Westfair Businesspersons of the Year: Regeneron’s Leonard Schleifer and George Yancopoulos
The editorial team has unanimously chosen Leonard S. Schleifer and George D. Yancopoulos, both MDs and PhDs, and co-founders of Regeneron, as Businesspersons of the Year ”“ not only for their ground-breaking discoveries in drug therapies and foundational technologies but for the way they have applied their innovative approach to medical research to the Covid-19 crisis. They have taken the Tarrytown-based company from a tiny 1988 startup to a $50 billion market-cap business with what they call “a unique science-driven culture.” We salute them for their compassionate, entrepreneurial spirit.
Among the things that stand out in the background of the Business Journals”™ Businesspersons of the Year for 2020 are a Chinese restaurant, an Italian restaurant and the concept of making the immune systems of mice perform as if they were the immune systems of humans.
It was a lunch in a Chinese restaurant that was pivotal for Tarrytown-based Regeneron Pharmaceuticals Inc. founder Leonard Schleifer and a dinner at an Italian restaurant that helped reshape the career of company co-founder George Yancopoulos.
As for the mice, one of the company”™s scientific breakthroughs has been in developing the methods to have the immune systems of mice create antibodies that are just like those that humans would create to fight off diseases.
The antibodies can be harvested to develop medications such as the monoclonal antibody cocktail that has been undergoing clinical trials for treating Covid-19. Regeneron”™s REGN-COV2 cocktail was one of three drugs given to President Trump when he was hospitalized with the coronavirus at Walter Reed National Military Medical Center in Bethesda, Maryland.
Trump, not knowing the name of the drug, called it simply “Regeneron,” giving the company instant worldwide recognition far outside of its normal scientific and business circles.
Back in 1988, Schleifer was a young neurologist and assistant professor at Cornell University who had an idea about starting a company that would come to be called Regeneron. The company”™s name is derived from regenerating neurons, cells that transmit signals to other cells.
“I decided to sort of figure out how I could get my hands on some money. And there was a neurology professor of mine, Frank Petito whose father, and everybody knew Frank Petito came from people who were in the business world; he was associated with that, and it turns out his father had been for a short while chairman of the board of Morgan Stanley,” Schleifer said.
“So I went to Frank. I said ”˜Frank I”™m starting up this venture. Can you put me in touch with, you know, some people who might be able to be helpful. And that sent me down a number of paths. I think he was the one actually who introduced me to George Sing.”
Sing was with Merrill Lynch Venture Capital Inc. at the time and later became a director at Regeneron.
“I got to meet George and he was really, he struck me as a guy who actually did want to build something, who respected science, who really would let us run, who respected the fact we had really smart people we were trying to bring around, and wasn”™t trying to be like a super-ego venture capitalist like you find today who think they know more about the science you know than anybody else and they”™re going to decide what you work on, they”™re gonna tell you how to do it. He wasn”™t that type of a guy,” Schleifer said.
“He was very, very creative, helpful on the business side, super helpful, helping me understand some of these things. He and I finally went to a Chinese restaurant in Manhattan and we literally scratched out a deal on the terms that he”™d give me a million dollars on the back of a napkin, which I think he still has, or maybe I have. It”™s somewhere to be had. We literally scratched out on the back of a napkin and on a handshake and he lived up to it and he gave us a million bucks to sort of start the company.”
Starting the company also meant being able to convince Yancopoulos, a young molecular immunologist at Columbia University, to leave the university and come on board even though the two already had been informally working together. Yancopoulos brought along his father for a dinner with Schleifer at an Italian restaurant in Westchester. The father gave his blessing and Yancopoulos became the company”™s co-founder.
Academia vs. Entrepreneurship
Schleifer drew a sharp contrast between operating in the world of academia and in an entrepreneurial setting.
“You need something, you get it done. You need labs made, you make ”™em. And I think that may have helped convince George that we actually could do more not less in this kind of environment. I told George, ”˜We hire somebody they work out; if they don”™t work out you know, we”™re not saddled with them for the rest of our lives.”™ There are some advantages to living in an entrepreneurial business setting that you don”™t get in the academic setting. Of course you give up a lot that you get in academia, but you get a lot.”
Yancopoulos said he realized that Schleifer was right.
“I started realizing the power of what you could do when you didn”™t have bureaucracy and you didn”™t have red tape. When a small group of people that you all knew were really in charge and ran things and could make decisions quickly as opposed to in academia, you know some sort of faceless bureaucracy, you don”™t know who”™s controlling your world and your universe,” Yancopoulos said.
It”™s said that Yancopoulos has been fostering a company culture in which people are encouraged to share their scientific ideas while Schleifer has established a company ethic of doing well by doing good.
As they built the company, they also built a different way of looking at its personnel structure.
“What George needed in my opinion was somebody who could work for him that he could trust and that turned out to be me cause that”™s sort of how he viewed me, that I was working for him because I was doing my job so that he could do his job,” Schleifer said. “That”™s actually what I preached. That is, we”™re going to build a company where the administration of the company, the business people, the management, whoever, were working for the scientists rather than the scientists working for them.”
In 1991, Regeneron stock began trading on NASDAQ with an initial public offering that raised $91.6 million. The stock opened at $22 a share and dropped that day to $17. It took the company about 20 years before it started turning profits. On Oct. 19, 2020, the stock closed at $583.14. The company”™s 2019 revenue was $7.86 billion, up 17% from 2018. The net income reported for the year was $2.11 billion. The company reported having more than 8,000 full-time employees. According to a filing with the Securities and Exchange Commission, for 2019 Schleifer received total compensation worth $21,455,117 while Yancopoulos”™ compensation was $20,664,135.
The company”™s 2019 annual report noted that it had 20 investigational medicines in clinical development and has seven Regeneron-discovered medicines approved by the FDA. Among the other companies it works with are Sanofi and Bayer.
In a recent interview on the cable network MSNBC, Yancopoulos was asked about the circumstances under which President Trump received the REGEN-COV2 drug while it still was in clinical trials and not available to the public.
“There is a normal mechanism called the compassionate ”” use mechanism that”™s been in place for decades. What I can tell you is before the president, we”™ve had several other requests for our antibody cocktail through the same mechanism, which has to be approved not only by us but by the FDA,” Yancopoulos said.
“I can assure you, and this is a really important point to make, both Len Schleifer and myself who are the co-founders of the company are both physician-scientists. We remain the only biopharma company that was started and run still by physician-scientists. We believe that gives a very special focus on both patients and on the science and all the standards that we use I think are the highest I think in terms of putting the patients first and adhering to the highest level of ethics.”
Yancopoulos denied that the company has any special relationship with Trump. It had been reported that Trump formerly owned Regeneron stock and may currently hold stock in the pharmaceutical company Sanofi.
“We”™ve reached out certainly to the Biden team to offer our antibody cocktail to them and I think that this compassionate ””use mechanism as I said is something that”™s in place and has been put in place exactly for these sorts of extenuating circumstances,” Yancopoulos said.
Yancopoulos told the annual meeting of company stockholders on June 12, 2020, “We have programs that are first in class, the first drug that can really make a difference, like Dupixent is a great example of such a drug that has changed an entire landscape for all these allergic diseases from asthma, atopic dermatitis, and now you”™re hearing the possibilities for additional diseases and so forth. Another thing that we do is we also improve on current drugs if there are significant issues or problems or if we can improve the benefits to patients.”
Schleifer told that meeting, “We were moved by the protests and the message of racial and social injustice and we”™re committed to ensuring that Regeneron does its part to support a diverse and inclusive society both within Regeneron”™s walls and in our community and beyond.”
Regeneron provided some source material for this article.