Regeneron: New York State of Mind

May 31, 2013

Regeneron is the story of biotech, writ large on a ledger of visionary risk: two men, working out of a New York City apartment, place a big bet on the obscure science of nerve growth factors and end up building a business that today is touted as the millennium's next Amgen, with biotech's best long-term prospects for transition to the big leagues of Big Pharma.



The story line is a long and twisting one, extending 20 years from the company's launch in 1988 to the commercialization of its first product, Arcalyst, for a rare autoimmune disorder, in 2008. What is ironic—not to mention suspenseful—is how a near-death experience with the science of nerve growth factor forced a re-invention of the company around related process technologies that are spawning a rich legacy of innovations in areas tangential to Regeneron's original core mission.

So what could have been an epilogue became, through a double dose of forward-looking insight and initiative, a prelude to today's nosebleed high stock price—the ultimate symbol of market success. In the last five years—one-fifth of Regeneron's life as a company—its stock price has gone in only one direction. It was $20 per share in 2008. At press time in late May it hovers around $250.

Regeneron's staying power, expressed through the company's unwavering pursuit of not just scientific but also technological innovation, derives from the unique partnership formed between two individuals: founder, president and CEO Leonard Schleifer, and founding scientist, president of Regeneron Laboratories, and chief scientific officer George Yancopoulos. Two core beliefs cement the relationship. The first, attributed to Yancopoulos, is a commitment to developing new technologies in the service of drug discovery and development. The second, attributed to Schleifer, is a commitment to recognizing and then leveraging the value Regeneron creates – making deals and forming partnerships that enable the company to continue investing for the future. The fraternity seems to work. Last year, TheStreet's annual reader survey named Schleifer 2012's Best Biotech CEO. "After 25 years, and now being perhaps the longest CEO serving in the business, it's nice to be viewed as an overnight success," jokes Schleifer.



Regeneron is headquartered in Tarrytown, NY, 30 miles up the Hudson River from New York City. The company has three marketed products on its books—Arcalyst, an orphan drug; Eylea, a blockbuster eye product; and Zaltrap, a cancer therapy—plus a pipeline full of monoclonal antibodies, several in late stages. Regeneron entered the black in 2012 for the first time, as a profitable biotech. This milestone was long in coming but rested on a firm base, with crucial support from Big Pharma. After years spent playing musical chairs with pharma partners, Regeneron struck a sweeping platform technology deal with Sanofi in 2007, following an ex-US development and commercialization deal with Bayer in 2006 on aflibercept, which would become Eylea.

The story of Regeneron—a portmanteau of the words "regenerating" and "neurons," with "gene" in the middle—is one of a company working to balance the pursuit of cutting-edge scientific discovery and development, with the commercial prospects necessary to keep the bioreactors up and running. It's also about the determination to engineer failure into an adaptive trait for success.