Jeffrey Leiden--Vertex Pharmaceuticals

Jeffrey Leiden
CEO, Vertex Pharmaceuticals

2012 pay package: $5.66 million
2011 pay package: $10.72 million
Change: -47.2%

Professional Profile: Jeffrey Leiden began his career in academia, both as a practicing cardiologist and molecular biologist, and served as chief of cardiology at the University of Chicago and a professor of medicine at Harvard Medical School and Brigham and Women's Hospital from 1987 to 2000. In 2000, he joined Abbott Laboratories ($ABBT) as president and COO after starting several biotech companies like Vical ($VICL) and Cardiogene. Vertex ($VRTX) brought Leiden on as a member of its board of directors in 2009 and hired him on to the company's executive team in 2011.

2012 Compensation Stack: Leiden's salary was an even $1 million in 2012 plus $2,556,234 in options. Vertex paid him a hefty $2,088,000 cash bonus and $12,450 in other compensation. Broken down, 82% of Leiden's 2012 total compensation was incentive-based--in the form of annual cash bonus and equity compensation.

Company Performance: Vertex's hepatitis C-fighting protease inhibitor Incivek--approved by the FDA in 2011 with high expectations--reportedly hit $1 billion in sales faster than any drug before it.

Although designed to increase cure rates among people who are being treated for the first time and people who have already been treated for hep C, Incivek is not strong enough to work by itself and must be taken along with interferon. Interferon is known to cause a host of side effects, which can vary in severity from person to person. That, coupled with the appeal of an all-oral drug rather than the Incivek injectable, may have led some patients to forgo the Vertex drug and opt for other treatments.

In the third quarter of 2012, Vertex reported a $57.5 million loss amounting to 27 cents a share, compared with a $221.1 million, $1.02 per share profit in the same quarter a year ago. Revenue for the quarter was $336 million, short of analyst estimates of $377.1 million.

Vertex was dealt another blow in December when it announced that some patients had died from serious skin reactions related to Incivek. As a result, the FDA slapped a "black box" warning on the drug. While the drug originally was forecast to bring in $4 billion in sales by 2016, EvaluatePharma lowered those expectations by about 84%, to $669 million, partly because of impending competition from all-oral hep C regimens.

In its proxy statement, Vertex said it hit 90% of its 2012 goals--such as gaining accelerated approval for Kalydeco in the U.S. and multiple international markets--but that it brought in lower-than-forecasted Incivek net product revenues, mainly as the result of declining sales of HCV protease inhibitors. The company had planned for $1.5 billion to $1.7 billion in sales from Incivek but ended up making $1.2 billion by year's end.

This year, the company's cystic fibrosis drug Kalydeco is well positioned. It showed significant improvements in lung function in a recent Phase II trial. The FDA in early 2013 designated Kalydeco and Vertex's first CFTR corrector molecule, VX-809, as "Breakthrough" therapies, giving the company a fast track to quickly deliver an application for approval next year.

For more:
Special Report: Vertex - The Biggest R&D Spenders in Biotech
Wanted: Premier hepatitis C drug developer to partner with Vertex
Interview: Vertex CEO concerned about investors' 'hyper-focus' on hep C

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Jeffrey Leiden--Vertex Pharmaceuticals