Endo’s stock price hasn’t at all recovered from a sharp decline thanks to generics price erosion and a gloomy outlook for the company’s business. But CEO Paul Campanelli snagged a huge pay pump in 2018 anyway—and not just because the board thinks he's done a good job righting the ship.

Campanelli’s total 2018 pay package swelled to $19.97 million from $13.6 million the previous year, a recent proxy filing showed. That’s a lot, considering Endo’s total revenues dropped 15% last year to $2.95 billion. It also ranks him among the highest-paid biopharma leaders, ahead of Bristol-Myers Squibb CEO Giovanni Caforio’s $19.4 million and Pfizer's now-former CEO Ian Read.

The major boost came from his equity awards, which totaled $16.8 million for 2018, versus $10.8 million the prior year. And that happened despite Endo's new, across-the-board cutback to long-term equity awards, designed "to support its share utilization priorities."

Part of that boost—$5 million—was awarded in 2017 as part of a special bonus, but actually granted in 2018.

Here’s how it happened: In August 2017, Endo’s board decided that its executive pay needed to be more "competitive" with other biopharma companies, and that its top execs needed to own more equity in the company. So the board approved "special grants," and part of Campanelli's was delayed into 2018.

Why did Campanelli deserve the $9 million in equity specifically granted for his 2018 performance—and the $2.2 million in cash incentive pay, which was about $400,000 higher than his 2017 payout?

Campanelli took over Endo from former CEO and Valeant disciple Rajiv De Silva in late 2016, a difficult time for the company. It was immediately after Endo bought Par Pharmaceutical, where Campanelli worked at the time; U.S. generics pricing pressure worsened, and Endo's mountain of debt started to crush the company.

Under Campanelli, Endo embarked on a turnaround plan that focused its resources on sterile injectables, "high-barrier, technically challenging generic products," and specialty drugs, and aimed to cut its debt burden at the same time.

And in 2018, things appeared to be on the mend, despite continued declines in U.S. generics and a lack of new launches, given that some key rollouts aren't expected until late this year. Xiaflex, Endo’s core specialty drug for Peyronie’s disease and Dupuytren’s contracture, increased sales by 24% in 2018 to $265 million. Its entire sterile injectables portfolio, with hormone Vasostrict leading the way, delivered 24% sales growth last year. The company positioned itself to file its Xiaflex followup, CCH—which could be the first injectable for cellulite—in the second half of 2019. And earnings exceeded targets set by the board.

Based on that, the board decided to almost double Campanelli’s target cash bonus, which was itself 120% of his annual $950,000 base salary. Total cash incentive pay? $2.23 million.

Campanelli faces plenty of challenges, as Endo’s suffering stock price suggests. In 2017, the company yanked its opioid painkiller Opana ER at the request of the FDA, which worried about its abuse potential. But Endo still faces lawsuits brought by states against opioid producers for their role in the U.S. opioid epidemic.

"Shares are now down 21% in March, and concerns around the potential opioid liability have dominated our incoming calls on the name," RBC Capital analyst Randall Stanicky said in a note to clients in March.

Recent reports that Purdue Pharma, marketer of OxyContin, was considering bankruptcy didn’t help, Canaccord Genuity analyst Dewey Steadman noted the same month, even though he argued that Endo’s situation would be "far better than" Purdue’s in terms of potential monetary damages.

And in a blow to Endo’s sterile injectables ambitions, the Dublin-based company recently abandoned a $190 million deal to buy sterile injectables company Somerset Therapeutics and its India-based affiliate due to uncertainty over regulatory approvals in India.

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