CHA-CHING: SMALL BIOTECHS WRITE SOME OF AMERICA'S BIGGEST PAYCHECKS

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CHA-CHING: SMALL BIOTECHS WRITE SOME OF AMERICA'S BIGGEST PAYCHECKS
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10 August 2018
      Infinity Pharmaceuticals has stumbled over the last couple of years—selling off its lead oncology candidate, duvelisib, after being ditched by development partner AbbVie—but that hasn’t stopped the company from richly rewarding its employees. The median salary at Infinity is $495,513, making it the highest-paying pharma company in the United States and placing it at number two on a new list of the country’s most generous employers.

      In fact, 14 of the 25 top-paying companies are in the biopharma industry, the Business Journals reveal in a new report. While this may not be entirely surprising to those who follow the industry closely, the list could very well raise eyebrows among politicians and activists who have been pounding pharma companies to lower their drug prices and take a more restrained approach to executive pay.

      Infinity is not all that far behind the highest-paying company on the list, Lilis Energy, where the median salary is $500,000. Other biopharma companies in the top 10 include Savara ($367,864), Tesaro ($344,329), Sarepta Therapeutics ($256,151) and Agios Pharmaceuticals ($253,115).

      A deep dive into the five highest-paying pharma companies reveals some interesting disparities in the gaps between CEOs’ paychecks and those of the average worker. For example, at Infinity, the CEO-to-median-worker pay ratio is 5 to 1. At Savara, a Texas company that was recently forced to abandon a heart drug after it faltered in a phase 2 trial, that ratio is 2 to 1. But at Sarepta, the CEO pay ratio is 225 to 1.

      In May, Sarepta disclosed that CEO Douglas Ingram hauled in nearly $57 million in compensation in 2017, including $337,500 in salary, $420,875 in non-equity incentive compensation and a pile of shares and options. Ingram has only been on the job for about a year, but during that time, Sarepta’s stock has risen 165% as the company rolls out its first drug, Exondys 51, to treat Duchenne muscular dystrophy.

      Still, questions about whether biopharma executives are really worth as much as they’re paid continue to dog the industry. The Interfaith Center on Corporate Responsibility has been waging a campaign to force pharma companies to report on links between executive compensation and increases in drug prices. The group filed investor resolutions with five Big Pharma firms over the summer after reading a Credit Suisse report suggesting some drug companies generate all their profit growth from price hikes.

      None of the resolutions passed, but investor support for them ranged from 21% to 28%, leading ICCR to conclude that concerns about executive compensation and high drug prices “resonated strongly” with investors. Last year, ICCR asked 18 companies to disclose their reasoning behind price increases on some of their top drugs. The companies resisted the demand, saying drug pricing is too complex for the average consumer to understand.

      The Business Journals list of high-paying employers includes plenty more biopharma companies that have been targets of criticism over their compensation practices. Vertex Pharmaceuticals, for example, made the 14th spot on the list with its median salary of $211,511. Vertex CEO Jeff Leiden caught heat back in 2014 for his $45.8 million pay package, leading the company to overhaul its compensation practices. By 2016, Leiden’s pay had fallen to $17.4 million.

      There’s still a big gap between Leiden’s compensation and that of the average Vertex employee, however. The CEO pay ratio at Vertex is 81, according to the Business Journals report.