Sometimes the role of CFO is less about instituting reforms than identifying when something is working, and then getting out of the way. Robert Landry, who took on the position of CFO for Regeneron Pharmaceuticals Inc. last October, has learned the value of both approaches over his 26 years in the pharma/biopharmaceutical industry, holding a variety of finance positions. As he has settled into his latest role — his first as CFO of a publicly traded company — Landry sums up his strategy as: “Be an enabler, not a blocker.
“We never know where the next great piece of science or technology is coming from — someone could walk in one day and say, ‘We just did this intriguing study within our discovery group, but I don’t have the budget for further experiments,’ so it’s my job to enable these scientists to move forward with the studies,” says Landry. “We have to be flexible enough to have the resources to pursue the unexpected and unbudgeted opportunity.”
Landry’s belief in the importance of clearing the way for innovation and ensuring that he is there to support the innovators is an especially good fit for his new company. Since CEO Leonard Schleifer, M.D., Ph.D., founded Regeneron in 1988 with Chief Scientific Officer George Yancopoulos, M.D., Ph.D., opening the labs, the company has been researching, developing, and manufacturing medicines from its labs just over the Tappan Zee Bridge in Tarrytown, NY. Despite a number of near-successes, the company posted losses for its first two decades in business, but its leaders continued to believe in the work they were doing by applying science to the successful pursuit of new medicines and, in the process, building a vibrant enterprise.
Then, in 2011, the company received approval from the FDA to sell EYLEA, a treatment for wet age-related macular degeneration — a major cause of blindness in the elderly. At a time when many analysts thought the days of blockbuster pharmaceutical products had passed, EYLEA generated $838 million of U.S. sales in 2012, in its first full year on the market, and forecasts for 2014’s U.S. sales soar to $1.7 to $1.8 billion as additional uses for the drug may receive FDA approval.
“Len and George are really brilliant and have assembled a group of the most talented scientists in the world who are working within this shop,” says Landry. “What they’ve created here is just a juggernaut of research and development and product candidates that come out of our research labs and go into clinical development. It’s unlike anything I had previously witnessed.”
Keeping It Creative
Landry describes himself as being “very fortunate to work at one of the most innovative companies in the world.” Brilliance and inventiveness extend into the company culture. Far from the conventional lab that comes to mind when one hears “pharma company,” the Regeneron offices have the creative energy and work hard/play hard approach of a Silicon Valley startup (visit bit.ly/RegeneronVideo for a sense of the company’s attitude). This style helped to land Regeneron at the No. 4 spot on Forbes’ Innovative Companies list last year. Additionally, for two years in a row the readers of Science magazine have voted Regeneron the best biopharmaceutical company in the world to work for.
And, this is the culture and approach that Landry wants to help foster as CFO. He has introduced to his new team several concepts that he learned at Pfizer, like “enabling functions,” that he believes to be especially apt for Regeneron.
He was at Pfizer, Inc., for almost four years, most recently as senior vice president and treasurer, after two years as senior vice president of finance for a major division of the pharmaceutical giant. Prior to that, Landry served as CFO of Wyeth Australia & New Zealand before moving into the role of treasurer for all of Wyeth.
While Landry is now the decision maker on financial areas of the business, he emphasizes to his team that in many ways they provide a “client-services function” for the executives of other departments in the organization, from R&D to business development to legal.
“All these departments have great functional skills, and I don’t want them wasting their time on finance matters,” says Landry. “To the extent that our finance team can come in and support them on all finance-related matters, regardless the department, the better off the company will be. We say ‘use us.’ They’re our clients.”
Helping him in his transition to his new role is Murray A. Goldberg, who had served as Regeneron’s CFO for 19 of its 25 years in business. He became senior vice president of administration last year to make way for Landry, and now, as Goldberg prepares for his retirement at the end of 2014, provides guidance.
Goldberg maintained a lean, cost-conscious, organization over the bear years and that’s a focus Landry intends to continue.
“Murray is the one who managed Regeneron when cash-burn really mattered — whether they would have enough funds to survive the following year,” says Landry.
Focus on Facts
Regeneron, a company of 2,400 people, offers some distinct advantages for a self-proclaimed “facts-based guy,” compared to the 78,000-person giant Pfizer, where as treasurer, in 2013, Landry had very little connection to R&D.
This much smaller organization means Landry has more direct contact with every part of the business. Executive meetings are much more likely to include scientific discussions of how things are going in the lab and clinic as compared to how the financial performance is doing versus the budget.
“It allows you to get to the ground floor quicker, understand things quicker, eliminate a lot of bureaucracy,” says Landry. “With a lot fewer layers, you can speak to the subject matter experts and make decisions a lot quicker, without a lot of passing it along the daisy chain.”
This appreciation for the value of data was shaped by one experience in particular at Wyeth. In 2007, shortly after being named treasurer of that company, certain securities in its investment portfolio purchased prior to Landry’s tenure — AAA-rated subprime mortgage securities purchased by some of Wyeth’s external money managers — began showing unrealized losses.
“For the next 18 months, my team and I spent an inordinate amount of time familiarizing ourselves with every aspect of these securities in an attempt to maximize their market value and minimize impairments,” says Landry. “This included understanding the paydown structure of the securities and which specific tranche of the security Wyeth owned, which impacted when or if we would be paid and the default rates. As you could expect, there were numerous updates to the Audit Committee, CFO, and external auditors.”
This experience taught Landry many things beyond the nuances of subprime mortgage securities.
“My two most significant learnings were: 1) always trust, but verify, by asking lots of questions, and 2) don’t enter into transactions unless you have a complete understanding of what could go wrong,” says Landry. They are lessons that are quite easy to apply at a company as lean and transparent as Regeneron.
They are also lessons that Landry believes to be vital to the biopharmaceutical sector, more generally. The industry has been enjoying a period of fast growth and easy access to funding, with investors seemingly insatiable for new IPOs and follow-ups. But Landry knows this is the time for a CFO to move wisely and ensure the organization remains well positioned.
Landry is confident that by applying what he has previously learned at major biopharma companies, while ensuring Regeneron’s innovators have the resources they need to build on the company’s enormous success so far, the organization will be positioned for continued growth.
A Wealth of Experience
It’s unusual for a large publicly traded company to hire a CFO who has not already served in that role. But Regeneron did just that with Robert Landry.
“I am convinced that my success stems from the breadth of opportunities I have been afforded, obviously coupled with working hard, day in and day out,” says Landry, who has worked in finance since graduating from the University of Notre Dame about 27 years ago.
“[But] taking on new challenges … created stress, as you are frequently asked to operate outside your comfort level.” Adding to that, Landry relocated his family several times throughout his career.
As a Group CFO of Pfizer’s Diversified Businesses, he worked on its recent organizational transition. This segment included four operating business units, which included the former nutrition business, animal health business, Capsugel, which made gelatin caps for drugs, and the consumer health business.
In the two years he was there, Landry “worked around the clock splitting off and divesting three out of the four businesses,” selling Capsugel to KKR and the nutrition business to Nestlé. The animal health division split off from Pfizer and is now traded on the NYSE under the ticker Zoetis.
Each of these was a mammoth transaction, and he had the responsibilities of being the transactional finance lead for them all in a very short period of time — and for the most part, concurrently.
Now he believes that becoming the CFO of a public company seemed to be the natural next step. Having operated within treasury, controllership, internal audit, and FP&A, stepping into a position that oversees it all “simply made sense.”
Moving Into the C-suite
“The most exciting part of being a CFO is being on the inside of all C-suite discussions, whether they are board related, strategy related, or simply reviewing the monthly and quarterly results,” says Robert Landry, six months into his role as chief financial officer of Regeneron Pharmaceuticals Inc.
“I am very fortunate to work at one of the most innovative companies in the world. Couple that with a company that has grown exponentially over the last 18 months in a very energetic and evolving industry, biopharmaceuticals, and you have the recipe for daily excitement.”
Of course, moving into the C-suite is not all fun and excitement. With the new role comes much greater responsibility, with Landry now the ultimate decision maker on the organization’s most crucial finance questions.
At his previous companies, including Pfizer and Wyeth, Landry would provide research and recommendations to the CFOs to help them decide the best direction. At Regeneron, for all financial issues, the buck stops at Landry.
“Now that I am CFO, the decision-making role is reversed, whereby I receive the facts of the case and am expected to make the decision,” he says. “It’s strange being on the other side of the table, and it certainly carries more burden and stress.”
But it’s a burden he’s eager to accept each day to help the company meet its potential.