What’s a biotech CEO worth? The top 15 pay packages puts a spotlight on performance — usually
Regeneron CEO Leonard Schleifer attends Cold Spring Harbor Laboratory’s Double Helix Medals at the American Museum of Natural History on December 1, 2016.
Patrick McMullan/Getty Images
All biotech glory is fleeting. But the high pay can continue even after the plaudits and cheers are stilled.
Examining this year’s list of the 15 highest paid CEOs in biotech, you’ll find three ex-CEOs: Two who headed back to the biotech startup world, the other pushed out after a sales scandal. They all got one last year of compensation that dwarfs the payrolls of your average little biotech in search of fame and fortune.
A consummate dealmaker leads the list, followed by a self-made billionaire, but between the first and last you’ll see how compensation at this stage of the game is figured for your average high-profile public enterprise. With a couple of glaring exceptions, they’re all gambling big on next-gen drugs, and several are under extreme pressure to start producing some solid results.
Of course, high expectations should go with high pay. You don’t get paid the big bucks for nothing. And none of these CEOs would be shy about explaining why they qualify for the top pay in the industry.
Most make less than the Big Pharma CEOs you’ll find at the very top of every compensation count down. People like J&J’s Alex Gorsky (2016 compensation $26.9 million) or Ken Frazier at Merck ($21.8 million) are on top, with Ian Read ($17.3 million) and ex-Lilly CEO John Lechleiter ($18.3 million) coming in not far behind.
Hat tip to STAT, which helpfully pulled a lot of raw data on compensation. I weeded out a bunch of non-biotechs from that list, including all the generic players, and added background numbers on salary and compensation with some new commentary for each. I added Medivation to include David Hung’s compensation and dropped Jazz, which has yet to file a proxy this year.
Here they are:
1. David Hung
The scoop: There’s no doubt who scored the biggest compensation package in biotech last year. David Hung worked full time on getting the most for Medivation, after Sanofi put it in play. It was his swan song at the biotech, but he was well compensated for it. With stock options worth a cumulative $182 million, $14 million in incentive shares, appreciation rights registering in at $37 million, $1.82 million in severance pay and an $868,015 bonus for 2016, who could say that Hung had anything but a great year, selling the company to Pfizer for $14 billion. That’s all on top of the $118,574,269 in stock he already owned, but that won’t count as compensation. Add up all the golden parachute compensation and it comes to $35.6 million. The full payout: $354 million for the company he founded in 2003.
2. Len Schleifer
Salary: $1.24 million
2016 compensation: $28.3 million
2015 compensation: $47.4 million
Market cap: $45.3 billion
The scoop: Len Schleifer doesn’t apologize for setting his own standard for this list every year. But then, the outspoken Schleifer doesn’t apologize for much of anything. He and George Yancopoulos founded the company, they built it and they’re steering into a bright future. The others can talk about peers and so on, it’s doubtful Schleifer thinks that anyone else out there should match him on this score, which is still far out ahead of the pack even after taking a big step back on the compensation side. Like Yancopoulos, Schleifer’s stock holdings in the company amount to well over a billion dollars. And that’s because of the success of drugs like Eylea and more recently Dupixent. We’ll see how its PCSK9 contender does in the long run, but it’s not off to a good start. Nobody, though, throws a perfect game every time.
3. George Scangos
The scoop: George Scangos didn’t look like he was enjoying himself very much during his last year as CEO of Biogen. Tecfidera, handed to him in the clinic on his arrival, had gone on to become the company’s flagship drug, but it was looking a little tattered by 2016. Revenue declined, new rivals appeared, and the company’s pipeline wasn’t nearly big enough to satisfy analysts. Everyone wanted to see a big M&A deal, but they got Scangos’ departure instead as he headed back to the West Coast. Most of his team — a prominent and aggressive bunch — had already left by then, pursuing their own biotech dreams and leaving the new CEO a shot at building his own crew.
4. Jeffrey Leiden
The scoop: When Jeffrey Leiden was named CEO at Vertex in early 2012, the company faced a scary challenge. It’s flagship drug for hep C was headed for early extinction and the biotech had to make a risky leap to cystic fibrosis in order to survive. But that’s what Vertex accomplished, first with Kalydeco and then with Orkambi. True, European payers have been underwhelmed by the efficacy they were seeing for the prices Vertex demanded, but the US market has been fueling rapid gains in revenue. In the meantime, the company has been making an assault on new triples that could continue to mark improvements for the CF community. While not pretty on the data side, Leiden met the challenge Vertex faced. And he’s been well rewarded for it.
5. Jean-Jacques Bienaimé
The scoop: As a big player in rare disease R&D, BioMarin is often held up as a model of what many smaller companies would like to grow up to be. And CEO Jean-Jacques Bienaimé with R&D chief Henry Fuchs seem to relish the role of trendsetter. The company scored an approval for Brineura with data on only 22 patients, helping set a new standard for tiny studies and accelerated approvals. And they’re shooting for an accelerated OK on their gene therapy for hemophilia A, which may point to a cure. BioMarin is also aggressive on pricing, as we saw with the $702,000 WAC price on Brineura. That’s not the kind of spotlight the CEO is seeking, but it goes with the territory. Bienaimé makes mistakes, as we saw with an expensive misstep in Duchenne muscular dystrophy, when he bought out Prosensa’s failed drug for $680 million in cash. But he’s more often right than wrong, and that will keep him on this list.
6. Martine Rothblatt
The scoop: Martine Rothblatt has her eye on three primary opportunities at United Therapeutics; driving the growth of Remodulin, expanding the label on Tyvaso and pushing through a critical study dubbed FREEDOM-EV for Orenitram. The CEO is staying focused on those three programs to deliver the blockbuster revenue she’s promising investors. Pulmonary hypertension is a big focus at United, and Rothblatt shrugged off the prospect of going toe-to-toe with a giant like J&J, which recently closed on an acquisition of Actelion. “I think that’s of no concern whatsoever,” she said in the 2016 wrap-up with analysts. “We have competed against comparably large companies for almost our entire life – excuse me, almost our entire life and successfully.” Rothblatt is no stranger to thinking outside the box, though. And that periodically takes her up to the top of the pay charts with a company that scores closer to the middle of the pack.
7. John Milligan
The scoop: For one of the best-paid CEOs in biotech, John Milligan gets a lot of free advice from analysts. Most of it boils down to this: Buy something. Make it big and pretty and just as impactful as Pharmasset was. Find something that can succeed the way hep C succeeded, just don’t let it start to fade so quickly. That’s likely an impossible task, but the company has been signing on to some major licensing deals and has prospects in the clinic. Just don’t expect any of that to stop the advice from flowing in. And don’t look for Milligan to start obeying the commands at every snap of the fingers. Is he right? Time will tell.
8. David Hallal
The scoop: David Hallal resigned last year for “personal reasons,” but the board was none too pleased to hear reports that the sales force was being urged to fill early orders of Soliris so the company could hit its financial goals. Hallal’s departure was a good time to assess the company’s position, and a reorganization followed. Now former Baxalta chief Ludwig Hantson, who lost his position at the spinout when Shire came in and bought them out, is at the helm. Despite having a very bad, no good year in 2016, Hallal still came out in the biotech top 10.
9. Mark Alles
The scoop: Mark Alles was promoted to the top job at Celgene when Bob Hugin became executive chairman. That leaves Alles in the hot seat while the company sees if it can start capitalizing on the billions bet on the company’s pipeline. Celgene’s success in growing revenue has made it possible to cover one of the biggest bets on the biotech side of the research business. And signs would indicate that a few of these will likely hit. Given Celgene’s focus on leading, first-in-class drugs, the payoff has the potential to be big. And it will come as many bigger players continue to dither over the price of biotech assets. Win or lose, though, Alles will be held accountable alongside Hugin.
10. Hervé Hoppenot
The scoop: Hervé Hoppenot is building a company in his own way. His big payday came in 2014, when he qualified for a package worth $32.7 million. But this is the year we’ll see just how effectively the company lives up to Hoppenot’s ambition of becoming “big without becoming stupid.” That means aggressively following up on a big slate of IDO-checkpoint collaborations with the leaders in the field. And he’ll be watching the rear view mirror to see who’s coming up behind him. We still don’t know what went wrong at Eli Lilly, which was supposed to be preparing a market launch for baricitinib this year, instead of dealing with an FDA rejection. But that one — following an OK in Europe — is on Lilly.
11. Isaac Ciechanover
The scoop: So what is Isaac Ciechanover doing in this group? The Amgen spinoff ran into a serious setback when its trial for PINTA 745 failed a Phase II study for the treatment of protein energy wasting in patients with end stage renal disease in late 2015. The biotech has other fish to fry in the clinic, but the share price never has recovered. It’s now trading at a quarter of its two-year high and its market cap puts it well outside this compensation class.
12. Richard Pops
2016 compensation: $9,647,420 million
2015 compensation: $12.4 million
Market cap: $9.14 billion
The scoop: Richard Pops has become something of an evangelist for the company’s top late-stage drug prospect, ALKS-5461. The depression drug scored a big success in the final of three Phase III studies, and he’s taking the mixed data from the program in a big pitch to the FDA that will say a lot about the company’s future. Depression is one of the toughest diseases to target in biotech, plagued by a high placebo effect that has scuttled many a drug before it. To come out on top now would wow the industry and possibly mark a turnaround in R&D focus as more companies start to target depression again. Don’t mistake Pops’ soft-spoken ways for an absence of fervor. He speaks softly, and always well.
13. Clay Siegall
Seattle Genetics $SGEN
2016 compensation: $9,559,397 million
2015 compensation: $6.9 million
Market cap: $8.8 billion
The scoop: Clay Siegall has been much in the news lately, which is not typical of this CEO. He’s intent on expanding the use of Adcetris, with a Phase III readout from ECHELON-1 coming up. A clinical hold was imposed but then quickly lifted on its armed antibody dubbed SGN-CD33A (vadastuximab talirine). And enfortumab vedotin (ASG-22ME) is getting the spotlight as well. But it was the on and off relationship with Immunomedics that attracted the lion’s share of the attention more recently. Siegall’s $2 billion pact on Immunomedics’ lead drug fell apart just days ago when an activist investment group won control of the company, ousted the CEO and founding CSO and then severed the deal with Seattle Genetics. 2017 still marks a major year for Siegall, who just barely missed the top 10 in terms of compensation packages. Maybe he’ll break into that club this year.
14. Stephen Davis
The scoop: Steve Davis got the top job at Acadia back in 2015, when then CEO Uli Hacksell got the heave-ho following another unexpected delay in their long-awaited NDA for pimavanserin. Davis was moved up from the CFO’s job and a year later the company scored an FDA approval for the antipsychotic for Parkinson’s — despite frets about possible side effects and a higher death rate in the drug arm. The drug is now marketed as Nuplazid. Davis got a taste of the fluctuating sentiment for their therapy late in the year, when it was heralded as a success for Alzheimer’s psychosis but failed a key secondary endpoint.
15. Stanley Crooke
Market cap: $5.9 billion
The scoop: A couple of months ago Ionis’ subsidiary Akcea came out with some upbeat Phase III data for volanesorsen, but analysts quickly zeroed in on some troubling safety data in raising questions about its future. That’s often how it goes with Ionis, which will remain the primary shareholder in Akcea as the spinoff pursues an IPO of its own. For every big advance, there are hesitations about safety. Its partner Biogen has scored well with Spinraza, one of the most expensive therapies to hit the market in recent times. Through it all, Stanley Crooke has trenchantly insisted on a place in the biotech sun for his company. He is an uncompromising advocate for all things Ionis and RNA. It hasn’t been a smooth ride, but you can’t deny his successes amid all the carping.