Biotechs: Investors say bosses of loss makers are overpaid

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The Independent Online

Investors have lashed out at the sums earnt by executives at loss-making biotech firms.

"These development-stage companies are losing money, so it's fair to say that executives should not be paid huge amounts of money and should focus instead on actually developing products," said one investor speaking on condition of anonymity.

The vast majority of the companies in the UK biotech industry are loss-making and rely on investors to keep them afloat until they can get a product to market, which can take several years. However, stock prices have slumped in recent months, wiping millions off the value of these investments.

The executive compensation model, investors say, should be more akin to the US model, where the focus is on stock options. "People would be much happier if they were awarded

with upside on the share price," said June Scott of Reabourne Investment Management, a specialist in the sector.

Investors highlighted Antisoma, which specialises in cancer treatments, and Alizyme, a developer of obesity and diabetes treatments, as examples.

Richard Palmer, Alizyme's chief, took home a £281,000 basic salary in 2005, plus £192,000 in bonuses and expenses. He defended his pay packet: "I occupy the chief executive office as well as director of R&D. Investors get two for the price of one-and-a half."

Antisoma said the package for chief executive Glyn Edwards - £398,000 in salary, bonuses and expenses - is in line with the median remuneration of chiefs in FTSE Small Cap companies.

Both these firms lost money last year. Neither has brought a product to market.