June 11, 2015
By Alex Keown, BioSpace.com Breaking News Staff
CHICAGO -- Ever since the great recession of 2008, Americans have closely followed the compensation levels of top executives, including the ones in the pharmaceutical industry, where so often pay has been boosted by investor appetite, Bloomberg Business reported this morning.
The NASDAQ Biotechnology Index has grown more than five-fold since 2009, spurred in part due to interest rates kept low in response to the sputtering overall economy.
With investor confidence in the biotech sector high, many chief executive officers are commanding salaries higher than executives at Fortune 500 companies with enormous workforces, such as Apple or 21st Century Fox.
Below is a list where Bloomberg analysts highlighted the compensation packages of several pharmaceutical executives.
• Hans Bishop, Juno Therapeutics . According to Bloomberg, Bishop took home $88.2 million in total compensation in 2014, which made him the 11th highest paid CEO in the United States.
• Arie Belldegrun, the CEO of Kite Pharma, Inc. , was given awards valued at $95.2 million as of the company’s fiscal year-end in 2014, ranking him No. 8 on the index.
• Radius Health ’s Robert Ward took home $33.5 million in total compensation for his first year helming that company.
• Anacor Pharmaceuticals, Inc. CEO Paul Berns took home $22.4 million.
• Durata Therapeutics, Inc. CEO Paul Edick’s had compensation valued at $19.8 million.
In February Juno Therapeutics showed aggressive moves by rewarding its executives with generous bonuses for exceeding corporate goals. Juno is developing cell-based cancer immunotherapies based on chimeric antigen receptor and high-affinity T cell receptor technologies to genetically engineer T cells to recognize and kill cancer. The company was established in 2013 as a spinout of the Seattle-based nonprofit Fred Hutchinson Cancer Research Center. It has yet to bring a drug to market.
Although Kite fell short of expectations when the company released its 2014 annual financial report in March, analysts are still predicting a good year for 2015. In the first half of 2015, Kite said it plans to initiate its first pivotal study of its lead product candidate, KTE-C19, under its investigational new drug application in refractory diffuse large B cell lymphoma
Kite has partnerships with the National Institute for Clinical Excellence (NICE) and Amgen to develop therapies that engineer white blood cells to fight cancer. Under the agreement, which netted Kite a $60 million upfront payment earlier this year, Kite will leverage its CAR platform, research and development and manufacturing capabilities to develop and commercialize a next generation of novel CAR T cell immunotherapies.
Meeting corporate expectations is important when it comes to executive compensation. In March Johnson & Johnson , the world’s biggest healthcare products company, rewarded CEO Alex Gorsky with a 48 percent increase in pay to $25 million, following fourth quarter financial results that revealed significant growth in pharmaceutical sales and other areas. Prior to the decision, Gorsky received annual stock and option awards of $8.7 million, but that has jumped to $13.6 million with the salary hike.
In March Indiana-based Eli Lilly and Company changed the way the company accounts for its pension plans, which boosted the overall value of the company’s top five executives’ compensation by about 30 percent.
Other top executives at biotech and pharmaceutical companies were also awarded generous compensation for leading their companies through drug development programs.
The labor organization AFL-CIO compiled a list of top executive pay for 2014 and unsurprisingly, many of the top executives from the pharmaceutical industry made that list. Some notables are listed below:
• Regeneron Pharmaceuticals, Inc. ’s top executive Leonard S. Schleifer took home $41,965,424 in total compensation for 2014.
• Jeffrey M. Leiden of Vertex Pharmaceuticals was awarded $41,965,424 in total compensation in 2014. Since Leiden assumed the reins of the cystic fibrosis-drugmaking company three years ago, the company’s shares have gained 226 percent, while the Nasdaq Biotechnology Index rose 207 percent.
• Bristol-Myers Squibb Company ’s CEO Lamberto Andreotti took home $27,062,382 in 2014.
• Kenneth C. Frazier, CEO at Merck & Co. , had $25,029,370 in total compensation.
• Robert J. Hugin of Celgene Corp. earned $24,236,113 in 2014.
• Pfizer Inc. ’s Ian Read took home $23,283,048 in total compensation last year.
• Richard Gonzales of AbbVie was awarded $22,006,271 in total compensation.
• Leonard Bell of Alexion Pharmaceuticals Inc. received $20,570,703 in total compensation.
When Will Pfizer’s Breakup Happen?
Speculation that the revamping of Pfizer Inc. ’s internal business structure could happen as soon as this year has biotech wondering just when this Big Pharma company could see changes.
Last week an analyst with J.P. Morgan said he thinks there will be a much faster timeline than most of Wall Street had predicted for Pfizer’s stated mission to refocus its efforts on new medicines.
Pfizer initially announced in 2012 that it would be shedding units that were non-essential to that goal. It then promptly sold its nutrition silo to Nestle for $11.85 billion, which was rapidly accompanied by a public spin-off of its animal health business for $2.2 billion.
“While a Pfizer break-up would likely be a 2017 event, we see potential catalysts in 2015-2016,” said Chris Schott, an analyst at J.P. Morgan. “Three years of audited financial statements (2014-2016) are required before any part of Pfizer can be spun off, and we also see 2017 as an attractive time for action as investors see Pfizer’s innovative pipeline clearly contributing to growth and the established business having transitioned to a more stable profile.”
BioSpace wants to know what you think: Will Pfizer be a changed company by the end of 2015?
