Incyte was once expected to have one of the biggest drug launches of 2017 with baricitinib, its JAK inhibitor to treat rheumatoid arthritis. But the FDA turned it down, forcing Incyte and partner Eli Lilly to refile—pushing the potential approval date to the middle of this year.
That didn’t stop Incyte from handing CEO Hervé Hoppenot a 36% pay hike, however, bringing his total compensation for 2017 up to $16.1 million. Hoppenot’s base salary went up just 3% to $966,505, but the value of his options award nearly doubled to $11.7 million, according to the company’s proxy statement.
While it wasn’t quite as big a compensation boost as he got last year—when his pay package doubled over 2016—it could raise some eyebrows in biotech, where huge pay increases for CEOs of small companies are often frowned upon.
Incyte based its incentive awards on a mix of goals for 2017 that included R&D milestones and commercial targets—not all of which it achieved. Sales of its flagship cancer drug, Jakafi, surpassed the company’s target of $1.133 billion. But the baricitinb delay wasn't the only setback in drug development. The company did not meet its own deadline for starting a pivotal trial of Jakafi in patients with essential thrombocythemia, according to the proxy.
And Incyte did not meet “certain pre-defined milestones” in its pivotal trials of epacadostat, its IDO1 inhibitor that’s vying to be a first-in-class immuno-oncology drug. The company has eight such trials underway, combining the drug with checkpoint inhibitors from Merck & Co., Bristol-Myers Squibb and AstraZeneca.
Incyte's proxy didn’t specify what milestones weren’t met, but there’s no doubt Incyte is under pressure to score a win with epacadostat soon. In November, Bristol-Myers Squibb posted positive interim trial data on its epacadostat rival, which performed well in combination with its blockbuster Opdivo in bladder cancer. BMS got into the IDO market in 2015 with its $1.25 billion purchase of Flexus, and it’s now rapidly gaining on Incyte.
Hoppenot is widely credited with moving Incyte to the front of the IDO pack by stacking up combination trials for the drug. Last year, the company won over investors by partnering with Merck for an ambitious multitrial research plan combining epacadostat with Keytruda in several cancer types. In September, the companies released data from a small trial showing that 56% of melanoma patients responded well to the combo therapy for 45 weeks on average.
Still, the negatives have outweighed the positives over the past year in the minds of Incyte’s shareholders. The company’s stock has lost 41% of its value in the last 12 months, falling to $86.89 per share.
In mid-2016, Incyte revised its equity grant practices “with a view toward countering some of the effects of the volatile trading price of our common stock,” according to the proxy. The company is discontinuing restricted stock unit awards in favor of awards tied to performance, but that won’t start until July of this year.