Paul A. Friedman, like many travelers shuffling through airport security lines, sometimes daydreams about owning a private jet.
Dr. Friedman is one of the lucky ones who could afford it. Over the past few years, the former associate professor at Harvard Medical School sold $146.1 million worth of shares in Incyte Corp. He headed the firm as chief executive from lean times through the successful launch of a drug to treat a rare cancer.
Despite the windfall, he continues to drive his 2009 Audi. “We live in the same place, my wife and I,” said the 73-year-old physician, who retired as CEO in 2014 and remains a company director.
New drugs that extend or improve the lives of millions of people—and the potential of ones still in development—have lifted stocks of the biotechnology companies that own them and created a new class of millionaires from many of the scientists, doctors and investors behind them.
Biotech leaders have joined hedge-fund and tech executives in the U.S. corporate winner’s circle, riding the success of new high-price drugs and investor enthusiasm for the high-risk business. Some have bought fancy houses. Others, like Dr. Friedman, say not much has changed from lives spent in labs.
Organic chemist Norbert W. Bischofberger, the longtime research and development chief at Gilead Sciences Inc.—and a co-inventor of Tamiflu—sold $320.3 million worth of company stock through 2015. Yet his wife had his old car towed and replaced with a new Toyota after he balked at getting a new one. “The conversation,” he recalled, “went something like, Wife: ‘We should get a new car for you.’ I: ‘There is nothing wrong with the one I got.’ ”
Drugs conceived in biotech labs have advanced the treatment of such illnesses as hepatitis C, cystic fibrosis and some cancers. Many grew out of new insights into the genetic causes and biological processes of disease, aided by years of government and private research.
An analysis of corporate filings by The Wall Street Journal found that executives and directors at the 100 largest biotech companies sold stock valued at $8 billion in the industry’s bull market last year.
The payouts marked a dramatic peak for an industry that five years earlier was in the doldrums, with venture capital investments and initial public offerings nearing historical lows. Stock sales by biotech directors and executives averaged $1.2 billion annually from 2004 through 2011, adjusted for inflation, growing to an average $2.3 billion a year from 2012 through 2014.
The average annual market value of biotech companies in the S&P Composite 1500 more than tripled from $180 billion in 2010, to $594.2 billion this year, according to data from S&P Dow Jones Indices.
Paul A. Friedman in the lab of Incyte Corp. in Palo Alto, Calif., during the company’s lean times in 2003. The former chief executive sold $146.1 million in company stock in the years after the successful launch of a drug to treat a rare cancer.
Paul A. Friedman in the lab of Incyte Corp. in Palo Alto, Calif., during the company’s lean times in 2003. The former chief executive sold $146.1 million in company stock in the years after the successful launch of a drug to treat a rare cancer. Photo: Associated Press
Biotech was aided by low interest rates in the U.S. that drew investors to riskier, high-return ventures. The health-care law also helped by adding millions of people to insurance rolls, expanding the potential customer base with many people getting prescription drug coverage for the first time.
Scrutiny of drug prices and fear of government price controls have contributed to a recent slump in biotech stocks, with the Nasdaq Biotechnology index down 26% since January. “Every little company, every idea attracted capital,” said Geoffrey C. Porges, a senior biotechnology analyst at Leerink Partners LLC. “As a result, we probably overfunded the industry.”
Most of the new, patent-protected drugs have few rivals and scant limits on price, a sky’s-the-limit prospect that continues to draw investors to biotech firms with approved medicines—and to those only promising them.
Dr. Friedman is one of the lucky ones who could afford it. Over the past few years, the former associate professor at Harvard Medical School sold $146.1 million worth of shares in Incyte Corp. He headed the firm as chief executive from lean times through the successful launch of a drug to treat a rare cancer.
Despite the windfall, he continues to drive his 2009 Audi. “We live in the same place, my wife and I,” said the 73-year-old physician, who retired as CEO in 2014 and remains a company director.
New drugs that extend or improve the lives of millions of people—and the potential of ones still in development—have lifted stocks of the biotechnology companies that own them and created a new class of millionaires from many of the scientists, doctors and investors behind them.
Biotech leaders have joined hedge-fund and tech executives in the U.S. corporate winner’s circle, riding the success of new high-price drugs and investor enthusiasm for the high-risk business. Some have bought fancy houses. Others, like Dr. Friedman, say not much has changed from lives spent in labs.
Organic chemist Norbert W. Bischofberger, the longtime research and development chief at Gilead Sciences Inc.—and a co-inventor of Tamiflu—sold $320.3 million worth of company stock through 2015. Yet his wife had his old car towed and replaced with a new Toyota after he balked at getting a new one. “The conversation,” he recalled, “went something like, Wife: ‘We should get a new car for you.’ I: ‘There is nothing wrong with the one I got.’ ”
Drugs conceived in biotech labs have advanced the treatment of such illnesses as hepatitis C, cystic fibrosis and some cancers. Many grew out of new insights into the genetic causes and biological processes of disease, aided by years of government and private research.
An analysis of corporate filings by The Wall Street Journal found that executives and directors at the 100 largest biotech companies sold stock valued at $8 billion in the industry’s bull market last year.
The payouts marked a dramatic peak for an industry that five years earlier was in the doldrums, with venture capital investments and initial public offerings nearing historical lows. Stock sales by biotech directors and executives averaged $1.2 billion annually from 2004 through 2011, adjusted for inflation, growing to an average $2.3 billion a year from 2012 through 2014.
The average annual market value of biotech companies in the S&P Composite 1500 more than tripled from $180 billion in 2010, to $594.2 billion this year, according to data from S&P Dow Jones Indices.
Paul A. Friedman in the lab of Incyte Corp. in Palo Alto, Calif., during the company’s lean times in 2003. The former chief executive sold $146.1 million in company stock in the years after the successful launch of a drug to treat a rare cancer.
Paul A. Friedman in the lab of Incyte Corp. in Palo Alto, Calif., during the company’s lean times in 2003. The former chief executive sold $146.1 million in company stock in the years after the successful launch of a drug to treat a rare cancer. Photo: Associated Press
Biotech was aided by low interest rates in the U.S. that drew investors to riskier, high-return ventures. The health-care law also helped by adding millions of people to insurance rolls, expanding the potential customer base with many people getting prescription drug coverage for the first time.
Scrutiny of drug prices and fear of government price controls have contributed to a recent slump in biotech stocks, with the Nasdaq Biotechnology index down 26% since January. “Every little company, every idea attracted capital,” said Geoffrey C. Porges, a senior biotechnology analyst at Leerink Partners LLC. “As a result, we probably overfunded the industry.”
Most of the new, patent-protected drugs have few rivals and scant limits on price, a sky’s-the-limit prospect that continues to draw investors to biotech firms with approved medicines—and to those only promising them.
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