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| Dr. George Yancopoulos |
Dr. George Yancopoulos is reaping the rewards from more than two decades of work on Regeneron Pharmaceuticals' prodigious pipeline. Last year his compensation far exceeded the pay of his industry peers and made him the highest paid biopharma executive in the world.
In interviews with company leaders at Regeneron ($REGN), FierceBiotech has learned more about why the company rewarded its chief scientist with a pay package of $81.6 million. For instance, Yancopoulos confirmed that he has had multiple opportunities to jump ship and run R&D for Big Pharma companies, saying that he gets approached about such openings "all the time."
As the pay numbers show, Regeneron CEO Dr. Leonard "Len" Schleifer and others were hell-bent on keeping Yancopoulos at the company. And the Tarrytown, NY-based biotech powerhouse was in a position to reward its top executives after the blockbuster U.S. launch of its eye drug Eylea, which brought in U.S. net sales of $838 million last year and is expected to reach about $1.3 billion in sales this year.
Yancopoulos, who helped invent all three of Regeneron's FDA-approved drugs, earned a 500,000-share award in June 2012 that vests in June 2017. At the time of the stock award, it was worth $57.3 million and represented the bulk of the value on his 2012 pay package. Thanks to the company's stellar stock performance over the past year, at the close of the market on Monday those shares were worth a whopping $134.3 million.
Schleifer noted the steep rise in value of those shares at his office last week and explained what the cost of losing Yancopoulos would be.
"George is the most talented guy in the industry," Schleifer said in the interview. "I wanted to make sure that he had absolutely no reason to go someplace else or go out on his own, because we can pay him hundreds of millions of dollars or we can buy his drugs for billions of dollars when he's at another company. So it's a lot cheaper this way."
Schleifer and Yancopoulos have been building Regeneron together since 1989, when Schleifer finally succeeded in talking Yancopoulos into leaving his prestigious research post at Columbia University--where he earned his Ph.D. and M.D.--and jump into the exciting biotech game. For Yancopoulos, he says, it was also a chance to follow in the footsteps of his idol, Dr. P. Roy Vagelos, who was then the CEO of Merck ($MRK).
After his retirement from Merck, Vagelos became chairman of Regeneron in 1995 and remains at the helm of the company's board of directors.
Yancopoulos said he has declined offers from larger companies because "I feel ownership. I feel this is my company. Len and I, together with a bunch of our senior colleagues like [SVP of R&D] Neil Stahl, [SVP of Research] Andrew Murphy, [VP of Functional Genomics] David Valenzuela and others, we built this company."
Unlike their counterparts at other Big Biotech companies, Yancopoulos and his colleagues have assembled one of the top drug pipelines in the industry without making big purchases of other biotech outfits or licensing in candidates from other groups. Conversely, industry giants such as Sanofi ($SNY) and Bayer go to Regeneron, which has built a leading engine for discovering and developing monoclonal antibodies. Sanofi and Regeneron are partnered on at least half a dozen drugs in clinical development, including the PCSK9 drug for reducing cholesterol called alirocumab/REGN727.
Excluding Yancopoulos's compensation, the average of the 5 highest paid chief scientists in pharma was $7.8 million. The bottom line is that Yancopoulos made more than 10 times as much as his fellow chief scientists last year. Who could pass that up?
"Frankly, it's a sense of fairness," Schleifer said of his long-time collaborator, Yancopoulos. "You've got to treat a guy like that as a partner. He's created the value. He should be deriving the value." -- Ryan McBride (email | Twitter)
Editor's note: This article is the first in a series of stories about Regeneron. Check our website for more series pieces over the next several weeks.