Pharma's Long Lead Time

Biotech firm Regeneron is finally getting to the point where it may be profitable.  

I've been doing drug research since 1989 myself, which means that I'm fairly experienced. But Regeneron started in this business a year or two before I did, and they're just now getting their first major drug, Eylea (aflibercept) onto the market. To be fair, they did get approval for Araclyst (rilonacept) in 2008, but that one pays the electric bill and not much more - although that might be changing (see below).

As Andrew Pollack at the New York Times points out, the company has run through over two billion dollars over the years. . . .

But Eylea, a VEGF-based therapy for macular degeneration (entering the same space as Lucentis and Avastin), has now made it. And the company has another use for Arcalyst in preventative gout therapy coming along, and some interesting cholesterol work targeting PCSK9 in collaboration with Sanofi. So welcome, Regeneron, to the ranks of profitable biotech companies (well, pretty soon) who've developed their own products.

For those demanding to know why pharmaceutical firms are so profitable, this is why.  The time between starting research and turning a profit is, at a minimum, vast.  The risks are high and a lot of capital is destroyed along the way.  The survivors occasionally do very well--but there's no way to know, before you go into clinical trials, whether you're going to be one of the survivors, or the dead.