Struggling Biotech Firm Hires Retired Merck Leader as Chairman
NEW YORK (AP) _ Investors snapped up shares in Regeneron Pharmaceuticals Inc. Monday after the struggling biotech firm announced that Roy Vagelos, the retired leader of Merck & Co., would be its new chairman.
Vagelos is one of the most respected researchers in the drug industry, having chaired Merck, the world’s largest prescription drug company, from 1986 to last November, when he reached its mandatory retirement age of 65.
Regeneron is based in Tarrytown, north of New York City. It is researching genetically engineered treatments for nervous system disorders such as Alzheimer’s and Parkinson’s diseases and amyotrophic lateral sclerosis, also called ALS or Lou Gehrig’s disease.
The company was forced to lay off about 200 people or 25 percent of its staff last June after the failure of human tests of ciliary neurotrophic factor or CNTF, as a treatment for ALS. That failure sent its stock plummeting 50 percent as of Friday.
After the announcement of Vagelos’ appointment Monday morning, Regeneron shares jumped $1.25, or 36 percent, to $4.75 on the Nasdaq Stock Market.
Vagelos won’t actually be running the company. Leonard S. Schleifer, the former chairman, will retain the positions of chief executive officer and president of Regeneron.
The company said Vagelos will be active in overseeing company strategy and its science program.
``Dr. Vagelos knows no peer in his track record for fostering innovation and converting breakthrough scientific discoveries into commercially successful products,″ Schleifer said in a written statement. ``He will be actively involved in all areas of the company, including research target selection, product development, and recruitment.″
As a researcher and later an executive, Vagelos shepherded some of Merck’s most successful new drugs, including the heart drugs Vasotec and Prinivil, Mevacor and Zocor for cholesterol and Proscar for prostate enlargement.
``Of the many opportunities I have considered since my retirement from Merck, Regeneron represents the most attractive combination of top-caliber people, leading-edge science and longterm commercial potential,″ Vagelos said in a written statement.
Prior to his time as a corporate executive, Vagelos worked as a surgeon and biochemist. He has less experience in biotechnology in which scientists create drugs by splicing genes of human proteins and chemicals.
Vagelos said Monday he’s convinced Regeneron has the potential to be a major biotech firm.
Like many such firms, Regeneron has few products on the market and gets most of its revenue from investors and other drug companies that have agreed to support its research, hoping to gain a share of the profits in any drugs it develops.
Although Regeneron’s research is highly regarded, its first products are years away from market at best and it is actively seeking partners to help pay for its research.
It is in early stages of human tests for another treatment for ALS in conjunction with Amgen Inc., the largest biotech company, and Sumitomo Pharmaceutical Co. of Japan. And it is about to start human tests on a drug for Parkinson’s disease.
It lost $40 million in 1993 on $7.1 million in revenues.