CFO Intelligence Magazine – Winter 2022
Robert E. Landry
Regeneron, CFO
Financing Science
This CFO’s creativity led to an antidote for expenses
Regeneron is a publicly traded biotechnology company with a global presence that focuses on medicines for people
with serious diseases. Founded and led for over 30 years by physician-scientists, the company has developed nine
FDA-approved treatments — with numerous product candidates in development — designed to help patients with
eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, hematologic
conditions, infectious diseases and rare diseases.
As CFO of the company, Robert E. Landry makes sure that the scientists and other colleagues at Regeneron have enough cash to continue their work. That can be a challenge in the biotech space, where companies typically
grapple with significant expenses while facing long drug-development lead times. But Landry — a finance veteran who previously served as Senior VP and Treasurer of Pfizer, Inc. and earlier was CFO for Wyeth Pharmaceuticals’ Australian and New Zealand affiliates — isn’t fazed.
“At Regeneron, we view ourselves as a technology company that sells biopharma products,” he explains. “We enter into licensing and collaboration agreements with other organizations — including Sanofi [antibody and immunotherapy R&D], Bayer [ophthalmology], and Roche [global manufacturing and distribution collaboration for
COVID-19 antibody cocktails] to spread risk and costs.” One such product, REGEN-COV, is currently authorized in the U.S. to treat people who are at high risk of serious consequences from COVID-19 infection who are either
already infected and non-hospitalized, or are in certain post-exposure prophylaxis settings.
Combining Medicine and Finance
In addition to direct-reporting departments like Controller’s, Treasury, Financial Planning, Tax, and Internal Audit, Landry’s also responsible for the financing operations of Regeneron’s far-flung R&D and other facilities in Ireland, the UK, Canada and elsewhere. And although he’s not a scientist — Landry has a degree in accounting from Notre Dame — he often deals with them, and has to understand enough basic medical concepts to interact with them and to explain Regeneron’s strategies to potential and existing investors.
“I point out that Regeneron is founder-led by two physician-scientists who are passionate about building a company with a diverse portfolio of medicines that can help people in need,” he notes. “We do this by relentlessly innovating our proprietary, industry-leading, homegrown technologies; specializing in making the best antibodies across therapeutic areas; and finding the right collaborators to pursue new approaches to treating diseases. We have a proven track record, too, with nine FDA-approved treatments from which two of these drugs – Dupixent and Eylea – are mega-blockbusters and one with emergency use authorization. We’ve shown that our diligent early-stage research and technology development enable us to do best-in-class science with strong results.”
He also tells investors that Regeneron leverages technology to power its research pipeline — the goal is to increase the likelihood that initial research leads to successful medicines — with initiatives like the Regeneron Genetics Center (RGC). The RGC sequences DNA from volunteers and then analyzes the vast amount of anonymized genetic information, pairing it with anonymized medical records, to identify genetic patterns linked to disease and health. “It’s a treasure trove of gene-sequencing information that will help to speed and improve the drug development process,” including the development of genetic medicines, says Landry.
In November, the company announced it secured a new U.S. government supply agreement and is delivering an additional 1.4 million doses of REGEN-COV —
which received emergency use authorization from the FDA for use as post-exposure prevention for COVID-19 in adults and individuals 12 years of age and older weighing at least 40kg (~88 lbs.) who are at high risk for progression to severe COVID-19, including hospitalization or death. Regeneron’s Biologics License Application for REGEN-COV as treatment and prophylaxis has also been accepted by the FDA for priority review, with a mid-April 2022 action date.
Keeping an Eye on Capital
The company is growing, but effective capital deployment is still a key concern in the competitive biotech space. “We invest in our R&D capabilities, as advancing our pipeline remains our top priority,” Landry explains. “As evidenced by our productivity and the high returns we have generated historically on our R&D, these investments are critical for our business and shareholders. We also look to complement our internal efforts with external strategic partnerships and collaborations. We continue to invest, both in equity and milestone payments, as well as in ongoing R&D funding of joint programs, in complementary technologies in areas such as RNAi (or gene-based) therapeutics, oncolytic viruses (viruses that tend to infect and kill tumor cells) and CAR-T therapies (modifying patients’ immune system cells so they attack cancer cells).”
Once the R&D investments are made, Landry and his team assess additional strategic cash deployments, including stock buybacks. “Our overall business is growing with increasingly diversified revenue and cash flow streams,” he says. “Coupled with the strength of our balance sheet and our confidence in the long-term outlook for the business, we view opportunistic share buybacks as an efficient use of capital.”
Landry and his team also apply the same diligent approach to other initiatives, like the purchase and subsequent leaseback of the company’s Tarrytown, N.Y. headquarters. “We made the decision in 2017 to purchase our formerly leased 1.2 million square foot Tarrytown laboratory and office headquarters,” he says, “and to subsequently sell it to a consortium of banks who leased it back to Regeneron. This transaction yielded in excess of $110 million savings over a five-year period, given the low cost of borrowing compared to our prior lease.”
Other capital projects include an in-progress expansion at an existing 130-acre Regeneron manufacturing facility near Rensselaer, in upstate New York State. Upon completion in 2022, it will let the company bring its “fill-and-finish” operations — filling vials with medicine, and finishing the process of packaging the medicine for distribution — in-house. Pharmaceutical companies often use third parties to fill and finish their product, but that outsourcing often adds incremental costs and may result in manufacturing and distribution bottlenecks. Bringing this final step in-house also allows Regeneron to have full control over the quality and safety of its medicines from start to finish.
“Most recently, we announced that we will be expanding our Tarrytown headquarters with completion expected by 2027,” he notes. “Both a Sleepy Hollow and the Tarrytown expansion will be funded internally,” which helps to keep the company’s debt level at a manageable level.
An effective CFO can see beyond the numbers, however, and part of Landry’s personal brand is a “common sense” way of keeping people motivated and on track. “As I see it, we’re here to enable people — the finance side and on the medical and technological R&D side — to do their jobs,” he explains. “Part of that involves asking a lot of questions and determining whether a particular task is reasonable and feasible before asking people to take it on. Everyone here wants to accomplish everything, but sometimes you have to establish priorities. Our strategy is to approach all things through a scientific lens.”
Regeneron’s response to the pandemic illustrates that approach. “In January 2020, as we watched COVID-19 begin to spread worldwide, we knew we had to immediately help with our antibody technology because it was the right thing to do for society,” he recalls. “Thanks to our core technologies and prior experience rapidly developing medicine for an infectious disease in an outbreak setting — our previously developed Ebola medicine — we were ready. We worked day-and-night on site amid the height of the pandemic in the Westchester County COVID-19 epicenter. Five months later, we had a medicine ready for human clinical trials – an unheard-of record for speed. Five months after that, REGEN-COV became the first combination therapy to be authorized to treat COVID-19.”
A Hands-on Strategy
With some 10,000 employees and a market cap that’s north of $70 billion, Regeneron has the heft that’s needed to move ahead in the biotech space. “But we still feel like a startup when it comes to our immense energy and excitement around our science and the impact it can have on people with serious diseases,” Landry relates, noting that he previously held executive positions at larger companies like Wyeth and Pfizer. “I really enjoyed my time at Pfizer (market cap of more than $300 billion) where I was the Treasurer and a divisional CFO — I came there as a result of the Wyeth acquisition. There is a high level of talent across all functional departments that exists at both companies, but Regeneron can operate in a very nimble manner, and there is very little bureaucracy here. That helps us to continue to make advances in a timely manner.”
SIDEBAR 1:
A “people-grounded” management style
“My connection and motivation to my team is to be transparent, seek opinions, live by example, listen well,” says Regeneron CFO Robert Landry.
“I also believe in being compassionate; and not being embarrassed or considering it a sign of weakness to admit what you don’t know. In my 35 years of working, I have had the benefit of working for many different leaders — I have tried to take each of their best leadership attributes and incorporate these traits into my own style, making it a point to know my teams and colleagues on a personal level. I understand and let my teams know that our success is dependent on ‘every person every day’ doing their job.” <
SIDEBAR 2:
A data-driven approach to cutting costs
Under the guidance of Landry and his team, Regeneron continues to do more while keeping a leash on expenses. “To some extent we’re supported by the pharmaceutical companies that we work with,” he says. “We share our data and results with other scientists, and we give an early look to companies that invest with us.”
Regeneron also curtails expenses — and reduces its financial risk profile — by collaborating with other companies in the biotech and biopharma space. The August 2020 agreement with Roche to develop, manufacture, and distribute REGEN-COV — which is marketed by Roche as Ronapreve outside of the U.S. market — is an example of this strategy. Under the joint venture, Regeneron leads global development activities for certain R&D components, and the parties jointly fund certain ongoing studies, as well as any mutually agreed additional new global studies to further evaluate the potential of the specialized medicines casirivimab and imdevimab in treating or preventing COVID-19. The parties share gross profits from worldwide sales based on a pre-specified formula, depending on the amount of manufactured product supplied by each company to the market. During the third quarter of 2021, these “collaboration revenues” totaled more than $1 billion, up from $653 million in the prior-year quarter.
At the same time, Landry says, the company also tries to do more in-house. “We’ve developed significant R&D approaches — like our automated genomic scanning and sequencing — with an in-sourced approach,” he explains. “We may pay a bit more in payroll costs, but we can more-easily leverage our R&D discoveries, and our technology-
centered strategy also lets us curtail unnecessary expenses.” <