Regeneron's Schleifer, Yancopoulos set their company's ambitions sky high with $1.4B on the table in performance awards
Tuesday, January 5, 2021
Source: Endpoints News
One of the true success stories in biopharma, New York’s Regeneron has built a $51 billion market cap under the watchful eyes of co-founders and 32-year veterans Len Schleifer and George Yancopoulos. That success has made both men wealthy, even as Regeneron’s investor returns have flagged in recent years.
Regeneron’s ambitions are still sky high moving ahead — and just how much the company can capitalize on that vision could spell enormous paydays for its founders.
CEO Schleifer and CSO Yancopoulos may be due big bonuses in December 2028 after Regeneron’s board voted to rejigger their compensation to shell out one-time, performance-based awards that could reach up to $713 million for each of the execs, the drugmaker disclosed in a Tuesday filing with the SEC.
Regeneron opted to link both executives’ awards to the drugmaker’s cumulative share-price growth over five years with a three-year holding period after the performance-restricted stock units (PSU) fully vest. Previously, Schleifer and Yancopoulos were awarded tranched annual stock options that are common for C-suiters across biopharma.
The board set tiered milestones for both executives’ possible awards with a target goal of 65.6% growth on Regeneron’s most recent closing share price prior to the vote of $478.30. Hitting that number on the nose would earn both Schleifer and Yancopoulos a cool $196.5 million each.
On the absolute high end — 140% share growth over five years at a 19.2% annual rate — both Schleifer and Yancopoulos would be due a whopping $713.3 million each. There has never been a comparable payout for a biopharma executive, a possibility that underscores Schleifer and Yancopoulos’ remarkable run as well as their moon-eyed ambitions for their pipeline and existing portfolio.
But hitting that top-end figure, equivalent to a $1,150 share price, will take some doing as the company’s shares have traded mostly flat over the previous five years. Since July, the company’s shares have declined roughly 28% from a peak of $658.21 during the hype over of its antibody cocktail for Covid-19.
Even if Regeneron doesn’t hit the award threshold of 31.3% growth over the next five years, Schleifer and Yancopoulos can still earn half of the 248,108 PSU target figure if the drugmaker’s share price outperforms the Nasdaq Biotechnology Index by 200 basis points over that time. That would also be no easy task as the index has seen nearly 50% growth over the past five years.
Consider, though, that Regeneron’s shares sat at around $34 in January 2011 before skyrocketing to $492 five years later. Given that history, anything could be possible.
Finding a way to be sustainable year-over-year share growth will be the story of Regeneron’s near-term future as the company continues to expand its market lead for eye drug Eylea and looks to get its antibody cocktail into widespread use as a Covid-19 therapeutic.
A key player in that story will likely be immunology blockbuster Dupixent, a partnered med with Sanofi that figures to continue growing in the coming years as it racks up new indications. The drug could hit $12.5 billion in peak sales, by some analysts’ account, a significant boost from its $2.32 billion haul back in 2019.
Meanwhile, Regeneron is pursuing roughly 25 candidates in its Phase I/II pipeline to pair with its seven programs in late-stage trials. That pipeline could add the fuel to keep growing Regeneron’s share in the long term.