Biotech bil­lion­aire faces ac­cu­sa­tions of fraud for $1.3B 'catch-and-kil­l' can­cer drug deal

When biotech bil­lion­aire Patrick Soon-Sh­iong arranged a $90 mil­lion up­front pay­ment to Sor­ren­to from Nant­Phar­ma 4 years ago to ac­quire Cynvil­oq — promis­ing $1.2 bil­lion more in mile­stones — he her­ald­ed the deal, say­ing an “op­por­tu­ni­ty to de­vel­op com­bi­na­tion reg­i­mens of low-dose metro­nom­ic use of this ac­tive drug is an im­por­tant step in trans­form­ing can­cer care as we know it to­day.”

For his part, Sor­ren­to CEO Hen­ry Ji said he was “ex­cit­ed” that Soon-Sh­iong had stepped in to speed these new com­bos along.

To­day, he calls it the first act in a years-long swin­dle. And he’s su­ing Soon-Sh­iong.

As spelled out in the law­suit, which was wide­ly dis­trib­uted to the press, Ji al­leges that Soon-Sh­iong not on­ly played out a “catch-and-kill” plan to elim­i­nate a com­peti­tor to Soon-Sh­iong’s Abrax­ane, which he sold to Cel­gene in a deal that left him with more than a bil­lion dol­lars in Cel­gene stock, he used a big chunk of the mon­ey Sor­ren­to got in the up­front to help cov­er his costs for do­ing it.

Late Wednes­day evening, though, Soon-Sh­iong blast­ed back with a de­tailed re­sponse:

The law­suit is a cyn­i­cal at­tempt to de­flect from Sor­ren­to’s own breach of con­tract. The al­le­ga­tion that we have not de­vel­oped Cynvil­oq to pro­tect the sales of Abrax­ane is false and it ig­nores the facts. Be­cause it is to­tal­ly with­out mer­it, we shall de­fend our­selves vig­or­ous­ly against this base­less al­le­ga­tion.

There’s lots more, in­clud­ing breach of con­tract and a woe­ful lack of fol­low through, which I’ve in­clud­ed in its en­tire­ty be­low the al­le­ga­tions.

Ini­tial­ly, Ji says, Soon-Sh­iong was in­ter­est­ed in hav­ing Cel­gene buy it to pro­tect the Abrax­ane fran­chise, us­ing the sales from the new drug to pay off any loss­es from the bioe­quiv­a­lent Abrax­ane. Cel­gene, though, passed on an­titrust grounds, leav­ing Soon-Sh­iong to han­dle it when San­doz came call­ing with a deal in hand for the drug.

Hen­ry Ji, Sor­ren­to

“When Soon-Sh­iong heard about the po­ten­tial San­doz deal, he pan­icked,” says the law­suit, which was writ­ten as some­thing of a pot­boil­er. “He re­al­ized that if Cynvil­oq were sold to San­doz — a di­rect com­peti­tor to Cel­gene that had deep ex­pe­ri­ence bring­ing biosim­i­lars or gener­ics like Cynvil­oq suc­cess­ful­ly to mar­ket — it could dev­as­tate the sales of Abrax­ane, sig­nif­i­cant­ly dam­age Cel­gene’s share price, and there­fore per­son­al­ly cost Soon-Sh­iong hun­dreds of mil­lions of dol­lars.”

At the same time the sale went through in 2015, the suit con­tin­ues, Ji and Soon-Sh­iong cre­at­ed a joint ven­ture ded­i­cat­ed to im­munother­a­peu­tic an­ti­body can­cer drug R&D. Ji put up $40 mil­lion from his up­front for it. Then he al­leges that Soon-Sh­iong and his chief le­gal ad­vis­er Charles Kim se­cret­ly con­spired to pay Nant­Phar­ma its $90 mil­lion, drain­ing the JV’s ac­count of the cash it had, in­clud­ing Sor­ren­to’s $40 mil­lion.

As for Cynvil­oq, the suit says Soon-Sh­iong put it on a shelf, let­ting patents ex­pire and any val­ue in it leak away. Dur­ing that time, Cel­gene has been a reg­u­lar in­vestor in Soon-Sh­iong’s com­pa­nies, giv­ing them a role to play as the big Bris­tol-My­ers Squibb deal faces a share­hold­er vote in com­ing days. And Ji wants to have the $90 mil­lion re­turned to the JV so it can do its work, among oth­er things.

This isn’t the first time Soon-Sh­iong has been ac­cused of shady ac­tiv­i­ty. STAT pub­lished a se­ries of ar­ti­cles claim­ing that the bil­lion­aire had re­cap­tured a large do­na­tion to the Uni­ver­si­ty of Utah, while Politi­co fo­cused on an ap­par­ent scheme in which one of his com­pa­nies ob­tained a prop­er­ty from a non­prof­it at an un­der­val­ued price.

Through­out it all, Soon-Sh­iong, who’s cast him­self in the role of an R&D war­rior out to cure can­cer, has de­nied any wrong­do­ing and gone on to buy the Los An­ge­les Times. I asked Soon-Sh­iong and Cel­gene rep­re­sen­ta­tives if they had any com­ment.

Cel­gene’s me­dia shop has been dead silent for months. But they did re­spond here, with a spokesper­son say­ing “we don’t have a com­ment” about the suit.

Here’s the more de­tailed re­but­tal from Soon-Sh­iong.

Here are the facts:

When we ac­quired Cynvil­oq from Sor­ren­to, it was part of a larg­er trans­ac­tion in which we al­so ac­quired the ex­clu­sive rights to over 75 an­ti­bod­ies. Sor­ren­to has on­ly pro­vid­ed 15 an­ti­bod­ies to date, in breach of its con­trac­tu­al com­mit­ments, and has re­fused to oth­er­wise hon­or its ex­clu­siv­i­ty and oth­er oblig­a­tions. As one ex­am­ple, de­spite hav­ing ex­clu­sive­ly li­censed a PD-L1 an­ti­body to us, Sor­ren­to has since li­censed the same PD-L1 an­ti­body to a Ko­re­an com­pa­ny and an­nounced a Phase 1 study, in breach of our agree­ment.

Nant­Phar­ma ac­quired the Pa­cli­tax­el drug with the pub­lic rep­re­sen­ta­tion from Sor­ren­to that the mol­e­cule was found to be bioe­quiv­a­lent to Abrax­ane and that the FDA had agreed with Sor­ren­to’s find­ing of bioe­quiv­a­lence based on a meet­ing with the FDA. Fol­low­ing the ac­qui­si­tion, we dis­cov­ered that Sor­ren­to had mis­rep­re­sent­ed this in­for­ma­tion. Up­on dig­ging in­to the raw da­ta from the Sor­ren­to clin­i­cal tri­al, our sta­tis­ti­cians in fact dis­cov­ered that the drug was in­deed not bioe­quiv­a­lent and re­port­ed this find­ing to the com­pa­ny. We shared these find­ings with Sor­ren­to and in­formed them that it would not be pos­si­ble for us to file un­der the bioe­quiv­lance ap­proval path­way be­cause the da­ta did not sup­port that ap­proach.

Fur­ther­more, when we re­quest­ed a new sup­ply of the drug from the Ko­re­an man­u­fac­tur­er, we al­so dis­cov­ered that the for­mu­la­tion con­tained an im­pu­ri­ty and this re­quired the sup­pli­er to iden­ti­fy the cause of the im­pu­ri­ty and to mod­i­fy the man­u­fac­tur­er’s process to re­move the im­pu­ri­ty. This process was at­tempt­ed by the sup­pli­er who pre­sent­ed their re­sults to us re­cent­ly, but un­for­tu­nate­ly the process im­prove­ment fur­ther in­creased the in­sta­bil­i­ty of the drug. The need for fur­ther de­vel­op­ment to im­prove the sta­bil­i­ty by the man­u­fac­tur­er is cur­rent­ly un­der re­view while we pur­sue the safe­ty analy­sis of the orig­i­nal for­mu­la­tion in a Phase 1 study.

Be­cause the drug re­quired a new process, fur­ther sta­bil­i­ty test­ing, and a com­plete new Phase 1 clin­i­cal study, we sold the drug to our JV with Sor­ren­to, which had both reg­u­la­to­ry and for­mu­la­tion ex­per­tise. We ini­ti­at­ed  a Phase 1 study and this study is cur­rent­ly open and we are ac­tive­ly try­ing to re­cruit pa­tients as of this date. The state­ments and claims made by Sor­ren­to are thus puz­zling in light of our  dili­gent and re­spon­si­ble ac­tiv­i­ty ever since we ac­quired the drug, and can on­ly be viewed as a cyn­i­cal at­tempt to de­flect from their breach of con­tract.”

Steven Feld­man, an at­tor­ney with Hue­ston Hen­ni­gan rep­re­sent­ing Sor­ren­to, was ea­ger to re­ply.

It de­fies cred­i­bil­i­ty that a sci­en­tist and busi­ness­man as so­phis­ti­cat­ed and suc­cess­ful as Dr. Patrick Soon-Sh­iong en­tered in­to a $1.3 bil­lion trans­ac­tion with­out ex­am­in­ing the da­ta or con­duct­ing due dili­gence. Dis­cov­ery in this case will re­veal the nu­mer­ous false as­ser­tions in Dr. Soon-Sh­iong’s re­sponse.  We look for­ward to lit­i­gat­ing this case.

Im­age: Patrick Soon-Sh­iong (NHS Con­fed­er­a­tion)

The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

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How small- to mid-sized biotechs can adopt pa­tient cen­tric­i­ty in their on­col­o­gy tri­als

By Lucy Clos­sick Thom­son, Se­nior Di­rec­tor of On­col­o­gy Pro­ject Man­age­ment, Icon

Clin­i­cal tri­als in on­col­o­gy can be cost­ly and chal­leng­ing to man­age. One fac­tor that could re­duce costs and re­duce bar­ri­ers is har­ness­ing the pa­tient voice in tri­al de­sign to help ac­cel­er­ate pa­tient en­roll­ment. Now is the time to adopt pa­tient-cen­tric strate­gies that not on­ly fo­cus on pa­tient needs, but al­so can main­tain cost ef­fi­cien­cy.

John Reed at JPM 2019. Jeff Rumans for Endpoints News

Sanofi's John Reed con­tin­ues to re­or­ga­nize R&D, cut­ting 466 jobs while boost­ing can­cer, gene ther­a­py re­search

The R&D reorganization inside Sanofi is continuing, more than a year after the pharma giant brought in John Reed to head the research arm of the Paris-based company.
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UP­DAT­ED: Chica­go biotech ar­gues blue­bird, Third Rock 'killed' its ri­val, pi­o­neer­ing tha­lassemia gene ther­a­py in law­suit

Blue­bird bio $BLUE chief Nick Leschly court­ed con­tro­ver­sy last week when he re­vealed the com­pa­ny’s be­ta tha­lassemia treat­ment will car­ry a jaw-drop­ping $1.8 mil­lion price tag over a 5-year pe­ri­od in Eu­rope — mak­ing it the plan­et’s sec­ond most ex­pen­sive ther­a­py be­hind No­var­tis’ $NVS fresh­ly ap­proved spinal mus­cu­lar at­ro­phy ther­a­py, Zol­gens­ma, at $2.1 mil­lion. A Chica­go biotech, mean­while, has been fum­ing at the side­lines. In a law­suit filed ear­li­er this month, Er­rant Gene Ther­a­peu­tics al­leged that blue­bird and ven­ture cap­i­tal group Third Rock un­law­ful­ly prised a vi­ral vec­tor, de­vel­oped in part­ner­ship with the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter (MSK), from its grasp, and thwart­ed the de­vel­op­ment of its sem­i­nal gene ther­a­py.

Neil Woodford. Woodford Investment Management via YouTube

Wood­ford braces po­lit­i­cal storm as UK fi­nan­cial reg­u­la­tors scru­ti­nize fund sus­pen­sion

The shock of Neil Wood­ford’s de­ci­sion to block with­drawals for his flag­ship fund is still rip­pling through the rest of his port­fo­lio — and be­yond. Un­der po­lit­i­cal pres­sure, UK fi­nan­cial reg­u­la­tors are now tak­ing a hard look while in­vestors con­tin­ue to flee.

In a re­sponse let­ter to an MP, the Fi­nan­cial Con­duct Au­thor­i­ty re­vealed that it’s opened an in­ves­ti­ga­tion in­to the sus­pen­sion fol­low­ing months of en­gage­ment with Link Fund So­lu­tions, which tech­ni­cal­ly del­e­gat­ed Wood­ford’s firm to man­age its funds.

John Chiminski, Catalent CEO - File Photo

'It's a growth play': Catal­ent ac­quires Bris­tol-My­er­s' Eu­ro­pean launch pad, ex­pand­ing glob­al CD­MO ops

Catalent is staying on the growth track.

Just two months after committing $1.2 billion to pick up Paragon and take a deep dive into the sizzling hot gene therapy manufacturing sector, the CDMO is bouncing right back with a deal to buy out Bristol-Myers’ central launchpad for new therapies in Europe, acquiring a complex in Anagni, Italy, southwest of Rome, that will significantly expand its capacity on the continent.

There are no terms being offered, but this is no small deal. The Anagni campus employs some 700 staffers, and Catalent is planning to go right in — once the deal closes late this year — with a blueprint to build up the operations further as they expand on oral solid, biologics, and sterile product manufacturing and packaging.

This is an uncommon deal, Catalent CEO John Chiminski tells me. But it offers a shortcut for rapid growth that cuts years out of developing a green fields project. That’s time Catalent doesn’t have as the industry undergoes unprecedented expansion around the world.

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Arc­turus ex­pands col­lab­o­ra­tion, adding $30M cash; Ku­ra shoots for $100M raise

→  Rare dis­ease play­er Ul­tragenyx $RARE is ex­pand­ing its al­liance with Arc­turus $ARCT, pay­ing $24 mil­lion for eq­ui­ty and an­oth­er $6 mil­lion in an up­front as the two part­ners ex­pand their col­lab­o­ra­tion to in­clude up to 12 tar­gets. “This ex­pand­ed col­lab­o­ra­tion fur­ther so­lid­i­fies our mR­NA plat­form by adding ad­di­tion­al tar­gets and ex­pand­ing our abil­i­ty to po­ten­tial­ly treat more dis­eases,” said Emil Kakkis, the CEO at Ul­tragenyx. “We are pleased with the progress of our on­go­ing col­lab­o­ra­tion. Our most ad­vanced mR­NA pro­gram, UX053 for the treat­ment of Glyco­gen Stor­age Dis­ease Type III, is ex­pect­ed to move in­to the clin­ic next year, and we look for­ward to fur­ther build­ing up­on the ini­tial suc­cess of this part­ner­ship.”

Gilead baits new al­liance with $45M up­front, div­ing in­to the busy pro­tein degra­da­tion field

Gilead is jump­ing on board the pro­tein degra­da­tion band­wag­on. And they’re turn­ing to a low-pro­file Third Rock start­up for the ex­per­tise. But if you were look­ing for a trans­for­ma­tion­al deal to kick up fresh en­thu­si­asm for Gilead, you’ll have to re­main pa­tient.

This one will have a long way to go be­fore they get in­to the clin­ic.

The big biotech said Wednes­day morn­ing that it is pay­ing $45 mil­lion up­front and re­serv­ing a whop­ping $2.3 bil­lion in biotech bucks if San Fran­cis­co-based Nurix can point the way to new can­cer ther­a­pies, as well as drugs for oth­er, un­spec­i­fied dis­eases.

A new num­ber 1 drug? Keytru­da tapped to top the 10 biggest block­busters on the world stage by 2024

Analysts may be fretting about Keytruda’s longterm prospects as a host of rival therapies elbow their way to the market. But the folks at Evaluate Pharma are confident that last year’s $7 billion earner is headed for glory, tapping it to beat out the current #1 therapy Humira as AbbVie watches that franchise swoon over the next 5 years.

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