Alnylam has ambitious plans to join the ranks of the top five biotechs by market cap. And last year, CEO John Maraganore totted up compensation worthy of that ranking, more than the leaders of some Big Pharma companies.
Or perhaps a few million less, depending how confident he might be in meeting his performance goals.
A quick look at the company’s proxy—namely, its summary compensation table—doesn’t indicate exactly how much Maraganore could collect based on his stewardship of the biotech.
Maraganore scored a salary of nearly $950,000 in 2020, plus option awards of $5.74 million and a cash bonus of $1.11 million, the RNAi biotech said in a proxy filing. His “other” pay came in at around $16,000. In all, that's $7.82 million, a pay package that represented a 7% increase from his 2019 pay of $7.32 million.
Those are the summary numbers, but there’s more to the story.
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In the first quarter of 2020, Maraganore scored $11.5 million in option awards and performance-based stock units based on the company’s performance for the prior year. Alnylam’s summary compensation table, which reports overall pay for named executives, includes the value of the option awards—around $5.75 million—but not the PSUs, which vest if Maraganore and Alnylam meet certain benchmarks, a spokeswoman said.
For those awards to vest, Alnylam has to hit $2.5 billion in cumulative sales by 2024 and report operating profits for one full year by 2025, plus hit certain R&D milestones.
If one assumed Alnylam would hit those financial and R&D milestones, those stock units would be valued at $5.75 million, the proxy discloses in a footnote to the summary table.
The company does expect to reach those goals in "the next several years," the spokeswoman said. But it decided against including their current value in Maraganore's summary compensation tally.
Why? Under SEC rules and “associated accounting guidance,” those performance awards were “not deemed probable of vesting as of the grant date” and are not included in the summary compensation table, a spokeswoman said.
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“This does not mean that the performance award is at risk of not being achieved,” Alnylam’s spokeswoman said. “It just means that from an accounting perspective, it was not probable that the event would be achieved as of the grant date.”
While Alnylam and its accountants deemed those awards to be worth exactly zero for reporting purposes, the company “remains confident that the performance events can be achieved over the next several years,” she added.
If those awards are added to Maraganore’s pay for the year, his overall 2020 pay package totals around $13.55 million, besting some Big Pharma CEOs such as GlaxoSmithKline’s Emma Walmsley and Novartis’ Vas Narasimhan. Walmsley pulled in a $9.7 million pay package last year, while Narasimhan collected $11.6 million. That higher number puts Maraganore's overall pay about on par with Sanofi CEO Paul Hudson, who garnered a $13.6 million package.
Despite the pandemic challenges, Alnylam turned in a “remarkable performance” last year, the biotech's proxy says. The company progressed on its R&D and commercial goals and ended the year with four marketed drugs and 12 clinical programs, six of which are in late-stage testing.
In late November, the biotech scored FDA approval for Oxlumo to treat primary hyperoxaluria type 1, or PH1, a severe rare disease that causes patients to suffer from recurrent kidney stones and often forces patients into organ transplants.
With the FDA nod, Oxlumo became Alnylam’s third rare disease drug after FDA approvals in August 2018 for Onpattro and November 2019 for Givlaari. Onpattro is approved in polyneuropathy caused by hereditary transthyretin-mediated amyloidosis, while Givlaari treats acute hepatic porphyria.
Then, in December, Alnylam’s partner Novartis scored approval in Europe for Leqvio to treat hypercholesterolemia. Alnylam picked up a $15 million milestone payment for approval. The biotech discovered the drug and licensed it to The Medicines Company, which Novartis acquired.
Maraganore has outlined a goal to grow the company into a top 5 biotech by market cap in the coming years. The company's pipeline includes RNAi medicines targeting hemophilia, complement-mediated diseases and more.