The laboratory and office staff at Regeneron Pharmaceuticals Inc. was making a late-summer move to two new buildings and 229,000 square feet of fresh-painted, bamboo-floored, energy-efficient, naturally lighted space on The Landmark at Eastview campus when the biotech company reached another milestone. At headquarters on Old Saw Mill River Road, Regeneron hired its 1,000th employee.
By year”™s end, the company expects to hire another 50 employees, after increasing staff by 35 percent in 2008. In an unpredictable industry where failure, in financing and product development, is more typical than success and profit for a company, Regeneron is 20 years old and, though not yet profitable for shareholders, is financially secure and growing with multiple treatment products in various stages of development and revenue-boosting development agreements with two major health care companies.
The employees numbered “a handful,” four or five, when year-old Regeneron moved from “world headquarters” in a leaky Manhattan apartment to the former Union Carbide campus in the towns of Greenburgh and Mount Pleasant in 1990. So the company”™s founder, president and CEO, Dr. Leonard S. Schleifer, recalled last week. He sat at his desk in his new office in one of two connected three-story glass buildings that the Landmark”™s owner, BioMed Realty Trust Inc., built to suit its largest Westchester tenant. An adjoining third new shell building on the eight-building life sciences campus is available for leasing.
A board-certified neurologist and a Ph.D. trained in biochemical pharmacology, “I had the notion that Genentech (the pioneering biotechnology company started in 1976) was doing very interesting science,” said Schleifer. He wanted to do something similar in business and science but with a focus on drug treatments in his medical specialty. “We were always interested in molecular biotechnology and we thought we could apply this to neurological diseases,” Schleifer said.
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His academic mentor, Dr. Alfred Gilman, a 1994 Nobel Prize winner in medicine and current dean of the University of Texas Southwestern Medical School, at first discouraged Schleifer from his enterprise yet joined him as the company”™s co-founder. Gilman continues to serve on its board of directors.
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A Queens native, Schleifer looked to start his company in the New York City area. Space was available for short-term leasing on the Union Carbide campus; the founder looked to IBM Corp. as his corporate location guide. “I had assumed that IBM had spent a fortune of money to figure out that Westchester was a good environment for a high-technology company,” he said.
“I pursued it as though it was going to be a relatively easy launch,” said Schleifer, whose company”™s first commercially approved product, the anti-inflammatory drug Arcalyst for the treatment of a rare autoimmune disorder, was marketed in 2008, nearly two decades after Regeneron”™s founding. “Frankly, naiveté allowed me to keep pursuing this because I always thought we were just around the corner.”
The CEO started the NASDAQ-listed company, which went public in 1991, with a core group of “high-powered scientists” to make the discoveries needed for drug development. Chief among the early recruits was Dr. George D. Yancopoulos, a molecular biologist whom Schleifer called “probably the most talented young scientist at the time” in the country. Yancopoulos continues at Regeneron as executive vice president, chief scientific officer and Regeneron Research Laboratories president. Schleifer said he is perhaps the only member elected to the National Academy of Science from a biotech company.
Regeneron spokeswoman Laura Lindsay said another key appointment was Dr. P. Roy Vagelos, who was named board chairman in 1995. He is the former board chairman and CEO at Merck & Co. Inc. “Bringing him on board has really been a great asset to the company,” she said.
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In addition to its Westchester headquarters, Regeneron last year opened a small satellite office for clinical development in Bridgewater, N.J., to attract experienced employees from that state”™s downsizing pharmaceutical companies. The company is expanding operations and employs about 300 workers at its manufacturing facility in upstate Rensselaer, a former drug company plant acquired in 1993 as part of Regeneron”™s long-range plan to become a fully integrated pharmaceutical company.
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“From the very beginning, I didn”™t want to be dependent on anybody else for anything we had to do,” said Schleifer.
Regeneron reported a net loss in 2008 of $82.7 million, or $1.05 per share, compared to a net loss of $105.6 million, or $1.59 per share, in 2007. It ended the year with $527 million in cash reserves and securities.
Of $238.5 million in revenue in 2008, only $6.3 million came from sales of its newly launched Arcalyst. Used to treat a rare immune disorder with which only 300 persons in the U.S. have been diagnosed, “It”™s a very small market, but it”™s meeting a need for those people,” Robert J. Tertifay, senior vice president for Regeneron”™s commercial division, said of the drug.
The company earned the bulk of its revenue last year, $192.2 million, from research and development collaborations, including $154 million from the international Sanofi-aventis Group and $31.2 million from Bayer Health Care Inc. Regeneron this year, in separate collaborations with those companies, is conducting clinical trials on drug treatments for gout, cancer and eye diseases and an antibody for rheumatoid arthritis that will bring the company large-market opportunities.
The antibody product, developed using Regeneron”™s proprietary technology, is the first in a line of monoclonal antibodies Regeneron expects to produce, at a rate of two or three each year, as part of a global collaboration struck with Sanofi-aventis in late 2007. The Paris, France-based company, whose U.S. headquarters is in Bridgewater, N.J., made an $85 million up-front payment to Regeneron and will fund up to $475 million for research through 2012. The antibody development deal led Regeneron to hire several hundred employees last year.
“I would say we have a robust pipeline of drugs under development,” said Schleifer.
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“The company has always had a wealth of strong scientific innovation,” said Tertifay, who has overseen its commercial debut. “The real challenge is financing all of that innovation to bring it to market.”
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To survive and keep and attract investors, Regeneron has moved away from its founder”™s original mission to discover and develop treatments for neurologic disease. “One of the great disappointments of what we”™re doing here,” said Schleifer, “is not to come up with a treatment for Lou Gehrig”™s disease (amyotrophic lateral sclerosis), which we”™ve worked very hard at.”
Yet that effort was not wasted research, said Tertifay. It has led to discoveries and developments that can be applied to other serious diseases.
“The Sanofi collaboration has allowed us to take all the ideas that have been there for quite a few years and really move things forward,” said Tertifay. “Most biotechs focus on one compound that either makes it or breaks it. This company has got a little bit of cushion there in having multiple opportunities to survive.”
Schleifer said the pursuit of profit alone will not make a biotech company thrive. “The exciting thing for people here is that people can come to work every day and feel like what they”™re doing is making a difference for people suffering from diseases. That”™s a very powerful motivating factor and a real privilege.”
With the recent expansion, Regeneron now occupies 390,000 square feet of lab and office space at The Landmark. The new, sleekly designed buildings, said Lindsay, “really demonstrate our moving forward as a company. We”™re still a biotech company. It just puts on more of a corporate face” for a growing company that has operated in obscurity through much of its history in Westchester.
