

United Kingdom

France

Canada

Germany

Switzerland

United States

Retail Rx spending per capita each year

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Source: Census Bureau

The data in the graph is not conclusive as the yearly reports captures coverage at any point in time during the calendar year. The reason for providing the data as of the interview in March is because we wanted to gauge the current outlook as closely as possible. We observe that between early 2018 and early 2019, the uninsured population increased 40 basis points. This was driven by a 70 basis points decrease in Medicaid enrollment and a 40 basis point decrease in both employment-based and direct purchase plans.

CATALYSTS FOR GROWTH

Innovation and the desire to find the cure for diseases such as cancer and autoimmune diseases will continue to drive the growth in this market. The increased efficacy and safety of already approved biologics compared to traditional treatments has attracted capital and interest in the field.

INVESTMENT POSITIVES

The company shows strong financial strength to keep deploying money into research and development activities. We like the scientific profile of the company and believe their proprietary technology to be industry leading as evidenced by the success of EYLEA, the experimental drug to fight Ebola and their collaboration agreements. In addition, the stock is undervalued based on our DCF and Relative Valuation.

INVESTMENT NEGATIVES

Regeneron relies in product sales of EYLEA to generate 74% of total sales. Some patents in Europe are set to expire

next calendar year which will allow biosimilars to compete with EYLEA. We mentioned that the adoption of biosimilars has been slow in the past years, but this does not mean it will continue to be slow. More favorable regulatory frameworks in Europe has allowed for biosimilars to grow faster there than in the United States. Given that the first U.S. biosimilar drug was approved almost a decade after the first in Europe, the number of authorized biosimilar drugs in Europe far exceeds the number of biosimilars approved in the United States. Therefore, we do expect the company to be affected by these patent expirations.

VALUATION

Revenue Growth

Ideally, we would have like to forecast revenue based on the future outlook for each drug. However, the complex structure of the revenue sources made it hard for us to predict future cash flows based on the available information. More specifically, the revenue that comes from collaboration agreements is not only subject to the performance of the drugs but also reimbursement of manufacturing and R&D costs. In addition, REGN will add more revenue sources in the coming years as a result of developing drugs entering the market. Based on the assumption that REGN has the technological and scientific knowledge to continue creating breakthrough drugs, we don’t foresee that disruption of current revenue sources due to patent expirations or increased competition will be replaced by new drugs.

2019E 2020E 2021E 2022E 2023E EYLEA (U.S)

13.05% 7.00% 6.00% 5.00% 2.00%

Libtayo 1008.38% 74.90% 50.00% 40.00% 20.00% ARCALYST -5.70% 1.00% 1.00% 1.00% 1.00% Sanofi Antibody

100.08% 42.88% 30.00% 20.00% 15.00%

Sanofi Immuno-Oncology

-50.27% 1.00% 1.00% 1.00% 1.00%

Bayer 10.02% 1.00% 1.00% 1.00% 1.00% Other -8.23% 2.00% 2.00% 2.00% 2.00%

Source: HF Estimates

EYLEA in the United States will enjoy some time before patents start expiring in 2023. We foresee competition increasing for the drug thus our decreasing growth rates

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projections. We feel bullish with the commercialization of Libtayo and its ability to increase indications both as monotherapy and in conjunction with other drugs under development or from collaboration agreements. We don’t expect a lot of growth for ARCALYST as it addresses a rare disease thus demand will remain at current levels. In addition, the drug is not being studied for future indications thus we have decided to keep annual revenues at approximately $14.0 million. The growth in Sanofi Antibody collaboration is driven by Dupixent’s new indications that will increase revenue sources and the positive outlook to find new applications with three clinical trials in Phase 3. Sanofi Immuno-Oncology is expected to be cut in half this fiscal year due to a new structure of their Discovery and Development Agreement where the companies have decided to narrow their collaborative efforts to two bispecific antibodies. We then see growth accelerating due to the commercialization of Libtayo in European countries. The Bayer collaboration growth projections reflect patent expirations in Europe approaching next year.

Other revenue includes a variety of revenue sources such as revenue from Teva for the reimbursement of R&D expenses in relation to Fasinumab, Sanofi’s reimbursement for manufacturing ZALTRAP and revenue in connection with the BARDA (Biomedical Advanced Research and Development Authority) agreement to develop the treatment for Ebola. The growth rates we modeled are based on our positive outlook for Fasinumab and the promising data from REGN-EB3 (Ebola treatment).

Operating Expenses

Cost of goods sold is forecasted as a percentage of revenue based on the most recent data point from quarterly reports. This expense increased from 2018 due to the commercialization of Libtayo in the United States and the royalties paid to Sanofi in relation to this drug. Research and development expenses are also forecasted as a percentage of revenue based on a historical average of the last three years. However, we ignored the outlier data point from the second quarter of 2019 because the expense contained a $400 million up-front payment in connection with the collaboration agreement with Alnylam Pharmaceuticals, Inc. Similarly, selling, general & administrative expenses forecasted as a percentage of revenue based on a historical average of the last three

years. Cost of collaboration & contract manufacturing is forecasted the same way.

Profit Margins

As shown of the graph below, both operating margin and net profit margins will take a hit in 2019 due to the one-time expense of R&D mentioned above and the increase of COGS. We believe the company will have to keep up with the cost structure in order to remain competitive in the space. This includes spending between 30-34% of total revenues in R&D and 22-23% in SG&A.

Source: HF Estimates

Earnings Estimates

The table below reflects our earnings estimates in comparison to market consensus. Our differences arise from stronger revenue projections in years 2020 and 2021.

2019E 2020E 2021E 2022E 2023E HF $17.91 $22.59 $24.79 $26.79 $28.08 Consensus $17.61 $21.96 $22.41

Valuation

• DCF/EP= $515.07 • DDM= $414.19 • Relative Valuation= $456.48

Regeneron’s current stock price is $344.83. All the models indicate that the stock is undervalued. We are not taking the DDM model into account because the company has never paid a dividend in the past and we do not foresee this changing in the future. We feel confident that both the DCF and the Relative Valuation give an estimate of the

0%10%20%30%40%50%

2017 2018 2019E 2020E 2021E 2022E 2023E

Profit Margins

Operating Margin Net Profit Margin

Page 11

intrinsic value of the firm. However, we are basing our target range on the Relative Valuation price as it aligns with our decision to choose the stock in the first place. We used FactSet to screen for a stock in the biotechnology industry that was undervalued but was posting positive sales with recent and future EPS growth.

Weighted Average Cost of Capital

We calculated the cost of capital for REGN using the 10-year U.S Treasury Bill of 1.79% as a proxy for the risk-free rate plus a market risk premium of 4.95% (HF consensus) multiplied by the 3-year weekly Beta of 1.082 retrieved from Bloomberg’s regression model. We then use the number of shares outstanding times the share price of $344.87 to get the market value of equity. For the cost of debt, we use Damodaran’s estimate for the biotechnology industry as a proxy. The value of debt is comprised by the sum of capital lease obligations and the PV of operating leases. Plugging all these inputs into the formula we arrive at a WACC of 7.09%.

KEYS TO MONITOR

We need to monitor the progress of Libtayo’s clinical trials for the treatment of lung cancer and evaluate the feasibility of attracting market share despite being a late comer. If interim results suggest less survival rates than what Keytruda currently provides then do not think Libtayo will be a strong competitor in the field.

As mentioned before, there is a total of 21 products under development. Regeneron’s pipeline is critical to the long-term survival of the firm. Even though the process of drug approvals takes years the company currently enjoys some breakthrough and fast track designations which means that we can see some drugs coming to market earlier than expected. We need to monitor their pipeline closely and Regeneron’s ability to make up for EYLEA’s declining profits.

REFERENCES

1. Regeneron 10-Q 3rd Quarter 2019 2. Regeneron 10-K FY2018 3. Dexur https://dexur.com/a/eylea-lucentis-market-

share/473/

4. Pharma Times http://www.pharmatimes.com/web_exclusives/are_pcsk9_inhibitors_about_to_take_off_1289184

5. Regeneron Press Releases https://investor.regeneron.com/news-releases/news-release-details/regeneron-and-vyriad-announce-strategic-agreement-discovery-and

6. The Commonwealth Fund https://www.commonwealthfund.org/publications/issue-briefs/2017/oct/paying-prescription-drugs-around-world-why-us-outlier

7. Reuters https://www.reuters.com/brandfeatures/venture-capital/article?id=127616

8. National Center for Biotechnology Information https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3836377/#:~:targetText=The%20cryopyrin%2Dassociated%20periodic%20syndrome,is%20likely%20to%20be%20higher.

9. Pharmaceutical Technology https://www.pharmaceutical-technology.com/comment/sanofi-regenerons-kevzara-faces-competition-rheumatoid-arthritis-market/

10. Regeneron Press Releases https://investor.regeneron.com/news-releases/news-release-details/regeneron-provides-updates-phase-3-libtayor-cemiplimab

11. Food and Drug Administration https://www.fda.gov/drugs/biosimilars/biosimilar-product-information

12. Census Bureau https://www.census.gov/content/dam/Census/library/publications/2019/demo/p60-267.pdf

13. Alnylam Investors http://investors.alnylam.com/news-releases/news-release-details/alnylam-and-regeneron-announce-broad-collaboration-discover

14. Bloomberg https://www.bloomberg.com/news/articles/2019-08-12/ebola-drug-shows-promising-results-in-heart-of-congo-outbreak

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IMPORTANT DISCLAIMER

Henry Fund reports are created by students enrolled in the Applied Securities Management program at the University of Iowa’s Tippie College of Business. These reports provide potential employers and other interested parties an example of the analytical skills, investment knowledge, and communication abilities of our students. Henry Fund analysts are not registered investment advisors, brokers or officially licensed financial professionals. The investment opinion contained in this report does not represent an offer or solicitation to buy or sell any of the aforementioned securities. Unless otherwise noted, facts and figures included in this report are from publicly available sources. This report is not a complete compilation of data, and its accuracy is not guaranteed. From time to time, the University of Iowa, its faculty, staff, students, or the Henry Fund may hold an investment position in the companies mentioned in this report.

Regeneron PharmaceuticalsRevenue Decomposition(in $ millions)Fiscal Years Ending Dec.31 2016 2017 2018 2019 2020E 2021E 2022E 2023EREVENUESNet product sales 3,338 3,719 4,106 4,787 5,232 5,672 6,106 6,336

EYLEA - 3,702 4,077 4,609 4,931 5,227 5,489 5,599Libtayo - - 15 164 287 430 603 723ARCALYST - 17 15 14 14 14 14 14

Sanofi collaboration revenue 659 877 1,111 1,393 1,875 2,358 2,776 3,153Total Antibody 440 554 559 1,118 1,598 2,077 2,493 2,867Total Immuno-Oncology 219 324 552 275 277 280 283 286

Bayer HealthCare LLC collaboration revenue 744 938 1,077 1,185 1,196 1,208 1,221 1,233EYLEA 711 802 992 1,185 1,196 1,208 1,221 1,233Other 34 136 - - - - - -

Other revenue 119 338 417 382 390 398 406 414Total Revenues 4,860 5,872 6,711 7,747 8,694 9,636 10,508 11,135

GROWTHNet product sales 24.13% 11.39% 10.43% 16.57% 9.31% 8.40% 7.65% 3.77%

EYLEA 0 0 10.12% 13.05% 7.00% 6.00% 5.00% 2.00%Libtayo 0 0 0 1008.38% 74.90% 50.00% 40.00% 20.00%ARCALYST 0 0 -11.45% -5.70% 1.00% 1.00% 1.00% 1.00%

Sanofi collaboration revenue -13.20% 33.17% 26.66% 25.37% 34.62% 25.71% 17.74% 13.57%Total Antibody -33.60% 25.78% 0.96% 100.08% 42.88% 30.00% 20.00% 15.00%Total Immuno-Oncology 127.84% 48.05% 70.66% -50.27% 1.00% 1.00% 1.00% 1.00%

Bayer HealthCare LLC collaboration revenue 28.22% 26.04% 14.77% 10.02% 1.00% 1.00% 1.00% 1.00%EYLEA 26.93% 12.87% 23.68% 19.38% 1.00% 1.00% 1.00% 1.00%Other 63.41% 305.37% - - - - - -

Other revenue 59.09% 184.37% 23.17% -8.23% 2.00% 2.00% 2.00% 2.00%Total Revenues 18.44% 20.82% 14.28% 15.44% 12.23% 10.83% 9.05% 5.97%

Regeneron PharmaceuticalsIncome Statement(in $ millions)Fiscal Years Ending Dec.31 2017 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019E 2019E Q1 2020E Q2 2020E Q3 2020 Q4 2020 2020E 2021E 2022E 2023ETotal revenues 5,872 6,711 1,712 1,934 2,048 2,053 7,747 1,995 2,188 2,240 2,271 8,694 9,636 10,508 11,135 Research & development expenses 1,933 2,042 591 996 611 513 2,711 670 690 702 687 2,749 3,056 3,333 3,532 Depreciation and amortization expense 142 144 51 52 53 50 206 46 46 46 46 185 199 216 231 Selling, general & administrative expenses 1,320 1,556 411 417 420 472 1,720 455 475 472 583 1,985 2,214 2,415 2,559 Cost of goods sold 203 180 71 67 116 82 336 83 76 127 91 376 417 457 490 Cost of collaboration & contract manufacturing 195 254 108 86 111 73 378 74 88 105 81 347 371 405 429 Total expenses 3,793 4,176 1,232 1,618 1,310 1,191 5,351 1,327 1,375 1,451 1,489 5,643 6,258 6,825 7,241 Income from operations 2,080 2,534 480 316 739 862 2,396 668 813 789 782 3,052 3,378 3,683 3,894 Other income (expenses), net 24 47 74 (83) 38 14 42 11 11 11 11 43 44 45 45 Interest expense 25 28 8 8 8 8 31 - - - - 31 31 31 31 Debt extinguishment loss - - - - - - - - - - - - - - - Total other income (expense) (1) 19 66 (91) 30 6 11 11 11 11 11 12 13 13 14 Income before income taxes 2,079 2,554 546 225 769 868 2,407 679 824 800 792 3,064 3,390 3,696 3,908 Income tax expense 880 109 85 32 99 165 457 129 156 152 151 582 644 702 743 Net income 1,199 2,444 461 193 670 703 1,950 550 667 648 642 2,481 2,746 2,994 3,166

Weighted average shares outstanding - basic 106 108 109 109 109 109 109 110 110 110 110 110 111 112 113 Net income per share - basic 11.27$ 22.65$ 4.23$ 1.77$ 6.12$ 6.46$ 17.91$ 5.01$ 6.07$ 5.90$ 5.84$ 22.59$ 24.79$ 26.79$ 28.08$

Regeneron PharmaceuticalsBalance Sheet(in $ millions)Fiscal Years Ending Dec.31 2016 2017 2018 2019E 2020E 2021E 2022E 2023EASSETSCurrents assets:

Cash & cash equivalents 535 813 1,468 3,447 5,888 8,594 11,548 14,723 Marketable securities 503 597 1,342 1,366 1,391 1,416 1,441 1,467 Accounts receivable - trade, net 1,343 1,539 1,724 2,010 2,256 2,500 2,726 2,889 Accounts receivable from Sanofi 93 194 226 296 398 500 589 669 Accounts receivable from Bayer HealthCare LLC 175 242 293 314 317 320 324 327 Inventories 399 726 1,151 1,143 1,283 1,422 1,551 1,644 Deferred tax assets - - - - - - - - Prepaid expenses & other current assets 131 225 243 289 324 359 392 415

Total current assets 3,180 4,335 6,448 8,865 11,857 15,112 18,571 22,133 Marketable securities 864 1,486 1,755 1,786 1,818 1,851 1,884 1,918 Property, plant & equipment, net 2,083 2,359 2,576 2,805 3,064 3,316 3,560 3,797 Gross property, plant & equipment 2,509 2,925 3,305 3,740 4,184 4,635 5,095 5,563 Less accumulated depreciation 426 566 729 935 1,120 1,319 1,535 1,766 Deferred tax assets 825 506 829 746 671 604 544 489 Other assets 20 78 127 130 132 134 137 139

Total assets 6,973 8,764 11,735 14,332 17,543 21,017 24,696 28,477 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:

Accounts payable 135 178 218 243 273 303 330 350 Accrued expenses & other current liabilities 744 637 772 866 972 1,077 1,174 1,244 Capital lease obligations 127 - - - - - - - Deferred revenue from Sanofi, current portion 115 178 247 296 398 501 589 669 Deferred revenue - other, current portion 116 142 206 213 239 265 289 306 Other current liabilities 3 0 - - - - - -

Total current liabilities 1,241 1,135 1,443 1,618 1,882 2,145 2,382 2,570 Capital and facility lease obligations 352 703 709 709 709 709 709 709 Deferred revenue from Sanofi 503 380 279 350 471 593 698 792 Deferred revenue-other 327 249 185 271 304 337 368 390 Convertible senior notes - - - - - - - - Other long-term liabilities 100 152 362 368 375 382 388 395

Total liabilities 2,524 2,620 2,977 3,316 3,741 4,165 4,545 4,856 Stockholders' equity:Common stock 3,030 3,513 3,912 4,231 4,550 4,870 5,189 5,508 Retained earnings 1,748 2,947 5,254 7,204 9,686 12,432 15,426 18,591 Accumulated other comprehensive loss (13) 1 (12) (12) (12) (12) (12) (12) Treasury stock, at cost 316 316 396 406 421 436 451 466

Total stockholders' equity 4,449 6,144 8,757 11,016 13,802 16,853 20,151 23,621 Total liabities and stockholder's equity 6,973 8,764 11,735 14,332 17,543 21,017 24,696 28,477

Regeneron PharmaceuticalsCash Flow Statement(in $ millions)Fiscal Years Ending Dec.31 2014 2015 2016 2017 2018Operating activities:

Net income 348 636 896 1,199 2,444 Adjustments to reconcile net income to net cash:

Depreciation & amortization 53 75 105 145 148 Non-cash compensation expense 307 459 560 507 427 Non-cash interest expense 18 - - - - Loss on extinguishment of debt 33 19 - - - Other non-cash charges & expenses, net 30 34 45 64 12 Deferred taxes (67) (122) (360) 319 (140)

Changes in assets and liabilities:Sanofi, Bayer HealthCare LLC & trade accounts receivable (62) (491) (144) (363) (269) Inventories (61) (112) (150) (314) (388) Prepaid expenses & other assets (38) (79) 24 (113) (56) Deferred revenue 19 609 244 (113) (195) Accounts payable, accrued expenses & other liabilities 162 304 254 (23) 210

Net cash provided by operating activities 743 1,331 1,473 1,307 2,195 Investing activities:

Purchases of marketable securities (564) (557) (809) (1,277) (1,846) Sales or maturities of marketable securities 476 327 274 545 776 Capital expenditures (333) (678) (512) (273) (383) Other investing activities - - - - (10)

Net cash used for investing activities (421) (908) (1,047) (1,005) (1,463) Financing activities:

Proceeds (payments) in connection with facility & capital lease obligations (1) 26 (28) 37 - Repayments of convertible senior notes (221) (166) (13) - - Payments in connection with reduction of outstanding warrants (295) (573) (643) - - Proceeds from issuance of common stock 126 206 127 240 115 Payments in connection with common stock tendered for employee tax obligations(268) (161) (143) (302) (187) Repurchases of common stock - - - - (4) Excess tax benefit from stock-based compensation 449 405 - - -

Net cash used in financing activities (209) (263) (700) (24) (77) Net increase (decrease) in cash & cash equivalents 113 160 (274) 278 655 Cash & cash equivalents at beginning of year 536 649 809 535 825 Cash & cash equivalents at end of year 649 809 535 813 1,480

Regeneron PharmaceuticalsCash Flow Statement(in $ millions)Fiscal Years Ending Dec.31 2019E 2020E 2021E 2022E 2023EOperating activities:

Net income 1,950 2,481 2,746 2,994 3,166 Adjustments to reconcile net income to net cash:

Add depreciation and amortization 206 185 199 216 231 Change in deferred taxes 83 75 67 60 54

Changes in assets and liabilities:Accounts receivable (376) (351) (350) (318) (246) Inventories 8 (140) (139) (129) (93) Prepaid expenses & other current assets (46) (35) (35) (33) (23) Other assets (2) (2) (2) (2) (2) Accounts payable 25 30 30 27 20 Accrued expenses and other current liabilities 94 106 105 97 70 Deferred current revenue 56 128 128 113 97 Deferred revenue 157 154 154 136 117 Other long-term liabilities 7 7 7 7 7

Net cash flows from operating activities 2,161 2,637 2,910 3,168 3,398 Investing activities:

(Increase) decrease of investments (55) (56) (57) (58) (60) Purchases of property, plant & equipment (436) (444) (452) (460) (468)

Net cash flows used for investing activities (491) (500) (509) (518) (527) Financing activities:

Repurchases of common stock (10) (15) (15) (15) (15) Proceeds from issuance of common stock(ESOP exercises) 319 319 319 319 319 Changes in AOCI - - - - -

Net cash flows from financing activities 309 304 304 304 304 Net increase (decrease) in cash & cash equivalents 1,979 2,442 2,705 2,954 3,175 Cash & cash equivalents at beginning of year 1,468 3,447 5,888 8,594 11,548 Cash & cash equivalents at end of year 3,447 5,888 8,594 11,548 14,723

Regeneron PharmaceuticalsCommon Size Income Statement

Fiscal Years Ending Dec.31 2016 2017 2018 2019E 2020E 2021E 2022E 2023ETotal revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Research & development expenses 40.07% 32.92% 30.43% 34.99% 31.62% 31.72% 31.72% 31.72%Depreciation and amortization expense 2.15% 2.42% 2.15% 2.66% 2.13% 2.07% 2.05% 2.08%Selling, general & administrative expenses 24.23% 22.49% 23.19% 22.20% 22.83% 22.98% 22.98% 22.98%Cost of goods sold 4.00% 3.45% 2.68% 4.34% 4.33% 4.33% 4.35% 4.40%Cost of collaboration & contract manufacturing 2.16% 3.31% 3.79% 4.88% 4.00% 3.85% 3.85% 3.85%Total expenses 72.62% 64.59% 62.23% 69.07% 64.90% 64.95% 64.95% 65.03%Income from operations 27.38% 35.41% 37.77% 30.93% 35.10% 35.05% 35.05% 34.97%Other revenues (expenses), net 0.13% 0.41% 0.70% 0.55% 0.49% 0.45% 0.42% 0.41%Interest expense 0.15% 0.43% 0.42% 0.40% 0.36% 0.32% 0.30% 0.28%Debt extinguishment loss 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Total other income (expense) -0.02% -0.02% 0.28% 0.14% 0.14% 0.13% 0.13% 0.13%Income before income taxes 27.36% 35.40% 38.05% 31.07% 35.24% 35.18% 35.18% 35.10%Income tax expense 8.94% 14.99% 1.63% 5.90% 6.69% 6.68% 6.68% 6.67%Net income 18.42% 20.41% 36.42% 25.17% 28.54% 28.50% 28.49% 28.43%

Regeneron PharmaceuticalsCommon Size Balance Sheet

Fiscal Years Ending Dec.31 2016 2017 2018 2019E 2020E 2021E 2022E 2023EASSETSCurrents assets:

Cash & cash equivalents 11.01% 13.84% 21.87% 44.49% 67.73% 119.85% 140.11% 132.22%Marketable securities 10.36% 10.16% 20.00% 17.64% 16.00% 14.95% 13.96% 13.17%Accounts receivable - trade, net 27.64% 26.20% 25.69% 25.94% 25.94% 28.29% 27.49% 25.94%Accounts receivable from Sanofi 1.91% 3.30% 3.37% 3.82% 4.58% 6.12% 6.37% 6.01%Accounts receivable from Bayer HealthCare LLC 3.61% 4.12% 4.37% 4.05% 3.65% 3.36% 3.11% 2.93%Inventories 8.22% 12.37% 17.15% 14.76% 14.76% 16.10% 15.64% 14.76%Deferred tax assets 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Prepaid expenses & other current assets 2.69% 3.83% 3.63% 3.73% 3.73% 4.07% 3.95% 3.73%

Total current assets 65.43% 73.82% 96.08% 114.43% 136.38% 192.73% 210.64% 198.77%Marketable securities 17.78% 25.31% 26.15% 23.06% 20.91% 19.55% 18.25% 17.22%Property, plant & equipment, net 42.86% 40.17% 38.38% 36.21% 35.24% 36.95% 36.13% 34.10%Gross property, plant & equipment 51.62% 49.81% 49.24% 48.28% 48.12% 52.88% 52.94% 49.96%Less accumulated depreciation 8.75% 9.64% 10.86% 12.07% 12.88% 15.93% 16.81% 15.86%Deferred tax assets 16.98% 8.62% 12.35% 9.63% 7.72% 5.64% 4.66% 4.39%Other assets 0.42% 1.33% 1.90% 1.67% 1.52% 1.42% 1.33% 1.25%

Total assets 143.47% 149.25% 174.86% 185.01% 201.77% 256.29% 271.00% 255.73%LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:

Accounts payable 2.78% 3.03% 3.25% 3.14% 3.14% 3.43% 3.33% 3.14%Accrued expenses & other current liabilities 15.31% 10.85% 11.51% 11.18% 11.18% 12.19% 11.84% 11.18%Capital lease obligations 2.62% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Deferred revenue from Sanofi, current portion 2.37% 3.03% 3.68% 3.82% 4.58% 6.12% 6.37% 6.01%Deferred revenue - other, current portion 2.39% 2.42% 3.07% 2.75% 2.75% 2.99% 2.91% 2.75%Other current liabilities 0.07% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total current liabilities 25.54% 19.34% 21.50% 20.88% 21.64% 24.73% 24.45% 23.08%Capital and facility lease obligations 7.23% 11.98% 10.56% 9.15% 8.15% 7.35% 6.74% 6.36%Deferred revenue from Sanofi 10.36% 6.47% 4.16% 4.52% 5.42% 7.24% 7.54% 7.12%Deferred revenue-other 6.73% 4.24% 2.76% 3.50% 3.50% 3.82% 3.71% 3.50%Convertible senior notes 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Other long-term liabilities 2.07% 2.59% 5.39% 4.75% 4.31% 4.03% 3.76% 3.55%

Total liabilities 51.93% 44.62% 44.36% 42.80% 43.03% 47.17% 46.21% 43.61%Stockholders' equity:Common stock 62.34% 59.82% 58.29% 54.62% 52.34% 53.85% 52.42% 49.47%Retained earnings 35.97% 50.18% 78.30% 92.99% 111.40% 160.09% 176.93% 166.96%Accumulated other comprehensive loss -0.26% 0.01% -0.18% -0.16% -0.14% -0.13% -0.12% -0.11%Treasury stock, at cost 6.51% 5.39% 5.91% 5.25% 4.85% 4.68% 4.44% 4.19%

Total stockholders' equity 91.54% 104.63% 130.50% 142.20% 158.75% 209.12% 224.79% 212.13%Total liabities and stockholder's equity 143.47% 149.25% 174.86% 185.01% 201.77% 256.29% 271.00% 255.73%

Regeneron PharmaceuticalsWeighted Average Cost of Capital (WACC) Estimation

Cost of EquityRisk-free rate 1.79%Market risk premium 4.95%Beta 1.08Cost of Equity (Re) = 7.145900%

Cost of DebtPre-tax cost of debt 5.43%Marginal tax rate 19.00%After-tax Cost of Debt (Rd) = 4.40%

Market Value of EquityShares outstanding 108 Share price $344.83Market Value of Equity (E) = 37,207

Market Value of Debt Capital and lease obligations 709 PV of operating leases 22 Total Value of Debt (D) = 730

Total Value of the Firm (D+E) = 37,938

WACC = 7.09%

Regeneron PharmaceuticalsValue Driver Estimation(in $ millions)Fiscal Years Ending Dec.31 2016 2017 2018 2019E 2020E 2021E 2022E 2023ENOPLATEBITA CalculationOperating revenue 4,860 5,872 6,711 7,747 8,694 9,636 10,508 11,135 - COGS 195 203 180 336 376 417 457 490 - Selling, general & administrative 1,178 1,320 1,556 1,720 1,985 2,214 2,415 2,559 - Depreciation and amortization 105 142 144 206 185 199 216 231 - Research & development 1,948 1,933 2,042 2,711 2,749 3,056 3,333 3,532 - Cost of collaboration & contract manufacturing 105 195 254 378 347 371 405 429 + Implied interest on operating leases 5 2 1 1 1 1 2 2 EBITA 1,335 2,082 2,535 2,397 3,053 3,379 3,684 3,896

Adjusted TaxesIncome Tax Expense 434 880 109 457 582 644 702 743 - Tax shield on other revenues 1 5 9 8 8 8 8 9 + Tax on debt extinguishment loss - - - - - - - - + Tax on interest expense 1 5 5 6 6 6 6 6 - Tax on operating lease interest 1 0 0 0 0 0 0 0 Total Adjusted Taxes 434 880 105 455 580 641 699 740

NOPLAT CalculationEBITA 1,335 2,082 2,535 2,397 3,053 3,379 3,684 3,896 - Adjusted Taxes 434 880 105 455 580 641 699 740 + Change in Deferred Taxes (363) 319 (322) 83 75 67 60 54 NOPLAT 539 1,521 2,108 2,025 2,548 2,805 3,045 3,211

INVESTED CAPITALOperating current assets:Normal cash 97 117 134 155 174 193 210 223 Accounts receivable 1,612 1,974 2,243 2,620 2,971 3,321 3,639 3,885 Inventories 399 726 1,151 1,143 1,283 1,422 1,551 1,644 Prepaid expenses and other current assets 131 225 243 289 324 359 392 415 Total operating CA 2,239 3,043 3,772 4,207 4,752 5,295 5,792 6,166

Operating current liabilities:Accounts payable 135 178 218 243 273 303 330 350 Accrued expenses and other current liabilities 744 637 772 866 972 1,077 1,174 1,244 Deferred revenue 232 320 453 508 637 765 878 975 Other accrued expenses 3 0 - - - - - - Total operating CL 1,114 1,135 1,443 1,618 1,882 2,145 2,382 2,570

Net working capital 1,124 1,907 2,329 2,589 2,870 3,150 3,409 3,597

Net PPE 2,083 2,359 2,576 2,805 3,064 3,316 3,560 3,797

Other LT operating assetsPV of operating leases 40 19 22 24 26 29 31 33 Total LT operating assets 40 19 22 24 26 29 31 33

Other LT operating liabilitiesDeferred revenue 831 629 464 621 776 930 1,066 1,182 Total LT operating liabilities 831 629 464 621 776 930 1,066 1,182

IC CalculationNet operating WC 1,124 1,907 2,329 2,589 2,870 3,150 3,409 3,597 + Net PPE 2,083 2,359 2,576 2,805 3,064 3,316 3,560 3,797 + Other LT operating assets 40 19 22 24 26 29 31 33 - Other LT operating liabilities 831 629 464 621 776 930 1,066 1,182 Invested Capital 2,417 3,656 4,463 4,797 5,185 5,565 5,935 6,245

ROIC (NOPLAT/Beg. IC) 24.96% 62.93% 57.65% 45.38% 53.11% 54.09% 54.72% 54.10%

FCF (NOPLAT- change in IC) 279 282 1,301 1,691 2,160 2,424 2,675 2,901

Economic Profit (Beg. IC*(ROIC-WACC)) 386 1,349 1,848 1,709 2,208 2,437 2,651 2,790

Regeneron PharmaceuticalsDiscounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models

Key Inputs: CV Growth 2.00% CV ROIC 54.10% WACC 7.09% Cost of Equity 7.15%

Fiscal Years Ending Dec.31 2019E 2020E 2021E 2022E 2023E

DCF ModelPeriod 1 2 3 4 5NOPLAT 2,025 2,548 2,805 3,045 3,211 - Capital Expenditures 335 388 380 370 Free Cash Flow (FCF) 1,691 2,160 2,424 2,675 CV 60710Discount Factor 1.1 1.1 1.2 1.3PV of FCF 1,579 1,884 1,974 48,188 Total Value of Operating Assets 53,625

+ Investments 3,097 + Excess Cash 1,333 + Other assets 127 - Other liabilities (362) - Capital lease obligations (709) - PV of Operating Leases (22) - PV of ESOP (3,893) Value of Equity 53,198 Shares Outstanding 108 Intrinsic Value 493.03$ Partial Year Adjusted Value 515.27$

EP ModelPeriod 1 2 3 4 5Economic Profit to Discount 1,709 2,208 2,437 2,651 2,790 CV 54,775 Discount Factor 1.1 1.1 1.2 1.3PV of EP 1,595 1,925 1,984 43,657 Total PV 49,162 + Beginning IC 4,463 Total Value of Operating Assets 53,625

+ Investments 3,097 + Excess Cash 1,333 + Other assets 127 - Other liabilities (362) - Capital lease obligations (709) - PV of Operating Leases (22) - PV of ESOP (3,893) Value of Equity 53,198 Shares Outstanding 108 Intrinsic Value 493.03$ Partial Year Adjusted Value 515.27$

Regeneron PharmaceuticalsDividend Discount Model (DDM) or Fundamental P/E Valuation ModelKey Assumptions CV growth 4.83% CV ROE 13.40% Cost of Equity 7.15%

Fiscal Years Ending Dec.31 2019E 2020E 2021E 2022E 2023E

EPS 17.91$ 22.59$ 24.79$ 26.79$ 28.08$

Future Cash FlowsPeriod 1 2 3 4 5P/E Multiple (CV Year) 27.65 EPS (CV Year) 28.08 Future Stock Price 776.42 Dividends Per Share - - - - -

Discounted Cash Flows -$ -$ -$ -$ 589.11$

Intrinsic Value 589.11$ Partial Year Adjusted Value 612.67$

Regeneron PharmaceuticalsRelative Valuation Models

EPS EPSTicker Company Price 2019E 2020E P/E 19 P/E 20AMGN Amgen $222.85 $12.92 $14.04 17.2 15.9 NVS Novartis AG $90.04 $3.61 $4.26 24.9 21.1 VRTX Vertex Pharmaceuticals Inc $210.00 $3.10 $5.05 67.7 41.6 PFE Pfizer Inc $37.27 $3.18 $1.91 11.7 19.5 MRK Merck & Co., Inc. $84.90 $4.47 $4.92 19.0 17.3 ALXN Alexion Pharmaceuticals $108.34 $8.82 $9.29 12.3 11.7

Average 25.5 21.2

REGN Regeneron Pharmaceuticals $344.83 $ 17.91 $ 22.59 19.3 15.3

Implied Value: Relative P/E (EPS19) $ 456.48 Relative P/E (EPS20) 478.32$

Regeneron PharmaceuticalsKey Management Ratios

Fiscal Years Ending Dec.31 2016 2017 2018 2019E 2020E 2021E 2022E 2023E

Liquidity RatiosCurrent Assets 3,180 4,335 6,448 8,865 11,857 15,112 18,571 22,133 /Current Liabilities 1,241 1,135 1,443 1,618 1,882 2,145 2,382 2,570 = Current Ratio 2.56 3.82 4.47 5.48 6.30 7.05 7.79 8.61

Cash + Accounts Receivable 2,147 2,787 3,711 5,457 8,144 11,094 14,274 17,612 / Curent Liabilities 1,241 1,135 1,443 1,618 1,882 2,145 2,382 2,570 = Quick Ratio 1.73 2.45 2.57 3.37 4.33 5.17 5.99 6.85

Cash Assets 535 813 1,468 3,447 5,888 8,594 11,548 14,723 / Current Liabilities 1,241 1,135 1,443 1,618 1,882 2,145 2,382 2,570 = Cash Ratio 0.43 0.72 1.02 2.13 3.13 4.01 4.85 5.73

Activity or Asset-Management RatiosTotal Revenue 4,104 4,860 5,872 6,711 7,747 8,694 9,636 10,508 / Average Accounts Receivable 1,540 1,793 2,109 2,431 2,795 3,146 3,480 3,762 = Average Recivable Turnover 2.67 2.71 2.78 2.76 2.77 2.76 2.77 2.79

Cost of Goods Sold 242 195 203 180 336 376 417 457 / Average Inventory 319 563 939 1,147 1,213 1,353 1,487 1,597 = Inventory Turnover 75.78% 34.58% 21.57% 15.69% 27.68% 27.80% 28.07% 28.62%

Financial Leverage RatiosTotal Debt 479 703 709 709 709 709 709 709 / Total Assets 6,973 8,764 11,735 14,332 17,543 21,017 24,696 28,477 = Debt Ratio 0.07 0.08 0.06 0.05 0.04 0.03 0.03 0.02

Long-term debt 352 703 709 709 709 709 709 709 / Total SE 4,449 6,144 8,757 11,016 13,802 16,853 20,151 23,621 = Debt to Equity Ratio 0.08 0.11 0.08 0.06 0.05 0.04 0.04 0.03

Profitability RatiosSales-COGS 4,666 5,670 6,531 7,411 8,318 9,219 10,051 10,645 / Sales 4,860 5,872 6,711 7,747 8,694 9,636 10,508 11,135 = Gross Margin 96.00% 96.55% 97.32% 95.66% 95.67% 95.67% 95.65% 95.60%

Operating Income 1,331 2,080 2,534 2,396 3,052 3,378 3,683 3,894 / Sales 4,860 5,872 6,711 7,747 8,694 9,636 10,508 11,135 = Operating Margin 27.38% 35.41% 37.77% 30.93% 35.10% 35.05% 35.05% 34.97%

Net Income 896 1,199 2,444 1,950 2,481 2,746 2,994 3,166 / Sales 4,860 5,872 6,711 7,747 8,694 9,636 10,508 11,135 =Net Profit Margin 18.42% 20.41% 36.42% 25.17% 28.54% 28.50% 28.49% 28.43%

Net Income 896 1,199 2,444 1,950 2,481 2,746 2,994 3,166 / Average Total Assets 6,291 7,869 10,249 13,033 15,938 19,280 22,857 26,586 = Return on Assets 14.23% 15.23% 23.85% 14.96% 15.57% 14.24% 13.10% 11.91%

Net Income 896 1,199 2,444 1,950 2,481 2,746 2,994 3,166 / Average Total Equity 4,052 5,297 7,451 9,887 12,409 15,327 18,502 21,886 = Return on Equity 22.10% 22.63% 32.81% 19.72% 20.00% 17.92% 16.18% 14.47%

Payout Policy RatiosDividend - - - - - - - - / EPS 8.55$ 11.27$ 22.65$ 17.91$ 22.59$ 24.79$ 26.79$ 28.08$ = Dividend Payout Ratio 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

VALUATION OF OPTIONS GRANTED IN ESOP

Ticker Symbol REGNCurrent Stock Price $344.83Risk Free Rate 1.79%Current Dividend Yield 0.00%Annualized St. Dev. of Stock Returns 34.04%

Average Average B-S ValueRange of Number Exercise Remaining Option of OptionsOutstanding Options of Shares Price Life (yrs) Price GrantedRange 1 28 319.28 6.43 137.65$ 3,893$ Total 28 319.28$ 6.43 137.65$ 3,893$

Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding

Number of Options Outstanding (shares): 28Average Time to Maturity (years): 6.43Expected Annual Number of Options Exercised: 4

Current Average Strike Price: 319.28$ Cost of Equity: 7.15%Current Stock Price: $344.83

2019E 2020E 2021E 2022E 2023EIncrease in Shares Outstanding: 1 1 1 1 1Average Strike Price: 319.28$ 319.28$ 319.28$ 319.28$ 319.28$ Increase in Common Stock Account: 319 319 319 319 319

Change in Treasury Stock 10 15 15 15 15Expected Price of Repurchased Shares: 344.83$ 369.47$ 395.87$ 424.16$ 454.47$ Number of Shares Repurchased: 0 0 0 0 0

Shares Outstanding (beginning of the year) 108 109 110 111 112Plus: Shares Issued Through ESOP 1 1 1 1 1Less: Shares Repurchased in Treasury 0 0 0 0 0 Shares Outstanding (end of the year) 109 110 111 112 113

Present Value of Operating Lease Obligations (2018) Present Value of Operating Lease Obligations (2017) Present Value of Operating Lease Obligations (2016)

Operating Operating OperatingFiscal Years Ending Dec.31 Leases Fiscal Years Ending Dec.31 Leases Fiscal Years Ending Dec.31 Leases2019 10.40 2018 8.96 2017 9.882020 3.80 2019 3.91 2018 5.692021 3.40 2020 3.14 2019 5.092022 2.20 2021 2.43 2020 4.282023 1.50 2022 1.93 2021 3.99Thereafter 4.10 Thereafter 1.51 Thereafter 22.34Total Minimum Payments 25.40 Total Minimum Payments 21.88 Total Minimum Payments 51.27Less: Interest 3 Less: Interest 3 Less: Interest 11PV of Minimum Payments 22 PV of Minimum Payments 19 PV of Minimum Payments 40

Capitalization of Operating Leases Capitalization of Operating Leases Capitalization of Operating Leases

Pre-Tax Cost of Debt 5.43% Pre-Tax Cost of Debt 5.43% Pre-Tax Cost of Debt 5.43%Number Years Implied by Year 6 Payment 2.7 Number Years Implied by Year 6 Payment 1.0 Number Years Implied by Year 6 Payment 5.6

Lease PV Lease Lease PV Lease Lease PV LeaseYear Commitment Payment Year Commitment Payment Year Commitment Payment1 10.4 9.9 1 8.96 8.5 1 9.88 9.42 3.8 3.4 2 3.91 3.5 2 5.69 5.13 3.4 2.9 3 3.14 2.7 3 5.09 4.34 2.2 1.8 4 2.43 2.0 4 4.28 3.55 1.5 1.2 5 1.93 1.5 5 3.99 3.16 & beyond 1.5 2.9 6 & beyond 1.51 1.1 6 & beyond 3.99 14.5PV of Minimum Payments 22.0 PV of Minimum Payments 19.2 PV of Minimum Payments 39.8

Present Value of Operating Lease Obligations (2015) Present Value of Operating Lease Obligations (2014)

Operating OperatingFiscal Years Ending Dec.31 Leases Fiscal Years Ending Dec.31 Leases2016 15.49 2015 10.822017 11.76 2016 10.192018 11.75 2017 9.612019 11.74 2018 9.782020 11.38 2019 9.96Thereafter 50.75 Thereafter 58.27Total Minimum Payments 112.853 Total Minimum Payments 108.62Less: Interest 26 Less: Interest 28PV of Minimum Payments 87 PV of Minimum Payments 81

Capitalization of Operating Leases Capitalization of Operating Leases

Pre-Tax Cost of Debt 5.43% Pre-Tax Cost of Debt 5.43%Number Years Implied by Year 6 Payment 4.5 Number Years Implied by Year 6 Payment 5.9

Lease PV Lease Lease PV LeaseYear Commitment Payment Year Commitment Payment1 15.49 14.7 1 10.82 10.32 11.76 10.6 2 10.19 9.23 11.75 10.0 3 9.61 8.24 11.74 9.5 4 9.78 7.95 11.38 8.7 5 9.96 7.66 & beyond 11.38 33.8 6 & beyond 9.96 37.5PV of Minimum Payments 87.3 PV of Minimum Payments 80.7

CV Revenue Growth515.27$ 1.40% 1.60% 1.80% 2.00% 2.20% 2.40% 2.60%

2.10% 499.59 513.71 528.89 545.27 562.98 582.20 603.132.30% 497.26 511.29 526.38 542.66 560.26 579.37 600.182.50% 494.93 508.87 523.87 540.05 557.55 576.54 597.222.70% 492.59 506.46 521.36 537.44 554.83 573.71 594.262.90% 490.26 504.04 518.85 534.83 552.12 570.88 591.313.07% 488.28 501.98 516.72 532.62 549.81 568.47 588.803.30% 485.59 499.20 513.83 529.62 546.69 565.22 585.403.50% 483.26 496.78 511.32 527.01 543.97 562.39 582.443.70% 480.93 494.36 508.81 524.40 541.26 559.56 579.483.90% 478.59 491.95 506.30 521.79 538.55 556.73 576.534.10% 476.26 489.53 503.80 519.18 535.83 553.90 573.574.30% 473.93 487.11 501.29 516.58 533.12 551.07 570.61

WACC515.27$ 6.85% 6.95% 7.05% 7.14% 7.25% 7.35% 7.45%13.00% 584.27 571.92 560.06 549.79 537.71 527.16 517.0014.00% 577.29 565.09 553.37 543.21 531.27 520.85 510.8015.00% 570.31 558.25 546.67 536.63 524.84 514.53 504.6116.00% 563.33 551.41 539.97 530.06 518.40 508.22 498.4217.00% 556.35 544.58 533.27 523.48 511.96 501.91 492.2318.00% 549.36 537.74 526.58 516.90 505.53 495.60 486.0319.00% 542.38 530.90 519.88 510.32 499.09 489.29 479.8420.00% 535.40 524.07 513.18 503.75 492.66 482.97 473.6521.00% 528.42 517.23 506.48 497.17 486.22 476.66 467.4622.00% 521.44 510.39 499.78 490.59 479.79 470.35 461.2623.00% 514.46 503.56 493.09 484.02 473.35 464.04 455.0724.00% 507.48 496.72 486.39 477.44 466.92 457.73 448.88

CV SG&A as % of Sales515.27$ 20% 21% 22% 23% 24% 25% 26%29.00% 589.61 576.56 563.52 552.57 537.44 524.40 511.3630.00% 576.56 563.52 550.48 539.53 524.40 511.36 498.3231.00% 563.52 550.48 537.44 526.49 511.36 498.32 485.2832.00% 550.48 537.44 524.40 513.45 498.32 485.28 472.2433.00% 537.44 524.40 511.36 500.40 485.28 472.24 459.19

CV R&D as % of Sales 33.96% 524.92 511.88 498.84 487.89 472.76 459.72 446.6835.00% 511.36 498.32 485.28 474.32 459.19 446.15 433.1136.00% 498.32 485.28 472.24 461.28 446.15 433.11 420.0737.00% 485.28 472.24 459.19 448.24 433.11 420.07 407.0338.00% 472.24 459.19 446.15 435.20 420.07 407.03 393.9939.00% 459.19 446.15 433.11 422.16 407.03 393.99 380.95

Marginal Tax Rate

CV COGS as % Sales

CV Cost of Collaboration515.27$ 3.25% 3.35% 3.45% 3.55% 3.65% 3.75% 3.85%13.75% 524.69 523.38 522.07 520.76 519.45 518.14 516.8414.00% 524.72 523.41 522.10 520.79 519.48 518.18 516.8714.25% 524.75 523.44 522.13 520.82 519.51 518.21 516.9014.50% 524.78 523.47 522.16 520.85 519.55 518.24 516.9314.75% 524.81 523.50 522.19 520.89 519.58 518.27 516.96

CV Growth 15.00% 524.84 523.53 522.22 520.92 519.61 518.30 516.99Sanofi Collaboration 15.25% 524.87 523.56 522.26 520.95 519.64 518.33 517.02Total Immuno-Oncology 15.50% 524.90 523.60 522.29 520.98 519.67 518.36 517.05

15.75% 524.94 523.63 522.32 521.01 519.70 518.39 517.0816.00% 524.97 523.66 522.35 521.04 519.73 518.42 517.1116.25% 525.00 523.69 522.38 521.07 519.76 518.45 517.1416.50% 525.03 523.72 522.41 521.10 519.79 518.48 517.17

Risk-free Rate515.27$ 1.50% 1.60% 1.70% 1.79% 1.90% 2.00% 2.10%

0.80 768.45 746.67 726.05 708.41 687.94 670.30 653.510.85 717.15 698.08 679.97 664.43 646.33 630.69 615.750.90 672.19 655.36 639.32 625.52 609.41 595.43 582.060.95 632.48 617.51 603.21 590.87 576.42 563.86 551.811.00 597.15 583.75 570.90 559.80 546.77 535.42 524.50

Beta 1.05 565.51 553.43 541.84 531.79 519.98 509.67 499.731.08 548.06 536.69 525.76 516.27 505.11 495.35 485.941.15 511.21 501.25 491.66 483.31 473.47 464.84 456.501.20 487.74 478.64 469.85 462.20 453.15 445.21 437.521.25 466.30 457.95 449.87 442.82 434.48 427.14 420.041.30 446.64 438.94 431.49 424.97 417.26 410.46 403.871.35 428.55 421.43 414.52 408.49 401.32 395.01 388.87

Beta515.27$ 0.95 1.00 1.05 1.08 1.15 1.20 1.25

3.95% 749.96 710.31 674.59 654.81 612.82 585.94 561.294.15% 711.74 674.16 640.30 621.55 581.74 556.25 532.874.35% 677.17 641.46 609.29 591.46 553.62 529.38 507.154.55% 645.77 611.76 581.10 564.12 528.05 504.95 483.764.75% 617.12 584.64 555.37 539.15 504.71 482.65 462.404.95% 590.87 559.80 531.79 516.27 483.31 462.20 442.825.15% 566.73 536.95 510.11 495.23 463.63 443.38 424.805.35% 544.45 515.87 490.09 475.81 445.46 426.02 408.175.55% 523.84 496.35 471.57 457.83 428.64 409.93 392.775.75% 504.71 478.24 454.37 441.14 413.02 395.00 378.465.95% 486.91 461.38 438.36 425.60 398.48 381.10 365.15

Risk-premium