Ep3: George Yancopoulos

Welcome to you to Regeneron and visit our facilities. Great to be here.

Well, Len pretty much called me out of the blue before there was any labs or any facilities. It was pretty much just a dream. And at the time, biotech was sort of a dirty word. There were very few cases, if any, of successful scientists moving to biotech. And in fact, all my mentors and heroes were very concerned that I was considering leaving academia to join up with this guy. But I really fell in love with Len. I really thought that he had... first of all, he was a very ethical guy.

I felt that he really was dreaming the right dream, and I thought that we could really synergize well together. And part of it was also, you know, it was the right time in my life. You know, my dad kept telling me, you know, if you really believe you can do something big in science and you're depending on these government grants and you're just going to be talking about curing diseases, if you really think you can cure disease, this is the greatest country in the world. Do something big. And that was right around the time that I met Len. And so we decided to get together and take it on. I have to admit that I thought that it was going to be a lot easier and a lot faster. I am not sure if I really knew what a long haul it would really be. You know what I would have thought back then, but for sure, if I knew how it would turn out, I would do this every time.

Exactly. That's exactly right. It's the nature of the business. Yeah. Well, I think that of course sometimes people get lucky and there's probably other routes to success, but if you really want to build something that's really sustainable, something that has truly the ability to go from discovery to important new medicines that can help patients and doing it over and over again, particularly across all biologic and disease areas, you can't do that overnight. It really takes, as it took in our case, decades of building the background. And we're still building the background capabilities and technologies. We're always trying to come up with new things and new inventions because that's what you have to be doing. But it is all about developing the foundational capabilities and continuing to innovate and come up with new foundational capabilities that allow you to attack, I think, the hardest challenges facing mankind, which is understanding our biology and taking advantage of that understanding to make an impact in disease.

Well, I think that that's the notion of scientists. It's been good to have scientists leading biotech companies is sort of an olden notion and then a brand new notion. I mean, back in the days of Roy Vagelos at Merck, he was the paradigm. He was the example that everybody pointed to. Look, this is a guy. He is a top-notch scientist who went from academia to becoming head of R&D and he built Merck into what became the most admired company in the world and the example for all of us in the history of the biopharma industry in terms of science and innovation leading to new important drugs. I think everybody forgot it. Merck forgot it. As soon as he left, he recommended a scientist take over for him and they put a commercial guy in charge. Some link that to the problem subsequently at Merck. And I think we went through a period of decades where in fact, when for the first 20 years when Len and I were in charge of Regeneron, people say, hey, this is the problem. This is what you get when you put scientists in charge because we had from the outside very little to show for those 20 years. But what people don't realize is that anything worthwhile in the science world you have to build and it's not going to look from the outside as if there's dramatic commercial successes while you're building the science. I think in fact we sort of became the new paradigm when Regeneron took off and became one of the most successful examples and one of the only recent examples of a biotech company completely built from scratch that really has made it into one of the top five biotech companies in the world. All of a sudden people said, wow, maybe that's how we should do it. Maybe we should put scientists in charge. So we're hearkening back to the ancient models, you know, of the 70s and 80s with Roy Vagelos and people are maybe realizing that this is a business where, as I said, people don't realize how hard it is. I believe quantifiably maybe the hardest thing that we do as human beings. Look at the odds. 5,000 biotech companies in the United States, not to mention hundreds of major medical institutions, millions of researchers. Last year, 2016, 22 medicines approved by the FDA, only eight of them, only eight of them first-in-class. Most of them for orphan diseases treating just a few thousand people. Very few drugs really impacting lots of people suffering from all the important diseases we know about.

Well, but the numbers don't vary by more than twofold, right? So, you know, you might be talking 20 or 30 or 40 in a good year, but that's still disappointing. And the ones that are really new medicines is still, you know, in the single-digit range, especially those that aren't addressing orphan diseases. Why is that? Because it is so hard, because so many people aren't doing it the right way. If you look at the numbers from Regeneron, we actually have a sizable fraction of the world's production, one in 5,000 companies. Why? Because I think we built it right.

Well, ironically enough, it was my mentor Fred Alt and I in 1985 that actually made the first proposal to make these mice that could make human antibodies. And then other companies, in fact, Fred advised and collaborated with other companies, most notably Medarex and Abgenix, to make the first such mice. And we actually collaborated, we had an important collaboration with Medarex. I think there's a couple examples I think why we have survived and thrived and many of those companies have gone by, even though I think that those were great companies. Part of it was just business strategies and to give a lot of credit to Len, I mean, he helped create a business plan and structure where we would stay independent, whereas a lot of these other companies, their goal was to sort of get bought out. The other thing that we have to credit is that I think that the data actually show that even though we weren't the first, like I said, Fred and I were the first to propose making such mice, we weren't the first to succeed to make such mice, but the data show that our technology really is arguably the best. So the best technology in the right business framework, but just as importantly for these other companies, the technology was the primary foundation of the company. While it is a foundational technology for us, we are buttressing it, supporting it, amplifying it, synergizing with myriad other capabilities and technology. So for us, we can best take advantage of the best antibody technology because we have the best biology, we have the best target validation technology, we have the best target discovery technology. And so it's a huge important component for us, but it's supported by all these other critical foundation technologies. So a lot of other companies were only antibody companies. We were an antibody company. We were also a trap company. We were also, you know, the mouse genetics company. We were also the company that was revolutionizing new ways of doing biology. We're now also, I think, the leading human genetics company. So we're many different companies, many different capabilities come together and certainly the best antibody, fully human antibody technology helps turn a lot of those capabilities into important human therapeutics.

I couldn't have said it better myself. Yeah, it's about the culture. It's about starting with the science, about scientists like us recognizing and recruiting the best other scientists to join us in these efforts. Once you have that culture and once you're devoted to the science and the science is driving everything and once the scientist is the primary figure in the company, the most revered people in this company are the scientists, that makes it easier to get the best scientists to join you. If you're a big pharma company and commercial is in charge and so forth, you're not going to get the best people. But when it starts with the scientific culture driving it, everybody's looking at the scientists for the leadership, then you get the best scientific leaders. And I should point out, I mean, obviously there was Roy Vagelos and Merck, that was a great example for us. I think Genentech, particularly in the 80s and the 90s, and unfortunately their success came a little too late for them to hold on to their real research underpinnings and people, because a lot of the people who really built the great Genentech from the research side were gone by the time the 2000s came and they had all their commercial successes. So we could see as the commercial success was going on, they hadn't maintained that real scientific ingenuity and drive and foundation that had actually built them. We are very lucky in that, I think, because of our culture, because of the people we have, because I think we have a great team of people that we all thought we were really working together to build something, our scientists feel ownership. I mean, they built this place, they own this place, it's their company as well. Almost everybody withstood the ups and downs that we had. So almost all the key early people, and I'm not just talking about me and Len, I'm talking about the dozens and dozens of key scientists that really built this place, from the Neil Stahls to the Drew Murphys to the Jim Fandells to the Nick Papadopouloses and so on and so on. All those guys are still here. And they're still excited. And we in fact feel like we're just getting started.

Six. Yeah. 5,000. We keep careful track.

Well, let me just point that out though. I mean, just because it is a point of pride, but it does reflect who we are. I think this is the first time in history that any company has gone from scratch has gotten six drugs approved and all six came from its own labs, all based on its own foundational technologies. I mean, it's really astounding. That's not how the rest of the drug industry works, where everything is, you know, somebody buys a company, somebody licenses something in, you know, drugs go through, it was discovered in academia, then one small company buys another small company buys another, you know, finally Pfizer buys it and then brings it, you know, forward. So it really is unprecedented. I think it really reflects who we are and how we're different. But how do we stay different? I think that's a great question. I think that though we have more than 5,000 people, we're not really one monolithic company. I mean, we have different groups within us that have, you know, in some cases their own cultures. Some of them have been built sort of as separate modules. I think we have the greatest manufacturing capability in the business, all internally built. I mean, from the people who are more on the research and science side who develop the technologies and the cell lines and so forth, to the people in process development who then scale them up, to the people who are manufacturing at large scale, where we now have two plants up, one up at Rensselaer and one in Ireland, in Rahan in Ireland. Those people have a different culture, but it's very tied to our culture. They've sort of built in many cases their own parts, modules of this company, and they deserve enormous credit, tied very much to the rest of our culture and so forth. But by having essentially sub-companies and sub-efforts within it, while we can all stay part of the same unit, we do share so much in terms of our beliefs and our cultures. The research unit, for example, which has to be the most innovative and be protected in some way, still stays that way, and it's still only a few hundred people that are really driving that, still led by the same brain trust that we built over the years of a few dozen really top scientific leaders that I think are some of the greatest scientific minds of our time. We all still work together. We all still get together regularly, literally several meetings a week where we discuss the programs that are going on in research. And in many ways, why? Because we love it so much. It hasn't changed. It's many of the same people, incorporating young new people, bringing in some new ideas and fresh perspectives, but melding with and synergizing with the experience and all the knowledge that we've built over the years. I think it's a great way to both maintain and further empower our research effort.

No, I think that we do more collaborations with the outside world, both scientific and also corporate, than anyone else. But we do it from, I think, a different position, a real position of strength where we're real partners and collaborators. I think the problem that a lot of pharma and even biotech companies get into is they think, well, we don't need the internal capability. We'll find it outside. When you do that, there's no counterpart to the great outside people. And yeah, there's a lot of stuff going on that's great on the outside, but if you don't have the people on the inside who can really work with those people, push them, synergize, and so forth, first of all, the company's not even respected. And all you're doing is you're giving money to people on the outside to do what they want to do. We do it in a different way where we have a position of strength on the inside. We have the best scientists on the inside and any field that's important, we feel like we're leaders in that field, but we don't necessarily feel like we can do it all alone. So whether it be that we establish a major collaboration with somebody, a top human geneticist like Wendy Chung at Columbia with our Regeneron Genetic Center, we're not giving her money. We're giving her capabilities and expertise which she can't get anywhere else, which empowers her science. And we're working from a position of strength where we're not just subsidizing paying people to do work for us. We're using our science to engage them and do even better, bigger science. We do the same things with outside companies. When we collaborate with, you know, I can imagine if a big company says, "Oh, we got to get into this new CRISPR, this gene therapy space. We're going to buy a company or we're going to invest in a company or so forth." No, we believe we have some of the best capabilities. We've been doing genetic engineering and we've been playing with CRISPR as long if not longer than anybody else. But we recognize that an outside company like an Intellia actually has something to bring to the table and they can do a lot of things that maybe we don't want to be investing or maybe we're not as good at doing as them, but we work with them in a position of strength because we take our capabilities and our technology and we try to help them. We try to empower them and it's really a collaboration of equals. So whether it's the examples with the great academic groups or it's examples with, you know, the new biotech capabilities that we're excited about, when we do these collaborations, we're doing them in a much, much different way. So we believe there's a whole outside world out there, but we can access it, we think, much more powerfully by having our own capabilities in-house to leverage what's going on out there.

Yeah. I think that's where people come into trouble because if you don't have the internal science and the capability, you can't even accurately judge what outside company to buy, what outside technology to trust. So when we're in it, we can evaluate, hey, if there's somebody out there that's really worthwhile, whether it's an Intellia or it's an Editas or it's another company, we say, "Hey, yeah, we want to work with them." Whether it's outside academics, we say, "Hey, yeah, they're bringing something important to the table and we can judge that. We're not just, you know, doing intellectual, you know, adventures and saying, 'Oh, who should we buy? Who should we invest in?' and it's all done by consultants, which is unfortunately how it's done in the rest of the industry. It's done by top scientists on the inside saying, 'Yeah, we can work with these guys. Together, we can do better.'"

Well, that's the thing is too many people count on one trick, okay? And they're one-trick ponies, okay? I don't think it's ever going to be about one trick. It's sort of what we were just talking about. It's not the fact that we have the best human antibody technology in the world. That's not enough. It's not that we have the best human genetics capabilities in the world now. We're the largest sequencing operation on the planet in terms of sequencing humans. That's not enough. It's not that we actually have the best biology deep research groups and it goes on and on. It's that we have all of it. And that's the thing that people don't appreciate. This is biology. Life is complicated. Understanding life and disease is really, really complicated. You have to be deep. You have to be broad. And it's impossible to count on one thing. Everybody's always looking for that next one thing. They're hoping like, you know, that great app that makes a difference. Unfortunately, high-tech is a lot simpler than biotech, okay? It's a lot easier to make it in that world. In our world, it's about understanding life. And like I said, the numbers say, as you said, very few companies, you know, out of the thousands and thousands of biotech, almost none come up with one drug. Okay. The ones that come up with more than one drug become glorified. Okay. The ones that come up with six, there's only one of those. Okay. And why is that? It's because we are so deep. We're so committed. And we're so broad. And there's not going to be one trick. We believe in all of these things, everything that you bring up. We're heavily invested. We're trying. We're always working on the next thing. We're pushing every boundary that we can push. But if you're just in one space, if you're just trying one trick, it's all too complicated.

Well, that's been our attitude the whole time, which is, yeah, there are things obviously that one might consider so early in the research landscape that it's probably not worth our investing in. But we've fundamentally always believed that doing early-stage fundamental research where you can see the applications, we have to be in it to win it. Doesn't mean we have to be in it alone. Like I said, we have collaborations with academic groups ranging, I mentioned Wendy Chung at Columbia, the Hospital for Special Surgery, groups in every university all over the country, as well as healthcare groups like Geisinger is important. We just recently announced a major initiative where we're going to be sequencing the UK Biobank of 500,000 people. And we're looking for more such things. Yeah, these things in some ways are research, but they are so close to the heart of what biotech should be about. We're connecting, and we've already realized that it works, we're connecting human genetic variation to human disease. And that's a great starting point. So already, it's not that far from what we do every day. We've had drug programs that we were working on. We weren't quite sure if they were going to work or not. We found out that there's genetic variation in humans that supports the notion that yes, blocking that pathway is going to help in this disease. Okay, that gets us much more excited and more importantly provides us a lot more motivation to really push that pathway. Let alone the new discoveries that we make where we find a gene, oh, this gene variation protects against this or this gene variation causes that. This is where all the great stories start.

Exactly. Well, our first drug approval, which is our IL-1 trap or Arcalyst in cold-induced inflammatory syndrome, was perhaps the first example, one of the really first examples other than the deficiency diseases of going from a human genetic disease, mapping it, understanding it, seeing what the pathway was, coming up with a...

human biologic that blocks it, and having overwhelming benefit — 85% average improvement in a horrific disease. That's how you want genes to work. That was one of the first examples. And now, as you said, PCSK9, where we got the first approved anti-PCSK9 agent for lowering cholesterol and hopefully soon to have even stronger data suggesting that it be preventive in heart disease. That's now one of the most heralded examples of going from a gene discovery by our collaborators Helen Hobbs and Jonathan Cohen down at the University of Texas Southwestern. That's another example of another great group that we work with and we synergize with, because we bring things to the table for them, that has led to a great story. And in fact, almost all of our stories, all of our new medicines, have a major human genetic component that drove them.

Yeah. Well, I don't know if it's really killing them. It's more that the projects where the data becomes stronger and stronger, because it's always an accumulation of more and more information and data. Like I said, we might have a little human genetics data, which we then pursue, and if the human genetics data looks stronger, then we continue to pursue it. And then maybe we do a humanized genetic model in mouse, and if that looks good, then we pursue it. And then we make, let's say, a fully human antibody, and we try it in the genetically humanized mouse model, and then it works. And as the data accumulates, the story gets stronger and stronger. And then, like I said, you just keep pushing it and keep pushing it and keep pushing it. So it's more a matter of where you invest your resources as the stories get stronger. We've had very rare cases of when the data starts accumulating more and more and more, and we start pushing it, that we get late-stage failures. That is seen all over the rest of the industry. It happens all the time. It does not really happen with us. Why? Because it's such an accumulation of knowledge and data that keeps driving us forward that by the time we're pushing things, at that point, you know, we rarely see failures. As you know, Roy Vagelos has told us, by the time we get into late-stage data, we should be very, very sure about what results are going to show.