Regeneron had an early advantage in attracting interest from Big Pharma firms anxious to supplement their in-house pipelines.
Schleifer signed a deal with Amgen in 1990 —two years after founding the company—and Regeneron went public in '91, raising
$96.1 million. The Amgen deal was based on Regeneron's neurotrophic factors, and a belief that injecting nerve growth factors
could regenerate neuronal stem cells, or basically regrow brain cells. Six years later, Regeneron's lead brain-derived neurotrophic
factor (BDNF) would fail in a Phase III trial with ALS (or Lou Gehrig's disease) patients. But the 50/50 profit-sharing deal
Schleifer had negotiated with Amgen would become his signature, despite the fact that the BDNF candidate, and the other nerve
growth factors, never made it to market.
In Yancopoulos's telling, that kind of deal, now fairly commonplace, was unprecedented at the time. Other companies approached
Regeneron about its growth factors, but they all "wanted to partner by essentially buying them from us and giving us a lot
of money up front, and a little royalty," says Yancopoulos. "Len said, 'No way.' And that's one of those rare times a little
old biotech company stood up to a big company and made such a deal." In addition to 50/50 profits, Regeneron's partners, past
and current, provide the vast majority of funding for clinical development, which can run into the hundreds of millions of
dollars. "Last year we spent $600 million in R&D," says Yancopoulos. "And about three-quarters of that is funded by our partners."
It's convenient to frame Schleifer and Yancopoulos as the dual forces of business and science, respectively, but that's not
exactly the case. Schleifer is a licensed neurologist; he received his MD and PhD in pharmacology from the University of Virginia,
and then left for Cornell University Medical College. Following his residency, Schleifer, working as an assistant professor
at Cornell, kept up with the medical journals and was fascinated by some of the work that companies like Genentech were doing.
But the new biotechnology companies Schleifer was reading about were ignoring his chosen field. Schleifer told his thesis
advisor at the time—Alfred Gilman, a biochemist and later, in 1994, a Nobel Prize winner—that he thought a biotech company
focused on neurobiology and neurological diseases might make some sense. But Gilman shrugged him off. "[Gilman] said, 'Look,
let's forget about that stuff. Get back in the lab, and do what you're well-trained to do,'" says Schleifer. When Gilman realized
Schleifer wasn't giving up on the idea, he decided to help by recruiting experts for Regeneron's Scientific Advisory Board.
Gilman joined the company himself, as a director, in 1990.
One of Schleifer's neurology professors, Frank Petito, had a well-connected father (also named Frank Petito) who had served
as chairman of the board at Morgan Stanley. Schleifer probed Petito about potential backers for his new venture, which led
to a meeting with George Sing, who was working at Merrill Lynch Ventures. Sing helped Schleifer think through some of the
business issues, but he respected the intellectual project and wasn't the kind of VC who thinks he knows more about science
than scientists. Over Chinese food, Schleifer and Sing scratched out a deal on the back of a napkin, and Sing agreed to give
Schleifer $1 million to start the company.
Regeneron’s ’Trap’ products: Zaltrap, Eylea, and Arcalyst.
When the lead Regeneron/Amgen growth factor candidate failed a decade later, Edmund Debler, an analyst with Mehta & Isaly,
characterized Regeneron's situation as "grim," in a New York Times article. "Very rarely do companies get a second chance, no less a third," he told the paper. But he also called Regeneron,
in the same article, "one of the best research entities in the biotech world," adding that, "they just have not been able
to translate that research prowess into a drug."
Indeed, it would be another decade before Regeneron finally got its first drug approved, in 2008. Schleifer's early vision
of cloning nerve growth factors, delivering them to patients' brains, curing a few neurological diseases, and sailing off
into the sunset, did not come to pass. "The two biggest surprises for me were just how long it would take to translate good
research into an approved drug that you could actually sell to patients, and how expensive it would be to do that," says Schleifer.
Regeneron's failure to bring the nerve growth factors forward could have been the end of the story. Instead, the team of scientists
led by Yancopoulos kept learning from and building on their findings in the lab, which led to new areas of development. Perhaps
most importantly, Yancopoulos's team invented new process technologies to facilitate more sophisticated experimentation and
discovery. "I can directly trace how the things that we're discovering now started with ideas that we had 25 years ago," says