Given what we know about his condition and the virus, etc., that he had a very high probability of dying. When you save any life, it's important. When you save the president of the United States, it became quite the story.
Regeneron is one of the oldest and largest founder companies in the S&P 500. It's up there with the giants like Nvidia, Blackstone, Oracle, and Dell. It was founded in 1988 by Dr. Leonard Schleifer, its president and CEO, and Dr. George Yancopoulos, its president and chief scientific officer. Len and George have been in their same roles for 38 years.
They thought we were going to sell maybe 100 something the first year, but we sold 800 million. And it seemed like, oh my god, this is the real deal.
Today we sit down with Len to talk about Regeneron's history, its key products, and how its deep pipeline will position the company for success in the future.
I don't think we get any credit for our pipeline because if we take your revenue projections for Dupixent, you get all your value back from Dupixent, not to mention the $18 billion we have in the bank.
For Investors, by an investor. Conversations with executives building tomorrow's great companies. You mentioned liver disease and as I was going through your pipeline, you have a couple phase two assets for MASH.
Which ones are you most excited about?
The ones I haven't told you about. Stay tuned.
I'm Mike Rockefeller, co-chief investment officer of Woodline Partners, and this is Inspired.
Well, great to be here, Len.
Good to have you here, Mike. Has it sunk in yet that you are coming up on 40 years since you founded the company?
You know, it doesn't seem like 40 years on one side, and on the other hand, sometimes it seems like a lot longer. But you know, when you're doing something you love, time just passes.
Take us back to 1988 when you started the company, what the vision was, and maybe how that has turned into what Regeneron is today.
Yeah, it's been a long time. And you mentioned Warren Buffett, by the way, before we get to 1988. So there's a couple of people in my family who keep track of who's the longest continuous serving CEO of a large public company, and that was always Warren Buffett. I just ran into Warren at a conference and I thanked him for retiring because that moved me up the longest serving CEO continuously of a public company. But back in 1988, you know, I had completed a lot of training. If you think about it, after college, I did seven years of training as an MD PhD with a fellow by the name of Al Gilman, a great mentor of mine, Nobel Prize winner. Unfortunately, he passed away a few years ago from pancreatic cancer. But I had great training with Al. So I got both my MD and PhD, and then I decided that I still wanted to be a doctor, a real doctor, not just a paper doctor. So I spent four years in residency with internal medicine training for a year and then neurology training where I became a board certified neurologist. I was on the faculty at Cornell. I was doing research. I had a lot of grants, startup grants, NIH, American Heart Association. But as I was reading the literature, all the exciting work seemed to be about molecular biology. And I had been trained as a molecular biochemist, not a molecular biologist. I didn't do gene cloning or any of that stuff. And then all the great papers seemed to be coming from this company, Genentech, or Genentech as they call themselves. I said, 'What the heck is that?' And I said, 'Now that's interesting. They're a biotechnology company that are trying to come up with treatments for important diseases taking advantage of the new science called molecular biology and molecular cloning.' And so I had this notion about starting a company that would sort of try and imitate what Genentech was doing but do it in the context of neurobiology, neuroscience, because I was a neurologist. And I thought, what were they working on? They were working on things like human growth hormone, and then this company Amgen was coming along. They were working on EPO and Neupogen. And I said, you know, maybe the nervous system is just as complicated as the hematopoietic system. Frankly, obviously, I thought it was more complicated. So, and there was only one nerve growth factor known at the time, NGF. And I said, you know, there had to be more. And if we could clone them and make them and spritz them on people whose neurons were dying, maybe we could treat degenerative neurologic diseases. And I started thinking about that. And my mentor, Al Gilman, I said, 'Al, what do you think about this?' He said, 'It's the stupidest idea he's ever heard from me.' And he says he's heard a lot of stupid ones over seven years of training. But when he realized that I wasn't going to be talked out of this, he said, 'All right, if you're going to do this, let's do it right.' And he recruited a couple of Nobel Prize winners, Brown and Goldstein, and Arthur Kornberg, and Eric Kandel. We all got together and said, 'Let's do this.' And so I started this company called Regeneron for regenerating neurons. And the idea was to come up with new neurotrophic factors. The only problem was I wasn't a molecular biologist, and therein was a big problem because the way to get this was through molecular biology. And so we had this meeting of a bunch of scientific advisers, and I said, 'Well, how can we get a molecular biologist? Who's the brightest, smartest molecular biologist?' And they came up with some names, and fortunately, they came up with George. And now at this time, the company was really nascent. George Singh, who was at the time at Merrill Lynch Venture Capital, bet on us by putting a million dollars into the company. It was a big bet for George. He got a big chunk of the company for his firm, but he got us started. And believe it or not, George is still with us today on our board of directors. He's a great guy. And so I thought we had all the money in the world, a million bucks, you know, back in 1988 to start a company. Seemed great. The advisers I was talking to identified George. All we had to do was talk George into joining, which wasn't the easiest thing to do. George wanted to do it, but I had to get past his dad. It turns out he was a child of very hard-driving Greek immigrants. And I remember George saying, you know, let's have one more interview between us. I said, 'Okay.' I'd already shown him we were going to build these labs out quickly, faster than you could do in academia. We had literally on this campus, we took 10,000 square feet. That was a—we now own this entire multi-million square feet campus. We had 10,000 square feet. It was from Union Carbide who was showing immediately post-Bhopal. Anyway, the last interview I came up and George said, 'We meet at a restaurant.' And I couldn't see him in the restaurant, and I saw two people sitting, and I realized there was George and his dad. So, I had to get past an interview. I was actually being interviewed rather than the other way around. But anyway, George joined and the rest, as they say, is history.
You know, that's interesting because looking at your company versus other founder companies, you actually have two founders who have been leading this company for 38 years. How has your relationship with George been so successful for so long?
Yeah, it's a great question. I'm married for 51 years to my wife Harriet, and she's my, I would say, my out-of-work wife. And I like to think of George as my in-work spouse. And the common theme is there that in every relationship there has to be a saint. And I guess I'm going to argue that I'm the saint in those two relationships that are very long-lasting. Look, from the very beginning, I realized that there were two aspects of building this enterprise. One is sort of the science, the guts of the business, the molecular biology, cloning these things, doing the science, and the other was building the business around the science, funding it, you know, beg, borrow, and what have you they say to get the money. And I would say we've had a pretty healthy focus where each of us sort of know what we have to do, but we rely on each other for what we do. And so I interact greatly with George on the science. He's a genius, so it's hard for me to keep up, but he interacts a lot with me on the business side. And together we've managed because we've had a common purpose. I mean, common background, he's also an MD PhD, and we knew what we wanted to do. We wanted to use science to make a difference in patients' lives.
Were there any key decisions along the way that really changed the direction of the business?
Yeah, there were quite a few. Remember that this is hard to believe, but for the first 25 years of our existence, we lost money every single year. And I'm not talking nickels or dimes. I'm talking millions and billions. So for 25 years, we lost money. So the key decision we made is, despite a lot of people, including the likes of people like you and the investment community—not you in particular, but the analysts, the investment community, our shareholders, even our board—you know, 'Pick something, focus, and let's get it across the finish line.' And I think that the best decision that George and I made is we weren't going to do that. We weren't going to bet the entire company. It always sounds great, Hollywood kind of a thing. You bet the entire company on something. Well, if we'd done that, we'd have been out of business. We were rather, we were going to bet on the science, build a foundation of lots of different technologies, and not fall into the trap of trying to bet everything on one molecule because we had NT3 and BDNF. George actually cloned the first novel neurotrophic factor since NGF. And we thought, you know, we were going to spritz it on patients with Lou Gehrig's disease. We'd cure them. We'd get box seats at Yankee Stadium behind first base and sail off into the sunset in a matter of years. But obviously that didn't happen. But we kept saying, 'We're going to survive.' And when you meet up with a guy like George, it's pretty easy. You know, it wasn't a matter of if, it was a matter of when. So, I've just viewed my job as making sure we got to that when.
What have been your top moments?
Yeah. My top moments at Regeneron. Well, you know, there were so many it's hard to recount them. I mean, clearly just opening up the labs and realizing we were in business was kind of amazing. The IPO in 1991, sort of a big moment. Doing this multi-million dollar deal to really get us going with Sumitomo Chemical, big moment. Treating our first patient with one of our neurotrophic factors, even though it didn't work out, that was sort of a big moment. But the defining moment from a business point of view probably came in 2011. We were sort of heading down the home stretch trying to get Eylea approved, which—we had already approved Arcalyst a few years before, but that was for a very rare disease, although it's actually selling quite a bit right now. Kix is taking it over and doing a pretty good job there. But we didn't have a significant product that could keep the company going. And you know, 25 years, people were running out of patience, I think. But in 2011, we knew we had the data. We'd submitted to the FDA, and sure enough, they gave us in the summertime a CRL. I can't even remember. We've had so many CRLs in recent years and past that, you know, it's hard to remember what they felt was missing at the time. I think it was something related to manufacturing again. But my dad at the time was 99 and a half. He had been driving a car till he was 99, was in great shape, but he started to go downhill in the fall of 2011. And we didn't get the drug approved, and he kept saying, 'Len, money, money, when are you going to get that drug of yours approved?' And right around after Thanksgiving, we got the FDA approval, and a few days later, my father passed away. It was almost as though he was hanging on to see that happen. But that was a great moment and confluence—not great, obviously, losing my dad, but seeing him, being able for him to see our success at that age and knowing that we knew we had something. I remember going to the JP Morgan, I think it was called the Hambrecht & Quist Conference at the time, in early January 2012. We had just launched the product, and people thought that we were going to sell, I don't know, $5 million, but we sold like in the first three months something like $80 million. And then they thought we were going to sell maybe 100 something the first year, but we sold $800 million. And it seemed like, oh my god, this is the real deal now. We're a real company. We're treating lots of patients. We're changing people's lives. So that was pretty, you know, insurmountable times.
It's funny. When I was flying out to interview you, I told my kids, I have four young kids, and I said, 'I'm interviewing the CEO of Regeneron.' And they said, 'Oh, you know, who's that? What are they?' And I said, 'Well, you know, Eylea.' And they said, 'No, we don't know Eylea. Dupixent? No.' I said, 'Do you remember when the president got really sick and he got on TV and he said he was feeling better because he took the Regeneron?' I said, 'That's Regeneron.' They said, 'Oh, yeah.' So, that might be their top moment. Small sample size, but that was definitely a top moment.
That was an interesting story. I got a call from, I think it was Mark Meadows, who originally called from the chief of staff at the time, and they said they wanted to know—we had just announced, I think on the Tuesday, this was like on a Thursday, just announced that we had some really interesting data that we kind of knew this was going to work. This was a monoclonal cocktail for COVID. And they said that somebody in the White House wanted to get treated. Could we give it to them? I said, 'It's not the way it works. You can't just give an unapproved drug to somebody, some random person in the White House. You got to tell me more, and we got to see whether or not the person could qualify for a clinical trial because we were very strict. We just weren't giving it out. You had to participate in our trials.' That was the ethical and frankly moral thing to do. And finally, they admitted that it was the president, and that of course changed everything. And I said, 'Look, we can't ask the president of the United States in the middle of a pandemic to participate in a clinical trial. Come down to the site on Tuesday and we'll draw your blood and wait.' It just didn't make sense. So, we had to come up with a way that we could get him the drug. And I told him the only way that could happen is if the FDA approved it, and we haven't even asked them about it. They said, 'Don't worry about that. We'll take care of the FDA.' I said, 'Well, you say that, but I got to submit it.' And they said, 'That'll all be done within a matter of hours.' Seemed like that was done. And I remember them saying, 'Well, when are we going to get this stuff?' And I said, 'Well, it was being packaged because it was manufactured recently in New York, and we've chartered a plane and we're going to send that plane down.' 'Well, when's the plane going to get here?' They kept asking. 'Dallas?' 'You got to fly to Reagan. It's much closer.' I said, 'You can't just fly a private jet into Reagan. You know, this is post-9/11. You need 48 hours.' 'You tell your pilot, just head straight to Reagan. What's his tail number? We'll have the military sort of part the way.' So, I knew this was the serious stuff. And then I had to deal with this wonderful doctor, Sean Conley, who was the White House doctor. I mean, he wasn't equipped to deal with a president who was sick from a pandemic virus. Very nice guy. I had to tell him how you mix it. You hang the IV, get it in there, blah, blah. And sure enough, we get it into him late Thursday night. At this point, it's been told publicly that given what we know about his condition and the virus, etc., that he had a very high probability of dying. And they moved him to Walter Reed shortly after they gave him the infusion in the White House, but it worked like a charm. Within 24 hours, he had turned the corner. And then, you know, sort of our lives changed a little bit because of sort of the publicity. You know, when you save any life, it's important. When you save the president of the United States, it became quite the story. But it really did help because there's a real postscript to that. The bottom line is, so we were able to save a lot of lives.
Yeah. And you did it very quickly. You mobilized. It was very impressive.
Yeah. Maybe back to Eylea. So 2011 it got approved, most successful ophthalmology drug in history. You got an approval for the HD, and so for many years it was an important growth driver for Regeneron.
Recently we've had biosimilars with the 2 milligram, so the franchise has been declining. As you think about the next couple years, do you see this as sort of a stable business? Do you think there's a path back to growth?
Yeah, I think there is. I think right now we're at about 50/50 in terms of our dollar sales in HD versus Eylea itself, as some of the Eylea gets eaten up by biosimilars coming along, but some is getting transferred to HD. So I think HD will be able to be a growth in and of itself.
And then maybe on Dupixent, your other blockbuster, your IL-4/13. More than a blockbuster, I think it's one of the biggest drugs in the world.
It's one of the top drugs in the history of the business. It's the most prescribed drug by dermatologists, pulmonologists, allergists, gastroenterologists. In terms of a biologic, it's really, you know, it's taken off because it's a great drug.
When did you start working in this area of type 2 diseases?
So that was a long time before. George recently showed me some slides. I can't remember how far back, but a long, long time ago. In some respects, before he even came to Regeneron, he had thought about the switch factor and IL-4, and he was an admirer of Bill Paul at the NIH who had sort of popularized IL-4 as a very important switch factor changing IgG to IgE production. So it's probably a decade or two before that he started thinking about it. Even when it got first approved, we had slides saying all these different conditions we thought that it would get approved, and then eventually the genetics sort of backed all this up that we had done this all right because you could predict now with our genetic database what indications would work.
So you have nine indications.
Yeah. I can't even keep track of them.
It seems like there's still a lot of penetration left to go in each of the markets that you're in. And I'm sure you're hearing the sell side start to ask questions about the future of the drug, and some of them are saying that they think Dupixent could do over 30 billion in sales by the end of the decade. Do you think that's reasonable?
Well, as polite and as friendly and as much as I admire you, Mike, you know that I don't succumb to making predictions about future sales because I don't like to make predictions about things that I don't have any more information than you do. You can look at all the same information I have and you can make your best guesses. But I will say this, it's continuing to grow. It's annualizing, I think, and based on the last quarter, just the first quarter of this year, just under 20 billion. It is not even highly penetrated. I think it's under 20% in atopic dermatitis and less elsewhere. With new entrants, with Lilly's product and other products, you're starting to actually expand a little bit. You're not fighting over the same market share, so we're actually all still growing this market. And we're very underpenetrated in so many of the indications. I can certainly say I think growth being a growth driver is an easy bet.
Yeah, I had to try. It does look like it's very possible. You also have some next generation antibodies in this same area. Which ones of those do you think will be most meaningful?
Yeah. So once again, we don't try and make singular predictive bets because you start to fall in love with your own predictions. You know, if you think the Mets are going to win or the Knicks are going to win the championship, you start to fall in love with that. And that's okay if you're a fan. But if you're running a business, you don't want to be a fan of your molecules. You want to make sure we bring all of them along and the best will rise. But so what do we have going as possibilities there? I mean, we have with Sanofi, they're looking at how to give more, like with hyaluronidase, so things like that, how to give more of Dupixent so you can get a greater spacing between doses. We have what we call 'soup dupixent,' which is a long-acting version that targets the IL-4 receptor, same target as Dupixent. That's not officially yet in the collaboration, but the rules of the road are if it's the exact same target, we can't develop it on our own, and neither could Sanofi. So, you know, we basically have to discuss if and how and when we put this into the collaboration. But that's coming along, and I'm sure we'll be able to work something out where we bring that forward. We have long-acting IL-13, which we're moving along extremely rapidly. Long-acting IL-4. And we have some bispecifics as well. So we have a whole pipeline of things. We also have new thoughts on—we think we can cure allergy now. That's a bold statement, but I think we can back it up when we get our next generation of molecules, which I hope will be by the end of the year, early next year, into the clinic as a way to knock out cells specifically. I think we've sort of done some proof of principle there already. And so there's a lot for us to go in the type 2 immune space.
You put up some interesting data with tezepelumab and Dupixent in severe food allergy. How come you're not moving forward with that one?
Well, we did get a proof of principle there, but we think we have a better one, a better way of doing this. So the idea there was let's kill off the immunoglobulin-producing cells, and we used BCMA by CD3, and that killed off all the immunoglobulin-producing cells. The IgG went down, the IgM went down, the IgE went down, and the concept was, well, let's prevent any IgE from coming back by giving something like Dupixent. It worked. We could get 90-something percent of the IgE gone. It wouldn't come back. But it does take a long time for the IgG to come back. George and the gang had something even better which could destroy only the IgE-producing cells by some clever trick which we haven't told the world about yet, which is not so obvious. So I think that rather than spending a whole development program on something where we think a year behind it is something even better, you know, that's the luxury, by the way, of having a long-term perspective. The problem with this business, okay, is that number one, it's hard, and number two, it takes a long time, and number three, it's very expensive. So the very expensive part comes from people like you who pay for all this innovation because we know the Europeans don't pay for the innovation. We can talk about that. But so if you're going to pay for it, the trouble is your time horizons—maybe not Mike, who's been around for a hundred years, but others of your ilk, you know, their time frames are much shorter. And so the question is how do you square a circle where the time to do really important things is measured in half decades and decades, yet the time that you guys work in are sometimes milliseconds occasionally or as long as you're, which some of you consider long-term as a minute. On the other hand, there are some that have been with us since our IPO who really do take a long-term perspective. We can't, if you succumb to those time pressures, this is why you wind up doing the wrong things. This is why you get so many failures in our industry. It takes time to do things right. And you can't just say, 'Well, I got to have one. If you got something better, you got to bring that along.' So we have either the luxury, the wherewithal, or the foresight, whatever you want to call it, to—we're going to do things right, and if some take longer than others, that's okay.
You have a very deep pipeline of over 50 things that you're trying to get right. So it's really exciting. Maybe to start on the latest stage pipeline because you have some big phase three programs in areas like anti-coagulation, multiple myeloma, complement. Which one of those do you think is most underappreciated in terms of Regeneron kind of changing the trajectory over the coming years?
Well, and obesity, I think you've neglected. This is another big one. And obesity. You know, once again, how I see the world may not be how you guys see the world. And I don't think we get any credit for our pipeline because if you look at what the—if we take your revenue projections for Dupixent, you get all your value back from Dupixent, not to mention the $18 billion we have in the bank. So, there is a disconnect that people aren't paying enough attention to the pipeline. Let's start with obesity just because I think that you asked the way you asked the question. Which ones are people ignoring? People are getting a little bit tired of hearing about the next obesity drug that has a little bit more weight loss or maybe it can be taken a little less frequently or maybe it's oral. Question is, how do you really change this? And does it make any sense for Regeneron to go in this game? Well, one of the ways to change it, we thought, was to invent a GLP-1 that could actually lower cholesterol at the same time as you lose weight.
If you lose 50 pounds on Zepbound or Monjaro or Wegovy, whatever it is, you barely move the needle on your bad cholesterol. If your LDL was 150 when you started, maybe it's 145. It needs to go from 150 down to 50 or less. And so we wanted to invent a GLP that not only caused weight loss but lowered cholesterol. And of course we realized we had one which was Praluent. And if we could overcome a very hard technical task of getting these together co-formulated in a volume where you could just give it the same way, you wouldn't even know the Praluent is in there, then effectively we would have a drug that did both. And everybody misunderstands what we're trying to do here. We are not trying to sell more Praluent this way. We can talk about how we're going to sell more Praluent. We can talk about how Amgen lost an antitrust jury case 400 million to us. We can talk about that market, but that's not what this is really all about. This is about selling our GLP. And because we have a GLP that now lowers your cholesterol, so you can take Lilly's GLP or you can take Novo's GLP or you can take somebody else's, but none of them are going to lower cholesterol. Why not take ours? And I think doctors will like that. And so we get zero credit for that. Even though we're well on our way here, we licensed our GLP from Alnylam. And by the way, in their study, they had much less GI toxicity than tirzepatide did in a similar Chinese study, yet had the same weight loss or more. So the question is, do we think we have at least as good a GLP? Maybe we got a better one, but when we combine it with Praluent, we have a total new class of drugs. It's as though we invented a GLP that could also lower cholesterol. So you went to your doctor and you wanted to lose 50 pounds. And they said, 'By the way, if you lose 50 pounds, you still have to get your cholesterol down, but I have a GLP that does both. Why wouldn't you take that? Especially if you could do it in the same injection and hopefully at the same or close to the same price.'
How hard of a technical challenge is it combining those two?
It was not easy, but we've done it.
And when can you be in the clinic with that?
