Winding road to market
For small biotechs, the commercialization process can be a catch 22. Everyone wants to be first to market, but if you're dealing
with new mechanisms and novel drugs, the pharma partners necessary to fund late-stage development and drive commercialization
efforts want proof that it will work. But to get that proof, you need the late-stage clinical data.
Eylea (aflibercept), a Trap designed to block vascular endothelial growth factor (VEGF), was approved at the end of 2011.
The drug competes directly with Genentech's Lucentis (ranibizumab) and also with off-label Avastin (bevacizumab). Yancopoulos
says Regeneron "might have been the first people, or right there [with Genentech]...to consider using a VEGF blocker" for
macular degeneration in the mid-1990s. Lucentis beat Eylea to market by five years, but not for scientific reasons.
Regeneron was a much smaller company in the mid-90s, and totally dependent on a partner to bring drug candidates forward.
At the time, Regeneron had a partnership with Procter & Gamble, and P&G didn't like the VEGF trap for the eye. "They said
there was zero commercial opportunity, and though we could model it in an animal, nobody else had done it in man, so there
was no proof of concept in man," says Yancopoulos. P&G refused to put aflibercept into clinical development, and missed out
on Eylea, a product with sales that now exceed $1 billion. "They turned it down for three years in a row," before ownership
reverted back to Regeneron, says Yancopoulos.
Worse yet, no one else wanted to touch it because it had been rejected by P&G; Eylea was considered a failed molecule. "We
tried to incrementally push it forward with minimal resources...but we had no resources," says Yancopoulos. By this time,
Regeneron had developed a second version of the VEGF Trap, which would become Zaltrap (ziv-aflibercept). Schleifer and Yancopoulos
went out to pitch the pair to partners, and no one was interested.
In 2003, Genentech published data in support of its own VEGF blocker for cancer, and then the phones started ringing at Regeneron.
"All of sudden all the people we had pitched started to call us up," says Yancopoulos. "And they said, 'You know that deal
you proposed for the VEGF Trap for cancer? We'll take it.'" Schleifer told them that ship had sailed. "Len said, 'Sorry, you're
going to have to add a couple zeros,'" says Yancopoulos.
Schleifer convinced Aventis to take on both VEGF Trap indications, for cancer and the eye. After Aventis merged with Sanofi,
the company eventually said they didn't want to pursue the eye indication. Schleifer responded that the eye indication was
in the middle of clinical trials, and agreed to let Sanofi out of the deal if it would provide a little funding for the trials.
The result was that Sanofi handed the rights to the eye indication back to Regeneron, "and paid us $25 million to go away,"
A year or two later, Genentech published data on Lucentis, its VEGF blocker for the eye. "Now all of a sudden everybody's
calling us up again," says Yancopoulos. But this time, Schleifer demanded full rights in the United States, and licensed the
drug to Bayer ex-US, with a 50/50 profit share. "People were literally willing to give us another $200 million for the US
rights, and Len is saying, 'I don't think so,'" says Yancopoulos.
Schleifer says the basis of his deal-making is to recognize and then communicate the value of his company's offering. "I knew
that George and his team were the most unique innovators in the industry, and that I should value that innovation very highly
and demand fair transactions so that we, Regeneron, could share in those rewards in the short, medium, and long term," says
Schleifer. "Plus I cared about what was going to happen five or eight years later...because I wanted to be around for the
long haul. Our signature was that we weren't going to do anything unless we got to split the profits."